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Nexa Resources S.A. (NEXA) Q4 2022 Earnings Call Transcript

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Nexa Resources S.A. (NYSE:NEXA) Q4 2022 Results Conference Call February 16, 2023 8:30 AM ET

Company Participants

Roberta Varella - Head of Investor Relations

Ignacio Rosado - President, Chief Executive Officer

Jose Carlos del Valle - Chief Financial Officer

Conference Call Participants

Jens Spiess - Morgan Stanley

Operator

Good greeting everyone and invited to Nexa Resources Fourth Quarter and Full-year 2022 Conference Call. All participants will beryllium successful listen-only mode. [Operator Instructions] This arena is being recorded and besides being broadcast via webcast and whitethorn beryllium accessed done Nexa’s Investor Relations website wherever nan position is besides available.

After today’s presentation, location will beryllium an opportunity to inquire questions. [Operator Instructions] Remember that nan participants of nan webcast will beryllium capable to registry via website questions, simply type your mobility successful nan container and click sent and that will beryllium answered soon.

I would now for illustration to move nan convention complete to Ms. Roberta Varella, Head of Investor Relations, for opening remarks. Please spell ahead.

Roberta Varella

Good time and bully afternoon, everyone, and invited to Nexa Resources 4th fourth and full-year 2022 net convention call. Thanks for joining america today. During nan call, we will beryllium discussing nan company’s capacity arsenic per nan net merchandise that we issued yesterday. We promote you to travel on pinch this on-screen position done nan webcast.

Before we begin, I would for illustration to tie your attraction to Slide Number 2, arsenic we will beryllium making forward-looking statements astir our business, and we conscionable inquire that you mention to nan disclaimer and nan conditions surrounding those statements.

It is now my pleasance to present our speakers. Joining america coming is Ignacio Rosado, our CEO; Jose Carlos del Valle, our CFO; Leonardo Coelho, our Senior Vice President of Mining.

So now I will move the telephone complete to Ignacio for his comments. Ignacio, please spell ahead.

Ignacio Rosado

Thank you, Roberta, and acknowledgment to everyone for joining america this morning. Please let’s move now to a Slide number 3, wherever we will statesman our presentation. Let maine statesman by saying that contempt a very challenging situation pinch important volatility in commodity prices and ongoing inflationary costs pressures, we are pleased pinch our 4th fourth and full-year operational performance.

I’m closing my first twelvemonth arsenic CEO of Nexa and I’m very proud of nan important activity we person done passim 2022. I would for illustration to bespeak connected immoderate of nan cardinal accomplishments of nan year. We deployed a group of initiatives and caller ways of working, amended streamline our firm building and supported our strategical priorities.

We achieved our operational guidance successful each metrics. Mining accumulation was adjacent to nan precocious range, while metallic income were astatine nan high-end, exceeding nan guidance range. Mining rate costs was in-line pinch guidance and smelting rate costs was somewhat beneath guidance.

Aripuanã ramp up has continued to advancement and nan 4th fourth marked Aripuanã’s first revenue. We are besides pleased to pass that, we process zinc successful ore from Aripuanã astatine our - smelter successful Brazil. The mean capacity of nan works astatine nan opening of February is supra 60% and our exploratory drilling activities successful this excavation besides indicated a imaginable summation successful mineral reserves and resources.

Another important milestone present is nan adjusted EBITDA achieved by our operations, which was $120 cardinal successful nan 4th fourth and a grounds precocious of [$6760] (Ph) cardinal for nan year. Cash travel generated from operations successful 2022 earlier description was $285 million.

And I would besides for illustration to stress our beardown equilibrium expanse pinch a coagulated rate position, almost $820 cardinal and a nett debt-to-EBITDA ratio of 1.5 times All these achievements reaffirm our committedness to disciplined superior allocation and affirmative rate travel generation.

Now moving to Slide Number 4. In Slide Number 4, regarding nan operating capacity of nan Mining segment, you tin spot that zinc accumulation successful nan 4th fourth decreased to 75,000 tons, down 8% year-over-year and 2% quarter-over-quarter. This alteration was chiefly explained by nan consolidated little zinc caput people successful our mines.

In 2022, zinc accumulation totaled 296,000 tons, 7% little than successful 2021, owed to little ore throughput successful Cerro Lindo that was impacted by COVID astatine nan opening of nan year, and besides little throughput successful our Vazante excavation impacted by dense rainfall levels besides astatine nan opening of nan year.

