Q2 2025 Nexa Resources SA Earnings Call
Rodrigo Cammarosano: Good morning, ladies and gentlemen, and welcome to Nexa Resources' second quarter 2025 earnings conference call. Please note that today's event is being recorded and broadcasted live via Zoom, with access also available through Nexa's Investor Relations website. Our slide presentation is accompanying today's webcast and is also available for download on our Investor Relations website. A replay of the conference call will be available following its conclusion. As a reminder, all participants are in listen-only mode. Following today's presentation, we will open the floor for questions. To ask a question, if you are joining via Zoom, please click on the raise hand button. If your question has already been answered, you can lower your hand by clicking on the "Put Your Hand Down" button. You may also submit your question via the Q&A icon located in the bottom of your screen.
Good morning, ladies and gentlemen, and welcome to Nexa resources, second quarter, 2025 earnings conference. Call, please note, that today's event is being recorded and broadcasted live via Zoom with access also available through Nexus investor relations website, as like presentation is a company in 2 days, webcast and is also available for download on our investor relations website. Our replay of the conference call will be available following its conclusion, as a reminder. All participants are
Rodrigo Cammarosano: Please include your name and company when submitting your question. For participants joining by phone, press star followed by nine to raise or lower your hand, and once you are announced, press star followed by six to mute or unmute your microphone. Written questions that are not said during the call will be answered afterward by the Investor Relations team. Questions from media outlets will be handled separately by our Company Affairs team. Now, I would like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations and Treasury, for his opening remarks. Please go ahead, sir.
Listing only mode following today's presentation. We open the floor for questions to ask a question. If you are joining via Zoom, please click on the raise and button. If your question has already been answered, you can lower your hand by clicking on, put your hand down button. You may also submit your question via the Q&A icon located in the bottom of your screen. Please include your name and Company. When submitting your question for participants joined by phone press star, followed by 9 to raise your or lower your hand. And once you're announced press star, 6 follow with uh star, followed by 6, to mute your own mute, your microphone, written questions that are not addressed. During the call will be answered afterward. The investor relations team.
Rodrigo Cammarosano: Good morning, everyone, and welcome to Nexa Resources S.A.'s second quarter 2025 earnings conference call. Thank you for joining us today. During this call, we will discuss the company's performance as outlined in our earnings release issued yesterday. We encourage you to follow along with the on-screen presentation through the webcast. Before we begin, I would like to draw your attention to slide number two, where we outline our forward-looking statements about our business. Please refer to the disclaimer regarding these statements and their associated conditions. Now, it is my pleasure to introduce our speakers. Joining us today are our CEO, Ignacio Rosado, our CFO, José Carlos del Valle, and our Senior Vice President of Mining Operations, Leonardo Coelho. I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.
Questions from media Outlets will be handled separately by our company Affairs team. Now, I would like to turn the conference over to Mr. Rodrigo Koso head of investor relations, and treasury for his opening remarks, please go ahead, sir.
Good morning, everyone and welcome to next resources, second quarter 2025 earnings conference call. Thank you for joining us today.
During this call, we will discuss the company's performance Pharmacy as outlined in our earnings released issued yesterday. We encourage you to follow along with the on-screen presentation through the webcast.
Before we begin, I would like to draw your attention to his line number 2 where we outline our forward-looking statements about our business.
Please refer to the disclaimer regarding these statements and their associated conditions.
Our CFO and our, senior vice president of mining operations. Leonardo, I will turn the call over to a NASA for his comments in, as please go ahead.
Ignacio Rosado: Thank you, Rodrigo. Good morning, everyone, and thank you for joining us today. Before we dive into our second quarter and first half of 2025 financial results, I would like to begin by highlighting the key business catalysts driving Nexa Resources S.A.'s long-term growth and performance. Let's move to slide number three. As we continue to execute our strategy, four major business catalysts are shaping the path towards sustainable cash generation and long-term value creation. Starting with Ariponaa, which remains our top priority, the installation of the fourth tailings filter is progressing on schedule. Once operational, this will unlock the operation's full production capacity and improve both efficiency and cash flow. Ariponaa is a cornerstone asset in our portfolio, with a mine life of 15 years based on reserves and over 25 years when including resources. It is a highly competitive asset and well positioned in the cash cost curve.
Thank you, Rodrigo. Good morning, everyone. And thank you for joining us today.
Before we dive into our second quarter and first half of 2025 Financial results, I would like to begin by highlighting the key business Catalyst, driving Nexus, long-term growth and performance. Let's move to slide number 3.
As we continue to execute our strategy, major business catalysts are shaping the path towards sustainable cash generation and long-term value creation.
Starting with AA, which remains our top priority.
The installation of the fourth tailings filter is progressing on a scale.
Once operational, this will unlock the operations, full production capacity and improved, both efficiency and cash flow.
Is a Cornerstone asset in our portfolio.
with a main life of 15 years based on reserves and over 25 years when including resources,
Ignacio Rosado: The Cerro Pasco Integration Project is a key component of our strategy in Peru. With more than 15 years of life of mine and potential upside in net smelting return, it leverages the area's rich mineral endowment. In mineral exploration, in addition to the potential at Ariponaa, we continue to achieve promising results at Cerro Lindo, with extensions near its current infrastructure. At Pasco, drilling in the integration area reinforces our confidence in the mineral potential, with attractive zinc rates, and at Basanti, Sucuru Norte is also delivering promising results. Lastly, the integrated mine smelter business model continues to be a core competitive advantage. It reduces exposure to market volatility and enhances margins in positive price scene environments. With Ariponaa and Cerro Pasco under development, we are further strengthening our platform for sustainable cash flow.
It is a highly competitive asset and well positioned in the cash cost curve.
Integration project is a key component of our strategy in Peru.
With more than 15 years of life of mine and potential upside in net smelting return, it leverages the area's rich mineral endowment.
In Mineral exploration, in addition to the potential Atari PA.
We continue to achieve promising results at cindo with extensions near, its current infrastructure at Pasco Drilling in the integration area. Reinforces our confidence in the mineral potential with attractive, seen rates. And at basanti tsukuru Norte is also delivering promising results.
Lastly, the integrated minus melter business model continues to be a core competitive advantage.
It reduces exposure to Market volatility and enhances margins in positive price. Thinner environments.
Ignacio Rosado: With that, let's now turn to slide number four, where we will review our performance this quarter. Market conditions remain dynamic, with metal prices showing mixed trends. Zinc and lead came under pressure, while copper and silver prices strengthened, supporting a sequential improvement in our financial results. Nexa Resources S.A. delivers solid quarterly performance driven by disciplined execution and continued progress across our strategic priorities. We reported net revenues of $708 million, up 13% compared to the first quarter of 2025, and an adjusted EBITDA of $161 million, a 28% sequential increase. This performance reflects higher sales volumes, especially in our smelting segment, and the benefit of stronger by-product prices. Our free cash flow was $17 million, an improvement over the previous quarter, supported by better working capital management.
We are farther strengthening our platform for sustainable cash flow.
With that. Let's now turn to slide number 4.
Where we will review our performance, this quarter?
Market conditions remain dynamic, with metal prices showing mixed trends.
Think and Lead came under pressure while copper and silver prices. Strengthened.
Supporting a sequential improvement in our financial results.
Next, a delivered solid quarterly performance driven by DCP and execution and continued progress across our strategic priorities.
We reported net revenues of 78 million up, 13% compared to the first quarter of 2025 and adjusted evida of 161 million at 208% sequential increase.
This performance reflects higher sales volumes, especially in our smelting segments and the benefit of Stronger by product prices.
Ignacio Rosado: On the operating front, our mining segment produced 74,000 tons of zinc, up 9% quarter over quarter, as Ariponaa and Basante are recovering from disruptions in the first quarter of this year. Our smelting segment also delivered solid results, with total zinc sales reaching 145,000 tons, a 12% increase versus the first quarter. Looking ahead, we are revising our full-year production and cost guidance to reflect our operational challenges in the first quarter, in Ariponaa and Basante, which also impacted our smelters in Brasil. We continue to strengthen our financial position through proactive liability management initiatives completed early in the quarter, successfully extending debt maturities at competitive rates. These efforts, along with improved working capital, reinforce our investment grade profile and enhance our financial flexibility amid ongoing market volatility. On the strategic front, phase one of the Cerro Pasco Integration Project is progressing well.
