Nexa Resources S.A.

Good morning, everyone, and welcome to Nexa Resources' second quarter 2026 earnings call. Thank you for joining us. Today, we will walk through the results we published yesterday. If you would like to follow along, the presentation is available through the webcast. Before we begin, please take a moment to look at slider number two. It contains our forward-looking statements disclaimer, and we ask that you review it along with the related risk factors. Here with me today are Ignacio Rosado, our CEO, José Carlos del Valle, our CFO, and Leonardo Coelho, our Senior Vice President of Mining Operations. Ignacio, over to you.

Thank you Rodrigo and good morning everyone. Let me start on slide number three. The operational inflection we have been pursuing becomes visible this quarter. Adjusted EBITDA grew 78% year-over-year, $286 million, with a margin of about 31%. Net income was $98 million, or 52 cents per share. and Net Leverage continue coming down, closing the quarter at 1.4 times, a steep drop from where we were a year ago, supported by last 12 months adjusted EBITDA of over 1 billion. Three things drove the results. First, A constructive price environment across our entire metal mix, most notably silver, where prices averaged 117% above the second quarter of last year. The recovery of production at our Peruvian mines after the first quarter setbacks, as those assets returned to normal run rates. And third, better performance at our Brazilian smelters, including the contribution from byproducts, which partially offset the challenges at Cajamarquilla. Two milestones positioned us well for the second half of the year. Ataripuana, the fourth tailings filter, is now up and running. That removes a key, the bottom leg, and gives us more production flexibility going forward. and at Cerro Lindo we implemented the block caving mining method. It is an important milestone and over time we expect it to contribute to lower unit costs and better access to higher grade areas. In mining, zinc production reached 79,000 tons, up 8% year over year on better grades. In smelting, Zinc metal and oxide sales total 134,000 tons down 7% year over year and 8% quarter over quarter. impacted by the fire at Cajamarquilla in May. It is important to mention that the event affected the casting house, not upstream processing. So, we continued producing cathodes while we restored operations. Activities resumed gradually and returned to normal levels in June. That cathode inventory underpins the recovery of the affected volume in the second half. Free cash flow was slightly negative in the quarter, mainly reflecting a 131 million tax settlement payment in Peru related to the Rolindo stability agreement. Looking ahead, we expect positive cash flow in the coming quarters supported by improved production at Aripuana, the recovery of production at Cajamarquilla, and a resilient pricing environment. Let's move to slide number four for a closer look at the mining. Year over year, the 8% increase in zinc production comes from better ore grades across key assets. Sequentially, production was broadly flat. The recovery in Peru offset temporary lower grades at Aripuana. the commissioning of the fourth tailings filter and the scheduled ball mill liner replacement. Cash cost net of byproducts came in at 4 cents per pound in the quarter. For the first half, that puts us at negative 35 cents per pound, well below our 2026 guidance range. The drivers were strong byproduct credits from higher copper Silver and Gold prices and lower treatment charges Cost per tonne of run of mine was $57 per tonne in the quarter and $57 per tonne for the first half in line with full year guidance The year-over-year increase came from the appreciation of the Brazilian real against the US dollar and from higher personal and maintenance costs at most of our units, partially offset by a stronger by-product contribution. The financial picture for the segment is strong, net revenues of $524 million and adjusted EBITDA of $220 million, a 42% EBITDA margin. That is the kind of operating leverage we expect when prices and volumes both move in the right direction. Let me turn to Aripuana on slide number 5. ARIPONA delivered strong year-over-year performance. Treated ore was up 33% to 399,000 tons and sink production up 44% at 8.8 thousand tons. That reflects higher throughput and better grades as the operation keeps moving towards design capacity. Sequentially, the decline was expected. It reflects the commissioning of the fourth tailings filter during the quarter, together with the scheduled ball mill liner replacement. And we are already beginning to see the benefit of the new liner material. The filter itself was the milestone of the quarter. The new capacity processed more than 50,000 tons of tailings and supported average plant feed rates of 249 tons per hour in June. That is more than 86% capacity utilization. For the quarter as a whole, plant utilization averaged 71% with peak daily rates above 92%. What that tells us is that the operation can now sustain higher throughput with more flexibility and importantly with materially less exposure to weather disruptions during the rain