Good morning, and welcome to Nexa Resources' fourth quarter and full year 2024 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist. This event is being recorded and is also being broadcast via webcast and may be accessed through NexSys Investor Relations website where the presentation is also available. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. To withdraw your question, remember that the participants of the webcast will be able to register via website question. Simply type your questions in the box and click send, and that will be answered soon. I would now like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations, for opening remarks. Please go ahead.

Good morning, everyone, and welcome to Nexa Resources' fourth quarter and full year 2024 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 this on-screen presentation through the webcast. Before we begin, I would like to draw your attention to slide number two, where we will 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 is our CEO, Ignacio Rosado, our CFO, Jose Carlos Del Valle, and our Senior Vice President of Mining Operations, Leonardo Duque. With that, I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Thank you, Rodrigo, and good morning, everyone. Thank you for joining us today as we review our fourth quarter and full year 2024 results. Let's move to slide number three, where we highlight our main achievements for the year. As we close out 2024, we are very pleased with our performance. We achieved the second highest adjusted EBITDA in our history and for the first time since initiating the investment cycle in Aripuanã, generated positive consolidated cash flow. Our financial position also improved with a notable increase in our cash balance, a reduction in the gross debt, and an improvement in our net leverage ratio from 2.2 times in the third quarter to 1.7 times. In the fourth quarter, adjusted EBITDA reached $197 million, a 79% increase from the $110 million reported in the same period last year. For the full year, adjusted EBITDA totaled $714 million. This strong performance was driven by several key factors, including higher by-product contribution, increased zinc prices, lower environmental liabilities, and foreign exchange gains. On the operational front, we continue to make steady progress, meeting our 2024 production and cost guidance, while accelerating both revenue. Total consolidated net revenues for the fourth quarter reached $741 million, up 18% compared to the fourth quarter of last year and a 4% increase compared to the third quarter of this year. In terms of mining production, zinc output decreased by 11% quarter over quarter, while lead and silver production increased by 2% and 1% respectively, driven by higher grades. Copper production saw a slight decrease compared to the previous quarter, but was in line with our mine sequencing plan. I will share more details shortly, but I would like to highlight that the operation made a fully positive contribution to our adjusted EBITDA in 2024. Aripuanã has…

Thank you, Ignacio. Good morning, everyone. I will now continue with slide number ten. Starting with the chart on the upper left, we can see that total consolidated revenues for the fourth quarter increased by 18% year over year. This was mainly driven by higher metal prices, except for lead, and higher smelting sales volumes. These gains were partially offset by lower net premiums. Compared to the third quarter of 2024, net revenues grew by 4% supported by higher zinc, silver, and gold prices. For the full year 2024, consolidated net revenues reached $2,766 million, an 8% increase compared to 2023. This growth was mainly driven by favorable metal prices, higher copper and lead sales, and higher silver and gold payable from our mining operation. Moving on to profitability, our consolidated adjusted EBITDA for the fourth quarter reached $197 million, reflecting a strong 79% increase year over year. This performance was primarily driven by higher by-product contribution, increased metal sales volume, higher zinc prices, and foreign exchange gains. Compared to the third quarter of 2024, adjusted EBITDA also grew by 8%, as the impact of higher zinc prices was partially offset by higher variable costs. For the full year 2024, consolidated adjusted EBITDA totaled $704 million, a significant 76% increase compared to 2023, making it the second highest annual adjusted EBITDA in Nexa's history. This was mainly supported by favorable metal prices, foreign exchange benefit, higher by-product contribution, and ongoing improvements in both operational and financial management. Finally, it is worth noting that our consolidated adjusted EBITDA margin reached 26% in 2024, ten percentage points better than in the previous year. Now let's move on to slide number eleven. Looking at the top of our left slide, we can see that in 2024, we invested $277 million in CapEx, with…

Thank you, Jose Carlos. As we conclude today's call, I want to highlight the recent adoption of our new dividend policy. This policy is designed to enhance transparency, provide consistent returns to shareholders, and maintain the financial flexibility needed to support our growth targets. In 2024, both Standard & Poor's and Fitch reaffirmed Nexa's investment-grade rating with a stable outlook. Additionally, last November, Standard & Poor's assigned Nexa Recursos Minerais, our Brazilian subsidiary, its first-ever rating, also investment-grade with a stable outlook. This rating underscores the expectation of resilient operations in Brazil in the coming years. Last week, Standard & Poor's conducted its annual review and once again reaffirmed Nexa's investment-grade rating, maintaining a stable outlook. This recognition highlights our commitment to the financial discipline of the company. I also want to emphasize that in 2025, safety will remain a top priority. We are fully committed to strengthening our safety culture and continuously improving our protocols to ensure our employees' well-being. 2024 was a year marked by resilience and innovation. And as we move into 2025, we expect revenue growth supported by positive contributions on pricing and volume expansion. Our disciplined approach to capital allocation remains unchanged. We will prioritize CapEx investments in enhancing production capacity, extending the life of our mines, and ensuring long-term sustainable growth. Before I close, I want to express my gratitude to our exceptional team of dedicated professionals and our shareholders for their trust and support. Thank you for your attention. We truly appreciate your engagement. And now look forward to your questions. Operator, please open the line for questions.