Our free cash flow was 17 million and improvement over the previous quarter supported by better working Capital Management.
On the operating front. Our mining segment produced 74,000 tons of sink up 9% quarter over quarter as a a recovering from disruptions in the first quarter of this year.
Our smelting segment also delivered solid results.
With total think sales, reaching 145,000, tons at 12%, increase versus the first quarter.
Looking ahead. We are revising our full year production and cost guidance to reflect our operational challenges in the first quarter.
In a bisonte which also impacted our smelters in Brazil.
We continue to strengthen our financial position through proactive, liability management. Initiatives completed early in the quarter successfully extended that maturities at competitive rates.
This efforts along with improved working, capital reinforce our investment grade profile, and enhance our financial flexibility amid ongoing Market volatility.
Ignacio Rosado: Key milestones, including final engineering, permitting, and contractor mobilization, have been achieved. As I mentioned a moment ago, we remain on track with the acquisition and installation of the fourth tailings filter at Ariponaa in the coming months, and commissioning is expected in the first half of 2026. This is a crucial step to unlock full capacity and support long-term operational stability in this important asset. With that, let's move to slide number five to discuss our operating performance in more detail. Turning to our operating mining segment's performance, zinc production in the second quarter totals 74,000 tons, up 9% quarter over quarter, mainly driven by higher treated ore volumes and better grades at our Peruvian operations. Compared to the first half of last year, zinc production was down 14%, mainly due to lower output at Basante and Ariponaa, partially offset by a stronger production at Atacocha and El Porvenir.
1 of the several Pascal integration project is progressing. Well, key Milestones, including final engineering permitting and contractor mobilization have been achieved.
As I mentioned, a moment ago, we remain on track with the acquisition and installation of the fourth, tailings filter at Aria in the coming months and commissioning is expected in the first half of 2026.
This is a crucial step to unlock full capacity and support long-term operational stability in this important asset.
With that, let's move to slide number 5 to discuss our operating performance in more detail.
Turning to our operating. Mining segments performance.
Sink production in the second quarter total, 74,000 tons up 9% quarter over quarter. Mainly driven by higher treated or volumes and better grades at our Peruvian operations.
Ignacio Rosado: During the second quarter, Basante continued to face limited access to higher grade zones, while Ariponaa was still impacted by operational constraints in the tailings filter capacity related to excessive rainfall and maintenance challenges. Both mines are projecting better performance for the remaining of the year. Looking at costs, our consolidated mining cash cost net of by-products decreased to minus $0.11 per pound in the second quarter of this year, a significant improvement from $0.11 per pound in the first quarter of this year and $0.02 per pound in the second quarter of 2024. The sequential improvement was driven by higher by-products contribution and increased sales volume. Year-over-year decrease also reflects lower operational costs at our Peruvian mines and lower treatment charges. For the first half of 2025, cash costs were in line with our full-year guidance.
Compared to the first half of last year, seeing production was down 14%, mainly due to lower output at bisonte and edona partially offset by a stronger production at tatacoa. And El pour
During the second quarter bisonte continued to face limited access to higher grade zones was still impacted by operational, constraints.
in the tailings filter, capacity related to excessive rainfall and maintenance challenges,
both minds are projecting better performance for the remaining of the year.
Looking at costs, our Consolidated mining cash cost net of byproducts. Decreased to minus 11 cents per pound in the second quarter of this year. A significant improvement from 11 cents per pound in the first quarter of this year and 2 cents per pound in the second quarter of 2024.
The sequential Improvement was driven by Higher by products contribution and increase sales volume.
Year-over-year, decrease also reflects lower. Operational costs at our Peruvian minds and lower treatment charges.
Ignacio Rosado: Our cost per run of mine stood at $50 per ton, up 4% year-over-year and quarter over quarter, mainly reflecting higher costs associated with stabilization efforts at Ariponaa. Excluding Ariponaa, run of mine costs were 8% lower than in the second quarter of last year and remained broadly stable versus the first quarter of this year. Overall, the first half of 2025 cost per run of mine came in slightly below our revised guidance. Now, let's move to slide number six. Turning to our smelting segment, total sales reached 145,000 tons in the second quarter of this year, up 12% quarter over quarter, driven by higher production at Cajamarquilla and Yuisdefora, along with stronger zinc oxide sales in Tres Marias. Year-over-year, sales volumes declined 2% and was down 4% in the first half, in line with our sales guidance for the year.
For the first half of 2025 cash costs were in line with our full year guidance.
Our cost per run of mine, stood at $50 per ton up 4% in year-over-year and quarter over quarter.
Mainly reflecting higher costs associated with stabilization efforts at adipa.
Excluding.
Run of mine cost.
Where 8% lower than in the second quarter of last year and remain broadly stable versus the first quarter of this year.
Overall, the first half of 2025 cost per run of mine came in a slightly below uh, revised guidance.
Now, let's move to a slide number 6.
Turn into our smelting segment. Total sales reach 145,000 tons in the second quarter of this year up. 12% quarter over quarter driven by higher production like kamaria use the fora along with the stronger sink, Oka sales, in t Maria.
Ignacio Rosado: On the cost side, our consolidated smelting conversion cost stood at $0.39 per pound, up 19% quarter over quarter and 30% year-over-year, mainly due to higher maintenance expenses, third-party services, and input costs. Our cash cost in the second quarter of this year was $1.23 per pound compared to $1.17 per pound in the first quarter of this year and $1.19 per pound in the second quarter of last year. The increase versus the previous quarter reflects higher operational costs, while the year-over-year increase was driven by higher costs at our Brazilian smelters and lower treatment charges, partially offset by lower LME zinc prices. For the first half of 2025, our conversion cost was $0.36 per pound and our cash cost was $1.20 per pound, both within our revised full-year guidance. Let's move to slide number seven, where we will begin discussing Ariponaa.
Year over year sales volumes declined 2% and and was down 4% in the first half in line with our sales guidance for the year.
On the coast side, our Consolidated smelting conversion cost is stood at 39 cents per pound up 19% quarter over quarter and 30% year-over-year.
Mainly due to higher maintenance expenses, third-party services and input costs.
Our cash cost in the second quarter of this year was $1.23 per pound compared to $1.17 per pound in the first quarter of this year and $1.19 per pound in the second quarter of last year.
The increase versus the previous quarter reflects higher operational costs. While the year-over-year increase was driven by higher costs at our Brazilian smelters and lower treatment charges partially offset by lower lme sink prices.
For the first half of 2025, our conversion cost was 36 cents per pound and our cash cost was $1.20 per pound both within our re revised full year guidance.
Ignacio Rosado: During the second quarter of 2025, our plant faced increased downtime due to corrective stoppages caused by heavy rainfall in the first quarter, which impacted our tailings filter capacity. Our three tailing filters were refurbished and went through general maintenance during the months of May and June, which limited plant capacity. With the three filters fully operational, we are seeing more stable production in July, which should extend for the rest of the year. Recovery rates across all metals were at target levels, demonstrating operational consistency. We also saw a strong contribution from by-products, mainly copper, driven by higher volumes and prices, as well as improved silver and gold prices compared to the first quarter. In response to the disruptions experienced in the first half of 2025, we revised our 2025 production and cost per run of mine guidance.
Let's move to a slide number 7 where we will begin discussing aiona.
During the second quarter of 2025 our plant face, increased downtime due to corrective stoppages caused by heavy rainfall in the first quarter, which impacted our tailings filter capacity.
Filters were refurbished and went through general maintenance during the months of May and June, which limited plant capacity.
With a 3 filters fully operational. We are seeing more stable production in July, which should extend for the rest of the year.
Recovery rates across all metals were a Target levels demonstrating operational consistency.
We also saw a strong contribution from Bright products, mainly copper driven by higher volumes and prices as well as improved silver and gold prices compared to the first quarter.
In response to the disruptions experience in the first half of 2025.
