Nexa Resources Q2 2025 Earnings Report

Nexa Resources EPS Results

• Actual EPS: $0.11
• Consensus EPS: -$0.05
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: N/A

Nexa Resources Revenue Results

• Actual Revenue: $708.42 million
• Expected Revenue: $625.20 million
• Beat/Miss: Beat by +$83.22 million
• YoY Revenue Growth: N/A

Nexa Resources Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, August 1, 2025
• Conference Call Time: 9:00AM ET

Nexa Resources (NYSE:NEXA), together with its subsidiaries, engages in the zinc mining and smelting business worldwide. The company operates in two segments, Mining and Smelting. It produces zinc, zamac, zinc oxide, and zincal, as well as by-products, such as copper, lead, silver, gold, copper sulfate, sulfuric acid, copper cementum, silver concentrate, slag aggregates, and cadmium/sponge deposits. The company owns and operates six polymetallic mines, including three located in the Central Andes of Peru; two located in the State of Minas Gerais in Brazil; and one located in the State of Mato Grosso in Brazil. It also owns and operates three zinc smelters comprising one located in Cajamarquilla in Peru; and two located in the State of Minas Gerais in Brazil, which recovers and produces metallic zinc, zinc oxide, and by-products, such as sulfuric acid. The company also exports its products. Its products are used in civil construction, transportation, energy, agriculture, health, and consumer goods industries. The company was formerly known as VM Holding S.A. and changed its name to Nexa Resources S.A. in September 2017. The company was founded in 1956 and is based in Luxembourg, Luxembourg. Nexa Resources S.A. operates as a subsidiary of Votorantim S.A.

Nexa Resources Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Nexa delivered 13% higher net revenues and a 28% sequential uplift in adjusted EBITDA in Q2, driving improved free cash flow.
• Negative Sentiment: Operational disruptions at Aripuana (tailings filter capacity) and Vasante (geotechnical constraints) led to a downward revision of full-year production guidance.
• Positive Sentiment: Key strategic projects remain on track, with the fourth tailings filter at Aripuana set for Q2 2026 commissioning and Phase 1 of the Cerro Pasco integration achieving major engineering and permitting milestones.
• Positive Sentiment: Liability management measures—including a US $500 million bond issuance and extension of debt maturities to 7.7 years—have bolstered liquidity to US $738 million and preserved an investment-grade profile.
• Neutral Sentiment: Exploration programs at Cerro Lindo, Aripuana, Vasante and Cerro Pasco delivered encouraging drilling results, supporting resource extensions and long-term mine life potential.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Nexa Resources Second Quarter twenty twenty five 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. A 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.

[Operator]

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 Put your hand down button. You may also submit your question via the Q and A icon located in the bottom of your screen. Please include your name and company when submitting your question.

[Operator]

Press star followed by 6 to mute or unmute your microphone. Written questions that are not addressed 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 Camarozzano, Head of Investor Relations and Treasury, for his opening remarks. Please go ahead, sir.

[Rodrigo Cammarosano, Head - Treasury & IR at Nexa Resources]

Good morning, everyone, and welcome to Nexa Resources second quarter twenty twenty five 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.

[Rodrigo Cammarosano, Head - Treasury & IR at Nexa Resources]

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, Jose Carlos Del Valle and our Senior Vice President of Mining Operations, Leonardo Puel. I will turn the call over to Enacio for his comments. Enacio, please go ahead.

[Ignacio Rosado, President & CEO at Nexa Resources]

Thank you, Rodrigo. Good morning, everyone, and thank you for joining us today. Before we dive into our second quarter and 2025 financial results, I would like to begin by highlighting the key business catalysts driving Nexa'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.

[Ignacio Rosado, President & CEO at Nexa Resources]

Starting with Aripuana, which remains our top priority, the installation of the fourth tailings filter is progressing on a scale. Once operational, this will unlock the operation's full production capacity and improve both efficiency and cash flow. Aripuana is a cornerstone asset in our portfolio, with a mine life of fifteen years based on reserves and over twenty five years when including resources. It is a highly competitive asset and well positioned in the cash cost curve. The Cerro Del Pasco integration project is a key component of our strategy in Peru, With more than fifteen years of life of mine and potential upside in net smelting return, it leverages the area's rich mineral endowment.

