Nexa Resources S.A.

Good morning, ladies and gentlemen, and welcome to Nexa Resource 4th Quarter and Full Year 2025 Earnings Conference Call. Please note that today's event is being recorded and broadcast live via Zoom, with access also through Nexa's Investor Relations website. A slide presentation accompanying the webcast is available for download, as well as a replay of the conference call following its conclusions. As a reminder, all participants are currently in listen-only mode. Following today's presentation, we will open the floor for questions. To ask a question, if you are joined via Zoom, please click the raised hand. If your question is answered, you can lower your hand by clicking Put Hand Down. You may also submit your questions via the Q&A icon at the bottom of your screen. Please include your name and company when submitting your question. For participants joined by phone, press star followed by 9 to raise or lower your hand. Once announced, press star followed by 6 to mute or unmute your microphone. Writing 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 corporate affairs team. Now, I would like to turn the conference over to Mr. Rodrigo Camarosano, head of investor relations and treasury, for his opening remarks. Please go ahead.

Good day, everyone, and welcome to Nexa Resources' fourth quarter and full year 2025 earnings conference call. We appreciate your time and participation today. During the call, we will discuss NEXUS performance as detailed in the urgent release issued yesterday. We encourage you to follow along with the presentation available through the webcast. Before we begin, please turn to slide number two, which contains our forward-looking statements disclaimer. We ask that you review the information regarding these statements and the associated risk factors. Joining us today are our CEO, Ignacio Rosado, our CFO, José Carlos Del Valle, and our Senior Vice President of Mining Operations, Leonardo Coelho. With that, I will now turn the call over to Ignacio for his remarks. Ignacio, please go ahead.