We will now begin the question-and-answer session. On your touch-tone phone, if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Webcast platform. The first question today comes from Camilla Barder with Bradesco. Please go ahead.

Hi, good morning. Thank you for the opportunity for making my questions. I have two questions. The first, just some follow-up on. You mentioned you I was just wondering if you can share any quantitative estimates on that? And on the tailing filter, do you have an estimate on CapEx for the filter and after it's implemented? Next year. How much potential do you see for a capacity increase in Aripuanã? And the second question here, Jose, who passed in as you mentioned in the call, the project is moving ahead. First phase was approved, and second phase studies should be complete. Completed in the second semester. I just wanted to question any additional details of the project, CapEx, if you see any risk for startups, and more details on finance, it will be helpful. Thank you.

Pardon me. This is the conference operator. I believe our speaker lines are muted.

So I don't know if you can listen to me now. I was telling you that total CapEx of Pasco is around $140 million. $85 million comprises the implementation of wind spamming system of El Porvenir to Atacocha. What happens here is that the life of mine or the tailings dam El Porvenir is getting towards the end of its life of mine. The idea is to pump all these tailings to the Atacocha dam that has many, many, many years going forward. This is, as I said, a project cost $85 million and the rest of the CapEx comprises the interconnection of the two mines in the underground. This is very important because it will allow us to access all these resources that are in Atacocha, that we will be able to extract them through that infrastructure of El Porvenir. And for that, not only do we need the interconnection of the two mines by ramps, but also upgrading the shaft of El Porvenir to accommodate also the ore of Atacocha. So this project is between two and three years already approved the pumping, as we said. This pumping is gonna be for two years. We are starting the civil works in the second quarter. Of the pumping, and we already ordered some equipment. So in the next year, this will finish. And then in parallel, this upgrade of the shaft and interconnecting the mine will come probably in 2026 depending on how the studies go. That is regarding Cerro Pasco. Really, an important app is very difficult to project EBITDA or cash flow. Because it will depend on prices. I will tell you this. The Aripuanã project has been a very difficult one. To implement. I mentioned this many times. There were several factors that involve the some…

The next question comes from Carlos de Alba with Morgan Stanley. Please go ahead.

Thank you very much. Good morning. And I guess, just to confirm what you just said at the end of the last answer, do you expect Aripuanã to have positive EBITDA in 2025 and be higher than 2024? Did I get that right?

Yes. Yes. And this is, I would say, simple mathematics. We will have a higher production that costs are still high because we are not diluting fixed cost in this throughput limitation of the throughput. The costs but the costs are gonna be lower than in 2024. The production is gonna be higher. CapEx should be similar. The new filter is costing us $14 million more or less. But, yes, with these prices and the that we have and with the CapEx, yes, we believe that EBITDA and cash flow should be higher than in 2024.

Right. Makes sense. Alright. My second question is regarding the dividend policy. I just wanna make sure that I get what it means basically is to a minimum of 20% so not a minimum, but a 20% of free cash flow with a minimum payment of eight cents per common share. And so, basically, if I just look at our forecast of cash from operations, minus CapEx that amount, that free cash flow times 20% is what you will pay. Is that right?

Sure. Hi, Carlos. Good morning. Yes. The minimum is eight cents per share. So what we wanted to do is well, first of all, as you know, we have this new policy that we have already approved and it's eight cents per share. So that we put a floor on the dividend payment, but in a way that is transparent and more predictable. And the idea will be to pay 20% based on the cash flow that we generate each year, which is basically after sustaining capital. So we pay 20% on that free cash flow that internally we call pre-events. You would have a more predictable and consistent dividend flow over the years, and this is effective as of 2024 results.

Okay. So basically, it's the cash from operations minus your sustaining CapEx. 20% of that.

Right.

Well and what is the CapEx the sustaining CapEx that you're expecting for 2025?

This year, we are about $270 million in 2025. Is that plus what we have on Cerro Pasco because, you know, the data is pumping system is part of a is part of the sustaining CapEx. If I remember correctly, it's about $330 million. So that will be a slight change compared to the capital we have in 2024. And, obviously, what we have to into consideration is that we don't know what prices are going to be in 2025. But assuming that we have prices that are similar to 2024 and based on the improved performance that we expect from Aripuanã and the continuous improvement from our operations. We expect a positive trend in our cash flow generation going forward. So therefore, that should then benefit the areas that we're going to.

Fair enough. So the and the so the total sustaining CapEx expected in 2025 is around $330 million. Right. I can I can double I can confirm that number?

Yeah. But, yeah, it's around that neighbor.