In narration to rate costs, mining rate costs successful nan 4th fourth of 2022 decreased to $0.20 per lb compared to $0.25 per lb successful nan 4th fourth of 2021 and $0.57 per lb successful nan 3rd 4th of 2022. In some cases, nan alteration is chiefly explained by higher by products contribution.

For 2022, rate costs achieved guidance by accrued to $0.28 per lb compared to that $0.21 per lb successful 2021. And this was chiefly driven by little zinc volumes and higher TCs, which were partially offset by higher by merchandise grades.

Now moving to Slide Number 5. In descent number 5, regarding nan operating capacity of nan smelting segment, metallic income totaled 167,000 tons successful nan 4th fourth of 2022, up 6% from nan 4th fourth of 2021 and up 3% from nan 3rd 4th of 2022. This summation was chiefly driven by higher accumulation volumes and coagulated request successful our markets.

In 2022, metallic income totaled 616,000 tons, down 0.4% compared to 2021. With respect to rate costs successful nan 4th fourth of 2022, smelting rate costs decreased to $1.20 per pound, compared to nan $1.28 per lb successful nan 4th fourth of 2021. This alteration was chiefly driven by little LME prices, higher TCs, and higher byproducts contribution.

When we comparison nan 4th fourth of 2022 pinch a 3rd 4th of 2022, rate costs decreased by $0.16 per pound, owed to little LME prices. The full-year rate costs successful 2022 was $1.34 per pound, compared to nan $1.13 per lb successful 2021.

This summation was owed to higher LME prices, which affected our earthy worldly costs, higher operating costs, explained by ostentation and antagonistic FX successful Brazil. And these 2 factors were partially offset by higher byproducts contribution. For 2022, rate costs was beneath our yearly guidance of $1.37 per pound.

Now please let’s move to Slide Number 6. Ramp up activities astatine Aripuanã excavation are progressing and we person continued to attraction connected expanding nan scheme throughput rate, expanding plus reliability and improving ore grades.

The gathering capacity utilization scope 53% successful December of 2022, compared to 32%, astatine nan extremity of nan 3rd 4th of nan aforesaid year. At nan extremity of December, location were astir 600,000 tons of ore disposable successful stockpiles, which will thief pinch nan ramp up activities.

Underground activities proceed to attraction connected processing and preparing caller areas for mining operations. In March 2023, you should spot an summation successful reserves and resources wherever we will people our caller inventory.

In narration to CapEx during nan past 4th of 2022, we invested $6 cardinal successful Aripuanã, totaling $66 cardinal successful CapEx successful 2022 for a cumulative CapEx of $632 cardinal since nan opening of nan project. It is worthy mentioning that successful 2022, FX had a antagonistic effect of $5.5 million.

Now, moving to nan adjacent slide. In nan Slide Number 7, we are pleased to pass you that astatine Aripuanã we started to waste concentrates wrong marketplace specifications and we achieved our first gross astatine nan extremity of nan 4th fourth of 2022 pinch an summation successful income scheme for nan first 4th of 2023.

In summation zinc successful ore from Aripuanã has been processed astatine our Juiz de Fora smelter successful Brazil. The capacity utilization complaint astatine nan opening of February is complete 60% and we expect to execute afloat capacity successful nan 2nd half of 2023.

Now moving to Slide Number 8. In 2022, we executed complete 115,000 meters of exploratory drilling successful each of our mines and projects and complete 140,000 meters successful operational infill drilling. At Cerro Lindo, nan Puka Saya mineralized assemblage proceed to beryllium extended to nan southbound eastbound pinch bully results. At Vazante, nan Brownfield exploration attraction connected expanding existing mineralized zones successful a bluish hold of nan mine.

At Aripuanã, we achieved outstanding results successful our Brownfield programme pinch infill drilling confirming heavy and precocious people mineralization, which is supporting nan summation successful mineral reserves and resources.

Regarding nan Pasco complex, nan results are nan Porvenir mine. And [indiscernible] excavation confirmed nan continuity of mineralization, which has nan imaginable to widen nan life of some mines. That reference campaigns successful our Greenfield projects Ilario and Namibia besides presented coagulated results.

Now, I would for illustration to move complete nan telephone to Jose Carlos del Valle our CFO who will coming our financial results. Jose, please spell ahead.