[Ignacio Rosado, President & CEO at Nexa Resources]

In mineral exploration, in addition to the potential at Aripuana, 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 grades. And at Vasanti, Sukuru 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 enhances margins in positive price scenarios environments.

[Ignacio Rosado, President & CEO at Nexa Resources]

With Ariponance and Repasco under development, we are further strengthening our platform for sustainable cash flow. 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 delivered solid quarterly performance driven by disciplined execution and continued progress across our strategic priorities.

[Ignacio Rosado, President & CEO at Nexa Resources]

We reported net revenues of $7.00 $8,000,000 up 13% compared to the 2025 and adjusted EBITDA of $161,000,000 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 $17,000,000 an improvement over the previous quarter supported by better working capital management. On the operating front, our Mining segment produced 74,000 tonnes of zinc, up 9% quarter over quarter as Aripuana and Vasante 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 tonnes, a 12% increase versus the first quarter.

[Ignacio Rosado, President & CEO at Nexa Resources]

Looking ahead, we are revising our full year production and cost guidance to reflect our operational challenges in the first quarter in Aripuana and Vasante, 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 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. Key milestones including final engineering, permitting and contractor mobilization have been achieved.

[Ignacio Rosado, President & CEO at Nexa Resources]

As I mentioned a moment ago, we remain on track with the acquisition and installation of the fourth tailings filter at Aripuana in the coming months, and commissioning is expected in the 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 five to discuss our operating performance in more detail. Turning to our operating mining segment's performance, zinc production in the second quarter totaled 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 Vasanti and Aripuana, partially offset by stronger production at Atacocha and El Porvenir.

[Ignacio Rosado, President & CEO at Nexa Resources]

During the second quarter, Vasante continued to face limited access to higher grade zones, while Aripuana 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 $02 per pound in the 2024. The sequential improvement was driven by higher byproducts contribution and increased sales volume. Year over year decrease also reflects lower operational costs at our Peruvian mines and lower treatment charges.

[Ignacio Rosado, President & CEO at Nexa Resources]

For the 2025, cash costs were in line with our full year guidance. Our cost per run of mine stood at $50 per tonne, up 4% year over year and quarter over quarter, mainly reflecting higher costs associated with stabilization efforts at Aripuana. Excluding Aripuana, 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 2025 cost per run of mine came in slightly below our revised guidance. Now let's move to Slide six.

[Ignacio Rosado, President & CEO at Nexa Resources]

Turning to our smelting segment, total sales reached 145,000 tonnes in the second quarter of this year, up 12% quarter over quarter driven by higher production at Cajamarquilla and U. De Fora 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. 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.

[Ignacio Rosado, President & CEO at Nexa Resources]

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 2025, our conversion cost was $0.36 per pound and our cash cost was $1.2 per pound, both within our revised full year guidance. Let's move to Slide seven, where we will begin discussing Aripuana. During the 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.

[Ignacio Rosado, President & CEO at Nexa Resources]

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 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 experienced in the 2025, we revised our 2025 production and cost per run of mine guidance. However, it's worth noting that our C1 cash cost guidance remains unchanged, reaffirming Aripuana's competitive cost position.

[Ignacio Rosado, President & CEO at Nexa Resources]

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, President & CEO at Nexa Resources]

For the 2025, we expect to deliver higher adjusted EBITDA 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 delivery and installation in the 2025 with commissioning scheduled for the 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 Aripuana.

[Ignacio Rosado, President & CEO at Nexa Resources]

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. Key achievements include the completion of detailed 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 schedule and the start of construction activities following full site mobilization with airworks and civil works, which began in July.

[Ignacio Rosado, President & CEO at Nexa Resources]

Preparatory work for phase two is also progressing, including technical assessment of the Picasso Shaft and the planned 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. 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.

