Nexa Resources S.A. Common Shares 2026 Q3 Earnings Call

Please go ahead. Good morning, everyone, and welcome to Nexa Resources Third Quarter 2026 Earnings Call.

Thank you for joining us. Today, we will walk through the results we released yesterday. The presentation is available through the webcast if you would like to follow along. Before we begin, please take a moment to look at slide number 2, which contains our forward-looking statements disclaimer. We encourage you to 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 3. The third quarter marked another step forward for Nexa. Adjusted EBITDA reached $301 million, our highest of the year, up 62% from a year ago and 5% from the second quarter, with a 32% margin. We generated $73 million in free cash flow, and net leverage decreased to 1.2 times, down from 1.4 times in June and 2.2 times a year ago. On the bottom line, we reported a net loss of $47 million, mainly due to a $124 million non-cash impairment of our Juiz de Fora and Três Marias System units in Brazil. It has no impact on cash, and José Carlos will provide you with more details in a few minutes. What drove the quarter? Three things.

First, higher zinc prices, and compared with last year, a much stronger byproduct contribution, especially from silver and copper. Second, our Peruvian operations continue to normalize, and Aripuanã stepped up with the fourth tailing filter operating as expected. Third, Cajamarquilla operated normally throughout the quarter after the May fire, and sales volumes recovered. In mining, zinc production reached 85,000 tons, up 7% from the second quarter, driven mainly by Aripuanã. In smelting, production jumped 28% to 159,000 tons, as Cajamarquilla processed most of the cathode inventory buildup after the fire. Sales grew 9% to 146,000 tons, slower than production, as part of the output was allocated to fourth quarter sales. Looking ahead, 3 factors support the fourth quarter. At Aripuanã, plant utilization averaged 84% for the quarter and reached 90% in September. We expect utilization to continue to improve in the next quarter.

In smelting, the metal inventory at Cajamarquilla positioned us to meet seasonally stronger demand in the fourth quarter. At Cerro de Pasco, the integration project is on track for mechanical completion in December. On guidance, we raised our 2026 CapEx to $420 million, mainly to advance mine development at Aripuanã, bring forward investments at Cerro de Pasco, and reflect the stronger Brazilian real. We also updated our cost guidance to reflect higher metal prices and a stronger real. Our production and sales guidance for the year remains unchanged. Now, let's move to slide number 4 for a closer look at mining. Zinc production rose 7% from the second quarter to 85,000 tons on higher throughput and grades. Aripuanã, Vazante, and El Porvenir drove the increase, with higher zinc production. Compared with last year, production was up 1%.

Our production guidance for all metals remains unchanged, and we expect the fourth quarter to be our stronger quarter of the year. For copper, given the lower grades at Cerro Lindo, we expect to finish at the lower end of the range. On costs, cash cost net of byproducts was negative $0.64 per pound, better than both the second quarter and last year. Versus the second quarter, which reflects mark-to-market adjustments on lead and copper concentrates, lower costs, and higher zinc sales at Aripuanã. The year-over-year change is mainly driven by a stronger byproduct contribution. We lowered our 2026 cash cost guidance, reflecting much higher byproduct prices. So far this year, we are negative at $0.45 per pound towards the lower end of the new range. Cost per ton of run-of-mine was $54, down 5% from the second quarter and up 7% from last year.

We adjusted the guidance mainly due to the stronger Brazilian real and higher costs at Aripuanã. For the first 9 months, we are at $55.07, near the top of the range, and we expect this to improve in the fourth quarter with higher volumes. Financially, mining had a stronger quarter. Net revenues were $454 million, and Adjusted EBITDA was $236 million, up 7% from the second quarter and 44% year-over-year. Margin reached 52%, up 10 points from the second quarter. Now, let's move to Aripuanã on slide number 5. Aripuanã had a very good quarter. Treated ore reached a record 471,000 tons, up 18% from the second quarter, and zinc production rose 48% to 13,000 tons, matching its best quarter, driven by higher throughput and better grades. The fourth filter is performing well. It handled 61% of all the tailings filter in the quarter.

Plant utilization averaged 84%, up from 71% in the second quarter, and reached 90% in September. For the fourth quarter, we expect higher utilization and improved recoveries. Zinc production should remain stable as higher throughput offset lower grades in the mine plan. We are also accelerating mine development at Aripuanã to open more mining fronts and support higher throughput in 2027. Now, to Cerro Pasco on slide number six. At Cerro Pasco, phase one construction is advancing as planned. During the quarter, we completed all civil works, the major equipment assembly, the access road, and the raise of the Atacocha Dam. Pre-commissioning and commissioning are already underway. We expect mechanical completion in December, followed by commissioning activities in the first quarter of 2027.

The operating authorization for the pumping system is expected in the second quarter, and we expect to start pumping in the early third quarter of 2027 as planned. On permitting, the environmental impact study modifications for El Porvenir and Atacocha are still under review by SENACE, and we now expect approvals in March and April 2027. On CapEx, we invested $15 million in the quarter and $31 million so far this year. We raised the project's 2026 budget to $41 million, up from $31 million, as we bring forward investments. Now, let's move to smelting on slide number seven. In smelting, production reached 159,000 tons, up 28% from the second quarter and 8% from last year, driven by the recovery at Cajamarquilla and the processing of the cathode inventory buildup after the fire. Sales were 146,000 tons, up 9% from the second quarter.

Compared with last year, sales were down 2%. The inventory we built up Cajamarquilla, together with seasonally stronger demand in the fourth quarter, supports our unchanged full-year sales guidance. Byproducts more important for sulfuric acid sales rose 18% from the second quarter to 178,000 tons, and silver and copper cement sales were both up 14%. On costs, cash cost net of byproducts was $1.65 per pound, up 15% from the second quarter, as higher zinc prices raised the cost of the concentrate we purchase. We raised the guidance range considering higher zinc prices and a strong real, partially offset by higher byproduct prices. For the nine months, we are at $1.50 per pound within the new range. Conversion cost was $0.36 per pound in the quarter and $0.35 per pound for the first nine months.

We adjusted the guidance mainly for currency and higher fixed costs. Higher volumes in the fourth quarter should dilute fixed costs and keep us within the new range. Financially, the segment generated net revenues of $696 million and Adjusted EBITDA of $65 million, which was broadly stable for the second quarter and nearly three times higher than a year ago. The year-over-year improvement was mainly driven by byproducts, higher zinc prices, and higher realized treatment charges. The EBITDA margin was 9%. With that, I will hand it over to José Carlos, our CFO, for the financials.