season. As the new filter stabilizes, we expect utilization rates and production to increase further in the second half of the year. On exploration, we did not conduct exploration drilling at Aripona in the first half. But we completed over 23,000 meters of infield drilling. For the second half, the priority is the geophysical program, generating and refining targets, expanding known mineralization, and identifying new opportunities to support future mineral resource growth. Now to slide number six for the Cerro de Pasco integration project. This quarter, alongside To continue progress on Phase 1, we completed a review of the project's long-term configuration. With a more favorable metal price environment, we reassessed some operating parameters at the Atacocha open pit mine, including a review of economically mineable areas. Based on these results, we now expect the open pit to remain in operation for longer than originally anticipated. And because the open pit will sustain production longer, we are able to defer Phase 2, spreading capital over a longer period without reducing the complex's expected production. On CAPEX, total estimated investment moves from $138 million to $180 million concentrated in Phase 1. The CAPEX review was primarily driven by the incorporation of Geomembrane lining in the Atacocha tailings. Together with engineering updates and the decision to anticipate the Atacocha tailings storage facility raised into the current project phase. Our 2026 CAPEX for the project remains unchanged, at $31 million, with the incremental investment allocated to 2027 and beyond, and Phase II is deferred to 2032. On execution, this quarter we completed the main civil works, started electromechanical assembly, including the tailings thickener, and concluded the structural assembly of the pumping building. Looking ahead, the third quarter focuses on completing assembly and starting commissioning. Mechanical completion of the pumping system is expected in December. From there, we expect approval of the MEAS by SENACE and the start of the operating authorization process in the first quarter of 2027. Cerro de Pasco is a well-known high-potential polymetallic district. This review further de-risks the project and strengthens our integrated position there, sequencing the ore body to maximize value and minimize risk while preserving the long-term production of the complex. Now, on slide number seven, I will talk about our exploration results. Our first half exploration results reinforce the quality and depth of the portfolio. On slide number seven, you can see the high-grade intersections from our brownfield programs. The two highlights came from Basante and El Porvenir. At Basante, drilling at the Conexao Sucuri Norte target returns strong zinc mineralization close to existing infrastructure, which supports resource growth within the current mine plan. At El Porvenir, drilling at the integration target continued to confirm high-grade polymetallic mineralization and extended known zones. which reinforces the strategic upside of the Cerro Pasco integration project. At Cerro Lindo and at Ipuaná, our geological and target generation programs advance priority targets and open new opportunities for future drilling campaigns. Taken together, these results support the potential for future mineral resource growth and life of mine extensions across our assets. Let's turn to slide number 8 for smelting. In smelting, zinc metal and oxal cells were 134,000 tons, down 7% year over year and 8% quarter over quarter. Both declines mainly reflect the temporary suspension at Cajamarquilla after the fire in May. that was partially offset by higher volumes at both Brazilian smelters year over year and at Ruiz de Fora sequentially. We expect to recover the affected volume in the second half supported by the cathode inventory built during the quarter and our 2026 sales guidance remains unchanged. Byproducts continue to gain weight in the segment year over year Sulfuric acid sales rose 4%, silver content sales 22%, and copper cement sales were up 40%. On costs, cash cost net of byproducts was $1.44 per pound in the quarter, $1.42 per pound in the first half, above the upper end of our annual guidance. that reflects higher zinc LME prices impacting raw material costs, together with temporary higher operating costs at Cajamarquilla due to the fire, and the appreciation of the Brazilian Real. Conversion cost was 36 cents per pound in the quarter and 35 cents per pound in the first half, slightly above guidance, mainly on lower volumes at Cajamarquilla. At volumes recovered through the second half, we expect conversion costs to move back towards the guidance range. Despite the lower volumes, the segment delivered a strong financial performance. Net revenues of $584 million and adjusted EBITDA of $66 million, up 162% year-over-year and 11% margin. The year-over-year improvement came from lower raw material costs driven by the consumption of calcined inventory with lower unit costs and a higher share of zinc concentrate from our own mines, together with a stronger by-products contribution. With that, I will hand over to José Carlos, our CFO, for the financial slide.

