Nexa Resources S.A. Aktie

Good morning, ladies and gentlemen, and welcome to Nexa Resources Second Quarter 2026 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 the replay of the conference call following its conclusion. [Operator Instructions]

Now I would like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations and Treasury, for his opening remarks. Please go ahead.

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 Slide #2. It contains our forward-looking statement disclaimer, and we ask that you review it along with the related risk factors.

Here with me today are Ignacio Rosado, our CEO; Jose del Castro 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 #3. 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 $0.52 per share, and net leverage continued coming down, closing the quarter at 1.4x, 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. Second, 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 position us well for the second half of the year. At Aripuana, the fourth tailings filter is now up and running. That removes a key bottleneck 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 tonnes, up 8% year-over-year on better grades. In smelting, zinc metal and oxide sales totaled 134,000 tonnes, 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 $131 million tax settlement payment in Peru related to the Cerro Lindo 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 #4 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 $0.04 per pound in the quarter. For the first half, that puts us at negative $0.35 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 U.S. dollar and from higher personnel and maintenance costs at most of our units, partially offset by a stronger byproduct 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 #5. Aripuana delivered a strong year-over-year performance. Treated ore was up 33% to 399,000 tonnes and zinc production up 44% at 8,800 tonnes. 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 tonnes of tailings and supported average plant feed rates of 249 tonnes 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 rainy 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 Aripuana in the first half, but we completed over 23,000 meters of infill 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 #6 for the Cerro Pasco Integration Project. This quarter, alongside continued 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 a geomembrane lining in the Atacocha tailings, together with engineering updates and the decision to anticipate the Atacocha tailings storage facility raise into the current project phase. Our 2026 CapEx for the project remains unchanged at $31 million, with the incremental investments allocated to 2027 and beyond, and Phase 2 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 focus on completing assembly and starting commissioning. Mechanical completion of the pumping system is expected in December. From there, we expect approval of the MEIA by SENACE and the start of the operating authorization process in the first quarter of 2027.

Cerro Pasco is a well-known, high-potential polymetallic district. This review further derisks 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 #7, I will talk about our exploration results. Our first half exploration results reinforce the quality and depth of the portfolio. On Slide #7, you can see the high-grade intersections from our brownfield programs. The two highlights came from Vazante and El Porvenir. At Vazante, 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 Integracion target continues 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 Aripuana, 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 #8 for smelting. In smelting, zinc metal and oxide sales were 134,000 tonnes, 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 Juiz 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 $0.36 per pound in the quarter and $0.35 per pound in the first half, slightly above guidance, mainly on lower volumes at Cajamarquilla. As volumes recover 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 calcine inventory, with lower unit costs and a higher share of zinc concentrate from our own mines, together with a stronger byproducts contribution.

With that, I will hand over to Jose del Castro, our CFO, for the financial slides.

Thank you, Ignacio, and good morning, everyone. Let's go to Slide #9 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 byproduct contribution, together with higher zinc 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 byproduct 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 #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 Tailings Storage Facilities. Phase 1 of the Cerro 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 towards the second half as execution intensifies, mainly on Cerro Pasco Phase 1.

On exploration and project evaluation, we invested $17 million in the quarter, mainly in exploration drilling and mine development. 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 weigh towards the second half as drilling programs advance at Vazante, Aripuana and the Cerro Pasco Complex. Our full year guidance of $86 million remains unchanged.

Let's now turn to Slide #11 to discuss cash flow generation for the quarter. Starting from adjusted EBITDA of $286 million and adjusting for nonoperational items, operating cash flow before working capital and 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 noncontrolling interest, partially offset by dividends received by our subsidiary, Pollarix, 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 secured 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 a 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 was 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 #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-linked revolving credit facility. As you can see, our cash on hand alone covers substantially all of our financial commitments over the next 3 years. Additionally, average debt maturity stood at 7 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 1.4x from 1.59x in the prior quarter and 2.28x 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 disciplined deleveraging, gross debt reduction and lower interest expense over time. For year-end, we are targeting net leverage close to 1x, 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, Jose Carlos. Let me turn to the zinc and copper markets on Slide #13. Zinc prices stayed well supported through the quarter on tight fundamentals and persistent geopolitical risk with the LME price averaging $3,466 per tonne, 31% above the second quarter of last year. Smelter margins, on the other hand, remained compressed. Spot treatment charges in China fell further into negative territory, ending the quarter at minus $109 per tonne. 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 a net producer.

Looking ahead, we expect zinc to stay supported by tight concentrate supply, low exchange inventories and resilient demand. TC 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 tonne in the quarter, 40% above a year ago, supported by tight fundamentals and by expectations around U.S. 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 the structural picture remains constructive over the medium and long-term, supported by electrification, the energy transition and decarbonization.

Now let's turn to Slide #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. Forecasts now point to a more balanced silver market, supported by higher mine supply and by accelerated substitution in 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 Cerro Lindo streaming step-down 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 U.S. 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 byproduct 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 personnel exposure with remote-operated blasting and the start-up 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 Cajamarquilla. And on governance, we reinforced risk management under our ERM framework, advanced tailings management in line with international best practices, and were awarded once again the Gold Seal of the Brazilian Greenhouse Gas Protocol Program.

With that, I will hand it back to Ignacio for the closing remarks.

Thank you, Rodrigo. Before we open for questions, let me close on Slide 16 with a quick recap of our priorities.

First, Aripuana. With the 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 strategy.

Second, the Cerro 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 drilling results at El Porvenir and Vazante as well as continued success in extending life of mine across Cerro Pasco, Cerro Lindo and Vazante. 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, 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 step-down in effect, we entered the second half of the year with strong momentum and a clear set of priorities.

With that, let's open the line for questions.

[Operator Instructions] The first question comes from Pedro Mello with Citi.

My first question is regarding the production guidance for other metals, especially copper, silver and lead. We saw that production in 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 2 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?

And the second one is regarding the liability management. We saw another deleverage in the quarter. What's the timeline do you foresee for the gross debt payments now that the leverage is lower? And how should we view this payment pace in the coming quarters?

This is Rodrigo here. Thanks for your question. I will address the first question regarding the guidance, and then I will pass over to Jose 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 at El Porvenir at the beginning of the year. We are -- we pretty much recovered everything in El Porvenir and with the [indiscernible] also up and running in Aripuana, we expect to increase production in the second half of this year. So that's why the production guidance for the mining segment remains unchanged. So we expect -- 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 forward 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 Jose Carlos to address the liability part of the question.

Thank you for the question. It is true that we are lowering our net leverage, and this is, as Rodrigo, we mentioned during the presentation, 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, 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.

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

I just wanted to drill down a little bit on costs. 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 smelter 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 tax 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.

So just to clarify, you were talking about, 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 your question?

Yes, that's exactly it. And then I'm just... yes, that's fine.

So it's very important that you know that we keep a lot of control in our conversion costs in the smelters. However, we had two important events that affected the cost. 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 costs 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 cost in dollars goes 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 as -- and only, it's a matter of processing them. That's why with the cost control initiatives that we have and the throughputs going up, we are expecting to be in guidance. So that's the clarity or the simplest way to mention why we believe we will be in guidance. I don't know if that is clear for you.

Yes. Can I also ask a follow-up on that question just with respect to 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 '26?

Sure. So inflation is -- as we said in the press release, and I said in the presentation, inflation is coming from labor. Labor is 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, they 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 impact of these, let's say, 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 FX, 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 committing -- committed on keeping the costs at the same level for 2027. And I think we are making good progress towards that goal.

And then if I could just ask on M&A and your views, particularly in light of what's going on strategically with the [indiscernible] ownership position. In any way, does that impact your views on M&A and your appetite to potentially pursue acquisition? And I would note in the past what you've told us in this venue is that with debt where it is, M&A might not be an immediate priority. It might be something you'd look at more carefully once debt started to reduce. So we've seen that start to reduce. So maybe is there some more immediacy with respect to M&A at this point?

So from -- 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 Aripuana, and Vazante is coming as well. So capital allocation from growth perspective is coming from the life -- from extending the life of the mines.

We are also actively 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. Many -- Much of it was related to the Aripuana 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 Morro Agudo 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, yes, 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 won, that is between $800 million to $1 billion. We are aware of that. So today, it's not something that is doable. Going forward, with these projections on our cash flow generation for the next 3 to 4 years, our deleverage 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, Lawson. I don't know if that's clear for you.

[Operator Instructions] The next question comes from Henrique Braga with Morgan Stanley.

Just some additional color on Aripuana. Now that the 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 like what's your capacity utilization that you are forecasting for the rest of this year and 2027 onwards?

Thank you for the question. So after the implementation of the fourth filter, we see -- we saw a significant increase in the per tonne hour. So we are now reaching 260 tonnes per hour, which is very close to the nameplate capacity. So the expectation that we have is that in the coming months, we adjust operational parameters and the team learns how to operate at a different level so that you can reach the numbers that you have planned since the beginning of the year.

Yes. And one additional comment here that is important, by increasing this -- by solving this bottleneck of the fourth filter, a process of adjusting the plant to the new throughput is taking 2 to 3 months. So you will see that this step-up on full capacity will happen only in the next 2 or 3 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 Aripuana, and that's why we believe Aripuana 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 than the years before.

