Nexa Resources S.A.

Good morning and welcome to NEXA Resources Second Quarter 2024 Conference Call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. This event is being recorded and is also being broadcast via webcast and may be accessed through NEXA's 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 1 on your telephone keypad. To withdraw your question, please press star then 2. Please remember that the participants of the webcast will be able to register via website questions. Simply type your question in the box and click send, and that will be answered soon. I would now like to turn the conference over to Mr. Rodrigo Camaronson. Head of Investor Relations, for opening remarks. Please go ahead.

Good morning, everyone, and welcome to Nexa Resources' second quarter 2024 earnings conference call. Thanks for joining us today. During the call, we will be discussing the company's performance as per the earnings release that we 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 be making forward look statements about our business, and we ask you to refer to the disclaimer and the conditions surrounding those statements. It is now my pleasure to introduce our speakers. Joining us today is our CEO, Ignacio Rosado, our CFO, José Carlos Del Valle, and our Senior Vice President of Mining Operations, Leonardo Coelho. So now, I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Thank you, Rodrigo, and good morning to everyone. Thanks for joining us today to go over our second quarter results of 2024. Please, let's move to slide number three, where we will begin our presentation with the main highlights of the quarter. Let me start by saying that we had strong second quarter results. We have been witnessing positive momentum from commodity prices from the end of the first quarter, which has been sustained throughout the second quarter. Our solid operational performance and financial results reflect our commitment to our strategy and our focus on executing our priorities. as well as our efforts to optimize key investments and initiatives. In the second quarter of 2024, consolidated net revenues were $736 million up 27% quarter over quarter, mainly due to higher LME prices and increased smelting sales volume. Year over year, net revenues were up by 17%. Adjusted EBITDA in the second quarter of this year was $200 million, 64% higher compared to the $123 million in the last quarter. This performance was attributed to higher by-product contribution, higher sink prices, and increased smelting sales volume. Compared to the second quarter of last year, adjusted EBITDA increased by 180%, from 72 million. Our net leverage ratio in the second quarter of 2024 was 2.72 times versus 3.75 times in the first quarter of this year and 2.83 times in the second quarter of last year. These results reinforces our commitment to our strategy and our healthy and steady business fundamentals. Let me talk about the operational performance of Aripuana. Throughout April, May, and June, the plant increased utilization rates, delivered stable concentrate quality, and improved metallurgical recoveries that contributed to a solid adjusted EBITDA. In June, we achieved a positive operational cash flow generation. These factors confirm that transition of Aripuana to an ongoing operation. I will dive deeper in the key drivers of Aripuana later on in the presentation. Let me also emphasize that our Cerro Pascua integration project continues to advance on all fronts and we expect its approval in the upcoming months. Our brownfield exploration program in the second quarter advanced towards expanding our portfolio and aimed to add increase in the life of our mines. That said, our drilling strategy for this year is on track. We are focused on near-mine expansion, brownfield and infield drilling. As previously disclosed, we announced the divestment of our Moragudo operation at the beginning of April and on July 1st we announced the closing of the sale transaction. Under these conditions, mining activities ceased at the end of April. The sale of Morragudo is an important step in our portfolio optimization, which is a central part of our strategy to improve cash flow generation and returns. This focus allows us to concentrate our efforts on our most attractive operations. Additionally, in April, we concluded important transactions in line with our Liability Management Strategy. These transactions included extending our debt profile through the issuance of new debentures and bonds, as well as conducting tender offers. This strategy move allowed us to optimize our financial structure, diversify our funding sources and enhance our liquidity position. Jose Carlos will provide more detail on this topic in his presentation. Now let's move to slide number four to discuss our operating performance. Regarding the operating performance of the mining segment, zinc production reached 83,000 tons in the second quarter of this year, up 2% year over year, primarily due to higher zinc average grades, particularly at Cerro Lindo. Compared to the first quarter of this year, zinc production decreased by 5% due to lower volumes from the Peruvian mines and the absence of contributions from Morro Agudo in May and June of this year following the sale of this asset. In terms of cash costs in the second quarter of this year, it decreased to 3 cents per pound compared to 37 cents per pound in the second quarter of last