[Ignacio Rosado, President & CEO at Nexa Resources]

In Aripuana, 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 Vasante, 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 Jose Carlos Del Valle, our CFO, who will walk us through the financial results. Jose, please go ahead.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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 byproduct contribution, partially offset by lower zinc prices. However, when compared to the 2024, net revenues declined by 4%, mainly reflecting lower zinc, copper and lead prices as well as by lower smelting sales volume.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

On a year to date basis, net revenues for the 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 161,000,000 representing a 28% increase compared to the previous quarter. This performance was largely driven by higher smelter sales volumes and by increased byproduct 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 byproduct contribution.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

For the 2025, adjusted EBITDA totaled $286,000,000 down by 15% compared to the same period a year ago. Finally, our consolidated adjusted EBITDA margin for the quarter was 23%, up three percentage points from the previous quarter and five percentage points below the margin recorded in the second quarter of last year. Now let's move on to Slide number 11. Looking at the top left of the slide, the bar chart shows that we invested $137,000,000 in CapEx during the 2025, with the vast majority allocated to sustaining activities, including mine development, maintenance and tailing storage facilities, represented by the orange and light gray segments. Specifically, in the second quarter alone, we invested $87,000,000 in line with our expectations.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

In addition, investments related to Phase one of the Cerro Pasco integration project amounted to $17,000,000 during the quarter, bringing the year to date total to $18,000,000 in line with our plan. As previously disclosed in our annual guidance, total investment for this project in 2025 is expected to reach $44,000,000 Accordingly, our 2025 CapEx guidance remains unchanged at $347,000,000 with major disbursements expected in the second half of the year. Now looking at the lower part of the slide, we see that $32,000,000 was invested in mineral exploration and project evaluation in the 2025. Of this, 16,000,000 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.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

For that reason, we are reaffirming our 2025 guidance for exploration and project evaluation at $88,000,000 Now let's move on to the next slide to discuss our cash flow generation for the quarter. Starting with our $161,000,000 of adjusted EBITDA and after excluding nonoperational items, Nexa generated a healthy operating cash flow before working capital variations of $175,000,000 in the quarter. From this amount, we paid $63,000,000 in interest and taxes and invested $87,000,000 in CapEx across our operations. Additionally, as part of our liability management strategy, we can see that loans and investment had a positive net impact of $13,000,000 This reflects the new $500,000,000 bond offering and $40,000,000 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 $26,000,000 in dividends.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

Of this amount, approximately $30,000,000 was distributed to Nexa shareholders through share premium reimbursement and another $30,000,000 was paid as contractual dividends to non controlling interests. We also recorded a positive foreign exchange impact of $3,000,000 primarily due to the appreciation of the Brazilian real against the U. S. Dollar. Finally, we experienced a positive working capital variation impact of $3,000,000 a significant improvement compared to the negative $265,000,000 in the first quarter.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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 2025 was $17,000,000 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 2025, our available liquidity stood at approximately $738,000,000 including our undrawn $320,000,000 sustainability linked revolving credit facility. Looking at our debt profile, the average maturity at the end of the 2025 was seven point seven years, a meaningful improvement compared to the five point three years observed in the previous quarter.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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 $500,000,000 through the issuance of a twelve year bond that carries a competitive 6.6% coupon rate. This transaction supported our proactive liability management efforts, enabling the full redemption of our twenty twenty seven notes through an any and all tender offer, followed by a make whole call and the repurchase of approximately 72% of the twenty twenty eight notes through an any and all tender offer.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

These transactions marked a significant milestone for Nexa 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 $40,000,000 short term loan. In terms of leverage, our net debt to adjusted EBITDA ratio slightly increased from 2.1 at the end of the 2025 to 2.3 times at the end of the 2025. This slight increase was primarily attributed to a decline in adjusted EBITDA over the last twelve 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 strengthening our liquidity.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

As I mentioned before, maintaining 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. Now moving on to Slide number 14. 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.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

On the supply side, concentrate inventories declined over the quarter, reaching their lowest levels 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 twenty twenty four, reaching approximately $104 per tonne 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. Looking ahead, we remain positive on the medium to long term outlook for zinc given its critical role in energy transition and infrastructure development.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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 amid ongoing trade negotiations and persistent macroeconomic uncertainty.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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.

[Ignacio Rosado, President & CEO at Nexa Resources]

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 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.

[Ignacio Rosado, President & CEO at Nexa Resources]

Aripuana 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. In ESG, we are actively tracking our public commitments and making steady progress across multiple fronts.