We're 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 expects an impact from El Nino phenomenon this year, especially in the 4Q, how confident is the company of meeting the 2026 guidance?

Yes. That's a very good question. The projections that we have on El Nino are that it's going to be a very significant or strong El Nino. And that -- it's 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 would affect our consumables and delivering our concentrates, et cetera. So we have been facing these events for many years now, and we are used to that. So we have -- we're putting in place all these measures to make sure that we don't have business interruptions.

Having said that, you never know because we don't only depend on us, but depend on the infrastructure of the country, and we don't control that. Having said that, with the scenario that we are running and the projections that we have, we really don't expect a lot of impact during this year from the El Nino phenomenon. So we will keep the market posted. We don't know when it will 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 impact 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 consensus we have today.

[Operator Instructions] 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 Aripuana 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 will -- 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 on 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.

Good morning, ladies and gentlemen, and welcome to Nexa Resources First Quarter 2026 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 conclusion. [Operator Instructions]

Now I would like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations and Treasury, for his opening remarks.

Good morning, everyone, and welcome to Nexa Resources first quarter 2026 earnings conference call. Thank you for joining us today. During the call, we will discuss Nexa's performance as detailed in the earnings release issued yesterday. We encourage you to follow along with the presentation available through the webcast.

Before we begin, please turn to Slide #2, which contains our forward-looking statements disclaimer. We ask that you review the information regarding these statements and the associated risk factors.

Joining the call today are our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior Vice President of Mining Operations, Leonardo Coelho.

With that, I will turn it over to Ignacio.

Thank you, Rodrigo, and good morning, everyone.

Starting on Slide #3, our main highlights. The first quarter of 2026 was a strong start to the year. Adjusted EBITDA more than doubled year-over-year to $283 million with a margin of nearly 32%. Net income was $118 million or $0.67 per share, and net leverage continued to come down, closing the quarter at 1.59x, half a turn lower than where we were a year ago, benefited by a strong last 12 months adjusted EBITDA.

Three things drove the results: a constructive price environment across our entire metal mix, most notably silver, where prices averaged 164% above the first quarter of 2025; higher sales volumes in both segments; and operating performance that continues to improve, particularly at Aripuana, which delivered another quarterly production record. The quarter was not without challenges, heavy rainfall at Cerro Lindo, and illegal community blockade at Atacocha and a shaft constraint at El Porvenir, all impacted the Peruvian production sequentially. Those issues have been addressed and the affected operations returned to normal run rates.

In mining, zinc production reached 79,000 tonnes, up 18% year-over-year, with all 5 mines benefiting from improved ore grades. In smelting, zinc metal and oxide sales totaled 147,000 tonnes, up year-over-year and quarter-over-quarter, supported by ongoing operational improvements at our Brazilian smelters and continued solid performance at Cajamarquilla. The negative free cash flow in the quarter is consistent with our typical first quarter seasonality, reflecting working capital buildup and tax payments. We expect this to unwind over the coming quarters, reinforcing expectations of strong free cash flow generation in 2026.

Let me move to Slide #4 for a closer look at the mining segment. Year-over-year, the 18% increase in zinc production reflects better ore grades across all of our operations. Quarter-over-quarter, the decline was driven by the temporary constraints at the Peruvian mines. Cash cost net of byproducts came in at negative $0.76 per pound, well below our 2026 guidance range, driven by stronger byproduct credits following from higher zinc, copper, silver and gold prices.

Cost per run of mine was $57 per tonne, in line with guidance. The year-over-year increase was driven by the appreciation of the Brazilian real, higher maintenance costs and higher variable costs in specific operations. The financial picture for the segment is strong. Net revenues of $460 million and adjusted EBITDA of $231 million, translating into a 50% EBITDA margin, the kind of operating leverage we expect when prices and volumes both move in the right direction.

On Slide #5, I will talk about Aripuana. Aripuana was the standout asset of the quarter. We produced 13,000 tonnes of zinc, a quarterly record since the operation reached commercial production, supported by higher grades, better plant utilization and improved operational stability. On the fourth tailings filter, construction and installation were completed in late April. Commissioning started now in early May and is expected to be concluded in the second quarter. Once fully operational, the filter materially reduces our exposure to weather-driven throughput disruptions during the rainy season. Exploration continued to deliver encouraging results in the quarter. At Massaranduba, we hit a 16.6-meter intercept grading, 9.6% zinc and 3% lead, additional confirmation of the long-term potential of the district.

Now to Slide #6 for the Cerro Pasco integration project. Phase 1 of the Cerro Pasco integration project remained firmly on schedule during the quarter. We completed a slope stabilization at the construction site, started civil works and structural assembly of the pump building and concluded the manufacturing, testing and packaging of the main equipment, including the thickener and pumps, as you can see in the picture on the bottom of the slide. These are important technical milestones.

Looking ahead, we expect civil works to be completed and electromechanical assembly to progress through the 2026. Construction is targeted for completion in the third quarter of this year with full project finalization expected in the fourth quarter of this year. We then begin the operating authorization process, which positions the start of the pumping for the second quarter of 2027.

On the broader regulatory front, the second MEIA for El Porvenir and the third for Atacocha are under evaluation by SENACE, and we currently expect both approvals in the first quarter of 2027. Preparatory studies for Phase 2, including the Picasso shaft assessment also continued to advance during the quarter. This is one of the most important strategic levers in our portfolio. The integration extends life of mine at the Cerro Pasco complex beyond 15 years, lift the average NSR of the life of the operation and consolidates our position in one of Peru's most prospective polymetallic districts.

Now on Slide #7, I will talk about our smelting segment. In smelting, zinc, metal and oxide sales of 147,000 tonnes were up year-over-year and quarter-over-quarter. The Brazilian units are recovering their production pattern with Juiz de Fora producing 56% more zinc than in the first quarter of last year and Tres Marias 17%. Cajamarquilla continued to operate at solid levels. Cash cost net of byproducts was $1.40 per pound, slightly above the upper end of our annual guidance, reflecting higher zinc LME prices and lower TCs impacting concentrate purchases. We expect this to ease modestly over the next quarters as our Peruvian operations return to normal run rates, reducing third-party concentrate need.

Conversion cost was $0.34 per pound, in line with our 2026 guidance. Starting this quarter, we have expanded our earnings release to include byproduct sales performance, sulfuric acid, silver content and copper cement. As byproducts become a more expressive part of segment economics, we want to make those drivers more transparent for the market. Net revenues for the segment were $609 million with adjusted EBITDA of $51 million, an 8% margin. The margin reflects the structural pressure on global smelter economics from very low TCs.

With that, I will hand the call over to Jose Carlos del Valle, our CFO, for the financial review.

Thank you, Ignacio, and good morning, everyone.

Let's turn to Slide #8 for an overview of our financial performance. We started the year carrying momentum from our fourth quarter of 2025, a favorable price environment combined with stronger operational execution. Net revenues totaled $888 million, up 42% year-over-year and down 2% sequentially. The year-over-year increase was driven by higher metal prices across our portfolio, evidencing a $158 million larger byproduct contribution and improved performance in both the mining and smelting segments. The sequential decline reflects lower mining sales volumes, partially offset by higher smelting sales and stronger byproduct pricing.

Adjusted EBITDA came in at $283 million, up 126% year-over-year with a margin of 31.8%. The year-over-year improvement reflects price realization, operational leverage from higher volumes in both segments and stronger byproduct credits. Sequentially, EBITDA was 6% lower, driven mainly by higher unit costs from increased third-party concentrate consumption required to compensate for the temporarily lower output at our own Peruvian mines this quarter. We expect this to normalize as those operations return to full run rates.

Now to investments on Slide #9. We invested $72 million in CapEx during the first quarter, about 19% of our full year guidance, in line with the typical 20% to 25% first quarter pace. The bulk went into sustaining activities, mine development and tailing storage facilities. Phase 1 of the Cerro Pasco integration project accounted for $8 million in the quarter versus a $31 million guidance for the full year. We reaffirm our total 2026 CapEx guidance of $381 million with disbursements weighted towards the back of the year as project execution intensifies, particularly for Cerro Pasco Phase 1. On exploration and project evaluation, we invested $16 million in the quarter, mainly in exploration drilling and mine development. We also reaffirm our full year guidance of $86 million.

With that, let's turn to Slide #10 to review our cash flow for the quarter. Starting with our adjusted EBITDA of $283 million and adjusting for non-operational items, our operating cash flow before working capital was strong at $308 million. From there, $72 million went to CapEx and $81 million went to pay interest and taxes. Working capital and other variations were negative $283 million in the quarter, in line with what we typically see in the first quarter of every year.

Furthermore, this quarter, we made significant tax payments related to the stronger results we had in 2025, paid out annual bonuses and settled year-end confirming payables across our jurisdictions. As before, we expect this to reverse substantially over the coming quarters, both as part of the natural intra-year seasonality and as we push initiatives to continue to improve our cash conversion cycle.

Moving along, we also see that foreign exchange added a positive $6 million. And on the financing side, in Brazil, we drew a new $40 million 6-month loan at a very competitive interest rate. This was partially offset by regular debt service and lease payments, resulting in a net cash inflow of $21 million. In addition, we distributed $25 million in dividends to non-controlling interest. With that, free cash flow for the quarter closed at negative $126 million.