Thank you, Rodrigo. Good day, everyone, and thank you for joining us today. Starting on slide number three. NEXA delivered a strong finish to the year, with our four quarter results demonstrating consistent operational execution and the benefits of our disciplined focus on safety, efficiency and cost management, all within a supportive pricing environment. On the mining side, sink production reached 91,000 tons, a solid increase both quarter over quarter and year over year. This performance was driven by stronger results across all our operations, with Aripuana standing out as it achieved its highest quarterly production to date, a clear reflection of its growing operational stability. In our smelting division, total zinc sales were 142,000 tons, while Cajamarquilla continued to deliver stable output The sequential volume was constrained by lower production at our Brazilian smelters and softer demand for zinc oxide. Financially, the operational performance translated into our strongest quarter of the year. We reported net revenues of $903 million and adjusted EBITDA of $300 million. with both metrics showing relevant improvement across all comparable periods. This was underpinned by higher realized prices for zinc and our key byproducts, combined with our increased mining volumes. We recorded a net income of 81 million, or 38 cents per share, and generated 51 million in free cash flow. As a result, our net leverage improved to 1.7 times, further strengthening our balance sheet. Looking now at the full year 2025, seam production totaled 316,000 tons, successfully achieving our consolidated mining production guidance, with all individual metals also landing within their respective target ranges. In smelting, total metal sales reached 567,000 tons, which is in line with the midpoint of our guidance. From a financial perspective, full-year net revenues were 3 billion, while adjusted EBITDA reached 772 million, one of the strongest levels in the company's history. This performance reflects solid operational execution combined with a favorable pricing environment for zinc and key byproducts. Net income for the year was $223 million, or $1 per share. Free cash flow was negative $105 million, which included debt reductions and dividends. A combination of a supportive pricing environment and disciplined cost management allowed us to reduce gross debt and reinforce our financial flexibility. With that, let's move to slide number 4 to take a closer look at our mining performance. Our quarterly sink production of 91,000 tons represents 9% increase from the third quarter, driven by enhanced operational performance at Basante, Aripuana, Cerro Lindo and Atacocha. For the full year, our production of 316,000 tons of zinc met guidance. As we have previously discussed, volumes were impacted in the first half due to temporary operational constraints and lower grades. On costs, our consolidated mining cash cost, net of byproducts, improved sequentially to negative 58 cents per pound benefiting from stronger by-product grades and lower treatment charges. For the full year, cash cost came in at negative 30 cents per pound below our guidance, reflecting our disciplined cost management and favorable price dynamics. The cost per ton of run of mine was $56 in the quarter. a sequential increase primarily due to higher operational costs at Aripuana, as we continue to ramp up and stabilize the assets. On a full year basis, this cost was in line with our guidance. Financially, the mining segment delivered a robust performance, with net revenues of $532 million and adjusted EBITDA of $266 million in the quarter. translating to a strong 50% EBITDA margin. This was fueled by higher metal prices and improved operational execution. For the full year 2025, the segment generated approximately $1.6 billion in net revenues and $658 million in adjusted EBITDA. a 42% margin that clearly demonstrates the earnings resilience of our mining portfolio. With that, let's move to slide number 5 for a closer look at Aripuana's operational progress. In the fourth quarter, Aripuana achieved its highest production level to date, a direct result of enhanced operational reliability, reduced plant downtime and lower workforce turnover. The first tailings filter arrived on site in early November, and its installation is progressing as planned. We achieved key structural and mechanical milestones during the quarter, keeping the project firmly on schedule. Commissioning remains on track for the first half of 2026, positioning us to reach full operational capacity in the second half of the year. This is a critical step towards unlocking the plant's full potential and securing long-term cash flow generation. On exploration, recent drilling has confirmed new mineralized extensions, reinforcing our confidence in the asset's geological upside and its potential for further life-of-mine extensions. Now, please turn to slide number 6 for an update on the Cerro de Pasco integration project. In parallel with our operational progress, we have advanced preparatory studies for Phase II, including technical assessments of the Picasso shaft and several underground integration alternatives. Our goal is to define the most efficient long-term configuration to maximize value from this highly prospective mineral district. Looking ahead to 2026, we will intensify Phase I construction and commissioning activities. with a strong focus on discipline and consistent execution. The Cerro El Pasco integration project remains a key strategic driver, supporting a potential life of mine extension of over 15 years, enhancing profitability, and solidifying Nexa's long-term presence in one of Peru's most important mining districts. Next, on slide number seven, I would like to highlight the continued progress of our exploration program. Our 2025 exploration plan delivers solid results across our key assets, reaffirming their geological potential. In slide number seven, you can see deep intersections with high metal grates across all mines. At Cerro Lindo, activities focus on expanding known ore bodies in the southeast region. Drilling confirmed the continuity of mineralized zones, particularly in ore body 8C, which supports the mine's long-term production profile. At Aripuana, exploration concentrated on the Masaranduba target, where drilling confirmed new mineralized areas, including thick, high-grade intersections in a recently identified structure. At Basante, brownfield exploration advanced near existing infrastructure, confirming extensions of known zones and enhancing operational flexibility within the current mine plan. Finally, at Pasco, exploration continued delivering positive results around the integration target, which remains a strategic upside for the Cerro Pasco integration project. Together these results reinforce our resource and research inventory paving the way for further life of mine extensions. Now let's turn to slide number 8 to review our smelting performance in more detail. Turning to the smelting segment. Sales were 142,000 tons for the quarter and 567,000 tons for the full year. in line with our 2025 guidance. The sequential decline was primarily driven by lower production at our Brazilian smelters and softer demand for zinc oxide. From a cost perspective, the quarterly cash cost was $1.41 per pound. This reflects the impact of higher zinc prices and lower treatment charges. which impact margins in an environment of tight concentrate supply. For the full year, cash cost was $1.28 per pound, in line with our guidance. Conversion cost was $0.34 per pound in the quarter, slightly lower sequentially. On a year-over-year basis, the increase is attributable to higher operational costs and unfavorable foreign exchange variations at our Brazilian units. For the full year, conversion costs remained below our annual guidance, demonstrating disciplined cost control despite a challenging environment. From a financial standpoint, the segment generated net revenues of $573 million and adjusted EBITDA of $34 million in the quarter. reflecting the challenging market environment and operational constraints. For the full year 2025, net revenues total approximately 2 billion, with adjusted EBITDA of 113 million, corresponding to an EBITDA margin of 6%. Looking forward, increasing global mine supply is expected to lift treatment charges supporting a gradual rebound in margins. With that, I will now hand the call over to our CFO, Jose Carlos del Valle, for a detailed review of our financial results.