Ignacio Rosado: However, it's worth noting that our C1 cash cost guidance remains unchanged, reaffirming Ariponaa's competitive cost position. Despite all of these operational challenges, the asset continues to sit in the second quartile of the all-in sustaining cash cost curve, reflecting its long-term value potential. On the exploration front, our results from the first half of the year continue to highlight the strong geological potential of our asset. We are seeing ongoing confirmation of new mineralized zones, which increases our confidence in the future expansion of the life of our operation. Looking ahead, we expect continued improvement in plant performance, with monthly feed rates surpassing 130,000 tons, a level already achieved in July. Our efforts remain focused on addressing the current limitations in the tailings filter circuit. For the second half of 2025, we expect to deliver higher adjusted EBITDA supported by higher production, ongoing cost reduction initiatives, and margin improvements.
We revised our 2025 production and costs per run of mine guidance.
However, it's worth noting that our C1 cash cost guidance remains unchanged. Reaffirming a competitive cost position.
Despite all of these operational challenges, the asset continues to sit in the second quartile.
Of the all-in sustaining cash cost, curve reflecting its long-term value potential.
On the exploration, front our results from the first half of the Year, continue to highlight the strong geological potential of our asset.
We are seeing ongoing confirmation of new mineralized zones, which increases our confidence in the future expansion of the life of our operation.
Looking ahead. We expect continued Improvement in plant performance with monthly feed, rates surpassing 130,000 tons, a level already achieved in July.
Our efforts remain focused on addressing the current limitations in the tailings filter circuit.
Ignacio Rosado: As previously announced, we have procured the fourth tailings filter, which is currently in the manufacturing phase. We anticipate delivery and installation in the second half of 2025, with commissioning scheduled for the first half of 2026. This investment will enhance utilization capacity and operational stability further. In summary, despite early-year challenges, we remain confident in the strong fundamentals of Ariponaa. Its strong geological potential, combined with efficiency improvements, reinforces our ability to deliver long-term value for our shareholders. Let's now move to slide number eight to walk you through the most recent developments in the Cerro Pasco Integration Project. On this slide, I would like to highlight our progress in our Cerro Pasco Integration Project. This quarter marked significant progress in phase one, which focuses on the tailings pumping and piping system.
For the second half of 2025, we expect to deliver higher adjusted, Evita supported by higher production, ongoing cost reduction initiatives and margin improvements.
As previously announced, we have procured the fourth tailings filter which is currently in the manufacturing phase.
We anticipate the delivery and installation in the second half of 2025 with commissioning a schedule for the first half of 2026.
This investment will enhance utilization capacity and operational stability further.
In summary, despite early year challenges, we remain confident in the strong fundamentals of aipa.
It's a strong geological potential combined, with efficiency improvements reinforces our ability to deliver long-term value for our shareholders.
Let's now move to slide number 8 to walk you through the most recent developments in the several Pasco integration project.
On this slide, I would like to highlight our progress in our server. Pasco integration project.
This quarter marked significant progress in Phase 1, which focuses on the tailings pumping and piping system.
Ignacio Rosado: Key achievements include the completion of detail engineering for the tailings infrastructure at both El Porvenir and Atacocha, construction license secured for both sites, procurement of major equipment packages with manufacturing currently on the schedule, and the start of construction activities following full site mobilization with airworks and civil works, which began in July. Preparatory work for phase two is also progressing, including technical assessment of the Picasso shaft and the plant underground integration. As mentioned before, phase one is a critical enabler for the long-term sustainability of Cerro Pasco, as it will significantly expand tailings storage capacity and support future production plants. Let's move to slide number nine, where we will highlight our exploration program achievements during the first half of this year. On this slide, I would like to highlight the ongoing progress of our exploration program, which delivered positive results in the first half of this year.
Key achievements include the completion of detailed. Engineering for the tailings infrastructure at both,
Construction license secured for both sides.
Procurement of Mayor equipment packages, with manufacturing currently on the schedule and the start of construction activities following full sight mobilization with air works and Civil Works.
Which began in July?
Preparatory work for Phase 2 is also progressing, including the technical assessment of the Picasso shaft and the plant underground integration.
As mentioned before.
Phase 1 is a critical enabler.
For the long-term sustainability of Sir, Pasco.
As it will significantly expand tailings, storage capacity and support future production plants.
Let's move to slide number 9, where we will highlight our exploration program achievements. During the first half of this year,
Ignacio Rosado: At Cerro Lindo, the program remained focused on expanding known ore bodies in the southeast region, with drilling activities targeting the extensions of mineralized zones in ore bodies 8B and 8C. In Ariponaa, our activities were centered on the Mazaranduba target, where we continue to confirm new mineralized areas, reinforcing the long-term potential of the district. At Basante, our brownfield exploration efforts continue to advance, focusing on the expansion of mineralized zones in closing proximity to the existing mine infrastructure, where mineralization at target was confirmed. Finally, at Cerro Pasco, the exploration program delivered positive results, mainly around the integration target, which remains a key focus area for future development. With that, I will turn the call over to José Carlos del Valle, our CFO, who will walk us through the financial results. José, please go ahead.
on this slide, I would like to highlight the ongoing progress of our exploration program, which deliver positive results in the first half of this year.
At cindo the program remained focused on expanding non or bodies in the Southeast region with drilling activities targeting the extensions of mineralized zones in our bodies 8B and 8 C.
In Aria, our activities were centered on the mussar and dooba Target.
Where we continue to confirm new mineralized areas, reinforcing the long-term potential of the district?
Brown field, exploration efforts continue to advance.
Focusing on the expansion of mineralized zones. In closing, proximity to the existing mine infrastructure, where mineralization at Target was confirmed, is important. Finally, at Sascope, the exploration program delivered positive results, mainly around the integration of Target, which remains a key focus area for future development.
With that, I will turn the call over to Jose, Carlos, our CFO who will walk us through the financial results. Jose, please go ahead.
Jose Carlos Del Valle: Thank you, Ignacio, and good morning, everyone. I will now continue with slide number 10. Starting with the chart on the upper left, total consolidated net revenues for the second quarter increased 13% quarter over quarter. This growth was mainly driven by higher smelter sales volume and stronger by-product contribution, partially offset by lower zinc prices. However, when compared to the second quarter of 2024, net revenues declined by 4%, mainly reflecting lower zinc, copper, and lead prices, as well as by lower smelting sales volume. On a year-to-date basis, net revenues for the first half of 2025 remain broadly in line with the same period a year ago. Moving on to profitability, our consolidated adjusted EBITDA for the second quarter reached $161 million, representing a 28% increase compared to the previous quarter.
Thank you, ignazio and good morning everyone. I will now continue with slide number 10.
Starting with the chart on the upper left. Total Consolidated. Net revenues for the second quarter increased 13%, quarter over quarter. This growth was mainly driven by higher smelter sales, volume, and stronger bipro contribution, partially offset by lower sink prices.
However, when compared to the second quarter of 2024, net revenues declined by 4%, mainly reflecting lower sink copper and Lead prices as well as by lower smelting sales volume.
On a year to date basis, net revenues for the first half of 2025 remain broadly in line with the same period a year ago.
Jose Carlos Del Valle: This performance was largely driven by higher smelter sales volumes and by increased by-product contribution, again partially offset by lower zinc prices. Compared to the same quarter a year ago, adjusted EBITDA declined 22%, mainly due to higher operational costs and lower smelting sales volume, partially offset by stronger by-product contribution. For the first half of 2025, adjusted EBITDA totaled $286 million, down by 15% compared to the same period a year ago. Finally, our consolidated adjusted EBITDA margin for the quarter was 23%, up 3 percentage points from the previous quarter and 5 percentage points below the margin recorded in the second quarter of last year. Now, let's move on to slide number 11.
Moving on to profitability, our Consolidated, adjusted ebida for the second quarter reached 161 million representing a 28% increase compared to the previous quarter.
This performance was largely driven by higher smelter sales volumes and by increased Pro contribution, again, partially offset by lower sink prices.
Compared to the same quarter. A year ago, adjusted Evita declined 22% mainly due to higher. Operational costs and lower, smelting sales volume partially offset by stronger, byproduct contribution.