Let's move to Slide #11 to discuss liquidity, indebtedness and credit rating. Our liquidity position remains healthy. We ended the quarter with $716 million in total liquidity, including the undrawn $320 million sustainability-linked revolving credit facility. As you can see, our cash on hand alone is enough to cover pretty much all financial commitments over the next 4 years.

Average debt maturities stood at 7.2 years at quarter end with an average cost of debt of 6.27%, an improvement from the 6.49% at the end of 2025. Net leverage continued to come down at 1.59x versus 1.69x in the prior quarter and 2.09x a year ago. The improvement was driven primarily by stronger last 12-month EBITDA of $929 million. Looking ahead, we remain committed to disciplined deleveraging, focusing on reducing gross debt over time, lowering interest expense and maintaining net leverage below 1.7x throughout 2026, while preserving our investment-grade rating and competitive cost of capital.

With that, I'll hand it back to Rodrigo for the market fundamentals section.

Thank you, Jose Carlos.

Turning now to zinc and copper markets on Slide #12. Zinc prices remain supported by persistent concentrate tightness and low LME refined inventories. The LME zinc price was up 4% during the period, closing at $3,185 per tonne. At the same time, smelter margins remain compressed. Spot treatment charges in China, both domestic and imported, continue at historically low levels, which highlights how acute the concentrate shortage is. While key smelting byproducts such as sulfuric acid have provided some partial relief to margins, they have not been sufficient to fully offset the impact of lower TCs.

Looking into 2026, we do not expect a material recovery in TCs, particularly given that the annual benchmark has been settled at $85 per tonne. As a result, smelter margins are likely to remain under pressure. On the price front, zinc should continue to find support from solid fundamentals, including tight concentrate availability, low exchange inventories and resilient demand from galvanizing and infrastructure-related end users. On copper, supply fundamentals remain tight with ongoing concentrate scarcity and negative spot TC and RCs. Copper price presented some short-term volatility in the quarter linked to trade policies and inventory dynamics, but a structural setup remains constructive over the medium to long-term, supported by bullish demand expectations.

Now let's turn to Slide #13 for a look at precious metals. Silver prices reached multiyear high during the quarter, briefly trading above $120 per ounce before retracting. The fundamentals continued to be supportive, a sixth consecutive year of structural deficit, combined with strong industrial demand from solar PV, electric vehicles, AI infrastructure and data center build-out. This carries greater significance for Nexa as we produce roughly 11 million ounces of silver per year, making us a meaningful player in the global silver market.

Furthermore, in April, we reached a delivered threshold under our Cerro Lindo silver streaming agreement. As a result, the stream share of Cerro Lindo's production stepped down from 65% to 25%, with the remaining 75% now to be sold at prevailing market prices. At current silver levels, these represent an important recurring additional contribution to our cash generation from the second quarter onward. Gold prices also remained well supported through the quarter, driven by safe haven flows, sustained central bank purchases, a weaker U.S. dollar and elevated geopolitical uncertainty. Looking ahead, both metals should continue to contribute strongly to our cash generation and should provide diversification and countercyclical support to our polymetallic portfolio.

Now on Slide 14 on ESG, we have made progress across our main priorities during the quarter. We expanded community and inclusion programs in Brazil and Peru, advanced education and infrastructure projects with local communities near Cajamarquilla and Aripuana and continued our operational efficiency and low-carbon initiatives across the operations, including a backfill optimization project at Cerro Lindo that delivered meaningful reductions in cement and water consumption.

We also strengthened HS&E and ESG governance, including leadership level engagement and continued progress on environmental permitting at our Peruvian assets. Finally, in late April, we published our 2025 Annual Sustainability Report, our most comprehensive disclosure to date on environmental, social and governance performance. It is available on our Investor Relations website.

With that, I will hand it back to Ignacio for the closing remarks.

Thank you, Rodrigo.

Before we open for questions, let me close on Slide #15 with a quick recap of our priorities and key business drivers. First, Aripuana. The fourth filter commissioning is being completed this month, which positions us to reach full production capacity in the second half of 2026. Combined with our long reserve life, the asset is one of the central pillars of our long-term cash flow generation.

Second, Cerro Pasco integration. Phase 1 is on schedule for project finalization in the fourth quarter, setting up the start of pumping in the second quarter of 2027. The project extends the life of the mine beyond 15 years and improve the profitability of the complex.

Third, exploration. The 2025 reserve update extended life of mine across all of our operations. We are not just replacing depletion, we are growing the reserve and resource base. And this year, on back of strong drilling results, we have revised our 2026 program upwards to nearly 67,000 meters, about 12% above the original plan, with the increase concentrated at the Cerro Pasco complex and other exploration projects.

Fourth, growth. We continue to evaluate value-accretive opportunities in mining-friendly jurisdictions. Underlying all of this is a consistent set of priorities, financial and operational discipline, a stronger balance sheet, balanced capital allocation that includes shareholders' returns and an active ESG strategy. And most importantly, our absolute commitment to safety for our people and our communities.

Before we move to questions, I would like to take a moment to recognize Mauro Boletta, our Senior Vice President of Smelting and Commercial, who is retiring at the end of this month after more than 40 years with the Votorantim Group. Mauro has been instrumental in shaping our smelting and commercial operations. And on behalf of the entire Nexa team, I want to thank him for his contribution and wish him the very best.

With the first quarter Peruvian constraints behind us, the Aripuana filter commissioning underway and the Cerro Lindo silver streaming transition now in effect, we are entering the rest of the year with a strong momentum and a clear set of priorities.

With that, let's open the line for questions.

[Operator Instructions] The first question comes from Pedro Mello with Citi.

My first question is regarding Cerro Pasco integration project. So Phase 1 of the project remains on schedule with tailings pumping start estimated for 2Q '27. However, the 2 environmental approvals for El Porvenir and Atacocha are only expected for next year first Q, leaving a very tight window. So my question is, what are the key execution and permitting risk that could delay the 2Q '27 start? And regarding Phase 2, when do you expect to have a clear investment decision on the Picasso shaft and underground integration alternatives? So this is the first one.

And the second one relates to smelting segment where we saw a great improvement of results. So could you give us more color on what you expect in terms of driver for this segment results in the next quarters and why? And if we should expect this level of EBITDA near to $50 million per quarter going ahead?

Okay. No, thank you for the questions. Regarding Cerro Pasco, what we said is the pumping system is going to finish this year. So December this year, that pumping will be up and operational. And the permits, the modification on the environmental impact studies for Atacocha and El Porvenir will be ready in the first half of next year, okay? So there is going to be an overlap.

And what is key here is that we have more than a year of life of mine of our tailings capacity. So we keep track of the permits permanently, and we are very confident that the permits are going to come in the first quarter of next year. And given that we finished the construction and we have this cushion on capacity, it shouldn't be a problem for us to continue operating El Porvenir and Atacocha, okay? So we don't see any issues in that regard.

Regarding smelting, it's a very important question because what happened last year is that we have some problems in -- operational problems in Juiz de Fora and in Tres Marias in Brazil that impacted their production. We started an assessment and a fast-track improvement on operations during the last quarter of last year. And now we are producing more because recoveries are high, because we're making sure that this -- all these bottlenecks in the operation are being taken care of. So the operation is going to evolve in the next 3 quarters, probably a little bit better than what we had in the first quarter. So we believe that this is a continuous improvement to come back to KPIs -- operational KPIs that we had in 2024 and 2023.

Having said that, it's important to mention that all the smelters, Cajamarquilla is performing really, really well. But as we were saying in the call and I think in our press release, all of our smelters are facing a profitability problems in terms of the TCs. China is demanding a lot of concentrate. And even if we are improving operations, negative TCs or very low TCs are affecting all of our operations, which -- and this is very important for us as well, is being compensated by byproducts. The sulfuric acid market is very tight today. We are in a very good position for our production, especially for '27 because '26 is already being sold at a high part, and we closed a spot sale in a very, very important terms and silver and copper. So these byproducts more than offset the problem that we have in the TC front.

We -- it's difficult to see how the smelting market is going to perform in 2027 or in the next few months because I believe that profitability drivers are going to change. But in any case, what we can be focused is only on operational improvements that are happening. And as I was saying, the second quarter is going to be better than the first one, and we will come back to normal levels, the ones that you have been seeing in 2024, okay?

Our next question comes from Sathish Kasinathan with Bank of America.

Sathish, we cannot hear you.

It seems that Sathish is having some technical problems. [Operator Instructions] Our next question comes from Adam Smiarowski.

With the silver stream at Cerro Lindo -- sorry, can you hear me now?

Yes. Perfect.

Perfect. Okay. The lower silver stream at Cerro Lindo, I was just going to see maybe how some of that extra revenue is going to be reinvested. Whether you're looking at capital returns or M&A or other sort of changes in capital allocation? Are you able to comment on that?

Thank you for the question. To give some context, as you rightly mentioned, starting in the second quarter, we will begin to see the impact of the step down in the silver stream, which is going from 65% to 25% of the Cerro Lindo production. And to give you a sense of the impact, this is assuming Cerro Lindo producers, I would say, 3.6 million ounces per year at current prices, that's about $100 million more per year of cash generation, just to give you a sense of the magnitude of the impact.