Jose, please go ahead. Thank you, Ignacio, and good morning, everyone. Let's turn to slide number nine for an overview of our financial performance. We closed the year with strong momentum in the fourth quarter, driven by improved operational execution and supportive pricing environment. Starting with the upper left chart in the fourth quarter of 2025, net revenues reached $903 million, up 18% sequentially and 22% year-over-year. This growth was fueled by higher average metal prices, stronger contribution from by-products, and improved mining performance. For the full year, net revenues totaled $3 billion, a 9% increase compared to 2024. Moving to adjusted EBITDA, we reported $300 million in the quarter, a significant improvement, both quarter-over-quarter and year-over-year, translating to a 33% EBITDA margin. This reflects stronger price realization combined with improved operating leverage from increased volumes. For the full year, adjusted EBITDA reached $772 million, up 8% versus 2024, with a margin of 26%. This demonstrates the resilience of our integrated mining and smelting portfolio across varying market conditions. Overall, the year reflects disciplined execution, pricing support, and effective cost management across our sectors. Now let's turn to slide number 10 for a closer look at our investments. For the full year 2025, total CAPEX reached $352 million. The majority was directed towards sustaining activities, including mine development, maintenance, and tailing storage facilities, all fully aligned with our operational priorities and commitment to us in integrity. CAPEX execution came in slightly above our $347 million guidance, primarily due to the appreciation of the Brazilian Real against the U.S. dollar, which had an approximate impact of $7 million during the year. In the fourth quarter, CAPEX totaled $125 million, in line with our plan. Regarding the Cerro Pasco integration project, Phase 1 investments reached $12 million in the quarter and $42 million for the full year. This was slightly below the initial plan of $44 million, reflecting discipline project execution and cost control. Moving to the lower section of the slide, exploration and project evaluation investments totaled $78 million for the year, below the initial plan of $88 million. This performance is consistent with our capital allocation framework, which aims to maintain our focus on mine life extension and portfolio optimization. With that, let's turn to slide number 11 to review our cash flow generation. Starting from the $772 million of adjusted EBITDA and after adjusting non-operational items, we can see that during 2025 we generated $846 million in operating cash flow before working capital and other variations. From this amount, we invested $354 million in capex across our operations and paid $254 million in interest and taxes, reflecting both our investment cycle and our capital structure. Working capital and other cash flow variations had a negative impact of $212 million. Operational working capital remained essentially flat, with a movement largely explained by other cash items, including some one-offs. We continue to advance initiatives to enhance our cash conversion cycle and further strengthen liquidity. Foreign exchange variations contributed positively by $30 million, mainly due to the appreciation of the Brazilian real. As a result, cash flow before loans, debt payments, and dividends totaled $39 million. On the financing side, we can see a net debt reduction of $96 million, reflecting our liability management efforts and consistency in our debt reduction strategy. Additionally, during the year, we successfully issued a 12-year bond in April and completed the full redemption and partial tender offer of two earlier maturity bonds. Towards the end of the year, we also executed early repayment of some debt facilities along with our regular lease liability payments. These actions were essential to further strengthen our maturity profile and advance our overall debt reduction strategy. Furthermore, we also distributed $48 million in dividends, including share premium reimbursement and payments to non-controlling interests. After these movements, free cash flow for the full year was negative $105 million. Importantly, this outcome reflects deliberate capital allocation decisions, including debt reduction and shareholder distributions, while maintaining strong operating cash generation. With that, let's move to slide number 12. As you can see, our liquidity position remains robust, supporting a solid balance sheet and an extended debt maturity profile. We close a quarter with total liquidity of $842 million, including our undrawn $320 million sustainability-linked revolving crave facility. Our average debt maturity increased to 7.6 years compared to 5.6 years at the end of 2024, with an average cost of debt of 6.49%. This improvement reflects our proactive liability management actions during the year. Importantly, our available liquidity, excluding the RCF, covers all financial commitments over the next five years. Finally, net leverage improved to 1.7 times, down from 2.2 times in the previous quarter, supported by higher last 12-month EBITDA and a reduction in net debt. We continue to optimize our capital structure through funding diversification and disciplined liquidity management. Maintaining a maturity profile that is aligned with the live mine prospects of our assets remains a priority, while preserving our investment rate rating and a competitive cost of capital. Looking ahead, we remain committed to further deleveraging and reducing gross debt over time with a target of lowering interest expenses and enhancing financial flexibility. With that, I will now hand the call back to Rodrigo to discuss market fundamentals.