year. This decrease was mainly due to higher by-product contribution, driven by higher copper and lead prices, and lower treatment charges in the period. Compared to the first quarter of 2024, mining cash costs decreased by 24 cents per pound, impacted by lower treatment charges and higher by-product contribution. The cash costs in the first half of this year performed below the lower range of our guidance. The cost per run of mine for the quarter was $49 per ton, up 10% year over year due to lower treated ore volumes and up 7% quarter over quarter, mainly explained by higher third-party services and higher personnel costs. The cost per run of mine in the first half of this year was within our guidance. Now moving to slide number 5. Regarding the operating performance of the smelting segment, metal sales totaled 148,000 tons in the second quarter of this year, down 1% from the second quarter of last year. Compared to the first quarter of this year, metal sales increased by 7%, driven by higher production volumes at Cajamarquilla and Lluís de Fora. Smelting cash cost in the second quarter of this year was $1.19 per pound compared to $1.12 per pound in the second quarter of last year. This increase is mainly attributed to higher raw material costs due to higher sink prices and lower treatment charges. Compared to the first quarter of this year, Cash cost rose by 21%, also impacted by higher SIN prices and lower DCs. Our conversion cost was 30 cents per pound compared to the 32 cents per pound in the second quarter of last year due to improved operational efficiency in the period. Compared to the first quarter of this year, the conversion cost was relatively flat. I would like to highlight that both cash costs and conversion costs in the first half of this year performed within our guidance. Now moving to slide number six, where we will start talking about ARIPUANA. The solid operational performance of ARIPUANA and its improved financials mark an important advance in the second quarter. Our efforts focus on plant stabilization, continuous improved of feed and utilization rates, enhancing metallurgical recoveries and concentrate quality, as well as reducing downtime hours. In June, the average utilization rate was 81%, with many days operating above 90%. Treated ore improved significantly by the end of the quarter, reaching 133,000 tons, a 32% increase compared to March. In July, we expect to create more than 140,000 tons of ore, and we aim to achieve a target capacity of 160,000 tons per month by September. At current treatment levels and with improved grades from the Link and Ambrex ore bodies, we anticipate further production improvements that will continue to improve our margins. Regarding Alipuana's financial performance, we noted a significant improvement in this quarter, with positive adjusted EBITDA for the second consecutive quarter and positive operating cash flow in June. These are key milestones that reaffirm the asset's solid progress. Looking ahead, we expect further increases in plant feed and throughput rates, improved concentrate rates, higher metal recoveries, and cost reductions. In the next slide, we will provide more details on Aripona's operational performance for the quarter. Now moving to slide number seven. Starting with the capacity utilization in the upper left side, we noted that it performed at 81% in June based on the design capacity. When considering the 90th percentile for the month, the performance was 86%, indicating solid progress in plant reliability. In the upper right side, which shows plant downtown measure in days of corrective maintenance, we noted a significant decrease. This indicates also an important improvement in plant stabilization. At the bottom of the slide, both metallurgical recoveries and concentrate rates are performing at or near target levels, and in some cases surpassing those levels. As mentioned earlier, this solid operational performance and improved financial results confirm the full transition to an ongoing operation and mark an important milestone in Aripuana. Now, moving to slide number 8. On this slide, I would like to highlight our progress with the advanced technical studies for the Cerro de Pasco integration project. As we have discussed in previous calls, this project has the potential to unlock significant value for NEXA. We have made substantial progress across the four key work fronts, completing important steps such as engineering for the underground mine connection and the El Porvenir shaft upgrade. Additionally, we have advanced the engineering studies of the tailings pumping system, which will allow us to pump tailings from El Porvenir to Atacocha. Significant progress has also been executed on the plant's engineering assessment, which represents opportunities to enhance processing capacity. Support activities, including technical reviews and environmental studies and permits, are also advancing as expected. In March, we issued a technical report on the joint operations of El Porvenir and Atacocha, reflecting some of the benefits of the integration project and resulting in an increase in the reserves base of the Cerro Pasco complex. We are moving forward with a project closely monitoring market conditions and expect to submit its approval in the coming months. Now, I will turn the call over to José Carlos del Valle, our CFO, who will present our financial results. José, please go ahead.