Having said that, this does not change our capital allocation strategy. As we have mentioned a number of times, our key goal is to reduce our gross debt. So this will help us to accelerate that process. And the idea is that any excess cash that we generate in this favorable price scenario will allow us to do this in a faster time frame. So this is consistent with our overall strategy that we have been communicating to the market in the past, and there's no change to that.

No changes there, okay.

Our next question comes from Peter Varga with EAM.

Can you hear me?

Yes, we can hear you.

A couple of questions. Do you have an explicit leverage target you want to reach and over what time frame? And also I would like to ask your CapEx plan and maintenance and expansion CapEx in details for the coming quarters and how that can be influenced by smelting margins and zinc prices and basically and metal prices?

Yes. Our capital allocation strategy has not changed despite the silver streaming step down. In terms of CapEx, we are reaffirming our guidance. So the fact that we are generating higher cash flow in this favorable price scenario is not going to change that. So that's something to keep in mind. And in terms of leverage, as we have mentioned before, what we want is to have the flexibility so that we can go through different cycles. So part of the strategy of reducing the debt on one hand is to reduce interest expense, which is high for a company of the size of Nexa. But we want to have this financial flexibility because prices can change, and we want to have that additional buffer.

We don't know how fast we will be able to do this because we don't control prices, but we are certainly optimistic in this price scenario that we will be able to achieve this faster. I would say that reaching an overall net leverage of 1x would give us a lot of comfort so that we would have that buffer to go through the different cycles. So it will depend again on prices, but we are confident that we will be able to accelerate this with this stable production performance that we're having and with the supportive prices that we're seeing.

Okay. And also probably one question. We have seen some market rumors that your parent is looking to divest the company and then there are rumors that some European buyers are around. Can you comment on this, please?

Yes. I mean we have rumors all the weeks -- every week. And actually, we don't comment on rumors. What I can emphasize is that we are very active on looking for opportunities to grow Nexa, and we have a very dedicated team to make sure that we grow the company, not only in reserves and resources that we are being very successful, but also on opportunities that are in the market, especially in copper.

So that means that you are looking for M&A, but I mean, you already mentioned your net leverage goal. I mean, this 1x to reach over time you mentioned, but how can fit that M&A goal into the deleveraging goal? I mean, you want to finance that probably issuing new shares or what kind of financing can we expect if there is an M&A?

Yes. With this price environment, as Jose Carlos was saying and some internal action that are happening, which is the Cerro Lindo stream, we might expedite reducing the debt at the level that we are comfortable. And in the interim, the strategy is going to be looking for these accretive opportunities in the market. The timing depends on how much we reduce the debt and how fast and how -- what opportunities we find in the market.

We keep track. We have in our radar, a lot of opportunities. It's a difficult market today because it's very expensive. So I would say it will be a combination of reducing the debt and making sure that we can use our balance sheet, mainly our balance sheet to start looking for these opportunities. And given that it could be an overlap, we are -- we have to be creative, and we have been doing that. So I believe that it could be done, and we'll see what happens in the coming months.

Okay. And probably the last question. What do you expect from the new Peruvian government? I mean we have heard some -- I mean, it depends which party or which President will be at the end. But how do you expect the licensing and especially the environmental licensing for the operations going forward? I mean, do you have any view how left being presidency can affect the operation? And then do you have any plans for that scenario?

Yes. I guess, it's early days. We're not even in the second round today, and they're still debating who is going to go with the Fujimori party to the second round. But in any case, the way we see it is that we were already exposed to President Castillo. And I think they realize the 2 things. One is that the Central Bank is independent and changing that you will need to change the constitution. And to change the constitution, you will have to go to the Diputados Camara and Senadores Camara, and it's going to be very difficult for them to approve any change. So this is a lockup that we have. So the economy -- and if you see that the political noise is very difficult to affect the economy. That's one thing.

The second one that is very important is that any president regardless of their views on how they manage the country start to know that most of the income that comes through taxes are from the mining sector. So if they really want to finance some, let's say, projects or activities or actions that are against the mining sector, they will start losing this income and they cannot afford to do that. This happened to Castillo. So the Ministry of Finance or the Ministry of Economy is very robust in that regard, and it's very clear that if income comes down, they won't have anything to do different actions that differ from making sure that the country is growing, okay? So that's the second one.

And the last one is that we, mining companies are used to this sort of situations. And the most important part here is that you have good relations with your communities. So having good relations with them means that you have good agreements that benefit them, that benefit you, that are long term and that create an economic scenario for the 2 of us that is not affected by the political environment. So we don't see -- this has been the case for the last years. Many presidents have been impeached, which is a shame for Peruvians, for we Peruvians. But if you can see that -- and you can see that there is no link to the economic performance of the country. You can see that the mining sector managing communities effectively won't be affected that much by this noise in the political arena, okay? So that's more or less where we are. We'll see what happens. And we have to be prepared to any scenario, and this has been the case for many years.

Now I would like to turn the call over to the company for the written questions.

Thank you, operator. We have one question from the audience. The question is, is there any estimated date for a construction decision for the Stage 2 or Phase 2 of the Cerro de Pasco integration project? And will this Phase 2 require additional permitting?

Yes. Very important question. I think there was a question that was asked before. I apologize for not answering that. Very important question. The Phase 2 part of the project is integrating the 2 mines and making sure that we produce more ore. As we were saying in the presentation, we have a very dedicated team of -- in the exploration that started a strategy some years ago to start drilling heavily our mines. So we said many times that we are finding a lot of resources that have higher NSR and very important opportunities in the intersection and in Atacocha and El Porvenir in the underground parts.

The reason why we decided to delay the Phase 2 is because we are trying to make sure that we build a mine -- a life of mine plan that is more effective and has -- is more profitable for these 2 mines. And this is going to take some time. So I would say, we might be able to tell the market, I would say, in the next -- in the second half of this year, how are we going to manage that. Our Board is also waiting for that, and this is a priority. And the good thing is that the permits that we will have for El Porvenir and Atacocha that will be approved in the first half of next year also apply for this integration. So we won't have bottlenecking problems in these approvals.

So I think we are right on track. And we have a very good problem because the endowment that we use to approve the second phase has been increased significantly. That's why we are saying that we have more than 15 years. And today it's a matter of how are we going to build this new life of mine plans to make sure that profitability or NAV drives this evaluation, okay? So we'll keep you posted in what are we going to do in the following months.

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.

Thank you. I would like to emphasize that the closing of last year, we had a very strong results and we were exposed to prices -- to very good prices. This has been the case for the first quarter of this year. Unfortunately, we had some problems in our Peruvian operations that already have been resolved. But the message I would like to convey is that for the rest of the year, we are very committed to have very stable operations. We are very committed to offset some problems that we have in costs, regarding oil, regarding inflation in the market, regarding the FX in Brazil try to make sure that we sort of offset those with productivity measures.

So we built a very robust operating profit from our mines and smelters in the rest of the year, not only because we have these very good prices, because we take care of the main variables of the mines and smelters. So we look forward to speaking to you towards the end of the second quarter, and we are confident that we're going to deliver on our commitments and our guidance. So thank you very much for attending the call. And again, we look forward to speak to you in a few months.

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

Good morning, ladies and gentlemen, and welcome to Nexa Resources' Fourth 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 containing the webcast is available for download as well as a replay of the conference call following its conclusions.

[Operator Instructions]

Writing questions that are not addressed during the call will be answered afterwards 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 Cammarosano, 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 Nexa's performance as detailed in the earnings release issued yesterday. We encourage you to follow along with the presentation available through the webcast.

Before we begin, please turn to Slide #2, 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, Juan Ignacio Rosado; our CFO, Jose 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 #3. Nexa delivered a strong finish to the year with our fourth 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, zinc 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 instability. In our smelting division, total zinc sales were 142,000 tons, while Cajamarquilla continued to deliver a 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 $0.38 per share and generated $51 million in free cash flow. As a result, our net leverage improved to 1.7x further strengthening our balance sheet. Looking now at the full year 2025, SIM production totaled 316,000 tons, successfully achieving our consolidated mining production guidance with all 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, 1 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. The 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 #4 to take a closer look at our mining performance. Our quarterly zinc production of 91,000 tons represents a 9% increase from the third quarter driven by enhanced operational performance at Vazante, 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 costs net of byproducts, improved sequentially to negative $0.58 per pound, benefiting from a stronger byproduct [ trades ] and lower treatment charges. For the full year, cash costs came in at negative $0.30 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 $132 million, an 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 #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, reduce plant downtime and lower workforce turnover. The fourth 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 film on scale. 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 #6 for an update on the Cerrepasco integration project. In parallel with our operational progress, we have advanced preparatory styles 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 disciplined and consistent execution. The Cerro 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 1 of Peru's most important mining districts.

Next, on Slide #7, I would like to highlight the continued progress of our exploration product. Our 2025 exploration plan delivered solid results across our key assets, reaffirming their geological potential. In Slide #7, you can see deep intersections with high metal grades across all mines.