Thank you, José Carlos. Turn now to the zinc and copper markets on slide number 13. As you can see, zinc prices remain well supported throughout 2025. This strength was largely driven by persistent concentrate tightness and substantially low LME inventories. Treatment charges, particularly in China, averaged negative levels during the year, a clear reflection of raw material scarcity. Imported TCs ended the year around $60 per ton, still well below mid-cycle conditions. Structurally, the zinc market continues to reflect limited near-term mining supply growth relative to smelting capacity. This imbalance has supported prices, even against the backdrop of macro and trade-related volatility. Looking ahead to 2026, we expect a gradual improvement of mining supply, which should support a modest recovery in treatment charges from the historically low levels seen in 2025. However, this recovery is likely to be regionally distinguished. In China, smelters are expected to calibrate capacity utilization based on domestic concentrate availability, NCCs for imported concentrate. While outside China, high energy costs and sub-historical TCs may continue to constrain margin expansion in the near term. Overall, zinc prices should remain supported, at least in the first half of 2026, by tight inventories, resilient demand, and a softer U.S. dollar environment. Against this backdrop, NEXA integrated mine-to-smelter platform remains a key differentiator, It allows us to repartially mitigate concentrated market volatility and preserve margin resilience across cycles. Third, now to copper. Price is appreciated in 2025 on the back of supply discipline and sustained demand driven mailing by electrification. While trade policy volatility added uncertainty during the year, the underlying structural fundamentals remain constructive. Incremental supply additions are unlikely to fully rebalance the market in the near term, meaning medium-term supply constraints remain a key theme supporting copper price. Now let's turn to slide number 14 for a look at precious metals. Moving now to silver and gold. Silver was one of the best performing metals in the fourth quarter of 2025. The rally was supported by strong investment flows, monetary policy expectations, and sustained industrial demand, especially from solar energy, electrification, and AI-related infrastructure. Silver's dual role as both a monetary asset and an industrial input continues to support its demand profile. Importantly for NEXA, we produce around 11 million ounces of silver annually, which provides meaningful precious metals exposure within our base metals portfolio. And beginning in the second quarter of 2026, this is a key point. Our silver streaming agreement steps down from 65% to 25%. This materially increases our realized exposure to silver prices and enhances EBITDA leverage going forward. It is a relevant structural catalyst for our earnings profile. Turning to gold, prices traded near record levels in the fourth quarter, supported by central bank buying, ETF inflows, a softer U.S. dollar environment, and elevated geopolitical uncertainty. Gold continues to provide portfolio diversification and countercyclical support. Looking ahead, U.S. monetary policy and geopolitical developments remain key drivers for precious metals' price. Now, on slide 15, I will comment on the development of our EST agenda. Let me briefly turn to EST. In 2025, we continued to advance our ESG strategy as an integral component of our business management. On climate and decarbonization, we consolidated renewable energy supply across our operations and continued implementing operational efficiency initiatives aimed at managing emissions intensity. We also advanced circular economy initiatives, reinforcing our focus on waste reduction and resource efficiency across our units. From a governance standpoint, we maintained our CTP rating at B for both climate change and water security, and further reinforced the integration of our ESG criteria into our enterprise risk management framework. Community engagement also remained a focus, with continuing investments in local infrastructure and structural development programs both in Brazil and Peru. Our participation at COP30 reinforced our long-term commitment to climate action and responsible mining. Now, I would like to address an important governance development. Over recent months, we conducted a structured review of our public ESG targets. The objective was to enhance methodological consistency, improve transparency, and ensure alignment with operational realities and updated baselines. As a result of this process, we are proposing recalibrated targets grounded in three pillars. First, technical robustness and including refined baselines and 30-party verifications. Second, strategic transparency with recognition of operational constraints and industry dynamics. And third, sustainability of commitments, ensuring that targets remain realistic, measurable, and aligned with long-term business performance. We will disclose the full methodology and detailed targets in our sustainability report and 2026 materials. Now, moving to our final slide, our focus and priorities. I will now hand it back to Ignacio for his comments. Ignacio, the floor is yours.