Thank you, Ignacio, and good morning, everyone. Let's go to slide number nine for an overview of the financials. The momentum we achieved in the fourth quarter of last year carried through into the second quarter of 2026, supported by a favorable price environment and by the normalization of our Peruvian mining operations, despite a softer quarter in smelting. Net revenues totaled $908 million, up 28% year-over-year and 2% quarter-over-quarter. The year-over-year increase came from higher metal prices across the portfolio, including a $99 million larger by-product contribution, together with higher sink prices. This was partially offset by lower smelting sales volume. The sequential improvement was more modest, reflecting continued strength in metal prices and higher mining volumes, again, partially offset by lower smelting sales volume. Adjusted EBITDA came in at $286 million, up 78% year-over-year, with a margin of 31.5%. The year-over-year improvement reflects price realization, which translates into a stronger by-product contribution along with higher volumes in mining. Sequentially, adjusted EBITDA was broadly stable. The positives were lower raw material costs in smelting, lower maintenance expenses in Peru, and a higher share of zinc concentrate sourced from our own mines. Those were partially offset by lower byproduct contribution, mainly on lower silver prices, and by lower smelting sales volume. Let's move to investments on slide number 10. We invested $89 million in CAPEX during the quarter. bringing the first half total to 160 million, about 42% of our full year guidance. Most of it went into sustaining activities, mine development and tailing storage facilities. Phase one of the Cerro El Pasco integration project accounted for $9 million in the quarter and $17 million in the first half versus our $31 million guidance for the full year. Our total 2026 CAPEX guidance of $381 million remains unchanged, with disbursements weighted toward the second half as execution intensifies, mainly on Cerro de Pasco Phase 1. On exploration and project evaluation, we invested $17 million in the quarter, mainly in exploration, drilling, and mine development. The first half investment represents about 38% of the full year guidance, which is broadly in line with our typical first half pace. We expect disbursements to wait toward the second half as drilling programs advance at Basante, Aripuana, and the Cerro de Pasco complex. Our full year guidance of $86 million remains unchanged. Let's now turn to slide number 11 to discuss cash flow generation for the quarter. Starting from adjusted EBITDA of $286 million and adjusting for non-operational items, operating cash flow before working capital on CAPEX was strong at $286 million. From there, $92 million went to CAPEX and $93 million to interest and taxes. Foreign exchange had a negative impact of $3 million. On the financing side, regular debt service and lease payments resulted in a net outflow of $22 million. Dividends were a net negative of $4 million, reflecting dividends paid to non-controlling interests, partially offset by dividends received by our subsidiary, Polarix, from Enercan. Working capital and other variations were negative at $82 million in the quarter. This was mainly driven by the $131 million payment made in June related to a tax settlement in Peru associated with the Cerro Lindo Stability Agreement controversy with SUNAT following the final ruling issued by the Peruvian Tax Authority in May. Let me be clear on what this payment represents. Following a reassessment of uncertain tax positions, we made the required payment to preserve our legal right to continue disputing the assessments in the Peruvian judicial system. By doing so, we also secure reductions in penalties and interest available under the Peruvian tax law. This payment does not represent in any way acceptance of the positions asserted by the tax authority. Furthermore, we continue to believe our technical and legal positions provide strong basis for recovering the disputed amounts in the next few years. Excluding that payment, free cash flow for the quarter would have been positive $120 million. Including this one-off payment to SUNAT, free cash flow closed slightly negative at $10 million. On the remaining working capital items, the second quarter showed a meaningful recovery from the seasonal outflow recorded in the first quarter. We expect further improvement in the quarters ahead. Let's move to slide number 12 to talk about liquidity, indebtedness, and credit rating. Our liquidity position remains healthy. We ended the quarter with $707 million in total liquidity, including our undrawn $320 million sustainability link revolving credit facility. As you can see, our cash on hand alone covers substantially all of our financial commitments over the next three years. Additionally, average debt maturity stood at seven years at quarter end, with an average cost of debt of 6.22%, a slight improvement from the 6.27% at the end of the first quarter. Net leverage continued trending down at 1.4 times, from 1.59 times in the prior quarter and 2.28 times a year ago. This improvement was driven primarily by stronger adjusted EBITDA for the last 12 months, now above $1 billion. Looking ahead, We will maintain our commitment to discipline the leveraging, gross debt reduction, and lower interest expense over time. For year-end, we are targeting net leverage close to one time while preserving our investment grade rating and a competitive cost of capital. With that, I'll hand it back to Rodrigo to discuss the market fundamentals section.