At Cerro Lindo, activities focused on expanding now ore bodies in the Southeast region, drilling confirmed the continuity of mineralized zones, particularly in orebody 8C, which supports the mine's long-term production profile. At Aripuana, exploration concentrated on the [indiscernible] target, where drilling confirmed new mineralized areas, including peak high-grade intersections in a recently identified structure. Avasant 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 reserve inventory paving the way for further life of mine extensions.

Now let's turn to Slide #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, a slightly lower sequentially. On a year-over-year basis, the increase is attributable to higher operational costs and unfavorable foreign exchange valuations at our Brazilian units. For the full year, conversion costs remain 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 totaled 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 #9 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 byproducts 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 sets.

Now let's turn to Slide #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 tailings 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 disciplined 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 #11 to review our cash flow generation. Starting from the $772 million of adjusted EBITDA and after adjusting nonoperational 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 the 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 2 earlier maturity bonds. Towards the end of the year, we also executed early repayments 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 noncontrolling 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 #12. As you can see, our liquidity position remains robust, supporting a solid balance sheet and an extended debt maturity profile. We closed the quarter with total liquidity of $842 million, including our undrawn $320 million sustainability-linked revolving credit 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 5 years. Finally, net leverage improved to 1.7x, down from 2.2x 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 life of mine prospects of our assets remains a priority, while preserving our investment-grade 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, Jose Carlos. Turn now to the zinc and copper markets on Slide #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 is 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 and TCs 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 supportive, 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 [indiscernible] smelter platform remains a key differentiator. It allows us to partially mitigate concentrate market volatility and preserve margin resilience across cycles. Third, now to copper. Prices appreciated in 2025 on the back of supply discipline and sustained demand driven mainly 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 #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 produced around 11 million ounces of silver annual, 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 ESG agenda. Let me briefly turn to ESG. In 2025, we continue 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 CDP rating at B for both climate change and water security and further reinforces the integration of our ESG criteria into our enterprise risk management framework. Community engagement also remain a focus with continued investments in the [indiscernible] 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 improved transparency and ensure alignment with operational realities and updated base.

As a result of this process, we are proposing recalibrated targets grounded in 3 pillars. First, technical robustness and including refined baselines and third-party verification. Second, strategic transparency creates 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 #16. Before we open the floor for Q&A, let me close by reinforcing our strategic drivers and priorities. Aripuana continues to be a key near-term catalyst. The fourth 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 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 remains 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 deleveraging and shareholders' return.

Finally, ESG continues to evolve as a core pillar of how we manage the business at Nexa. In 2025, we enhanced our governance framework, improve methodological consistency in our public targets and reinforce the alignment between sustainability commitments and operational realities. Our goal is clear increased transparency and ensure ESG execution strengthens the long-term sustainability of the business. As we look ahead, we entered 2026 with improved operational stability disciplined capital allocation and a well-defined set of priorities, focus on business resilience and consistent shareholder returns. With that, let's open the floor for your questions.

[Operator Instructions]

Our first question comes from Pedro Mello from Citi.

My question relates to the seasonal rainy period at the Aripuana assets this quarter. Could you provide some color on the evolution of the asset production throughout this year given the seasonal context of the first quarter and the inauguration of the [indiscernible] future affecting the second half of the year, please?

Yes. Yes, it's a very good question. In January, we have -- to give you an idea and based on some numbers, the bottleneck that we have with these 3 filters, the tailings filters takes the plant around 44 -- 140,000 tons to 145,000 tons per month, okay? We have been delivering production at this rate during the last 6 months. In the last 3 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 zinc equivalent production. So we are in the same rate as previous 6 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 pass the raining season in a very smooth way. But we maintain the silver equivalent production and actually, we increased 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 4 filter 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 are confident that Aripuana finally is going to be at full capacity.

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

This is Orest Wowkodaw with Scotiabank. Can you hear me?

Orest, we can hear you clearly.

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 delever the balance sheet fairly quickly.

Orest, 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 silver streaming agreement in Cerro Lindo that actually has a step down in -- probably in May of this year when we reached a milestone of 19 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 strong financials, investment rating and the [indiscernible] cash, but we are confident with the structure that we have today. We view positively the recent trend in prices, not just on silver. So we're confident that with that, we will be able to generate strong cash flow and continue with our commitment of reducing debt in the coming years.

Okay. So it's not something it's a high priority right now.

No, it's not.

[Operator Instructions] The next question comes from Camilo Jaca from [indiscernible].

Hello, or -- my name is Kamilla [indiscernible]. I'm [indiscernible] 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 server the Cerro Lindo silver stream in 2026 and 2027, if applicable, considering that deliveries are priced at a fixed percentage of spot.

Yes. [indiscernible], thank you for the question. Yes, 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% of the Cerro Lindo silver production to 25% of the Cerro Lindo silver production. So there's 40% that in the past had to be delivered to the streamer and now will stay within Nexa. So you can do the math at the current prices, what the impact of that would be.

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 or an incident in any of our operations or logistics?

Yes. Yes. There were -- yes, Peru's facing again, the El Nino phenomenon. And we are not facing any impact on production on logistics now. We have been working through the years in this. We had 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. But so far, we have an impacted by that.

Thank you, Ignacio. The first question was from Orlando [indiscernible] from Credicorp Capital. So we have a second question here is, "can you provide color on Phase 2 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.

Yes. 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 plan in this second phase because we have been drilling heavily in the intersection of the 2 months. And because of that, we have been funding a lot of resources with very high grade. And because of that, we decided to postpone this phase 2. Having said that, we will still drill this intersection. And in, I would say, in 1 or 2 years, we will have an inventory of reserves that is more important for us and with that, we will build a mine plan. So we don't have any specific date to access high grades at Atacocha. They 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 1 or 2 years.

Thank you, Ignacio. We have another question from the audience. Is there -- there is this ambition of the management to use -- the instrument, I believe, it is the one that Jose Carlos mentioned, to lock in the benefits of currently high silver prices?

Yes. As I mentioned, we're not considering silver streaming as an option. Today, it's not a priority. We always listen to to propose, obviously, there's a lot of interest in silver. It's currently not a priority.

We have another question that comes from Omar [indiscernible] from Vincent Compass. Can you provide an update on Magistral project and Tinka Resources investment?

Yes. Well, Magistral, we said before, it's a very good project. And we are always assessing what we're 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 as -- 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 [indiscernible], there was a follow-up on equity that we didn't -- we decided not to go through because we believe that is a very important asset, but we have other priorities. So we got diluted, okay? I guess there is another question in that that around the elections.

Yes. Let me read the question again. So -- and there is a sequential question from Walmart, which is can you comment on current electrode environment in Peru and the company talks on this matter?

Yes. Well, it's a shame that we have another president that is going to stay for the next 3 months in Peru. And the last 1 lasted only 4 months. And there is a lot of political noise around this, and it's very, 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 this a political problem that we face, okay? 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 the mining sector, specifically, we -- our surroundings, our stakeholders, especially communities.

We have very good relationship with them in most cases. And they also don't follow this 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 3 to 4 months in the way we -- our relationship with communities. So we'll see what happens in April, and we will -- we'll come back to that question later on, okay?

Thank you, Ignacio. We got another question. So from Orlando from Credicorp Capital. So you amortize around $120 million in that 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, 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, Jose. 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 -- we hedge a small portion of our silver production also taking into consideration that we have the silver streaming agreement. So it was a small portion of our silver production, mainly in Peru. The floor is around $52, and the [indiscernible] is around $84.

Thank you, Jose. We have another question here from the audience comes from Pedro Mello from Citibank. So the question is more related to the medium-term strategy for the company. So if the company managed to implement the fourth future for Aripuana's, executed a turnaround by reducing leverage and gross debt with the extension of mine life being constant, I mean, the replenish of the mine life such as the Pasco complex project. So what should be the company's [indiscernible] Pasco step for long-term investors?

Yes. 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 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, Aripuana is stabilizing and growing, Cerro Pasco is stabilizing and growing; and Cerro Lindo being stable and Vazante as well. And the smelter's recovery part of the profitability with a market that is changing. Next with the [indiscernible] assets is in a solid position exposed to very good prices and bringing down debt. 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, Ignacio. So I will hand it back to the operator. So I believe we have some -- a couple of questions through the phone.

The next question comes from [indiscernible] Braga from Morgan Stanley.

I just wanted to follow up if you could give additional details on your CapEx disbursement that you have envisioned for the project this year and the next.

This is Rodrigo. I can take this question. So we are on track with the execution of the Phase I. 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 the Phase I this year, and this will pave the way for Phase 2 just like Ignacio. 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. Ignacio 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 depot here in Brazil. We recognize the impact of these weather conditions have had on the municipality and express our solidarity with the local community. We reaffirmed that our dam structures continue to be closely monitored and remain safe with no change in their stability levels. Safety remains 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 closed the quarter, we exposed again with these prices. And we look forward to speaking with you again during next quarter. 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 Nexa. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to Nexa Resources Third Quarter 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 conclusion. [Operator Instructions] Written questions that are not addressed during the call will be answered afterward by the Investor Relations team. Questions media outlets will be handled separately by our company affairs team.

Now I would like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations and Treasury, for his opening remarks. Please go ahead.