[Ignacio Rosado, President & CEO at Nexa Resources]

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.

[Ignacio Rosado, President & CEO at Nexa Resources]

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. Thank you all once again for joining us today.

[Ignacio Rosado, President & CEO at Nexa Resources]

We appreciate your continued support and confidence in Nexa. Operator, please open the line for questions.

[Operator]

Thank you. We are now beginning the question and answer section. You may also submit your question using the Q and A icon located on the bottom of your screen. Please include your name and company when typing your question. For participants joining by phone, star followed by nine to raise your hand or lower it, Our first question comes from Lawson Winder from Bank of America. Please Mr. Winder, your microphone is open.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Thank you, operator. Can you just confirm that you can hear me fine?

[Operator]

Yes. Yes. We can hear you.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Okay. Fantastic. Thank you very much. Hello, Ignacio and, Jose Carlos and team. Good morning, and thank you for today's update.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

It's very helpful. If I may, I'd like to ask you about the, the guidance or the the change in the guidance, for, several of your metals. And and and just asking from the point of view that, a a number of the issues that that you highlighted that led to the downgrade in production, actually occurred in q one and in April. So prior to the the q one twenty twenty five 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 q one?

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Was was there some potential catch up that you you saw happening? Or or or is there something else that happened in the quarter that that contributed to what had already was impacting the the the production in q one in April? Thanks very much.

[Ignacio Rosado, President & CEO at Nexa Resources]

Yes. Thank you, Lawson. Very good question. If you look at the guidance we are giving, has been affected mainly by Aripuana and Basante. So the SIL pillar collapse in Basante happened in March, which means that this tonnage that we lost with high grade was being affected in the second quarter.

[Ignacio Rosado, President & CEO at Nexa Resources]

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 Vasanti. In the case of Aripuana, we told the market that at the end of the first quarter, we had this heavy rainy season and that impacted the filters. And we didn't expect the condition of the filters being a very very poor condition. So 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.

[Ignacio Rosado, President & CEO at Nexa Resources]

So with this with the result of these actions, we wanted to be careful in projecting the rest of the year. And that's why we are only forecasting for the 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 of the guidance for the rest of the year. If you see the other mines, the guidance has not changed.

[Ignacio Rosado, President & CEO at Nexa Resources]

And the problem has been that given that Aripuana and Basante provide for Tres Marias and also for Juice de Fora in the case of Aripuana, the impact of them, we have also seen or was translated in the second quarter. So this has been the case.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Okay. Understood. And then if if I could drill down on Vasante a little bit, you mentioned geotechnical challenges that that limited the grade. Could you just describe that, in terms of whether that was unstable ground conditions that was impacting productivity? And so you just weren't getting to high grades.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Is it dilution or some combination of that and and and maybe some other factors?

[Ignacio Rosado, President & CEO at Nexa Resources]

Yeah. I think, Leonardo?

[Leonardo Nunes Coelho, Senior Vice President of Mining Operations at Nexa Resources]

Yes. I can. Can you hear me well?

[Ignacio Rosado, President & CEO at Nexa Resources]

Yeah. We can.

[Leonardo Nunes Coelho, Senior Vice President of Mining Operations at Nexa Resources]

Yes. The the the pillar constraint has constrained the mining production at the secondary lanes. So, usually, we we mine the second primary lanes, and then you access the secondary lanes. And the constraint that brings the the failure of a part of a pillar make was to decide to suspend the other areas until we we realize and we make sure that the conditions are safe for the other similar lanes. Unfortunately, we had put lot of efforts to prepare some of of those lanes that were higher grade lanes.

[Leonardo Nunes Coelho, Senior Vice President of Mining Operations at Nexa Resources]

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, we're gonna be able to increase production. If you look in the general overview of the mine, there is not a a an issue in terms of geotechnical conditions. This is a this an event that has occurred in the in the specific area, but we are taking cautions and actions to make sure that the mine is doesn't have such similar conditions for the coming year.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

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, like like rock bolting or or shot creating or anything along those lines?

[Leonardo Nunes Coelho, Senior Vice President of Mining Operations at Nexa Resources]

Yes. For short term, no. In Vazante, we have, we are shot creating more or less 6% of the whole mine development. We are accessing if there is, the need to to increase this for the rest of the mine would is not need yet, but we don't we are not seeing any need for the short term yet.