Thank you, José Carlos. Let me turn to the zinc and copper markets on slide number 13. Zinc prices stayed well supported through the quarter on tight fundamentals and persistent geopolitical risk, with the LME price averaging $3,466 per ton, 31% above the second quarter of last year. Smelter margins, on the other hand, remain compressed. Spot treatment charges in China fell further into negative territory, ending the quarter at minus $109 per ton. That is a clear sign of how acute the concentrate shortage still is. Byproducts are what cushion that pressure, especially sulfuric acid, and that is where we are well positioned as an ad producer. Looking ahead, we expect zinc to stay supported by tight concentrate supply, low exchange inventories, and resilient demand. DC pressure on global smelter margins is likely to persist, and continued geopolitical uncertainty could push energy prices up, which can further constrain smelter utilization and tighten refined supply. On copper, the LME price averaged $13,329 per ton in the quarter, 40% above a year ago, supported by tight fundamentals and by expectations around US import tariffs. Spot treatment and refining charges remained structurally negative, reflecting a persistent concentrate deficit. We did see some short-term volatility linked to trade policy and inventory dynamics. But a structural picture remains constructive over the medium and long term, supported by electrification, the energy transition and decarbonization. Now, let's turn to slide number 14 for a look at precious metals. In the second quarter, silver peaked at nearly $87 per ounce in May, then retracted, closing June around $59 per ounce. Despite that volatility, prices averaged $73 per ounce in the quarter, more than double the level of a year ago. Forecast now points to a more balanced silver market, supported by higher mine supply and by accelerated substitution and cost-sensitive applications. And weaker expectations for further Federal Reserve rate cuts, amid persistent inflation and geopolitical instability, added volatility during the quarter. Nexa remains a significant player in the global silver market, with annual production of around 11 million ounces. And with the Cerlindo streaming stepped down in effect since May, that exposure matters more. A larger share of production is now realized at spot prices, which supports stronger cash generation. On gold, the rally moderated during the quarter, with prices averaging around $4,500 per ounce, 37% above a year ago. Gold stayed supported by Middle East tensions and persistent US inflation, while expectations that the Federal Reserve easing cycle had run its course took some momentum out. Looking forward, both metals should continue to provide diversification to our polymetallic portfolio, and their by-product credits continue to reduce unit cash costs across our operations. Now on slide 15. We continue advancing our ESG priorities during the quarter. On safety and community, we strengthened controls and reduced personal exposure, with remote operated blasting and the startup of block caving at Cerro Lindo. We also continued investing in the communities around our operations, in both Brazil and Peru. On innovation and circular economy, we moved several projects toward commercialization, turning waste into value, and began deploying artificial intelligence in our operations at Vazante and Carmarquilla. And on governance, we reinforced risk management under our ERM framework. Thank you Rodrigo. Before we open for questions, let me close on slide 16.

