Good morning, ladies and gentlemen, and welcome to Nexa Resources First Quarter 2025 Earnings Conference Call. Please note that today's event is being recorded and broadcast live via Zoom, with access also available through Nexa's Investor Relations website. A slide presentation is accompanying today's webcast and is also accessible on our Investor Relations website. A replay of the conference call will be available following its conclusion. As a reminder, all participants are currently in a listen-only mode. Following today's presentation, we will open the floor for questions. [Operator Instructions] 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.

Good morning, everyone, and welcome to Nexa Resources first 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 2 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 comment. Ignacio, please go ahead.

Thank you, Rodrigo, and good morning everyone. Thank you for joining us today. As we review our first quarter 2025 results. Let's move to Slide 3 where we highlight our results for the quarter. Before discussing our quarterly performance, I want to briefly acknowledge the current macro environment. The past few months have been marked by significant volatility with concerns over global economic slowdown, geopolitical tensions, inflation and supply chain disruptions. While the environment remains challenging, we continue to see strong medium and long-term fundamentals for zinc, copper and other key metals supported by demand drivers like infrastructure development and industrial revitalization. Supply constraints and historically low zinc treatment charges persist, but we believe new demand opportunities will continue to emerge. Nexa is well positioned to navigate this environment focused on improving margins through disciplined operational performance and cost control. In the first quarter of 2025, we faced some operational challenges at certain sites, which led to production volumes slightly below our initial estimates. In the mine segment this was mainly due to a typically heavy rainfall in the Pasco region, impacting El Porvenir and Atacocha's performance, as well as Aripuanã where precipitation levels were approximately 30% above historical averages. Although our smelters also operated slightly below our budget, we remain in line with our 2025 guidance, which anticipates a year-over-year reduction of approx 15,000 tons to reflect a more volatile market environment and lower TCs. Despite these challenges, we deliver an adjusted EBITDA of $125 million with margins remaining within historical ranges. Our consolidated net revenues total $627 million, even with lower smelting sales volumes. [Audio Gap] times at the end of the first quarter, temporarily impacted by seasonal working capital intensity, which is higher early in the year. We expect to normalize these variations over the coming quarters.…

Thank you, José Carlos. I would like to briefly highlight our key priorities for 2025 and where we are focusing our efforts. Starting with growth, the Cerro Pasco Integration project is moving forward as planned. Construction of the tailings pumping system should begin in the second quarter and that project will support us in extending operations for over 10 years, adding substantial value. At Aripuanã, we are working to increase production, improve filter performance and make the mine more flexible while keeping our cost efficiency efforts in place. This will support better margins and a stronger cash flow going forward. Exploration remains a key pillar of our long-term strategy. We are working to extend the life of our assets, particularly by advancing geological studies in Aripuanã, progressing in the integration zone in Pasco and deepening our efforts at Cerro Lindo. On the ESG front, we continue to track our progress towards public commitments actively. I want to mention that we have just published our 2024 annual report which brings a comprehensive view of our performance and progress on strategic fronts. The report is available on our Investor Relations website. Financially, we are continuing to execute our liability management and delivering strategy aiming to improve financial flexibility. A quick reminder that our Annual General Meeting will be held in Luxembourg on May 8. The convening notice and proxy card have already been made available to shareholders. Finally, we remain guided by financial and operating discipline, prioritizing cash generation and smart capital allocation in line with our long-term strategy in a dynamic and currently volatile environment this disciplined approach continues to be the foundation of our strategy and resilience. Thank you all again for joining us today. We appreciate your continued support and confidence in Nexa. Operator, please open the line for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Camilla Barder from Bradesco BBI. You can open your microphone.

We cannot listen Camila. We cannot listen.

I think Camila is having some trouble. I'm going to pass the first question to Hernán Kisluk with MetLife. You can open your microphone, sir. Hernán Kisluk: Hello, good morning. Thank you for taking my question. I was wondering maybe if you can provide more color on what you mean by geotechnical issues that you're having at Vazante. And also we have been monitoring several indoors production levels and in the last two quarters it has been below historical averages. So if you can also provide some color on what is happening there? So particularly focusing in the near term, if you think production will recovery in upcoming quarters, and also particularly at Vazante, if these geotechnical issues have consequences for the medium- and long-term operations of the mine.