For the first half of 2025 adjusted EV that total 286 million down by 15% compared to the same period a year ago.
Finally, our Consolidated adjusted. EV the margin for the quarter was 23% up 3%, percentage points from the previous quarter and 5 percentage points below the margin recorded in the second quarter of last year.
Now, let's move on to slide number 11.
Jose Carlos Del Valle: Looking at the top left of the slide, the bar chart shows that we invested $137 million in CapEx during the first half of 2025, with the vast majority allocated to sustaining activities, including mine development, maintenance, and tailing storage facilities, represented by the orange and light gray sectors. Specifically, in the second quarter alone, we invested $87 million, in line with our expectations. In addition, investments related to phase one of the Cerro Pasco Integration Project amounted to $17 million during the quarter, bringing the year-to-date total to $18 million, in line with our plan. As previously exposed in our annual guidance, total investment for this project in 2025 is expected to reach $44 million. Accordingly, our 2025 CapEx guidance remains unchanged at $347 million, with major disbursements expected in the second half of the year.
Looking at the top left of the slide, the bar chart shows that we invested $137 million in capex. During the first half of 2025, the vast majority is allocated to sustaining activities, including maintenance and tailings storage facilities, represented by the orange and light grey sections.
Specifically in the second quarter alone, we invested 87 million in line with our expectations.
In addition investment related to phase 1 of the setup. Pascal integration project amounted to 17 million dollars during the quarter, bringing the year to the total to 18 million in line with our plan.
as previously, it's closed in our annual guidance total investment for this project in 2025, is expected to reach 44 million
Jose Carlos Del Valle: Now, looking at the lower part of the slide, we see that $32 million was invested in mineral exploration and project evaluation in the first half of 2025. Of this, $16 million was invested in the second quarter, mainly allocated to mineral exploration and mine development, supporting our ongoing exploration activities across our portfolio, as shown by the dark gray and orange bars. We expect an acceleration in disbursement in these areas over the coming quarters, in line with the execution schedules of our project. For that reason, we are reaffirming our 2025 guidance for exploration and project evaluation at $88 million. Now, let's move on to the next slide to discuss our cash flow generation for the quarter. Starting with our $161 million of adjusted EBITDA, and after excluding non-operational items, Nexa generated a healthy operating cash flow before working capital variations of $175 million in the quarter.
Accordingly, our 2025 capex guidance remains unchanged at 347 million with major disbursements expected in the second half of the year.
Now looking at the lower part of the slide, we see that 32 million was invested in Mineral exploration and project evaluation in the first half of 2025.
Of this, $1.6 billion was invested in the second quarter, mainly allocated to mineral exploration and development, supporting our ongoing exploration activities across our portfolio. As shown by the dark grey and orange bars.
We expect an acceleration in disbursement in these areas over the coming quarters in line with the execution schedules of our project. For that reason we are reaffirming our 2025 guidance for exploration and project evaluation at 888 million.
Now, let's move on to the next slide to discuss our cash flow generation for the quarter.
Jose Carlos Del Valle: From this amount, we paid $63 million in interest and taxes and invested $87 million in CapEx across our operations. Additionally, as part of our liability management strategy, we can see that loans and investments had a positive net impact of $13 million. This reflects the new $500 million bond offering and $40 million in new short-term debt, partially offset by loan and financing repayments, including the full redemption of our 2027 notes and a partial repurchase of our 2028 notes. Furthermore, we paid $26 million in dividends. Of this amount, approximately $30 million was distributed to Nexa shareholders through share premium reimbursement, and another $30 million was paid as contractual dividends to non-controlling interests. We also recorded a positive foreign exchange impact of $3 million, primarily due to the appreciation of the Brazilian real against the U.S. dollar.
Starting with our 161 million of adjusted, evida and after excluding non-operational items. Next, I generated a healthy operating cash flow before working capital variations of 175 million in the quarter.
From this amount, we paid $63 million in interest and taxes and invested $87 million in CAPEX across our operations.
In new short-term debt, partially offset by loan and financing repayments, including the full redemption of our 2027 notes and the partial repurchase of our 2028 notes.
Furthermore, we paid $26 million in debits of this amount. Approximately $30 million was distributed to shareholders through share premium reimbursement. Another $13 million was paid as contractual dividends to non-controlling interests.
Jose Carlos Del Valle: Finally, we experienced a positive working capital variation impact of $3 million, a significant improvement compared to the negative $265 million in the first quarter. We remain committed to initiatives to optimize Nexa's working capital cycle, including improvements in receivables and payables management to further strengthen our liquidity and financial flexibility. Combining all these factors, our total free cash flow generation in the second quarter of 2025 was $17 million. Now, let's move to slide number 13. As you can see, our liquidity position remains healthy, allowing us to maintain a solid balance sheet and an improved and extended debt maturity profile. At the end of the second quarter of 2025, our available liquidity stood at approximately $738 million, including our undrawn $320 million sustainability link revolving credit facility.
We also recorded a positive Foreign Exchange impact of 3 million. Primarily due to the appreciation of the Brazilian rail against the US dollar. Finally, we experience a positive working capital variation, impact of $3 million. A significant Improvement compared to the negative -265 million in the first quarter.
We remain committed to initiatives to optimize Nexus, working capital cycle, including improvements in receivables and payables management to further. Strengthen our liquidity and financial flexibility.
Combining all these factors, our total free cash flow generation in the second quarter of 2025 was $17 million.
Now, let's move to slide number 13.
As you can see, our liquidity position remains healthy, allowing us to maintain a solid balance sheet and an improved and extended debt maturity profile.
Jose Carlos Del Valle: Looking at our debt profile, the average maturity at the end of the second quarter of 2025 was 7.7 years, a meaningful improvement compared to the 5.3 years observed in the previous quarter. This is a result of the successful execution of our liability management strategy during the quarter. Consequently, our debt now carries an average cost of 6.3%. Important to note that as of June 30, our total cash position, excluding the RCF, was sufficient to cover all obligations maturing over the next three years. As previously disclosed, we successfully raised $500 million through the issuance of a 12-year bond that carries a competitive 6.6% coupon rate.
at the end of the second quarter of 2025 are available liquidity, stood at approximately 738 million, including our undrawn 320 million sustainability linked revolving credit facility,
Looking at our debt profile. The average maturity at the end of the second quarter of 2025 was 7.7 years. A meaningful Improvement compared to the 5.3 years of served in the previous quarter. This is the result of the successful execution of our liability management strategy during the quarter.
Consequently, our debt now carries an average cost of 6.3%.
Important to note that as of June 30th, our total cash position, excluding the RCF was sufficient to cover all of obligations maturing over the next 3 years.
Jose Carlos Del Valle: This transaction supported our proactive liability management efforts, enabling the full redemption of our 2027 notes through an any and all tender offer, followed by a make-call and a repurchase of approximately 72% of the 2028 notes through an any and all tender offer. These transactions marked a significant milestone for Nexa Resources S.A., as they extended our debt maturity profile, enhanced our financial flexibility, reinforced our solid credit metrics and investor confidence, and reduced near-term refinancing risk. Additionally, taking advantage of favorable market conditions and to further strengthen our short-term liquidity, we secured a new $40 million short-term loan. In terms of leverage, our net debt-to-adjusted EBITDA ratio slightly increased from 2.1 at the end of the first quarter of 2025 to 2.3 times at the end of the second quarter of 2025.
As previously mentioned, we successfully raised $500 billion through the issuance of a 12-year bond that carries a competitive 6.6% coupon rate.
This transaction supported our proactive, liability management efforts, enabling the full Redemption of our 2027 notes. Through an any and all tender offered followed by a make, call call and the repurchase of approximately 72% of the 2028 notes through and any and all tender offer.
These transactions marked a significant milestone for next as they extended our debt maturity profile. Enhance our financial flexibility reinforced our solid credit metrics and investor confidence and reduce near-term refinancing risk.
Additionally taking advantage of favorable market conditions and to further strengthen our short-term liquidity, we secured a new 40 million dollar short-term loan.