With a quick recap of our priorities. First, Aripuana. With a fourth tailings filter now fully operational, we are positioned to unlock full production capacity in the second half of the year, supported by its long reserve life and significant resource potential. Aripuana remains one of the key pillars of our long-term cash flow generation study. Second, the Cerro de Pasco project. The scope review prioritizes lower-risk, low-cost open-pit extraction at Atacocha and sequences capital more efficiently, while preserving the production profile we expect. It is a well-known high-potential polymetallic district, and that project strengthens our integrated position there. Third, exploration. Our first half exploration program delivered encouraging results, with positive breeding results at El Porvenir and Basante, as well as continued success in extending Life of Mine across Cerro Pasco, Cerro Lindo and Basante. Our goal is not simply to replace depletion, it is to further grow our resources and reserve base. Fourth, growth. We continue to actively evaluate value generating opportunities in mining-friendly jurisdictions. Underpinning all of this is a consistent set of priorities, financial and operational discipline, a stronger balance sheet, balanced capital allocation that includes shareholder returns, and a consistent ESG strategy. and above all our commitment to the safety of our people and our communities. With the first quarter constraints in Peru behind us, the Aripuana filter up and running, Cajamarquilla back to normal levels and the Cerro Lindo silver streaming stepped down in effect, we entered the second half of the year with a strong momentum and a clear set of priorities. With that, let's open the line for 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 questions using the Q&A icon at the bottom of your 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. The first question comes from Pedro Melo with Citi.

Hi everyone, good morning. Thank you for taking my questions. My first question is regarding the production guidance for other metals, especially copper, silver and lead. We saw that production the first half of the year reached about Midpoint of the guidance for the year for zinc and bottom for the other metals. So based on the grades that you have for the next two quarters and dynamics for each asset, does it make sense to imagine a midpoint for the year or higher in the second half? Or do you see the quarterly pace to keep reaching a level between bottom to the mid of the range? The second one is regarding the liability management. We saw another deleverage in the quarter. What's the timeline you foresee for the gross debit payments now that the leverage is lower? And how should we view this payment pace in the coming quarters? Thank you.

Hi, Pedro. Can you hear me well? Yes, I hear you fine. Okay, this is Rodrigo here. Thanks for your question. I will address the first question regarding the guidance, and then I will pass over to you, José Carlos, to talk about the liability. In terms of the guidance, you're right. So, if we look at the first half of the year, it was mainly driven by the, in terms of the mining production, by the impacts of the setbacks that we saw, especially in El Povinier at the beginning of the year. We pretty much recover everything in the up of the year. And with the first filtering also up and running in Arepoana, we expect to increase production on the second half of this year. So that's why the production guidance for the mining segment remains unchanged. So it's hard to say if this is going to be midpoint or lower end. But we are confident that we're going to be able to keep increasing production in the second half and try to maximize production as much as we can. In terms of the smelting, we also had in the first half of the year the impact of the fire in Cajamarquilla. Important to mention that the fire was specifically in the casting house, so we were able to keep producing cathodes during the incident, and during the time we were recovering the operations, and now we are moving towards to recover the production we missed in the second half of this year. But again, maximizing production and keeping also the smelting guidance, production guidance unchanged. So I will pass to José Carlos to address the library question. Hi Pedro, good morning.

Thank you for the question. It is true that we are lowering our net leverage and this is, as Rodrigo, as we've mentioned during the presentation, this is mainly related to the higher EBITDA that we are recording for the last 12 months. And this trend is expected to continue, so we see that as something favorable. However, we continue to have as a first priority the goal of reducing gross debt. Because as you know, EBITDA can change depending on what prices are. So we cannot just rely on that. We want to continue to reduce gross debt in line with the priorities that we have communicated over the last couple of years. And we can assume that any excess cash that we generate, you know, we will use part of that to pay dividends within our dividend policy, but any excess cash additional to that will go to pay down debt. Difficult to tell exactly how long that will take. Because it will depend on a number of factors that we don't control, but you can be sure that that will continue to be our first priority.

Very clear. Thank you.

The next question comes from Lauso Winder with Bank of America.