Yes, sure. No, the geotechnical issues related to a stope that we had that one of the pillars that support the stope collapse, this was isolated. And like what happened is that the mineral contained in that stope had a very high grade. So we have to isolate the zone and we couldn't extract the mineral to provide that in the coming months to the plant to have a higher grade that was anticipated in our mining plant. The idea is that we recover some of the production of Vazante. We are still working on recovering the mineral from this stock, but the idea is that we recover part of the production of a Vazante in the year. Okay? And that is the main explanation. In the case of the other mines in Pasco, the rainy season, as we said, impacted the pit of Atacocha. It's not raining anymore. So the projections show that we will recover all of our production that we couldn't have in the first quarter through the year. And then that is going to be the same for Porvenir. Porvenir is going to recover also full production through the year. In the case of Aripuanã, it's more difficult because this is -- this as I said before, this has been a very difficult project to build. And the only bottleneck that we have today are the tailings filters. And as I said in the last quarter, these tailings filters really perform, but it's difficult to maintain them. It's difficult to change parts when we have to change parts. So we have capacity constraints that with the rainy season deteriorate even more. The four filter will solve that problem. But it's coming in the first quarter of next year. So Aripuanã might be in the lower range of the guidance. So if you add Vazante mid-to-lower range of the guidance, achieving guidance in the other two mines, Cerro Lindo going very well and Aripuanã low range, the average should be that we will be around the mid range of the guidance. So that's what we are expecting. I mean, we are putting all the measures to make sure that the second quarter is better and the rest of the year we will show this improvement. Hernán Kisluk: Thank you, Ignacio.

I have Camilla Barder with Bradesco BBI here again on the line. Please, you can open your microphone.

Hello, can you hear me now?

Yes, Camilla.

Okay. So sorry for that. So, good morning and thank you for taking my questions. Two questions on my side. First on TC. I just wanted to hear a little bit about your views on the impact of the recent trends on TCRCs for Nexa. I know you have some fixed contracts for next years, but you still have some exposure. So I just wanted to get your thoughts on that? And the second question is about leverage. So Nexa has done a good job on its deleverage path over the past quarter, but last quarter leverage went up following a compressed free cash flow as you mentioned, should be reversed. So my question is, how do you see leverage evolving in next quarters? And what would you consider as a reasonable target for the end of the year? Thank you.

Okay. So I will talk about the TCs and then I will let José Carlos answer the question on the leverage. So TCs, it was a surprise to have this $80 TC agreed between Teck and Korea Zinc. Yes. We as you said, we closed most of our contracts already for the year. And one thing that we have is that we have bridge contracts, which account that the conditions of our TCs have a three year program. So we have also conditions on TCs of the previous two years that were better and we will be affected by this year's TCs. Having said that, between our mines we use a benchmark. So the benchmark we used before was above $100, today is $80, but between among our mines it doesn't matter because it will go from one packet to another packet. So the mines will benefit and the smelters will be hit by this $40 difference that we have. In the case of the rest of the concentrate that we buy for Cajamarquilla and the smelters in Brazil, as I was saying, we already have closed contracts. So, and they are not exposed, most of them are not exposed to benchmark. So we believe that in that regard for us this year, that this is are sort of under control. We don't have a lot of spot sales or purchasing concentrate for our smelters this year. Having said that, I would like to comment that with this TC of $80, with prices of zinc today as 2,600 and premiums that there were already low last year and this year as well, the smelters profitability in the world are going to suffer very much. Stocks are low today. So we will see that evolution during the first half of this…

Very clear. Thank you very much. José Carlos del Valle: Sure.

Our next question comes from Carlos de Alba with Morgan Stanley. You can open your microphone.

Yes. Good morning. Thank you very much for the comments. Just following on up on the prior comment on working capital. Yes, so look, the negative working capital in the quarter was $265 million. I understand the seasonality of the first quarter, but this was like twice as negative as we have seen in the first quarter of prior years. And as you have been mentioning, the market is challenging with prices and TCRCs. So do you expect at this point in time to fully reverse that $265 million net working capital in the year and finish 2025 with a cash inflow from working capital?

Thank you, Carlos. I can comment on that. For planning purposes, what we normally assume is that working capital should be flat on an annual basis. So despite these fluctuations within the year that we see, that we have been seeing in the last few years, our assumption is that it will be flat. So it should be net zero. One particular aspect that affected the working capital in the first quarter, I would say is related to taxes. Taxes because we had better profitability in 2024 compared to prior years, we had to pay more taxes. And this all happens in the first quarter. And there was one non-recurring item that is mentioned in an earnings release. We paid $61 million related to some of the tax contingencies that we had to take advantage of discounts on interests and penalties. And there was an amnesty related to one of the years that we also had pending related to Atacocha and El Porvenir. So this was a one-off effect of $61 million that by itself is already a significant difference. So the combination of those two factors is what has in a way enhanced this volatility that we see in the first quarter. So we continue to expect that throughout the year we will be able to reverse that and then close to flat.

