Nexa Resources SA Q1 FY2025 earnings call

• Macro Environment: Challenging with global economic slowdown, geopolitical tensions, etc., but zinc/copper fundamentals strong.
• Operational Challenges: Mining affected by heavy rainfall; smelters operated below budget.
• Projects: Cerro Pasco Integration Phase 1 (tailings pumping/piping) progressing; Aripuanã fourth tailings filter under construction.
• Financials: Adjusted EBITDA $125M, net revenues $627M. CapEx $50M in Q1, 2025 CapEx guidance unchanged at $347M, exploration/evaluation guidance $88M.
• ESG: 2024 annual report published; ongoing ESG progress tracking.

Mining Segment

• Zinc production in Q1 2025 reached 67,000 tons, down 23% year-over-year and 8% quarter-over-quarter. Mining cash cost dropped to $0.11 per pound (vs $0.26 per pound in same period last year), but increased $0.12 per pound quarter-over-quarter due to lower zinc volumes. Cost per run of mine was $48 per ton, up 7% year-over-year and 8% quarter-over-quarter, with Aripuanã inclusion affecting the figure.

Smelting Segment

• Total sales in Q1 reached 130,000 tons, decreased 6% year-over-year and 14% quarter-over-quarter. Consolidated smelting cash cost was $1.17 per pound, up from $0.98 per pound in same period last year. Conversion cost was $0.33 per pound, slightly up from $0.30 per pound in same period last year.

Aripuanã

• Production declined due to heavy rainfall, but concentrate quality stable. Costs stayed within 2025 guidance range. Mine life extended to 15 years. Fourth tailings filter acquisition completed, under construction with commissioning planned for Q1 2026.

• 2025 guidance for adjusted EBITDA and operating cash flow expected to improve at Aripuanã.
• CapEx guidance for 2025 remains $347M with disbursements to accelerate.
• Exploration/evaluation guidance reaffirmed at $88M.
• Debt maturity extended via bond transactions, enhancing financial flexibility.

• Geotechnical issues at Vazante affecting production.
• Volatile macro environment, geopolitical tensions, and supply chain disruptions.
• Low zinc treatment charges impacting smelter margins.

Q: Can you provide more color on geotechnical issues at Vazante and production levels?

A: Geotechnical issue was an isolated stope collapse affecting high-grade mineral extraction. Working to recover production at Vazante, with expectations of improvement through the year.

Q: Thoughts on TC impact and leverage?

A: TCs benchmark at $80, most contracts closed; leverage expected to reverse with working capital expected to be flat annually.

Q: Will working capital reverse and impact of tariffs?

A: Taxes and one-off tax payments affected Q1 working capital; no significant tariff impact on zinc sales as most contracts are closed.