Thank you very much, operator. Hello. Rodrigo and the entire team. Thank you for taking my question today. I just wanted to drill down a little bit on cost. There was a comment that you made in the release. I apologize for the background noise. There was a comment you made in the release about addressing Seltzer costs that were running ahead of guidance in the first half of the year. I mean, it's not surprising given the incident that occurred. Could you maybe speak to why you highlighted that in the text and whether you see the ability to recover from those higher costs in the second half of the year? And then I might have a follow up on that, too. Thank you.

So, just to clarify, you were talking about that our conversion cost was high in the first half of the year, and why we are projecting that it's going to go down? Is that really a question?

Yeah, that's exactly it. And then I'm just, yeah, yeah, no, that's fine. Thank you.

So, it's very important that you know that we keep a lot of control in our conversion costs in these methods. However, we had two important events that affected the costs. One is the Cajamarquilla event that we couldn't produce all the throughput or the metal we wanted to produce in June and July because of the fire. So this throughput affected the unit cost, and that's why the conversion cost went up. The second one is FX, especially affecting the smelters in Brazil. As you know, the FX always, all Brazil costs are in reais, and then when there is an impact on FX, the costs in dollars go up. This is a minor impact. So in the second half, given that all of our smelters are going to produce at full capacity and Cajamarquilla is going to recover all the metal, That we can because we have an inventory of cathodes and only is a matter of processing them. So that's why with the cost control initiatives that we have and the throughputs going up, I think you're on mute.

I apologize. Thank you. Yeah, that's very helpful. Can I also ask a follow up on that question, just respect the general inflation? Where is your cost inflation running this year, vis-a-vis your budget? And what was your budget? And then as you head into the planning season for 2027, where are you anticipating general inflation will come in for your budget next year versus 2026?

Sure. So inflation, as we said in the press release and we said in the presentation, inflation is coming from labor. Labor is, you know, almost 40% of our costs directly and indirectly with contractors. So the demand for labor in Peru and in Brazil is very high. And then when you replace or renew contracts, labor is a significant component and that is happening today. So inflation comes from that. The second one is that we are having higher maintenance costs. Because we are, in a sense, anticipating most of the maintenance that we need for our plants and our equipment to make sure that we can deliver on our production for next year. And this is also facing some higher costs, especially from contractors that, at the end of the day, are the ones that perform our maintenance. So these are the two. With that, and this has been the case and it's always like that, we try to find other initiatives by reducing people, by renegotiating some long-term contracts that are going to help us offset most of the impacts. of these inflationary pressures. We cannot tell you what will happen in 2027, but what I can tell you is that we are very committed to keep our unit costs flat. One comment that is important is that, especially in Brazil, FX is difficult because, as I was saying, the costs in Brazil are in reais. So you can have a lot of measures to mitigate the inflation in reais. But because of the effects, the effect or the impact is higher. So the mines in Brazil in dollar terms might face some incrementals. In the case of Peru, it's different because it's a different scenario. But in any case, we are committed on keeping the costs at the same levels for 2027. And I think we are making good progress towards that goal.

Thank you, that is extremely helpful. And then if I could just ask on M&A and your views, particularly in light of what's going on strategically with the Votor and team ownership position, in any way does that impact your views on M&A and your appetite to potentially pursue acquisitions? And I would note in the past, what you've told us in this venue is that with debt where it is, So, if I hear you correctly,