All right, thank you. And my second question is, so if during the remainder of the year seeing prices don't improve too much, but the way the market works out, the current tough situation for smelters is for TCs to improve, spot to improve and the benchmark contract next year to improve and therefore that improves the profitability of smelters. That would be not the best scenario for Nexa. Am I right on this view? You would benefit more if seeing prices go up that if only TCs go up, right?

Yes, yes. As I was saying, we already closed our TCs. So we will have a lot of impacts if the spot price improves. We won't have a lot of impact this year. However, we start negotiating. As I was saying, we have BRIC contracts. So we will start negotiating for next year and next year will be a net benefit. But for this year we will mostly benefit for better prices. Okay. Having said that Carlos, you see that we also produce silver and copper and the price of silver today is at $33 and we produce 12 million ounces of silver and then almost 30,000 tons of copper. And price of copper is also up. So that is something that is going to help us mitigate these price levels of zinc that we have today. In any case, we are concentrating our efforts on what we can control, which is the operational improvement of our mines. We are aware that this quarter was really bad and we acknowledge that and we believe that we have the rest of the year to show the market that most of our operations are going to improve. And Aripuanã, we have to wait for the fourth filter, but still it's going to improve because in the dry season the filters will perform as expected.

Thank you very much, Ignacio.

Okay. Now, I would like to turn the call over to the company for the written questions. Please go ahead.

Thank you, operator. So thank you everybody for the questions. So I will start with a question. Actually it was a question from Henrique Braga from Morgan Stanley about the impacts on working capital. But I believe that it was already addressed by José Carlos and also about the production, which was also addressed by Ignacio. The second question comes from Declan Hanlon from Santander. And it's basically the first part of the question, which is in regards to the working capital was already answered. And the second part is still an expectation, the reversing the majority of this working capital in the following quarters already addressed. And the second part of the question is, if the company can talk about the tariffs risks and how the company is managing the expectations over those risks and contingency plans that the company may have if the scenario deteriorates?

Yes. So about tariffs, as we have been saying this, we are not exposed to tariffs in terms of zinc today. As I was saying, most of our contracts are already closed and the relationship we have with the states is mainly through Cajamarquilla in Peru. The U.S. has applied a 10% tariff on Peru, but there is an exception on zinc. The zinc market in the U.S. is around 1 million tons. They demand 1 million tons. Most of it comes from Canada and Mexico. Okay? And we provide the states with almost 8% of what they demand. So we are not expecting a drop in our demand for our zinc there. Having said that, we don't know what will happen. But the comment that I can make that is that, if there is no recession this year in the U.S., this 1 million tons demand is going to be there and they will demand that they will have to pay more. And given that Mexico has been - has a tariff today on zinc, I think, I believe it's 25% and Canada as well. I don't see American companies buying zinc from other part of the world because as I was saying, there is no zinc available. So most of the measures that stays put is hurting the customers in the U.S. in terms of, let's say consumables at the mines. We don't have tariffs, we are not, we don't import most from the states and we don't have tariffs there. So all the logistics chain hasn't been interrupted. So for this year we are only tracking, I would say expectations, which is something that is influenced the zinc price mainly. And so far the, there is resistance for the zinc at 2600. We'll see what happens rest of the year and we are monitoring that. Monitoring that means that we want to accomplish our operational budgets, but we are aware of cash flow as well. So we will benefit from probably better prices on silver and copper, but we will be hurt from prices on zinc. So the idea is we take measures to try to stabilize our cash flow and reach levels that will help us with the leverage that José Carlos has been explained. So this is more or less what we do through the year. We keep control every two weeks of what is going on. We make sure that our mines are always being tracked on production costs and CapEx. So this is the only thing we can do. So we'll see what happens in the coming months. And yes, we are aware of all of that.

Thank you. This concludes the question-and-answer session. I would now like to hand the call over to Mr. Ignacio Rosado for his closing remarks. Please go ahead, sir.

Okay, thank you very much for attending the call. As I said before, we are aware that we had a tough quarter in terms of our operations. We are working on the measures to make sure that we recover most of the production for the rest of the year. We are also aware that we have a volatility environment and we are prepared to face that environment in the coming months. We are very proud that the Cerro Pasco project is going as expected, on time and on CapEx. And also we are confident that we will have the S4 filter of Aripuanã in the first quarter of next year. Even if this year has this volatility and this uncertainty as Nexa, we work on the long-term and what we want to make sure is that we finish the CapEx of the expansion CapEx of the projects, we extend the life of the mines. So in the coming years, given the fundamentals of zinc, we start bringing the cash flow to start lowering the debt, to start giving dividends and also to start looking for other acquisitions as well. Thank you very much for attending. We look forward to have you, have this call in three months. Have a good day.

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