Thank you, Rodrigo. Now turning to slide number 16. Before we open the floor for Q&A, let me close by reinforcing our strategic drivers and priorities. Aripana continues to be a key near-term catalyst. The Ford filter is progressing on schedule, and will unlock full production capacity in 2026, positioning the asset to further strengthen cash generation. Supported by a long reserve life and resource base, Aripuana is a core contributor to our long-term value creation. At Cerro de Pasco, the integration project targets a relevant life of mine extension within a well-established mineral region. The project enhances asset integration, improves operational flexibility, and enhances the profitability profile of the entire complex. Exploration continues to deliver across our assets, paving the way to further life of mine extensions and reinforcing the quality of our asset portfolio. At the same time, we remain disciplined in our approach to growth, we continue to evaluate value accretive opportunities selectively. Operational and financial discipline remain central to our strategy. We are focused on generating sustainable cash flow to continue strengthening our balance sheet and to support a balanced capital allocation approach that includes the leveraging and shareholders' returns. Finally, ESG continues to evolve as a core pillar of how we manage the business at Nexa. In 2025, we enhance our governance framework, improve methodological consistency in our public targets, and reinforce the alignment between sustainability commitments and operational realities. Our goal is clear, increase transparency and ensure ESG execution strengthens the long-term sustainability of the business. As we look ahead, we enter 2026 with improved operational stability, disciplined capital allocation, and a well-defined set of priorities focused on business resilience and consistent shareholder returns. With that, let's open the floor for your questions.

Thank you. We will now begin the question and answer session. To ask a question, if you are joined via Zoom, please click the Raise Hand button. You may also submit your question using the Q&A icon at the bottom of the screen. Please include your name and company when typing your question. For participants joined by phone, press star followed by 9 to raise or lower your hand. Once announced, press star followed by 6 to mute or unmute your microphone. Our first question comes from Pedro Melo from City.

Hi, do you hear me? Hi, we can hear you. Okay, thank you. Thanks for taking my questions. My question relates to the seasonal rainy period at the Arepoana asset, this quarter. Could you provide some color on the evolution of the asset production through this year, given the seasonal of the first quarter and the inauguration of the fourth future affecting the second half of the year, please?

Yes, yes. It's a very good question. In January, we have a, to give you an idea based on some numbers, The bottleneck that we have with these three filters, tailings filters, takes the plant around to 140,000 to 145,000 tons per month, okay? We have been delivering production at this rate during the last six months. In the last three years, the rainy season that was very heavy caused a lot of pressure on the filters, and that's why we needed to slower this throughput because the filters were not performing at this capacity, okay? In the case of January, we had a rate of 140 again. And given that we are mining a high-grade zone, we produce a very high sink equivalent production. So we are in the same rate as the previous six months that were wet season. In February, went also very well. We needed to reduce the throughput a little bit because we want to make sure that we – past the rainy season in a very smooth way but we maintain that the the silver equivalent production and actually we increase it because also we were actually zones of higher grades this is going to be the case for march which is important so compared to previous years this plan shows that with this rainy season that we are facing this plant is starting to stabilize at these levels okay In April, we're going to implement the four filters that is going to be ramping up between April, May, and June. And with that and the capacity of these filters, we should be able to reach full capacity in the second half of this year. So we see that the rainy season is no longer a bottleneck, and we're confident that And finally, it's going to be at full capacity.

Thank you. So clear.

The next question came in by phone. Please state your name and company before asking your question.

Oh, hi. This is Oris Walkenow with Scotiabank. Can you hear me?

Hi, Oris. We can hear you clearly.

Thank you. My question is around your silver. Obviously, there's been a ton of interest in the market with silver pricing really having moved up. We've seen some really extraordinary valuations out there for silver streams. I'm just curious. I know you have an existing stream, but I'm curious if you're at all contemplating doing additional silver streaming that could potentially bring you significant cash to just fully de-lever the balance sheet fairly quickly.

Thank you for the question. You're right. We are an important producer of silver, produce around 11 million ounces. So this certainly has a strong contribution in our results and in our valuation as well. As you mentioned, we do have a prevailing civil streaming agreement in Cerro Lindo that actually has a step down in probably in May of this year when we reach a milestone of 90 million ounces. So that in itself is going to bring some additional benefit to our annual results. To your specific question whether we are considering this, I mean, no. We're always looking for the best options to have a strong balance sheet and to maximize the balance of having you know, strong financials, the investment rating and the needed cash. But we are confident with the structure that we have today. We view positively the recent trend in prices, not just of silver. So we're confident that with that, we will be able to generate a strong cash flow and continue with our commitment of reducing debt in the coming years.