Good morning, everyone, and welcome to Nexa Resources Third Quarter 2025 Earnings Conference Call. Thank you for joining us today. During the call, we will discuss Nexa's performance as per our earnings release issued yesterday. We encourage you to follow the on-screen presentation through the webcast.

Before we begin, I would like to highlight Slide #2, which outlines forward-looking statements about our business. Please refer to the disclaimer regarding these statements and their conditions.

Now it is my pleasure to introduce our speakers. Joining us today are: our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior VP of Mining Operations, Leonardo Coelho.

I will now hand the call over to Ignacio for his comments. Ignacio, please go ahead.

Thank you, Rodrigo. Good morning, everyone, and thank you for joining us today. Before we dive into our third quarter results, I would like to highlight the strategic catalysts that are strengthening Nexa's competitive position and underpinning our long-term value creation. We are executing our strategy across 5 key business catalysts, building a more resilient portfolio for long-term sustainable cash generation.

Starting with Aripuana, we are pleased to share that the fourth tailings filter is in route to the mine site. Installation begins in the fourth quarter of this year, enabling commissioning in early 2026. This is a critical step to achieving full production capacity. We will provide more details shortly.

In Peru, the Cerro Pasco integration project advances on plan. It leverages a well-known high-potential mineral district with over 15 years of potential mine life and meaningful net smelter return uplift. Our integrated mine smelter model remains a core differentiator. It mitigates volatility during down cycles, captures stronger margins in supportive pricing environments and enhance value retention across the zinc chain.

Finally, our growth strategy involves actively evaluating accretive opportunities in mining-friendly jurisdictions. Any investment will be grounded in disciplined capital allocation, prioritizing returns, operational excellence and sustainability. Together, these catalysts reinforce our strategic position and lay a strong foundation for long-term performance.

Let's begin with a review of our strong third quarter performance on Slide #4. Nexa delivered robust operational and financial results this quarter, driven by disciplined execution, improved mining output and a constructive price environment. Mining production reached 84,000 tons of zinc, a sequential and year-over-year increase. This was driven mainly by a record quarter at Aripuana and a solid recovery at Vazante following the disruptions at the beginning of the year.

In Smelting, total zinc sales were 150,000 tons, reflecting a stronger performance across all units, with Cajamarquilla also achieving its highest quarterly output to date. Financially, this translates into net revenues of $764 million and adjusted EBITDA of $186 million, both improving in all comparable periods, supported by higher volumes and stronger byproducts prices. We recorded a net income of $100 million or $0.52 per share and a free cash flow of $52 million, up versus the previous quarter, strengthening our balance sheet with net leverage slightly decreasing to 2.2x.

Now let's dive deeper into our mining performance on Slide #5. Our quarterly zinc production of 84,000 tons was up 14% from the second quarter. This was powered by a solid recovery at Vazante and a record quarter increase at Aripuana, which produced 10,000 tons of zinc, a 70% sequential increase.

For the first 9 months of 2025, zinc production reached 225,000 tons, reflecting lower treated volumes and grades in the first half of this year. Our consolidated mining cash cost net of byproducts strongly improved to minus $0.49 per pound, driven by higher byproduct credits and lower TCs. Year-to-date cash costs were minus $0.18 per pound, better than our guidance.

Our cost per run of mine was $51 per ton, stable quarter-over-quarter and in line with our guidance. As we previously highlighted, the year-over-year increase mainly reflects conditions at Aripuana earlier in the year. Excluding Aripuana, costs were broadly in line with the prior year. Financially, the Mining segment delivered net revenues of $372 million and adjusted EBITDA of $164 million with a 44% EBITDA margin, supported by stronger prices and improved operational performance.

With that, let's move to Slide #6 for more on Aripuana's quarterly milestone. Aripuana delivered its best performance since ramp-up, reflecting a more stable operation and a higher throughput in this period. The arrival of the fourth tailings filter is a critical step. We expect this upgrade to enable reaching nameplate capacity by the second half of 2026, securing long-term operational stability and cash generation.

On cost performance, we saw a notable quarterly improvement, supported by higher treated ore volumes and ongoing optimization. And finally, exploration continues to enhance future potential. Recent drilling results confirmed new mineralized extensions, reinforcing our confidence in the geological upside and the potential to keep extending the life of the asset.

Let's move to Slide #7 to review the latest developments on the Cerro Pasco integration project. In the third quarter, we made strong progress on Phase 1, which focuses on the new tailings pumping and piping system. Site mobilization is now complete, and we are progressing well with earthworks and civil construction on key areas, including the plant platform, tailings thickener and drive pipe channel. Major procurement packages are secured with 2 key packages fully manufactured this quarter.

In parallel, we are advancing with Phase 2 studies, which include technical assessment for the Picasso shaft and underground integration to define the most efficient long-term configuration. This project remains a strategic enabler for Cerro Pasco's long-term sustainability, supporting future production in this important mineral district.

Let's move to Slide #8 to review our Smelting operating performance in more detail. In our Smelting segment, sales reached 150,000 tons in the quarter, a 3% sequential increase, driven by higher production across all units, including a record quarter at Cajamarquilla, a continued recovery at Tres Marias.

For the first 9 months of 2025, sales totaled 425,000 tons, in line with our sales guidance, which reflected lower production earlier in the year. Financially, in the third quarter of this year, the segment delivered net revenues of $541 million and adjusted EBITDA of $23 million, reflecting the current margin environment and cost dynamics.

Our cost performance in the quarter was in line with expectations with a cash cost of $1.32 per pound, driven by higher zinc prices and lower TCs. Year-to-date, cash costs were $1.24 per pound, well aligned with our revised guidance. Our conversion cost was $0.35 per pound, is stable quarter-over-quarter and slightly below guidance year-to-date. The year-over-year comparison reflects lower sales volumes and higher operational costs as expected.

With that, I will 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 #9 for a summary of our financial performance. We saw strong momentum this quarter. Starting with the chart on the upper left, net revenues reached $764 million, up 8% sequentially and year-over-year, driven by higher zinc prices, byproduct credits and stronger operational performance. Year-to-date, net revenues reached $2.1 billion, an increase of 4% versus the first 9 months of 2024.

Moving to adjusted EBITDA. We reported $186 million in the quarter, a 16% increase from the last quarter and a 2% increase year-over-year with a healthy margin of 24%. This performance was supported by higher sales volumes and improved byproduct revenues. For the first 9 months of the year, adjusted EBITDA totaled $472 million, 9% lower than last year, primarily due to lower sales volumes in the first half of the year, lower TCs and higher operating costs.

Now turning to Slide #10 for some detail on our investments. In the first 9 months of 2025, we invested $227 million in CapEx, with the majority allocated to sustaining activities, including mine development, maintenance and tailings storage facilities, fully aligned with our operational priorities. In the quarter alone, CapEx totaled $90 million, in line with our expectations. For the Cerro de Pasco integration project, Phase 1 investments reached $12 million in the quarter and $30 million year-to-date, keeping us firmly on track with our full year guidance of $44 million. As such, our total 2025 CapEx guidance remains unchanged at $347 million.

Moving to the lower part of the slide, exploration and project evaluation investments totaled $53 million in the first 9 months of the year, of which $21 million was in the third quarter. These investments were primarily directed towards exploration drilling and mine development across our portfolio, supporting long-term optionality and value creation. We also reaffirm our $88 million guidance for exploration and project evaluation for the year as we continue to invest in our long-term pipeline.

Let's look at our cash flow generation for the quarter on Slide #11. We generated $196 million in operating cash flow before working capital, starting from $186 million of adjusted EBITDA and after excluding nonoperational items. This amount, we paid $48 million in interest and taxes and invested $91 million in CapEx across our operations. Loans and investments required $10 million, reflecting regular payments of financing and lease liabilities, partially offset by dividends received and the net sales of financial investments. We also paid $16 million in dividends to noncontrolling interests.

Foreign exchange gains contributed $2 million, mainly to the continued depreciation of the Brazilian real. Finally, working capital posted a positive impact of $19 million as we continue to prioritize initiatives to optimize our cycle and strengthen our liquidity. Looking ahead, we expect working capital to remain positive in the fourth quarter, bringing the full year position closer to neutral. Combining these effects, free cash flow in the quarter totaled $52 million.

With that, let's move to Slide #12. As you can see, our liquidity position remains healthy, supporting a solid balance sheet and an extended debt maturity profile. We ended the quarter with a solid liquidity of $790 million, including our undrawn $320 million sustainability-linked revolving credit facility. Our average debt maturity stands at 10.4 years with an average cost of 6.2% Importantly, our available liquidity, excluding the RCF, comfortably covers all of our financial commitments through the next 4 years. Net leverage improved to 2.2x, down from 2.3x at the end of last quarter, reflecting higher EBITDA for the last 12 months and a reduction in net debt.

Furthermore, we continue to optimize our capital structure by diversifying funding sources and enhancing liquidity. A key priority is maintaining a debt maturity profile that is aligned with the long life of our assets while preserving our investment-grade rating and guaranteeing competitive financing costs. We remain committed to deleveraging and reducing gross debt. Additionally, in the fourth quarter, we expect working capital normalization and stronger cash generation to further support our financial flexibility.

With that, I will now hand the call back to Rodrigo, who will discuss market fundamentals and our key insights from LME Week. Rodrigo, please go ahead.