Jose Carlos Del Valle: This slight increase was primarily attributed to a decline in adjusted EBITDA over the last 12 months and to a lesser extent to a slight increase in net debt. We continue to evaluate opportunities to further optimize our capital structure, diversify our funding sources, and strengthen our liquidity. As I mentioned before, maintaining a debt maturity profile that is aligned with the loan life of our assets while preserving our investment grade rating and securing the most competitive financing costs remains a top priority. Despite this temporary increase in leverage, we remain committed to our deleveraging and gross debt reduction strategy. We also expect a gradual reversal of the negative working capital trend seen year to date, along with an increase in our cash flow generation capacity in the second half of the year. Moving on to slide number 14.
In terms of Leverage our, net debt to adjusted EV the ratio slightly increase from 2.1. At the end of the first quarter of 2025 to 2.3 times. At the end of the second quarter of 2025, this slight increase was primarily attributed to a decline in adjusted Eva over the last 12 months. And to a lesser extent, to a slight increase in net debt.
We continue to evaluate opportunities to further, optimize our capital structure, diversify our funding sources and strengthen our liquidity. As I mentioned before, maintaining a debt maturity profile, that is aligned with the long life of our assets. While preserving our investment grade rating and securing the most competitive, financing costs remains a top priority.
Despite this temporary increase in leverage, we remain committed to our deleveraging and gross debt reduction strategy. We also expect a gradual reversal of the negative working capital Trends, senior year to date along with an increase in our cash flow generation capacity in the second half of the year.
Now, moving on to slide number 14.
Jose Carlos Del Valle: In the second quarter, the LME zinc price averaged $2,641 per ton, marking a 7% decline both year-over-year and quarter-over-quarter. In April, zinc prices dropped in response to U.S. tariff announcements and ongoing macroeconomic uncertainty. However, prices later stabilized as the market digested the impact of temporary exemptions on certain imports. Despite recent volatility, zinc market fundamentals remain resilient. On the supply side, concentrate inventories declined over the quarter, reaching their lowest level since 2023. This likely reflects lower metal production, as low TCs continue to pressure smelter margins. Spot TCs rebounded from negative levels observed in late 2024, reaching approximately $104 per ton in June. Still, current levels continue to challenge less competitive smelters, which could lead to further reduction in metal production, positively impacting prices and metal premiums.
In the second quarter, the LMS sink price averaged $2,641 per ton, marking a 7% decline both year-over-year and quarter-over-quarter.
In April sink, prices dropped in response to us, star announcements and ongoing macroeconomic uncertainty.
However prices later stabilized as the market digested, the impact of temporary exemptions on certain Imports.
Despite recent volatility St. Market fundamentals, remain resilient.
Over the quarter reaching their lowest level. Since 2023, this likely reflects lower metal production, a slow TCS continue to pressure smelter margins
Spot. This is rebounded from negative levels of served in late, 2024 reaching, approximately 104 dollars per ton in June.
Still current levels continue to challenge less competitive smelters which could lead to further reduction, in metal, production, positively, impacting prices, and metal premiums.
Jose Carlos Del Valle: Looking ahead, we remain positive on the medium to long-term outlook for zinc, given its critical role in energy transition and infrastructure development. Moving now to slide 15. During the second quarter, the LME copper price averaged $9,524 per ton, down 2% year-over-year but up 2% quarter-over-quarter. From April to June, price movements were largely driven by a severe short squeeze and by declining exchange inventories. This volatility extended into July, when the announcement of U.S. tariffs led to a surge in copper shipments to American warehouses, further exacerbating visible inventory declines. Despite this volatile environment, copper market fundamentals are expected to remain supportive. Turning to silver, the average LME price during the second quarter reached $34 per ounce, representing a 17% increase both year-over-year and quarter-over-quarter. Looking ahead, metal prices are expected to remain volatile, aiming ongoing trade negotiations and persistent macroeconomic uncertainty.
Looking ahead, we remain positive on the medium to long-term outlook for zinc, given its critical role in energy transition and infrastructure development.
Moving now to slide 15.
During the second quarter, the LME copper price averaged $9,524 per tonne.
Down 2% year-over-year, but up 2% quarter-over-quarter.
From April to June price movements were largely driven by a severe short squeeze and by declining exchange inventories.
This volatility extended into July, when the announcement of U.S. tariffs led to a surge in copper shipments to American warehouses, further exacerbating visible inventory declines.
Despite this volatile environment copper Market, fundamentals are expected to remain supportive turning to Silver. The average lme price during the second quarter reached, 34 dollars, per ounce representing a 17% increase, both year-over-year and quarter over quarter.
Jose Carlos Del Valle: However, a structural supply gap driven by mine supply constraints and critically low inventories continue to provide price support. I will now turn the presentation back to Ignacio for his final remarks.
Looking ahead, metal prices are expected to remain volatile, aim at ongoing trade, negotiations and persistent macroeconomic uncertainty.
However, a structural Supply Gap, driven by my Supply, constraints and critically low inventories continue to provide price support.
I will now turn the presentation back to Ignacio for his final remarks.
Ignacio Rosado: Thank you, José Carlos del Valle. Before we conclude, I would like to reflect on the broader context and reaffirm our priorities for 2025. We continue to make solid progress on our long-term strategy. Guided by our business catalysts, the Cerro Pasco Integration Project is advancing well and is a key pillar of our growth plan, with additional mine life and NAV upside potential. It represents a strong value creation opportunity. Ariponaa still presents short-term challenges, but it remains a long-life, high-potential asset positioned in the second quartile of the cost curve. Our ongoing efforts to increase production and reduce operating costs are expected to support Nexa's sustainable cash generation. On the exploration front, we have seen encouraging results in all our mines. These developments reinforce our zinc integration strategy and support life of mine extensions.
thank you, Jose Carlos
Before we conclude, I would like to reflect on the broader context and reaffirm our priorities for 2025.
We continue to make solid progress on our long-term strategy, Guided by our business catalyst.
The C Pasco integration project is advancing well and is a key pillar of our growth plan, with additional mind, life, and NAB upside potential.
It represents a strong value creation opportunity.
I still present short-term challenges, but it remains a long-life, high-potential asset position in the second quartile of the cost curve.
Our ongoing efforts to increase production and reduce operating costs are expected to support Nexus sustainable cash generation.
Ignacio Rosado: In ESG, we are actively tracking our public commitments and making steady progress across multiple fronts. Financially, we continue to extend the maturity of our balance sheet through liability management and deleveraging to improve flexibility and resilience. Despite the current volatility in zinc prices, the long-term outlook is positive, supported by structural demand from sectors such as the energy transition and possible lack of mine supply. Recent U.S. tariffs may affect global trade flows, but Nexa's direct exposure remains very limited. Lastly, it is with great sadness that I would acknowledge the loss of a senior colleague who passed away during the quarter. Although the incident occurred outside of our operations and during a leisure weekend, our thoughts are with his family, friends, and teammates. At Nexa, safety and care are core values. We remain deeply committed to fostering a respectful and supportive environment for all.
On the exploration front, we have seen encouraging results in all our minds. This developments reinforce our sink integration strategy and support life of mine extensions.
in ESG, we are actively tracking our Republic commitments and making a steady progress across multiple fronts
Financially, we continue to extend the maturity of our balance sheet through liability management and delivering to improve flexibility and resilience.
Despite our current volatility in prices, the long-term Outlook is positive.
Supported by structural demand from sectors such as the energy transition and possible, lack of Mind Supply.
recent us, tariffs may affect global trade flows, but Nexus direct exposure remains very limited
Lastly, it is with great sadness that I would acknowledge the loss of a senior colleague, who passed away during the quarter.
Although the incident occurred outside of our operations and during a leisure weekend, our thoughts are with his family, friends, and teammates.
At Nexa, safety and care are core values.
Ignacio Rosado: Thank you all once again for joining us today. We appreciate your continued support and confidence in Nexa. Operator, please open the line for questions.
We remain deeply committed to fostering a respectful and supportive environment for all.
Thank you all once again, for joining us today.
We appreciate your continued support and confidence in next.
Operator: Please open the line for questions.