Okay, so it's not something that's a high priority right now?

No, it's not.

Okay, thank you.

Once again, if you would like to ask a question, please click on Raise Hand at the bottom of your screen. The next question comes from Camilo Huacha from CalPAP.

Hello, Rodrigo. Good morning. Thanks for taking my question. My name is Camilo Wolcha. I'm at CalPAS Securities Peru. And my question is related to the one before. And it is, how should we think about the cash flow impact of the Cerro Lindo silver stream in 2026 and 2027, if applicable, considering that deliveries are priced at a fixed percentage of a spot?

Yes. Hi, Camilo. Thank you for the question. Yeah, as I mentioned, we've had this silver streaming agreement for a while, and there's a step down that is reached when we deliver 19 million ounces. So this is going to happen in the next few months. And we – and these percentages that are committed to the silver streaming agreement will go down from 65 percent of the Cerro Lindo silver production to 25 percent of the Cerro Lindo silver production. So there is 40% that in the past had to be delivered to the streamer and now will stay within Nexa. So you can do the math, you know, at the current prices, what the impact of that would be.

Thank you very much.

Now I would like to turn the call over to Mr. Rodrigo for the writing question. Please go ahead.

Thank you, operator. We have one first question here from the audience. The question is, recently there has been some news related to strong rains in Peru. So, can you comment if there has been any incident in any of our operations or logistics?

Yes, yes. Peru is facing again the El Niño phenomenon. And we are not facing any impact on production and on logistics now. We have been working through the years in this. We have some events in Cerro Lindo of summer heavy rain. Nothing happened, and we are managing that, and production hasn't been impacted. And in the case of Pascua as well. So we are well prepared today for those events. We don't know what will happen in the future, of course, but so far we haven't been impacted by that.

Thank you, Inasur. The first question was from Orlando Barriga from Credit Corp Capital. So, we have a second question here is, can you provide color on phase two of the Cerro de Pasco integration project? and especially in regards to the start-up date and when we expect to have access to high-grade reserves at Atacocha?

Yeah, this is a very good question, and this is a very good problem to have, I would say. We don't have a specific date because we are already starting on planning this second phase because we have been drilling heavily in the intersection of the two mines. And because of that, we have been funding a lot of resources with very high rate. And because of that, we decided to postpone this phase two. Having said that, we will still drill this intersection. And I would say in one or two years, we will have an inventory of reserves that is more important for us. And with that, we will build a mine plant. So, we don't have a specific date to access high grades at Atacocha. There are good grades, but probably the intersection have higher grades. The NSR is higher. So we will know eventually when we will have the mine plan. So we will keep the market informed. But for the time being, it's a very good problem to have. And specifically, we don't have a date. And we will have some color in the next one or two years.

Thank you, Inácio. We have another question from the audience. Is there an ambition of the management to use the instrument, I believe it is the one that José Carlos mentioned, to lock in the benefits of currency high silver prices?

Yes, hi. As I mentioned, we're not considering silver streaming as an option today. It's not a priority. We always listen to proposals. Obviously, there's a lot of interest in silver. It's currently not a priority.

Thank you, José Carlos. We have another question that comes from Omar Abreaneda from Vintage Compass. Can you provide an update on Magistral project and TINCA resources investment?

Yes. Well, Magistral, we said before, is a very good project, and we are always assessing what we are going to do with this project. The environmental impact study was disapproved, and we are now at the stage that we have to sit with the government to see how we perceive this important project going forward. So for the time being, we don't have any specific action for that, especially only sitting with them and see how can we envision this in the coming years. In the case of TINCA, there was a follow-up on equity that we decided not to go through because we believe that it's a very important asset, but we have other priorities, so we got diluted, okay? I guess there is another question around the elections.

Yeah. Let me read the question again. So, and there's a sequential question from Omar, which is, can you comment on the current electoral environment in Peru and the company thoughts on this matter?