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Okay. Okay. I I guess we'll watch that. And then just finally, I mean, on the exploration results that you put out, earlier this week, there were some really spectacular intercepts at Aripuana and Vajante. Do you anticipate replacing reserves mined this year, first of all?

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

But then when you think about those two assets, Aripuana and Vajante, and and vis a vis these exploration results, Do you expect to incorporate those exploration results into your year end resource? And and what what does it mean for the outlook for the the year end resource? Thanks.

[Ignacio Rosado, President & CEO at Nexa Resources]

Yeah. Let's say, the grades that you have seen in the presentation, I would say are yes, they are not spectacular. But as we said, they showed a potential for mineralized areas. If you look at at Vasante, we have been replacing the life of the mine every year, okay, at least since I'm here the last three years, but I've seen also in the past. And the idea is that we start mining an area that is called the BBMG.

[Ignacio Rosado, President & CEO at Nexa Resources]

I think we mentioned this to you before. This is an area that is projected in a high grade. So we are aiming to do, in general, Basanta is to increase the seven years to more than nine to ten and start replacing from there, okay? The fact that Sukuri Norte, which is the one we are presenting, is showing these results. Actually, we wanted only to highlight that mineralization is extended.

[Ignacio Rosado, President & CEO at Nexa Resources]

We might based on your comment, what we are going to do is we're going to make sure that we flag more on this process of replacing reserves, okay? In the case of Aripuana, as we said, years, it's the same comment. I mean, we don't need to drill Aripuana a lot because fifteen years in the short term is enough, and we are restricted on CapEx. But what we will do is show these intersects that also bring more mineralization. And that's why we're saying that at least we have twenty five years based on the resources.

[Ignacio Rosado, President & CEO at Nexa Resources]

The conversion of resources into reserves is very high. So what we're going to do is we're going to show you how this process goes and make sure that we are clear in terms of replacing reserves and extending reserves, okay?

[Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America]

Yes, that's great. Thank you very much for your comments today. I greatly appreciate it. Best of luck.

[Ignacio Rosado, President & CEO at Nexa Resources]

Thank you. Thank you,

[Operator]

Please include your name and company when typing your question. Our next question comes from Stefan Westcott from Citi. Please Mr. Westcott, your microphone is open.

[Stefan Weskott, Sell-Side Equity Research Analyst at Citigroup]

Yes. Thanks, everyone. Thanks for taking my question. So my first question regarding Aripuana for filter installation. How long it should take for the ramp up or initial estimates after decommissioning on the first half of next year?

[Stefan Weskott, Sell-Side Equity Research Analyst at Citigroup]

And regarding my second question, despite the first half lower production impacted by rains and also lowers in prices impacted by Liberation Day, Leverage remaining pretty much under control at 2.2 times average for the first half. And with free cash flow expected to improve going forward on improving production and higher zinc prices, How do you guys are seeing the balance between deleveraging dividends and products disbursement going forward? Thank you.

[Ignacio Rosado, President & CEO at Nexa Resources]

Okay. So I'm going go through the Aripuana question, and I'll let Jose Carlos and Rodrigo Camarosano go through the other part. So in the case of the filter, as we said, it's right on track. The filter is being fabricated now, and it's going to be ready before the year end. All civil works are also on time and on budget as well.

[Ignacio Rosado, President & CEO at Nexa Resources]

So the commissioning should happen towards the March and April. We expect that the new filter will have will be up and running in the second quarter of next year. 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 order to make sure that we speed up all this process. So 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's why we are reflecting a better production for the second half With DC filters accommodating 70% of that capacity and the new filter accommodating the rest, we should be able to have a full run rate in the 2026.

[Ignacio Rosado, President & CEO at Nexa Resources]

We don't expect any delays on that. And we will keep you updated on the advancements from now since to the date of commission, okay? The other questions, please, Jose.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

Thank you, Ignacio. Can you hear me well?