Thank you, Jose Carlos. Moving to Slide #13. Let's start with the zinc market, where we see the backdrop continuing to evolve in a more constructive direction. During the quarter, LME prices trended higher, closing September at around USD 3,010 per ton. This strength was primarily supported by low exchange inventories and a weaker U.S. dollar.

On the supply side, while concentrate availability is gradually improving, utilization across the Smelting segment remains uneven. We believe seasonal and logistical factors will likely keep market relatively tight in the near term, supporting prices. This is reflected in treatment charges.

In China, imported spot TCs rose to about USD 110 per ton, reflecting increased concentrate availability. Meanwhile, Chinese domestic TCs eased toward the quarter's end as local supply restricted against steady smelter demand. Looking ahead, we see the market moving toward a balance. Galvanization demand remains robust, supported by global infrastructure and renewable energy investments. On the other hand, supply growth continues to face structural headwinds from declining ore grades and mine depletion, particularly in the Western Hemisphere.

Now turning to Slide 14 for a look at copper and silver. Copper market remains well supported by strong fundamentals. Supply disruptions and slower-than-expected mine ramp-ups have restricted balances, helping to keep prices at around USD 10,300 per ton. Demand continues to be driven by electrification, infrastructure spending and the rapid expansion of AI-related infrastructure, such as data center.

Silver also performed strongly, up roughly 58% year-over-year. This reflects its dual role as both a key industrial metal for the energy transition and a safe haven asset supported by the monetary dynamics.

Our outlook for both is constructive. Copper fundamentals are solid with structural demand from electrification, EVs and grid investment expected to outpace new supply, which remains constrained by permitting and project delays. For silver, industrial demand, particularly from solar, electronics and electric vehicles continues to grow, while investment demand benefits from global monetary uncertainty. This combination should help sustain prices at elevated levels relative to historical averages.

Now moving to the next slide. Finally, on Slides 15 and 16, I want to summarize our key takeaways from the LME Week held in London in mid-October. The sentiment was notably constructive. Despite global macro volatility, there was a broad bullish consensus on base metals and a strong recognition of zinc's essential role in decarbonization, especially in galvanizing steel for renewables, EVs and infrastructure. This aligns perfectly with our earlier discussions and reinforces that Nexa is well positioned to capture value as the market rebalances.

Looking forward, there are a few key factors we are watching closely, treatment charges benchmarks for the next year, Chinese export flows, mine output in the Western Hemisphere and trade policy developments. The 2026 forecasted TC benchmark is currently trending power around USD 130 to USD 180 per ton, which points to a gradual recovery in smelter margins. We see zinc prices holding near USD 3,000 per ton with limited downside given the tightening supply outside China.

Furthermore, potential export restrictions and logistical issues in China could redirect material flows to other markets. This would favor producers like Nexa with our regionally integrated low-carbon operations in the Americas. As major mines in the Western world approach depletion and our Aripuana mine advances towards full capacity, Nexa's reliable and sustainable asset base is a key differentiator, is strengthening our leadership position. In summary, we see a highly supportive backdrop across our key commodities, resilient demand, tightening supply and a growing recognition of zinc's strategic importance.

Now on Slide 17, I will comment on our ESG agenda. First, in social performance and community, we received the PERUMIN Seal of Excellence in Gender Equity, a recognition of our efforts to advance diversity and inclusion in the mining sector. We also launched Nexa Transforma in Brazil, a unified platform to scale our social investments.

Second, in the Environmental Stewardship, we obtained the GHG Protocol Brazil Gold Seal for the second year, demonstrating our progress in reducing emissions. We also advanced circular economy projects at our smelters.

And third, in Governance and Transparency, we achieved full compliance with the LME Responsible Sourcing standards, Track A, aligned with OECD Due Diligence Guidance, an important milestone that reinforces credibility across our value chain. Taken together, these achievements underscore our leadership in sustainable zinc production and our commitment to creating long-term value for all stakeholders. 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 #18 to explain our focus and priorities. We delivered a strong third quarter and continue to execute our strategy with discipline.

At Aripuana, while some short-term challenges remain, the asset is demonstrating its long-term strength. Our record quarter production reinforces its potential and sustainable cash generation.

At Cerro Pasco, execution continues to move forward, unlocking a significant value creation opportunity in a Peruvian district.

Exploration results across our portfolio indicate potential further mine life extensions and greater mine smelter integration, reinforcing our business model. From a financial perspective, our balance sheet remains solid, supported by disciplined capital allocation and a clear commitment to deleveraging.

Most importantly, our unwavering commitment to safety for our people and communities remains the foundation of everything we do. This is all underpinned by our ESG leadership exemplified by our Cajamarquilla smelter, one of the world's largest zinc smelters, which is now powered by 100% renewable energy.

In closing, we thank you again for the time and continued confidence in Nexa. Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Gabriel Barra from Citi.

I have 2 here from my side and mostly focused on the capital allocation. You guys have mentioned about the working capital relief in the fourth quarter. We believe and we are seeing the results of the company, we expect the company to have a stronger free cash flow for now on. How should we see the leverage level of the company behaving in the short to medium term? And what's the level of leverage that the company is targeting for next year?

I know that you guys cannot give like a kind of guidance, but I want to understand the trend here for the leverage? And additionally, on this question, there is any other way here to decrease faster the gross debt in the short term? How do you see this liability management given this comfortable level of liquidity in the short term of the company? So most of the -- [ in fact ] those are the 2 questions that I have here.

Gabriel, thank you for the question. Yes, I think this is an important topic and one that has come up in previous meetings as well. And I think we can reinforce our commitment to deleveraging. Obviously, the speed at which we can do that will rely on, first of all, our discipline in achieving our operational results, which we are on track for. The expectation that we have on operational results going forward. That's key, and that's something that we can control.

Something that we don't control, but that is showing favorable tailwinds is current level of prices, which will obviously help us to achieve better free cash flow and to reduce leverage faster as well. Going forward, we continue to see that operational results and free cash flow generation should improve, obviously, subject to what prices are going to be. Ideally, we would like to reduce our gross debt by about $500 million to $600 million in the next 4 years or so, but we have to take this 1 year at a time, obviously.

And we would like to bring down our net leverage to levels closer to onetime, so that we have more flexibility because we will continue to see volatility, and we know we are in a cyclical industry, so conditions can change. And this all in parallel to our constant efforts to control costs despite inflation, our aspiration is to keep costs at least at the level of what we had the prior year despite inflation. So that's a continuous effort, and I don't see that changing in the short to medium term.

So our goals continue to be the same. Our priorities, as we have mentioned before, are the same. Deleveraging is key. And in line with that, also maintaining our investment grade. Hope I answered your question. Please let me know if there's -- if I missed something.

No, really clear.

Our next question comes via phone. [Operator Instructions]

Can you hear me?

Perfectly.

All right. So 2 questions. One is on the Aripuana. Can you maybe provide Ignacio or Leonardo a little bit more color as to what are the next steps to install the fourth filter. You did mention Ignacio that you should expect the second or middle of the year, second half of the year to have this in operation. But what are the critical steps between now and then?

And then my second question will be on free cash flow generation. I wanted to confirm, Jose Carlos, that you expect working capital in the fourth quarter to generate cash; and therefore, bringing the full year working capital to be neutral in terms of cash contribution? And then any views -- early views on the CapEx for 2026?

Okay. Thank you, [ Carlos. ] Thank you for the questions. First of all, around Aripuana, as I was saying, the project is on track to be -- to start commissioning in April next year. The filter has arrived in Brazil is going to be in the operation next week and all the infrastructure that we are building to accommodate the filter and putting the piping system in place and all the earthworks that have to be done are advancing very well. So we anticipate that at the end of the first quarter April, we will start commissioning.

Commissioning should be very fast because -- I mean, we have done everything we needed to do in terms of details of construction to make sure that we can commission in a fast way. So that's why we are saying that the full benefit will come in the -- through the mid next year, okay? Important to mention that today, we have -- we are -- with the 3 filters that we have that have, they have limited capacity in terms of achieving humidity for our stockpiles.

We are performing very well on those, and we are achieving close to 80% of capacity of the plant and the filter, the fourth filter itself has a capacity around 75,000 tons to 80,000 tons and the capacity -- total capacity of the plant is 180,000 tons. So it give us a 35%, 40% capacity. So with the 3 filters that we have today and the fourth filter that we have that is coming, we should be able to produce at full capacity, as we are saying, starting April commissioning and in the second half at full speed.

So we are very confident on that. And we believe that the project is on track and the CapEx that we said that we were going to spend is also the one that we are achieving today. Okay?

Regarding working capital, Jose Carlos, please?

Yes. I will address that. You're right. As we have seen in prior years, we have this intra-year seasonality, which we have seen quarter after quarter this year as well. So our expectation is that in the fourth quarter, we will also have a positive contribution from working capital. And the target continues to be that for the entire year, the impact should be close to 0. And for planning purposes, that is the same assumption that we use, that we see some seasonality within the year. But year-over-year, unless something surprising happens, we should expect working capital to have a neutral effect on the cash flow generation of the company.