Yeah. Well, it's a shame that we have another president that is going to stay for the next three months in Peru, and the last one lasted only four months. And there is a lot of political noise around this, and it's very difficult to digest, especially for people outside Peru. Having said that, I would say that the economic context of the country is very strong. And the economic development of the country, in a sense, does not follow these political problems that we face. Regarding the new president that will come, it's very difficult to say. We have to wait until the first round that is happening in April. But in any case, in all of these years, Peru has been a stable country from an economic point of view. with a stable exchange rate growing and the political environment does not impact most of the economic development of the country in that in the mining sector specifically we our surroundings our stakeholders especially communities we have very good relationships with them in most cases and they also don't follow these political problems that we are facing. Actually, the relationship that we have with them and the way we treat that relationship from an economic point of view is the thing that matters, okay? So that's why this new president won't influence in the next three to four months in the way we, our relation with communities. So we'll see what happens in April and we can back to that question later on, okay?

Thank you, Inas. We got another question. So from Orlando, from Credit Corp Capital. So you amortized around $120 million in gross debt during the 4Q. How much are you planning on paying down in 2026 and 2027?

Thanks for the question, Orlando. Yes, as we have been mentioning in our last calls, debt repayment is a priority. So in the absence of any major changes, the idea is that any excess cash that we generate, you know, we will use to pay dividends according to our dividend policy, and the rest will go to pay down debt. So that's the plan.

Thank you, José. We got another question. So, this is more specific in regards to the hedge of silver and gold. So, could you provide details on the floor and upper limit of the hedging program for silver and gold?

Yes, thank you for the question. That's true. We did a small portion. We hedged a small portion of our silver production. a also taking into consideration that we have the silver streaming agreement so it was a small portion of our silver production mainly mainly in peru the floor is around 52 dollars and the cap is around 84 dollars thank you jose uh we have a another question here from the audience comes from pedro melo from citibank

So, the question is more related to the medium-term strategy for the company. So, if the company manages to implement the fourth filter for Alipona, execute a turnaround by reducing leverage and gross debt, with the extension of mine life being constant, I mean, the replenishment of the mine life, such as the Cerro de Pasco complex project. So, what should be the company's next step for long-term investments?

Yeah, very good question. As Jose Carlos mentioned, the idea is that with these price levels and the stability on operations that we are showing now, especially with Aripuana, we generate a significant cash flow this year, and we try to start reducing in a significant way our debt. This debt was accumulated because of the Aripuana project. Based on that and the other fronts going forward, Alipana stabilizing and growing, Cerro Pasco stabilizing and growing, and Cerro Lindo being stable and bastante as well, and the smelters recovering part of the profitability with a market that is changing. Next up with the current assets is in a solid position exposed to very good prices and bringing down debts. With that, I would say that the next step is that we are very active looking for opportunities in the market, especially in copper. We have a list of alternatives that we have assessed and are very close to. And I would say that if that happens through this year, we will be more active looking for these opportunities because the balance sheet that we will have is going to be more flexible to try to achieve those. So it's very simple, a solid company exposed to prices and trying to look for the opportunity in copper.

Thank you, Inácio. So I will hand it back to the operator. So I believe we have a couple of questions through the phone.

Thank you. The next question comes from Henrique Braga from Morgan Stanley.

Hello, Tim. Thanks for taking my question. I just wanted to follow up on Seto Pasco. If you could give additional details on your capex disbursement that you have envisioned for the project this year and the next. Thank you.

Hi, Henrique. This is Rodrigo. I can take this question. So, we are on track with execution of the phase one. The capex that we spent last year was pretty much in line with the expectation for the year, around $42 million. So we believe that the CAPEX for this year should be the same amount because the idea is to complete the phase one this year. And this will pave the way for phase two, just like Inácio mentioned. So execution is on track and CAPEX so far is on budget.

This concludes our question and answer session. I would now like to hand the call over to Mr. Inácio Rosado for his closing remarks. Mr. Rosado, please go ahead.

Thank you very much. Before we conclude, I would like to briefly address the recent intense rainfall in Gris de Fora, here in Brazil. We recognize the impact these weather conditions have had on the municipality and express our solidarity with the local community. We reaffirm that our dam structures continue to be closely monitored and remain safe with no change in their stability barriers. Safety remains at our top priority and we reaffirm our ongoing commitment to the integrity of our operations, our employees, and the communities that we operate. In this case specifically, we are providing full support to employees who have been affected by the situation and the community in general. Regarding our first quarter, we are looking forward to have a strong quarter from an operational point of view. Hopefully, we close the quarter, we expose again with these prices. And we look forward to speaking with you again during next class. Have a great day and thank you very much again.

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