[Ignacio Rosado, President & CEO at Nexa Resources]

Yes.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

Excellent. So on 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 and cash flow generation.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

That that is true. We 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. So 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 we we will see a we see a favorable trend. Our priorities continue to be the 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.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

We we 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, you know, growth opportunities that we may have in the future. So first, be before that, we need to we need to lower our gross debt, reduce the amount of interest expense that we pay every year. So we would feel more comfortable with leverage levels in the neighborhood of around one time. So I I I'm not sure if I missed something, but I think that answers the bulk of our question. If if I missed something, please please let me know.

[Stefan Weskott, Sell-Side Equity Research Analyst at Citigroup]

No. That's great. Thank you. Thank you, guys.

[Operator]

Thank you. Our next question comes via phone. Please state your name and company before asking your question and press 9 to activate it, please.

[Orest Wowkodaw, MD, Senior Research Analyst - Metals & Mining at Scotiobank]

Hi. This is Orest Wowkodaw from Scotiabank. Can you hear me?

[Ignacio Rosado, President & CEO at Nexa Resources]

Yes, can.

[Orest Wowkodaw, MD, Senior Research Analyst - Metals & Mining at Scotiobank]

Just a follow-up on Arapahana. I feel like your languaging around the timing for the commissioning around the Filter Press is a little bit later than previous. I'm wondering if this current timing will impact your 2026 guidance at Arapana, 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 timeframe for the new equipment?

[Ignacio Rosado, President & CEO at Nexa Resources]

No, no. No, thank you for the question. No, no, the dates are the same. March, April is the case. I mean, is in the second quarter, so that's why I'm saying that.

[Ignacio Rosado, President & CEO at Nexa Resources]

But I mean, we are very confident that those dates are not going to move, and the guidance on 2026 hasn't been moved. It's the same. So we can reiterate that, Orest.

[Orest Wowkodaw, MD, Senior Research Analyst - Metals & Mining at Scotiobank]

Okay. And just as a follow-up. I mean there was a very significant negative working 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?

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

I I can answer that, Orest. Good morning. This this is an ongoing cycle that we see. I think we've seen this at least since I joined the company. Typically, there there's 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 May mainly in Peru, but also some of them in Brazil.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

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's those are probably the two the two 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 not nothing different this year. On average, though, for for the year as a whole, we expect to have a a stable level of cap of working capital.

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

So not an investment, not a disinvestment. Just on on average, give or take, it should be zero impact on on working capital That's what you can expect.

[Orest Wowkodaw, MD, Senior Research Analyst - Metals & Mining at Scotiobank]

So are are you suggesting you you think you can reverse the the entire negative from q one by the end of the year?

[José Carlos del Valle Castro, Group CFO & Senior VP of Finance at Nexa Resources]

Yes. That is correct. Just as it happened in 2024 and in 2023.

[Operator]

Please use the raise hand button and you can also submit written questions using the Q and 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 9 to join and 6 to activate your microphone. Wait while we pull for questions. This does concludes our Q and A session.

[Operator]

I would now like to hand the call over to Mr. Ignacio Rosal for his closing remarks. Please, Mr. Rosal, please go ahead.

[Ignacio Rosado, President & CEO at Nexa Resources]

Thank you. Thank you all for attending. We are aware that we had a very difficult first quarter impacted by Aripuana. That is still a challenge and that we are working on that and making sure that the three filters that we have today work properly and the four filter comes right on time, on budget. We are confident that happening this, the fundamental value of Aripuana is going to come, and we are working very hard towards that.

[Ignacio Rosado, President & CEO at Nexa Resources]

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, would like to thank you for your time. We will keep you posted in 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.

[Operator]

Thank you. This concludes today's conference call. We appreciate your participation and interest in Nexa. You may now disconnect and have a wonderful day.

Participants

Executives

• Rodrigo Cammarosano, Head - Treasury & IR
• Ignacio Rosado, President & CEO
• José Carlos del Valle Castro, Group CFO & Senior VP of Finance
• Leonardo Nunes Coelho, Senior Vice President of Mining Operations

Analysts

• Lawson Winder, Director & Equity Research Analyst - Metals & Mining at Bank of America
• Stefan Weskott, Sell-Side Equity Research Analyst at Citigroup
• Orest Wowkodaw, MD, Senior Research Analyst - Metals & Mining at Scotiobank