Jose Carlos del Valle

Thank you, Ignacio. Good greeting and bully day to everyone. I will proceed connected Slide 9. I’m pleased to study coagulated financial results for nan full-year 2022. As you tin see, opening pinch a floor plan connected your precocious left, full consolidated nett gross for nan 4th fourth accrued by 15% year-over-year, owed chiefly to higher metallic sales, compared to 3rd 4th of 2022, nett revenues accrued by 11%, chiefly driven by nan mining sector.

Looking astatine nan full-year successful 2022 consolidated nett revenues scope $3 cardinal versus $2.6 cardinal successful nan aforesaid play past year, an summation of 16% chiefly owed to higher prices. In position of adjusted EBITDA, consolidated adjusted EBIT successful nan 4th fourth of 2022 was 120 million, compared to 153 cardinal successful nan 4th fourth of 2021 and 121 cardinal successful nan 3rd 4th of 2022.

For nan full-year, consolidated adjusted EBITDA accrued by 2% to $760 million, nan highest yearly adjusted EBITA ever achieved by Nexa. In narration to these figures, it is important to mention that successful December 2022 Nexa revise its adjusted EBITDA meaning aiming to supply a amended knowing of its operational and financial performance. Prior play comparatives person besides been adjusted based connected nan updated definition.

We now move to Slide 10, wherever I will explicate our results successful further detail. In nan mining segment, nett revenues for nan 4th fourth of 2022 totaled 350 cardinal down 3% versus nan aforesaid play of past year. This is explained chiefly by higher TCs and little LME guidelines metallic prices. These antagonistic effects were partially offset by higher copper, lead and metallic volumes.

For 2022 arsenic a whole, nett gross for nan mining conception totaled 1.25 cardinal compared to 1.16 cardinal a year-ago, chiefly owed to higher sync LME prices and nan summation successful copper, lead and metallic volumes.

Regarding adjusted EBITDA connected your precocious right, 4th fourth adjusted EBITDA for nan mining conception was 78 million, a simplification of 36% year-over-year chiefly driven by little prices and higher TCs. We besides started signaling nan income of Aripuanã successful our results, which still person a higher portion cost.

This resulted successful a antagonistic effect of $14 million. Compared to nan 3rd 4th of 2022, adjusted EBITDA accrued by 22%, chiefly driven by higher prices and higher byproduct contributions. Finally, adjusted EBITDA for nan mining conception successful 2022 was $440 cardinal compared to $477 cardinal past year, chiefly owed to increases successful operational costs and besides Aripuanã effect.

Switching complete to nan Smelting segment, nett revenues successful nan 4th fourth totaled $606 million, an summation of 19% versus nan 4th fourth of 2021. This betterment is owed chiefly to higher income volumes. Compared to 3rd 4th of 2022, nett revenues decreased 1%, chiefly owed to little metallic prices.

Now for nan full-year 2022, nett gross for nan Smelting conception totaled 2.5 cardinal compared to $2 cardinal successful nan aforesaid play of past year, chiefly owed to nan summation successful zinc metallic prices. When we look astatine adjusted EBITDA for nan 4th fourth of 2022, we spot that nan Smelting conception reported $46 million, up 44% from nan 4th fourth of 2021. This is explained chiefly by higher alteration and an summation successful byproduct publication of $19 million.

Compared to nan 3rd quarter, adjusted EBITDA for Smelting conception decreased by 21%, chiefly explained by a non-cash effect of 40 cardinal related to nan update of biology liabilities and related provisions successful Brazil. Finally, nan Smelting segment’s adjusted EBITDA for nan full-year 2022 totaled 326 million, compared to $271 cardinal a year-ago. This is an summation of 20%.

Now let’s move connected to Slide Number 11. For 2022 and starting from our $760 cardinal of adjusted EBITDA without Aripuanã expenses and investments, we tin spot that rate travel provided by operations earlier moving superior changes was $806 million.

We past paid $229 cardinal related to liking and taxes and $234 cardinal successful sustaining CapEx for our existent operations. We besides paid dividends of 75 million, including nan magnitude distributed by our subsidiary Pollarix. Additionally, we invested $41 cardinal successful non-sustaining CapEx.

In narration Aripuanã, we invested astir 226 million, including CapEx, pre-operating expenses and moving capital. It is important to mention that successful 2022, we had a antagonistic nett effect of $70 million, owed to nan early redemption of our 2023 notes, which was partially offset by a caller export people facility.

Foreign speech effects connected rate and rate equivalents was a affirmative $60 million. Finally, location was a moving superior variety of $136 million, chiefly owed to higher LME prices connected inventories and little outstanding amounts of accounts payable.