In terms of CapEx for next year, we're still actually in the budgeting process. So it will be early to tell you -- to give you some guidance. Obviously, we will make that public as soon as we finalize our figures. But I don't see anything drastic changing in 2026 compared to 2025. So for practical purposes, you can assume that it will be something in the same neighborhood, but we are finalizing the details of that, and we will share as soon as we can.

Our next question comes from Tathiane Candini from JPMorgan.

My question is a little bit of a follow-up for my colleagues. And I would just like to understand a little bit your perspective when it comes to 2026. I think we are a little bit more conservative on zinc prices with like some rise in supplies, demand, which is not following up that fast. We know that prices have been pretty resilient.

But my question for you guys is the CapEx, and I understand that you still budgeted this, but does the CapEx for next year has flexibility to adjust in case of lower zinc prices? We know that Pasco complex like has some development to happen. We know that Aripuana also, as you mentioned, is working on the fourth filter. So my question here is just to understand a little bit on how flexibility do you feel that you have for CapEx if needed?

Thank you for the question. We have some flexibility on CapEx. Let's say, we have -- 3 streams on CapEx. One is the projects that we have that are important for us, the fourth filter, the Cerro Pasco project, and those we have to develop. Because at the end of the day, this is value creation for the company in the long term.

The second one is sustaining CapEx, which is the CapEx that you have to incur to make sure that you achieve your production for the year and that you make the money that you are expecting to make. And that is something that we can -- is somehow flexible, but it's better to achieve that because otherwise, the operations are going to suffer in 2027 because you have to develop the mine, you have to buy the equipment, and we are very, very rigid or disciplined on that.

And the third is the CapEx that we have in different projects that they follow a capital allocation strategy. That CapEx that accounts more or less 20%, 25% of the total CapEx is the one that is flexible for us for 2026 and in general, okay?

But having said that, you're talking about prices. The way we do our budget is that we are very conservative on zinc. Zinc is our main metal. And we believe that doing a conservative price scenario for zinc for next year for us is important. So we challenge our operations and make sure that we have the production we want, we have the cost that we want and we achieve the CapEx that we need to achieve, okay?

The good thing is that we also produce other metals: 70,000 tons of lead, 12 million ounces of silver, which is a lot and the upside on silver is very high; and we produce almost 30,000 tons of copper. So these 3 metals that are byproducts for us are showing fundamental values that might be able to be similar to the levels that we have today in 2026.

So having said that, managing the variables that we can manage, I believe being conservative on zinc, we might get some exposure in the other metals, and we might get a more robust cash flow, okay?

Clear, guys.

Our next question comes from Lawson Winder with Bank of America.

Can you hear me okay?

Yes.

Okay. Fantastic. My screen was just showing that I was muted. If I could turn the attention back to Aripuana and dig in a bit more on the workforce turnover issues that you had had. And of course, on recent calls, you've spoken to some of the efforts to address those. But where is that today? And where is the turnover versus recent peaks? And then some of the programs that you've spoken to in the past to address the issue, how are those proceeding?

Yes. No, very important your question because Aripuana has been a very difficult project to build. We had a very tough 2 years of commissioning. And one of the work streams that are very important -- is very important for us is turnover. We started with a turnover of 35%, 40%, and that was very high because this Aripuana location is very isolated from the rest of Brazil. And it's a small town that we have been developing for the long term. We have been working on putting schools -- on hospitals and building entertainment for families that is important for us.

So you are right, we are -- turnover is improving. The average that we have today is between 18% to 20%, which is still high, yes. So the measures that we take is -- the most important one is trying to make sure that the families that live there have a long-term view of staying in that town, okay? And this is schools, this is health programs. This is building programs for the [ wives. ] We are also working on retention programs for key people. We need to bring senior people because of the turnover. The senior people are the ones that really manage the plant, the mine and the main facilities. And because of the turnover, you have to train and train and train again.

So we are putting programs for senior people with retention bonuses that are important, and we are giving them flexibility on the fly in, fly out again. So there is a coordination effort to make sure that this turnover goes down to normal levels that are between 8% to 10%.

Having said that, we experienced that many years in the past in Vazante. So this is our process. We are aware that this is our process. So we take some backup actions here. One is that instead of having, let's say, in maintenance for the plant, a shift of 20 people, we have more. So we train them all and with the turnover, we have the full people or the full team in the plant whenever it's needed, okay? So we have also some backup [ plans ] that are costing us money.

And if you can see the cost of Aripuana today is high, but it's part of the progress that we need to be -- in terms of building the team that we want. We have very good people there. We have talented people there. But it's difficult for them because, again, Brazil is also a very -- it's a full employment. So we compete with other industries and other mining companies -- so we have to do a big effort to retain this talent. But I think we are doing the right thing. We believe we have the right strategy. So that's why turnover is going down, but still there is a long way to go.

Okay. Fantastic. I also wanted to just say thank you for providing a specific Q4 guidance. And then on Cerro Lindo, you didn't mention silver, but the guidance and 9 months results imply flat silver production in Q4 versus Q3. Is that accurate?

Lawson, this is Rodrigo. Thanks for the question. You're right. We expect Cerro Lindo -- actually, we expect Cerro Lindo to perform slightly better in 4Q versus 3Q in terms of zinc production and lead production. Silver may be flat quarter-over-quarter. This is basically driven by the current mine plan. But as we move forward with the 4Q reaching the end of the year, we're going to revise the very short-term mine plan to see if we can eventually access higher silver grades. But so far, we are planning to have like a flat quarter-over-quarter in terms of silver.

Okay. And then just finally, Ignacio, a question for you, just given where you come from. There's a national election just around the corner in Peru. What is your view right now on the mood in the country? And is there any risk of a potential material change in direction post elections, but then -- particularly as it pertains to mining?

Yes. It's a very important question. And you know that we have a new President that is in place 2 weeks ago. And if you are not local or you're not close to Peru, you believe that this is a very difficult situation in terms of political environment, which is -- but in any case, what I want to convey, and this will happen also for the next elections is that the country or the mining sector runs according to your relationship with communities and relationship with authorities regarding permits and projects and doing that.

So in the last 10, 15 years, the case has been that if you keep a strong relationship with communities, you make a win-win strategy and you develop your projects -- it shouldn't be a problem in the political environment. So the political environment, in a sense, is isolated from the day-to-day of mining companies and in -- other industries as well.

Having said that, it's difficult to predict what will happen in the new election because today, we have many candidates, and this has been the case for the last also 15, 20 years. So the -- towards the finishing to start the first round, which is, I think, is in April next year, we will know 3 to 5 days before who are going to be the ones that are going to go to the second round. Today, we don't know. So this is a career that is a marathon from here to April.

Yes. But the comment is that I think most presents have realized always that the income that they get from the mining sector is so important that they cannot -- I mean, affect the mining companies and the mining sector. This has been the case for Las Bambas. This has been the case for Cerro Verde and for most mining companies because 12%, 15% of the GDP of Peru is mining.

So I think everybody realizes that it's good to keep the mining sector going on. And I think this relates to new projects, this relates to permits that you will get. This relates to relationship with authorities that you have. But then you have to build always a relationship with community. So this is more or less the context, Lawson. I believe it's going to be -- there is a lot that we can say in the next months. and we have to wait. We have to wait.

Now I'll turn the call over to Mr. Rodrigo Cammarosano for reading questions. Please go ahead, sir.

Thank you, operator. We have one initial question from an investor. So the question is, with an increased silver price, is Nexa pursuing any opportunities to increase silver production? I will hand this discussion to Jose Carlos.

Thank you, Rodrigo. The short answer is no, and I wish that we have that flexibility. But as you probably know, for us, silver is a byproduct. So it comes together with the other metals that we produce and that they already have a defined mining plan. It's very difficult to prioritize even though it will be great given current prices.

However, the good news, and you probably remember this, we have a silver streaming agreement that dates back from 2016 or 2017, and this is related to the silver production of Cerro Lindo. So 65% of the Cerro Lindo silver production goes to the silver streamer, but this streaming contract stipulates that once a certain threshold of 90 million ounces is reached, this steps down to 25%. And this is happening towards the end of the second quarter. We expect that this will happen towards the end of second quarter of next year.

So that's about -- Cerro Lindo produces close to 4 million ounces, close to 4 million ounces of silver. So this is about 1.6 million ounces. This could be $70 million to $75 million of cash flow -- additional cash flow at current prices. So this is significant. So this is the good news, even though our silver production is not that flexible. This is good news for Nexa in 2026.

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

Thank you very much. Thank you very much all for attending one more time. I would like to reiterate our commitment to deliver a strong production on the fourth quarter of this year. I believe that at these price levels, we should be able to generate additional cash flow. This has been a very difficult year for us.

And as we were saying, we have a very weak first half of the year based on the Aripuana performance, based on the problems that we have -- geotechnical problems we had on Vazante. And also based on the poor market of smelters regarding the TCs, very low TCs and sometimes negative TCs that affected the cash flows of the smelters.

So with those challenges, the third quarter for us was strong. We believe that we are in a good trend to build the fourth quarter also similar to the third one. And next year, we are very committed to make sure that Aripuana achieves full production that we finish the piping system in Pasco and that we are exposed to better commercial terms to our smelters, especially in Brazil. So thank you very much to all. We look forward to speaking to you for our year closing numbers. Thank you.