Right. Jose, so sorry. This is Rodrigo here. Just confirming the sustaining CapEx for 2025 is gonna be $316 million. Right? This is the number that we released in our guidance. On the beginning of February.

Three six zero.

Three six zero. Okay. Three one six. Three sixteen. Three Okay. Three one six. Okay. Good. Alright. Alright. Excellent. And then my last question, is on working capital. Obviously, big swings, you know, throughout the year. How should we think about working capital in Q1, like, Q2, Q3, Q4, just given how significant the volatility is?

Yes. I can comment on that, Carlos? We don't expect a different trend from what we saw in 2024 and 2023. There is a seasonality in how our working capital behaves throughout the year. But on average, going forward, I would say that it will be safe to assume that working capital effects should be close to neutral on an annual basis. However, you would we would still see that volatility quarter to quarter as we have seen in the last.

Okay.

Yep. That's clear. Thank you very much, Ignacio, Jose Carlos, and Rodrigo.

No. You're welcome.

We will now take questions from the webcast.

I'd like to hand the call back over to Rodrigo.

Thank you, operator. We have some follow-up questions from the audience here in the web. So I would start with the one well, Ignacio already mentioned about the four fifty nine ninety point nine. So there's one question from Henrique from Morgan Stanley. So terms of adding more color and why the developing the fourth filter now. So I believe that this was already answered. So and there's another question one question from Heron. Kuleslik from MetLife. So what should we expect in terms of cash flow generation for 2025? And what are your plans for capital, Casey? Jose, can you address this one?

Yes. Yes. Mean, we have somehow already addressed the cash flow question. I mean, without knowing exactly what prices are going to be, our expectation is that our performance is going to continue to improve. 2025, even though we won't have the a Wi-Fi filter in place yet, there is an expectation that the performance there will be better. We always have this constant initiative to control our costs. As you remember from 2024, we were within guidance. So on those aspects that we control, we expect that we will have better performance, and depending on prices, prices are better. Obviously, that will translate into better cash flow generation. So the expectation is positive. In terms of capital allocation, I think we have mentioned before that we have a very clear strategy of, obviously, first, focusing on extending the life of mine of our mines. Secondly, I would say the reduction of gross debt is not just a matter of reducing leverage or net debt, but also reducing gross debt so that we can also reduce our interest expense obligations. And then we also have this newly approved dividend policy so that we can also provide a consistent return to shareholders over time. So I would say that those are the features.

Thank you, Jose. We have one question from Omar. From Compass Group. So, actually, there are three questions. The first one is, is there any other asset you are willing to sell? The second question is regarding Aripuanã. What is the cost of the additional filter? And when do you expect the plant to work at nameplate capacity? And the last question is to comment on the status of Magistral project.

Yes. So as we said, we sold mostly all only assets that we wanted to get rid of because there were no transformational assets. There were small assets for us. And that part of the strategy is to make sure that we that the four mines that we have get developed increase the life of the mine, and we operationally execute them in the best way possible. But the growth will come from a new project that we have to look for in terms of M&A. Has to be a brownfield advanced brownfield project or a producing mine. As we said before, mainly copper and zinc. So we are not willing to sell any other. Or I already said that the additional cost is $14 million. The full capacity will come in the second quarter of next year. I mean, and regarding Magistral, as we know, the mayor was disapproved. Environmental impact study was disapproved. It wasn't it was disapproved because the community we had problems with the community, especially in the pandemic. That blocked all these roads and all these areas, and there were some processes not allocated to Nexa. Now we are negotiating with the that is the entity from the government on what are our next steps. And this is gonna take some months. Having said that, we are still very interested in Magistral. But Magistral, as we already said also in other calls, is a project that has to compete with other projects that we might have in our radar because, you know, wanna make sure that we build the most profitable mine. So Magistral has to compete in that regard. We will update the market in these conversations and negotiations with the authorities. And we believe, as I said, that they will come in the next months.

Thank you, Ignacio. We have one question from Rodrigo Murietta from AFP Integra. So based on the guidance provided at the beginning of February, El Porvenir and Atacocha for the midterm. Are including a part of the Pasco integration project mineralization in the guidance. Hi, Rodrigo. Thank you for the question.

We are not considering yet of the integration area. The guidance considers only the reserve base that we have currently. And we expect to publish some resources by this year and to convert into reserve by next year. And then you can assume a part of it in our plan.

This concludes our question and answer session. Now we will hand the call over to Ignacio for his final remarks.

Thank you. Thank you very much all for attending this call. We appreciate very much your interest in the company. We had a very good 2024 year regardless of the problems in Aripuanã. I still we still believe Aripuanã is gonna be a fantastic mine going forward. We are very committed to our challenges to achieve our challenges for 2025. 2025 is gonna be still a challenging year, but we have a very important group of people committed and clear in the strategies that we have to follow. Thank you very much, and we look forward to speaking to you in the next in the close, you know, the first quarter of 2025. Have a great weekend.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.