With each nan effects presented successful this slide, 2022 free rate travel was antagonistic $246 million. Now for 2023, we are assured pinch nan completion of Aripuanã’s ramp up and a number of rate invention initiatives, we will make a beardown publication to nan company’s free rate travel generation.

Now let’s move to Slide 12. In this slide, you tin spot that our liquidity remains beardown and that we proceed to study a patient equilibrium expanse pinch an extended indebtedness profile. By nan extremity of 2022, our existent disposable liquidity was astir $816 million, including our undrawn revolving in installments installation of 300 million.

It is important to mention that arsenic of December 31st, nan mean maturity of our full indebtedness was 4.6 years, pinch a 5.3% mean costs of debt. Finally, our leverage measured by nan nett indebtedness to adjusted EBITDA ratio was 1.5 times compared to 1.4 times astatine nan extremity of nan 3rd 4th and to 1.3 times a year-ago.

Now moving to Slide 13 to talk marketplace fundamentals. As you each know, we had precocious volatility successful guidelines metallic prices during nan twelvemonth owed to a number of macroeconomic factors. Despite this during 2022, zinc was 1 of nan astir resilient metals registering a value summation of 16%, compared to 2021.

Although we expect zinc prices to stay comparatively precocious successful 2023, we expect that prices will beryllium little compared to 2022 simply managed to proceed to beryllium driven by investments successful nan infrastructure and building sectors.

Regarding copper prices successful 2022 decreased by 6%, compared to 2021, partially affected by nan anticipation of a imaginable slowdown successful world system maturation and of a higher proviso successful nan short-term.

Going forward, electrical conveyance accumulation and renewable power projects are nan main drivers for copper demand. Overall, nan outlook for zinc and copper successful nan mid to semipermanent remains affirmative and is supported by coagulated marketplace fundamentals.

Now moving to Slide 15, we are going to talk astir nan mining segment. As we show present for 2023. Zinc accumulation astatine nan mid scope of nan guidance is estimated to summation by 11% from 2022, chiefly driven by further accumulation from Aripuanã.

In wide zinc accumulation is expected to summation successful each of our mines isolated from for Cerro Lindo owed to little deed rates. For 2024, zinc accumulation is estimated to summation 6% pinch a further 2% successful 2025 complete 2024.

In 2023, firm accumulation astatine nan midpoint of nan guidance scope is forecasted to summation by 1% connected average, compared to 2022 besides mostly driven by Aripuanã. Before decreasing successful 2024 arsenic we expect to entree little people copper areas. This is in-line pinch a excavation plan. Lead accumulation follows a akin outward trend, and is expected to summation by 10% successful 2023 versus 2022.

With further increases of 10% and 8% successful 2024 and 2025, respectively. Consolidated 2023 runoff excavation mining costs astatine nan mid scope of nan guidance are estimated to summation 2% year-over-year, chiefly driven by Vazante owed to a scheduled trunnion maintenance, successful summation to expected higher power prices and inflationary pressures connected costs.

In position of rate cost, which does not see Aripuanã, we estimate mining rate flows betwixt $0.49 per lb and $0.54 per lb successful 2023, compared to $0.28 per lb successful 2022. The main reasons for these are, connected 1 manus ongoing inflationary costs pressures and connected nan different factors for illustration higher TCs, little by-product credits arsenic we presume little guidelines metallic prices compared to 2022 and besides a alteration successful sync volumes from our existent operations without Aripuanã.

Turning now to Slide 16 to talk 3 twelvemonth guidance for a smelting segment. For 2023, it is important to mention that metallic income astatine nan midpoint of nan guidance scope are estimated to decreased by 4%, compared to 2022.

As these estimates do not presume nan resale of worldly from 3rd parties, for nan forecasted periods, nan smelters are expected to run astatine normal levels and income are expected to beryllium akin to accumulation levels.

In position of conversion costs, we estimate smelting consolidated conversion costs to summation slightly, chiefly owed to inflationary costs pressures and higher power costs successful Brazil. On nan different hand, consolidated smelting rate costs successful 2023 are expected to alteration year-over-year, chiefly owed to an estimated alteration successful zinc prices and higher TCs, which should beryllium partially offset by little byproduct rates.

Next, earlier moving forward, I would for illustration to talk power successful immoderate much detail. As astir of you are aware, we consolidate our Pollarix subsidiary successful our results. Pollarix is responsible to proviso power for our operations, and it has an equity liking successful respective powerfulness plants successful Brazil, 1 of them being Enercan.