Rodrigo Cammarosano: Thank you. We are now beginning the question and answer section. To ask a question, if you are joined by Nexa Zoom, please click on the raise hand button. You may also submit your question using the Q&A icon located on the bottom of your screen. Please include your name and company when typing your question. For participants joining by phone, press star followed by nine to raise your hand or lower it, and once you are announced, press star followed by six to mute your microphone. Wait while we pull for questions. Our first question comes from Lawson Winder from Bank of America. Mr. Winder, your microphone is open.
By 6 to mute, or unmute your microphone, wait while pull for questions.
Our first question comes from Lawson Winder from Bank of America, please, Mr. Winder your microphone's open.
Lawson Winder: Thank you, Operator. Can you just confirm that you can hear me fine?
Rodrigo Cammarosano: Yes, yes, we can hear you.
Lawson Winder: Okay, fantastic. Thank you very much. Hello, Ignacio and José Carlos and team. Good morning, and thank you for today's update. It is very helpful. If I may, I would like to ask you about the guidance or the change in the guidance for several of your metals. Just asking from the point of view that a number of the issues that you highlighted that led to the downgrade in production actually occurred in Q1 and in April, so prior to the Q1 2025 result, at which time you obviously held your guidance at that point. When you look back, at that point, what held you back from reducing guidance in Q1? Was there some potential catch-up that you saw happening, or is there something else that happened in the quarter that contributed to what it already was impacting the production in Q1 in April? Thanks very much.
Thank you, operator. Can you just confirm that you can hear me fine? Yes, yes. We can hear you.
Okay, fantastic. Thank you very much. Hello Ygnacio and Jose Carlos and team. Uh, good morning and thank you for today's update, it's very helpful. Um, if I may, I'd like to ask you about the uh the guidance or the the change in the guidance. Um for um several of your medals.
And and and just asking from the point of view that um, a number of the issues that that you highlighted that led to the downgrade in production. Um, actually occurred in q1 and in April. So prior to the, the q1 20225 result at which time you obviously held your your guidance at at that point. So so when you look back, I mean at that point what held you back from reducing guidance in q1? Was that was there some potential um catch up that you you saw if it's happening or or or is there something else that happened in the quarter that uh that contributed to what it already? Um uh was impacting the the
Ignacio Rosado: Yeah, thank you, Lawson. Very good question. If you look at the guidance we are given, it has been affected mainly by Ariponaa and Basante. The silpillar collapse in Basante happened in March, which means that this tonnage that we lost with high grade was being affected in the second quarter. We didn't know until late in the second quarter how we were going to recover, if at all we were going to recover this tonnage, and it didn't happen. Later in the quarter was the case for Basante. In the case of Ariponaa, we told the market that at the end of the first quarter, we had this heavy rainy season that impacted the filters, and we didn't expect the condition of the filters to be in a very poor condition.
The production in q1 in April. Thanks very much.
Yeah, thank you, Lotson. Very good question.
If you look at the guidance we are given, it has been affected mainly by Adi.
So, the, the seal pillar collapse in bisonte happened in, in March.
Which means that this tonnage that we lost with high grade was affecting the second quarter.
We didn't know until late in the second quarter, how we were going to recover. If at all, we were going to recover this tonnage and didn't happen. So later in the quarter was the case for basanti in the case of
Ignacio Rosado: Just in May, we made a diagnostic, and we decided, as we said in this call, to refurbish them and to give a general maintenance in June and July. With the result of these actions, we wanted to be careful in projecting the rest of the year. That's why we are only forecasting for the rest of the year today. That's why the guidance has changed a little bit, and that's why this is the time we want to tell the market for the rest of the guidance for the rest of the year. If you see the other mines, the guidance has not changed, and the problem has been that given that Ariponaa and Basante provide for Tres Marias and also for Yuisdefora in the case of Ariponaa, the impact of them we have also seen was translated in the second quarter. This has been the case.
We told the market that at the end of the first quarter, we had this a heavy rainy season and that impacted the filters. And the we didn't expect that condition of the filters being in a very this very poor condition. So just in May, at the in may we we made a a a a diagnostic and we decided as we said, in this call to refurbish them and to give a general maintenance in June and July. So with this,
It with a result of these actions. Uh we wanted to be careful in projecting the rest of the year. And that's why we are only forecasting for the yes rest of the year today. And that's why the guidance has changed a little bit and that's why this is the time we want to tell the market for the rest, the guidance for the rest of the year. If you see that the other Minds, The Guidance has not changed.
And the problem has been that given the importance of provide for T Maria and and also for use the photo in the case of the impact of them.
We have also seen or trans was translated in the second quarter.
So this has been the case.
Lawson Winder: Okay, understood. If I could drill down on Basante a little bit, you mentioned geotechnical challenges that limited the grade. Could you just describe that in terms of whether that was unstable ground conditions that were impacting productivity, so you just weren't getting the high grades? Is it dilution or some combination of that and maybe some other factors?
Okay.
Understood and then um if if I get drilled down on bisonte a little bit um you mentioned geotechnical challenges um that that limited the grade is is could you.
Speaker 7: I think Leonardo.
Just describe that, um, in terms of whether that was unstable ground conditions that were impacting productivity. Um, and so you just weren't getting the high grades. Is it dilution or some combination of that and maybe some other factors?
Yeah, I think Leonardo.
Leonardo Coelho: Yes, I can. Can you hear me well?
Speaker 7: Yeah, we can.
Can you hear me? Well.
Leonardo Coelho: Yeah, the pillar constraint has constrained the mine production of the secondary lanes. Usually, we mine the primary lanes, then you access the secondary lanes. The constraint that brings the failure of a part of a pillar made was to decide to suspend the other areas until we realize and we make sure that the conditions are safe for the other similar lanes. Unfortunately, we had put a lot of efforts to prepare some of those lanes that were higher grade lanes. As a cautious action, we decided to slow it down until we make sure that we are being able to produce. This is why we are forecasting by the second half of the year, we are going to be able to increase production. If you look in the general overview of the mine, there is not an issue in terms of geotechnical conditions.
Yeah, yeah, we can. Yeah. The the the pillar constraint has constrained the
Mining production at the secondary lens.
So, usually we mining the second primary lens and then you access the secondary lens.
And the constraint that brings the the failure of a part of a pillar equals to decided to suspend the other areas until we we realize and we make sure that the conditions are safe for the other similar lens.
Put a lot of effort into preparing some of those lengths that were higher grade lanes.
And as a cautious action, we decided to to slow it down until we make sure that we are being able to to produce
This is why we are forecasting by the second half of the Year going to be able to increase production.
If you look at the general overview of the mind, there is not an issue in terms of.
Leonardo Coelho: This is an event that has occurred in a specific area, but we are taking cautious actions to make sure that the mine doesn't have such similar conditions for the coming year.
Job technical conditions. This is a
A an event that has occurred in many specific area. But we are taking cautions and actions to make sure that the mind is doesn't have such similar conditions for the coming year.
Lawson Winder: Looking at it from a cost point of view, it sounds like what you are saying is you are not anticipating any sort of increase in costs of mining associated with additional ground support, like rock bolting or shotcreting or anything along those lines?
And then just looking at it from a cost point of view. It sounds like what you're saying is, you know, you're not anticipating any sort of increase in cost of mining associated with additional ground support, uh, like like rock bolting or or shot creating or anything along those lines.
Leonardo Coelho: Yes, for short term, no. In Basante, we are shotcreting more or less 60% of the whole mine development. We are accessing if there is the need to increase this for the rest of the mine. It is not needed yet, but we are not seeing any need for the short term yet.
Yes, for a short term. No invasive. We have, uh, we are short creating more or less 6% of the whole mine development.
Lawson Winder: Okay. Okay, I guess we'll watch that. Then just finally, on the exploration results that you put out earlier this week, there were some really spectacular intercepts at Ariponaa and Basante. Do you anticipate replacing Reserves Mine this year, first of all? When you think about those two assets, Ariponaa and Basante, and vis-à-vis these exploration results, do you expect to incorporate those exploration results into your year-end resource? What does it mean for the outlook for the year-end resource?