From a capital allocation, let's say, strategy, we are trying to still look for opportunities in the market. However, the priorities of capital allocation are extending the life of the mines today. We have been successful with Cerro Pasco, we are being successful with Cerro Lindo and Alipuana and Basante is coming as well. So capital allocation from growth perspectives is coming from extending the life of the mines. We are also active on looking for other alternatives of buying and we have said that in all of our calls. But as you know, we have a net debt of $1.4 billion dollars. Much of it was related to the Adipuana project that now is generating cash flow. So we are being conservative in assessing, even if we have a lot of opportunities to assess, we are being conservative in assessing or trying to look for acquisitions in the market. Having said that, the other part that is important for us is advancing our early stage projects. So Hilarion, that is a significant silver deposit, is something that with these prices looks attractive. There is Monica Lourdes that is copper that we are advancing. So we are putting money there as well. So that is more or less where we are. With respect to our balance sheet, I would say that with the current balance sheet that we have, it's difficult to go and look for an acquisition of a transformation project that we want. That is between 800 to a million dollars. We are aware of that. So today is not something that is doable. Going forward with these projections on our cash flow generation for the next three, four years, our delivery is going to go down significantly and that will match with our acquisition strategy. So, I guess that's more or less the context that we have today. Dawson, I don't know if that's clear for you.

That is very clear. Thank you very, very much.

Once again, if you'd like to ask a question, please click the raise hand button at the bottom of your screen. The next question comes from Henrique Braga with Morgan Stanley.

Hello everyone, thanks for taking my question. Just some additional color on Adipuana. Now that the far filter is installed and we will integrate the operations, I just want to get your sense on how you expect to run the asset. So what's your expected, meaning the run rate and what's your capacity, the utilization that you are forecasting for the rest of this year and 2017 onwards? Thank you.

Hi Henrique, thank you for the question. So after the implementation of the fourth filter, we saw a significant increase in the tons per hour. So we are now reaching 260 tons per hour, which is very close to the nameplate capacity. So the expectation that you'll have is that in the coming months, we adjust operational parameters and the team learn how to operate in a different level so that you can, you know,

Yeah, and one additional comment here that is important. By increasing this, by solving this bottleneck of the four filters, a process of adjusting the plant to the new throughput is taking two, three months. So you will see that this step up on full capacity will happen only in the next two or three months. However, we know what we are doing and we know that full capacity is coming. So I guess there is no significant bottleneck that will happen. that will prevent us to not achieving full capacity in the coming months. So that's ARIPONA and that's why we believe ARIPONA towards the end of the year and next year is going to produce a lot of significant more cash flow than what we produced this year and the years before.

We actually moving to address questions from the chat. So we have one first question here. Let me take it. So the question is, given that the first half zinc equivalent production was down and that Peru expect an impact from El Niño phenomenon this year, especially in the 4Q, how confident is the company of meeting the 2026 guidance?

Yeah, that's a very good question. The projections that we have on the Niño are that it's going to be a very significant or a strong Niño. And, you know, that is really heavy rains in many parts of the country. and that could impact the operations in terms of roads, in terms of blockages of roads that will affect our consumables and delivering our concentrates, etc. So, we have been facing these events for many years now and we are used to that. So, we are putting in place all these measures to make sure that we don't have business interruptions. Having said that, you never know because we not only depend on us, but depend on the infrastructure of the country, and we don't control that. Having said that, with the scenarios that we are running and the projections that we have, we really don't expect a lot of impact during this year from the Niño phenomenon. So, we will keep the market posted. We don't know when we'll start. We don't know how long it will last, but I think as a company we have been learning how to manage this and we are prepared to face the impacts and make sure that we mitigate or we have a low impact in our production and in our profitability. So that is more or less the context that we have today.

Once again, if you'd like to ask a question, please click the raise hand button at the bottom of your screen. This concludes our question and answer session. I would now like to hand the call over to Mr. Ignacio Rosado for his closing remarks. Mr. Rosado, please go ahead.

Okay, thank you. Thank you again for attending the call. Thank you again for your questions and for your interest in NEXA. As we said, we are well positioned to have a good second half of the year with ARIPANA running at full capacity, with Cerro Pasco recovering. All this production that we had lost in the first half with Cajamarquilla also going back to normal levels and with all the measures we are taking to achieve our budget and achieve our guidance, we are confident that we will have promising results in the second half. We look forward to speaking with you in the next closing quarter and we will keep you posted in any initiatives or anything that could happen in NEXA within this quarter and for the rest of the year. Thank you again and have a great week.

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