Zinc production of 333,000 tons in 2023 increased by 12% compared to 2022.

Consolidated net revenues totaled US$2,573 million in 2023, while consolidated adjusted EBITDA reached US$391 million, mainly driven by lower LME (“London Metal Exchange”) metal prices.

ESG: CDP (“Carbon Disclosure Project”) upgraded Nexa’s rating from C to B in 2023, reflecting an improvement in their governance, strategy, metrics, disclosure, and transparency.

Nexa Resources, one of the world’s leading zinc producers, increased its zinc production to 333,000 tons in 2023, up 12% from 2022, driven by higher treated ore and the advancement of operations at the new Aripuanã mine. Lead production rose by 14% to 65,000 tons. Copper and silver production remained stable at 33,000 tons and 10.3 million ounces, respectively. This performance contributed to achieving the production guidance for the mining segment in 2023, with all metals in the upper range of it.

In the smelting segment, zinc metal and oxide sales totaled 590,000 tons in 2023, down 3% from 2022. This performance was primarily explained by lower production volumes across our smelters, in addition to a slowdown in domestic demand in Brazil. However, despite these challenges, metal sales of 590kt in 2023 achieved the mid-range of our annual guidance.

In terms of financial performance, Nexa recorded consolidated net revenue of US$2,573 million in 2023, down 15% from the previous year, primarily explained by lower zinc prices and lower smelting sales volume. Adjusted EBITDA for the same period totaled US$391 million, down by 49% compared to 2022, mainly due to lower LME metal prices, the extension of the ramp-up period of Aripuanã and lower smelting sales volume. Adjusted net loss totaled US$41 million in 2023.

“In 2023, we continued to focus on increasing efficiency across our organization. We closed the year achieving operational guidance with strong financial and operational discipline despite a very challenging environment. We expect 2024 will likely be another challenging year for zinc price, due to a sluggish global economic growth, mainly driven by geopolitical instabilities and uncertainties about the easing of monetary policy by central banks in key economies. However, we will remain focused on our priorities, including completing the Aripuanã ramp-up, making meaningful progress in the Cerro Pasco integration project, maintaining discipline in capital allocation, and aiming for continued operational efficiency and positive cash flow generation.” stated Ignacio Rosado, CEO of Nexa.

Capital Expenditures (“CAPEX”)

In 2023, Nexa invested US$309 million in sustaining, HS&E and mine development. Of this amount, US$80 million are related to Aripuanã.

Growth Strategy and Asset Portfolio

In 4Q23, Nexa continued to advance the technical studies of the Pasco integration project. This project is expected to develop a robust organic growth option for the company. We expect to start and complete the project approval process in 2024.

Main ESG Highlights

In 2023, Nexa remained focused on ESG initiatives. CDP (“Carbon Disclosure Project”) concluded its evaluation cycle for the year 2023 and announced that our rating in the “Climate Change” questionnaire increased from C to B. This result reflects the efforts, disclosure, and transparency of Nexa related to governance, strategy, risk management, metrics, and targets. Other highlights of the year included:

Advancements in the waste dry disposal system at the Três Marias smelter, which consists of filtering the waste pulp for subsequent disposal through the dry stacking process, as waste disposal in this unit was going directly to its tailings deposit. The initiative achieved excellent results, filtering an average of 74% of the operation’s material throughout the year. In December 2023, filtration reached more than 90%. And from 2024 onwards, we expect filtration to reach between 95% and 100%, reflecting the company’s commitment to sustainable waste management practices.

Authorization to use biofuel to replace fossil fuels in all 47 furnaces in the zinc oxide operation in Três Marias. At the end of 2023, Nexa successfully expanded the use of biofuel to 12 furnaces. This initiative supports Nexa’s goal to reduce scope 1 CO2 emissions by 20% until 2030, contributing to a cleaner and greener future.

Brasil Mineral (a Brazilian magazine specializing in the mining sector) recognized Nexa as a leader in “Social Governance” and awarded “Company of the Year – Mining Sector 2023”. This recognition was partly in acknowledgement of Nexa’s training program nearly 2,000 people in the Aripuanã region (MT), supporting the participants in their reintegration into the job market.

Successful closing of a $320 million sustainability-linked revolving credit facility in October 2023. This action reflects Nexa’s unwavering commitment to reducing its carbon footprint. Such efforts are consistent with Nexa’s ESG ambitions, targeting net-zero greenhouse gas emissions by 2050.

In September 2023, Fitch Ratings affirmed its ‘BBB-‘ rating and ‘stable’ outlook, while in December 2023, S&P upgraded Nexa to investment grade level and in January 2024, Moody’s affirmed its ‘Ba2-‘ rating and changed the outlook from ‘stable’ to ‘negative’, reinforcing Nexa’s financial resilience and stability.

CAPEX investments are expected to reach US$ 311 million in 2024

In 2024, CAPEX guidance is US$311 million. Sustaining investments are expected to total US$261 million, with the mining segment representing US$200 million, including US$39 million allocated for Aripuanã, while the smelting segment would account for US$61 million.

In the mining segment, the majority of sustaining capital expenditures are US$103 million for underground mine development. Additionally, US$20 million will be allocated for El Porvenir’s dam elevation project, US$19 million for overall maintenance, US$18 million for tailings storage facility (“TSF”), US$6 million for maintenance of heavy mobile equipment (“HME”), and US$3 million for improvement of Cerro Pasco’s dam pumping system.

In the smelting segment, the majority of sustaining capital expenditures are US$36 million for overall maintenance. Additionally, US$14 million will be allocated for roaster maintenance, US$7 million for assets improvement and US$4 million for TSF.

Health, safety, and environmental (“HS&E”) capital expenses are forecasted to be US$24 million. Other non-expansion capital expenses are forecasted to be US$21 million, including non-recurring IT expenses related to the enterprise resource planning (“ERP”) modernization program of US$7.5 million in 2024.

Exploration and Project Evaluation for 2024

Nexa continues to focus on replacing and increasing mineral reserves and resources as part of its long-term strategy. The company plans to invest US$58 million in exploration in 2024, with US$42 million allocated mainly to greenfield and brownfield projects.

Project evaluation expenses are estimated at US$14 million, including the project to extend the life of the disposal facility of Três Marias smelter. The remaining expenses are for corporate IT, potential growth projects and various projects across Nexa’s business units.

Furthermore, Nexa anticipates an investment of US$4 million in technology, related to projects to improve current operations and US$17 million to continue contributing to the social and economic development of its host communities.