We are accessing if there is the need to to increase this, for the rest of the mind would is not need yet but we don't, we are not seeing any need for the short term yet.
Okay.
Ignacio Rosado: Yeah, let's say the grades that you have seen in the presentation, I would say are, yeah, they are not spectacular, but as we said, they showed a potential for mineralized areas. If you look at Basante, we have been replacing the life of the mine every year, okay, at least since I am here the last three years, but I have seen also in the past. The idea is that we start mining an area that is called the BBMG. I think we mentioned this to you before. This is an area that is projected in the high grade. So we are aiming to do, in general, in Basante, is to increase these seven years to more than nine to ten and start replacing from there.
Okay. Uh, I guess we'll watch that. Um, and then just finally, I mean, on the expiration results that you put out, um, earlier this week, uh, there were some really spectacular intercepts that are upon you and the jante. Um, do you anticipate replacing reserves mine this year? First of all. But then, when you think about those 2 assets are upon you and Vante in, in Visa V, these expiration results, do you expect to incorporate those expiration results into your year end resource? And, and what, what does it mean for the outlook for the the year end resource? Thanks.
Yeah.
Ah, the the let's say the the the grace that you have seen in the presentation I would say are yeah there are no spectacular but as as we said they showed a a potential for mineralized areas. If you look at the at bisonte we have been replacing the life of the mine every year. Okay at least since I'm here the last 3 years but I've seen also in the past
And the idea is that we start mining an area that is called a BVM. I think we mentioned this to you before. This is an area that is projected in the a high grade.
Ignacio Rosado: Okay, the fact that Sucuri Norte, which is the one that we are presenting, is showing these results, actually, we wanted only to highlight that mineralization is extended. We might, based on your comment, what we are going to do is we are going to make sure that we flag more on this process of replacing reserves, okay? In the case of Ariponaa, as we said, 15 years is the same comment. I mean, we do not need to drill Ariponaa a lot because 15 years in the short term is enough and we are restricted on CapEx. But what we will do is show these intercepts that also bring more mineralization. And that is why we are saying that at least we have 25 years based on the resources. The conversion of resources into reserves is very high.
So we are aiming to do in general in bisonte is to increase the 7 years to to more than 9 to 10 and start replacing from them from there. Okay. The the the fact that sukuri North, which is, is that what we are presenting is is showing these results actually. We wanted only to highlight that mineralization is extended.
We might based on your comment. What we are going to do is we're going to make sure that we flag more on on this process of replacing a research, okay? In the case of a, as we said, 15 years is is the same comment. I mean, we don't need to drill a lot because 15 years in the short term is enough and we are restricted on capex.
Ignacio Rosado: So what we are going to do is we are going to show you how this process goes and make sure that we are clear in terms of replacing reserves and extending reserves, okay?
But what we will do is show this intersects that also bring more mineralization and that's why we're saying that at least we have 25 years based on the resources that conversion of resources into resources is very high.
So what we're going to do is when we want to show you how this process goes and make sure that we are clear in terms of replacing research and extending research.
Okay.
Lawson Winder: Yep, that is great. Thank you very much for your comment today. Greatly appreciate it. Best of luck.
Ignacio Rosado: Thank you. Thank you, though.
Yep, that's great. Thank you very much for your comment today. I greatly appreciate it. Best of luck.
Thank you. Thank you.
Rodrigo Cammarosano: Once again, if you wish to ask a question on audio via Zoom, use the raise hand button. You can also send written questions through the Q&A icon located on the bottom side of your screen. Please include your name and company when typing your question. For joining via phone, press star then nine to raise your hand. Once you are announced, press star and six to unmute your microphone. Our next question comes from Stefan Wescott from Citi. Please, Mr. Wescott, your microphone is open.
Once again, if you wish to ask a question on audio via Zoom, use the raise hand button. You can also send written questions throughout the Q&A, with the icon located on the bottom side of your screen.
Please include your name and Company when typing your question and for joining via phone, Press Start, 109 to raise your hand and once you're announced, press the star and 6 to unmute your microphone.
City.
Please, Mr. Wescott, your microphone's open.
Stefan Wescott: Yeah, thanks, everyone. Thanks for taking my question. My first question regarding Ariponaa for filter installation, how long it should take for the ramp-up or initial estimates after the commissioning on the first half of next year? Regarding my second question, despite the first half lower production impacted by rains and also lower zinc prices impacted by Liberation Day, leverage remaining pretty much under control at 2.2 times average for the first half. With free cash flow expected to improve going forward on improving production and higher zinc prices, how do you guys see the balance between deleveraging dividends and product reimbursement going forward? Thank you.
Yeah, thanks everyone. Thanks for taking my question. So my first question regarding a for filter installation, uh, how long it should take for the ramp up, your initial estimates after the commissioning, on the first half of of next year?
And uh, regarding my second question, uh despite the first half uh lower production impacted by rains and also lowers in prices impacted by Liberation day uh leverage remaining. Pretty much under control at 2 2.2 times average for for the first half and we've free cash. Flow expected to improve going forward on, improving production and hiring prices. How do you guys are seeing the balance between the leveraging dividends and products debt going forward? Thank you.
Ignacio Rosado: Okay, I am going to go through the Ariponaa question. Then I let José Carlos del Valle and Rodrigo Cammarosano go through the other part. In the case of the filter, as we said, it is right on track. The filter is being fabricated now, and it is going to be ready before the year end. All civil works are also on time and on budget as well. The commissioning should happen towards the end of March and April. We expect that the new filter will be up and running in Q2 of next year. It shouldn't be a lot of time. We have baked a lot of tests, and we have done a lot of work in order to make sure that we speed up all this process.
Okay, so I'm going to go through the question and I let Jose Carlos and rodo go through the the other part.
So in the case of the filter, as we said Is Right on track, the filter is being fabricated and now and it's going to be ready before the year end.
All Civil Works are also on time and on budget as well. So the commissioning should happen towards the end of March. And April we expect that the new filter will have a will be up and running in the second quarter of next year.
Ignacio Rosado: With these three filters with a limited capacity that, as we know, and we know them better now, and we are maintaining them better now, and that is why we are reflecting a better production for the second half. With these three filters accommodating 70% of the capacity and the new filter accommodating the rest, we should be able to have a full run rate in Q2 of 2026. We do not expect any delays on that, and we will keep you updated on the advancements from now to the date of commission, okay? The other questions, please, José.
So it shouldn't be a lot of time. We have baked a lot of tests and we have done a lot of work in in order to make sure that we we speed up all these process. So with this 3 filters with a limited capacity that as we know and we know them better now and and we are maintaining them better now and that's why we are reflecting a better production for the second half.
With this series. There's a, a accommodating 70% of our of the capacity and the new filter accommodating the rest.
We should be able to have a a a a full run rate in the second quarter of 2026. We don't expect
Any delays on that.
And we will keep a a, a you updated on the advancements. See, from now since 2 to the to the date of commission, okay?
The other questions please Jose.
Jose Carlos Del Valle: Thank you, Ignacio. Can you hear me well?
Ignacio Rosado: Yes.
Thank you. Can you hear me? Well,
Jose Carlos Del Valle: Excellent. On the second question, you asked about how we see deleveraging evolving with the expectation that our second half will be better than the first half in terms of results and cash flow generation. That is true. We expect more stable performance, more favorable prices, and also taking into consideration the typical seasonality, we see higher cash generation towards the end of the year compared to the first half of the year. We would expect an improvement in terms of our deleveraging, obviously, unless something unexpected happens in terms of prices or in the macroeconomic environment, so that we will see a favorable trend.
yes.
Jose Carlos Del Valle: Our priorities continue to be the ones we have mentioned before as part of our capital allocation framework, obviously extending the life of mine of our mines, so investing in our own operating units, which is the most efficient way of using our capital, then reducing gross debt. We would like to have a lower leverage level that gives us more of a buffer to go through different cycles and also to recover some of the financial flexibility that we had in the past, also thinking about what growth opportunities that we may have in the future. First, before that, we need to lower our gross debt, reduce the amount of interest expense that we pay every year. We would feel more comfortable with leverage levels in the neighborhood of around one time. I'm not sure if I missed something, but I think that answers the bulk of our questions.
Excellent. So um on on the second question, you asked about how we see the leveraging evolving with the expectation that our second half will be better than the first half in terms of results and and cash flow generation. That that is true. We we expect more stable performance, more favorable prices uh and also taking into consideration, the typical seasonality we see higher cash generation towards the end of the year compared to the first half of the year. So we would expect an improvement in terms of our the leveraging, uh, obviously, unless something unexpected happens in terms of prices around the macroeconomic environment. So that we we, we will see, ah, we see a favorable Trend, um, our priorities continue to be the the ones we have mentioned before, uh, as part of our Capital allocation framework.
Obviously, extending the life of mine of our mind. So, investing in our own operating units which is the most efficient way of using our Capital H. Then, uh, reducing gross debt. We we, we would like to have a lower leverage level, uh, that gives us more of a buffer to
Go through a different cycles and also to recover some of the financial flexibility that we had in the past. Also thinking about what the, you know, growth opportunities that we may have in the future. So first before that, we need to, we need to lower our gross debt. Reduce the amount of interest expense that we pay every year.
Jose Carlos Del Valle: If I missed something, please let me know.
And so we would feel more comfortable with leverage levels in the neighborhood of around 1 time. Um, so I'm not sure if I missed something, but I think that answers a bunch of our questions. If I missed something, please let me know.
Speaker 7: No, that's great. Thank you. Thank you, guys.
Jose Carlos Del Valle: Thank you.
No, that's great. Thank you. Thank you guys.
Thank you.
Rodrigo Cammarosano: Our next question comes via phone. Please state your name and company before asking your question and press star nine to activate it.
Or 6 turn 9 to activate it, please.
Horace Wanklyn: Hi, this is Horace walking up from Scotiabank. Can you hear me?
Hi. Um, this is Oris. Blocked out from Scotia Bank, can you hear me?
Jose Carlos Del Valle: Yes, I can.
Horace Wanklyn: Yeah, yeah, I can hear you. Yes, thanks. Just a follow-up on Ariponaa. I feel like your languaging around the timing for the commissioning around the filter press is a little bit later than previous. I am wondering if this current timing will impact your 2026 guidance at Ariponaa, 50,000 to 65,000 tons of zinc, or should we start thinking that that may have to come down to accommodate the commissioning timing, which I think you said is a March-April timeframe for the new equipment?
Yes, yes, I can. Yes, I can hear. Yes, thanks. Um, just following up on ERAP PA. I feel like your language around the timing for the commissioning of the filter press is a little bit later than previously, but I'm wondering if...
this current timing, um, will impact your 26 guidance at aeroplano 50,000 to 65,000 tons of zinc, or should we start thinking that that may have to come down to accommodate the commissioning timing, which I think you said, is March April time frame, uh, for the, for the new equipment,
Ignacio Rosado: No, no, no, thank you for the question. The dates are the same. March-April is the case. April is in Q2, so that is why I am saying that. We are very confident that those dates are not going to move, and the guidance on 2026 has not been moved; it is the same. So we can reiterate that, Horace.
No, no, no, no. Thank you for the question. No, no. The dates are the same; March and April are the case. I mean, April is in the second quarter, so that's why I'm saying that. But, I mean, we are very confident that those dates are not going to move, and the guidance on 2026 hasn't been moved.
Is the same. So we can re reiterate that, or
Horace Wanklyn: Okay. Just as a follow-up, there was a very significant negative working capital change in Q1. How many quarters, based on where we are now, do you think it is going to take to make meaningful progress to reverse that?
Okay. And just uh, as a follow-up. I mean, um, there was a
Capital change in the first quarter.
How many quarter like, based on where we are now? How many quarters do you think it's going to take to make meaningful progress to reverse that?
Jose Carlos Del Valle: I can answer that, Horace. Good morning. This is an ongoing cycle that we see. I think we've seen this at least since I joined the company. Typically, there's a negative working capital impact in the first quarter that has to do with a number of large payments that have to be made, mainly in Peru, but also some of them in Brazil. As a result of also the high level of investment that typically takes place in the fourth quarter and that has to, and that is paid in the first quarter. Those are probably the two main drivers. We see that typical cycle repeating itself year after year and then gradually recovering throughout the rest of the year. Nothing different this year. On average, though, for the year as a whole, we expect to have a stable level of working capital.
I I can answer that or it's good morning. This this is an ongoing cycle that we see. I think we've seen this please since I joined the company typically. Uh there there is a, there's a negative working capital impact in the first quarter that has to do with a number of large payments that have to be made in in, in in Peru. But also some of the in Brazil and as a result of also of the high level of investment that typically takes place in the in the fourth quarter and that has to and and that is paid in the first quarter so that those are probably the 2, the 2, main drivers. So we see, we see that typical cycle repeating itself year after year and then gradually recovering throughout the rest of the year. So the not nothing different this year on average though for a for the year as a whole we expect to
Jose Carlos Del Valle: Not an investment, not a disinvestment, just on average, give or take, there should be zero impact on working capital going forward. That's what you can expect.
We have this stable level of working capital, so not an investment, not a disinvestment; just on average, give or take, it should have zero impact on working capital going forward. That's what you can expect.
Horace Wanklyn: Are you suggesting you think you can reverse the entire negative from Q1 by the end of the year?
Jose Carlos Del Valle: Yes, that is correct, just as it happened in 2024 and in 2023.
I'm sorry, are you suggesting that you think you can reverse the entire negative from Q1 by the end of the year?
Horace Wanklyn: Okay. All right, thank you.
Yes, that is correct. Just as it happened in 2024 and in 2023.
Jose Carlos Del Valle: Sure.
All right. Thank you.
Mhm, sure.
Rodrigo Cammarosano: Just as a reminder, if you wish to ask a question via Zoom, please use the raise hand button. You can also submit written questions using the Q&A icon located on the bottom of your screen. Please include your name and company when typing your question. You can also join via phone, pressing star nine to join and star six to activate your microphone. Wait while we poll for questions. This does conclude our Q&A session. I would now like to hand the call over to Mr. Ignacio Rosado for his closing remarks. Mr. Rosado, please go ahead.
Just as a reminder, if you wish to ask a question via Zoom, please use the raise hand button. You can also submit written questions using the Q&A icon located on the border of your screen. Please include your name and company. When typing your question, you can also join via phone by pressing *9 to join and *6 to activate your microphone. Wait while we pull for questions.
Ignacio Rosado: Thank you. Thank you all for attending. We are aware that we had a very difficult first quarter impacted by Ariponaa. That is still a challenge, and we are working on that and making sure that the three filters that we have today work properly and the fourth filter comes right on time on budget. We are confident that happening this, that the fundamental value of Ariponaa is going to come, and we are working very hard towards that. We are also working hard on our Pasco projects and making sure that we deliver this pumping and piping system towards next year and then that we work on the other fronts to make sure that this Pasco region also projects a long life of mine and good profitability. With that, we would like to thank you for the time. We will keep you posted in any changes.
This does conclude our Q&A session. I'd now like to hand the call over to Mr. Enos Rosal for his closing remarks. Please, Mr. Rosal, go ahead.
Thank you, thank you for attending. We are aware that we had a very difficult first quarter impacted by aduana. That is still a challenge, and we are working on that and making sure that the three filters that we have today work properly on the four, which comes right on time and on budget. We are confident that this will happen. The fundamental value of A is going to come, and we are working very hard towards that.
We are also working hard on the on our Paschal projects.
Ignacio Rosado: We look forward to speaking to you at the end of the first and third quarter. Thank you very much and have a good day.
Mined on an angle of profitability with that. We would like to thank you for that time. We will keep you posted on any changes. We look forward to speaking to you at the end of the first third quarter. Thank you very much, and have a good day.
Jose Carlos Del Valle: Thank you.
Rodrigo Cammarosano: This concludes today's conference call. We appreciate your participation and interest in Nexa. You may now disconnect and have a wonderful day.
Thank you.
This concludes today's conference call. We appreciate your participation and interest in Nexa Resources. You may now disconnect and have a wonderful day.
Speaker 1: Goodbye.