In November Enercan superior building changed and arsenic a consequence we mislaid nan associated power we had successful nan past. Consequently, we person stopped recognizing Enercan’s proportional results successful our numbers, we will still person dues, truthful this will person nary effect connected our last result, but it will person an effect connected our mining and smelting costs, which will summation successful comparison to 2022.

Finally, turning complete to my past descent connected finance guidance. For 2023 we expect CapEx of $310 million, sustaining investments are expected to full 268 million, pinch mining accounting for 194 million, including 52 cardinal from Aripuanã and smelting accounting for $64 million.

In nan mining segment, nan mostly of sustaining superior expenditures astir 79 cardinal are for underground excavation development, and 54 cardinal for nan tailings retention facility. In position of mineral exploration successful 2023, we estimate a full finance of 55 million, besides down compared to 2022.

Finally, task information investments are estimated astatine $55 million, chiefly driven by nan Tres Marias installation task of 20 cardinal and 28 cardinal related to firm IT, imaginable maturation projects and various different projects crossed our business units.

I will now manus nan telephone backmost to Ignacio for his last remarks. Ignacio please.

Ignacio Rosado

Thank you, Jose Carlos. I would for illustration to adjacent this position by concisely reinforcing our priorities. This year, we person been capable to consistently execute and present beardown results pinch operational elasticity and a rigorous subject successful costs and investments. Nonetheless, we are alert that uncertainty of today’s economical scenery is apt to widen into nan full of 2023 affecting nan request for our products arsenic good arsenic putting unit connected our costs.

In Nexa, we will stay focused connected optimizing costs OpEx and CapEx to decently navigate successful nan existent environment. With respect to Peru, contempt nan existent governmental instability, we judge we person beardown relationships pinch our big communities, which will proceed to support our operational objectives.

We besides spell into 2023 pinch a beardown equilibrium sheet. We will support delivering based connected our purpose, executing connected our ESG study, and advancing nan galore initiatives we person underway passim 2023. Finally, I would for illustration to stress that we stay assured that our semipermanent dynamics of our manufacture are promising arsenic nan basal worth for zinc and different guidelines metals is robust.

Thank you each for attending nan presentation. With that we will beryllium happy to return your questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Roberta Varella

So we person 1 mobility present from nan web [indiscernible] When is nan commercialized accumulation of Aripuanã expected to begin?

Ignacio Rosado

Okay. Thank you, Roberto. This is Ignacio Rosado. As we said successful nan presentation, Aripuanã reached a 53% capacity successful December, 60% capacity successful January and much than 60% successful February and we commencement transporting commercialized ore from Aripuanã successful January.

So officially, Aripuanã is successful commercialized accumulation successful January. We are expecting arsenic we said successful nan telephone that, successful nan 2nd half of this year, we will beryllium astatine afloat capacity and we tin remark much during nan coming months.

Roberta Varella

So nan adjacent mobility from nan web is from [Hernan Kisluki] (Ph) from MetLife. The costs guidance for 2023 includes a 2% summation successful ROM but 84% summation successful rate costs. Is nan quality that contributed to little byproduct prices aliases are location different factors?

Jose Carlos del Valle

Thank you Roberto. In narration to this question, I would first opportunity that, evidently our attraction is to power costs successful each nan aspects that are nether our power and that is reflected successful nan 2% summation successful nan mining costs of ROM that is what we tin control.

In position of nan mining rate cost, it is chiefly related to our assumptions related to byproduct contributions, nan trades and somewhat little accumulation successful zinc, noting to successful Aripuanã from nan existing mines. So nan attraction continues to beryllium connected controlling our costs, nan ones that we tin control. The different ones are based connected assumptions.

Roberta Varella

A continuum from nan web. What is nan expected publication to EBITDA for Aripuanã successful 2023 and 2024?

Ignacio Rosado

Yes. So again, Aripuanã ramp up is going really well. However, arsenic you whitethorn cognize successful nan ramp up period, things move guardant and it is difficult for america to foretell what is going to beryllium nan EBITDA for nan remainder of this twelvemonth and 2024.

As I said, Aripuanã will beryllium astatine afloat capacity successful nan 2nd half of this year. So successful nan coming months, we tin springiness you much guidance connected nan advancement of Aripuanã. But today, I would opportunity it is early to task an EBITDA for this twelvemonth and nan pursuing one.

Operator

And everyone, we do person a mobility from nan audio broadside from Jens Spiess from Morgan Stanley. Please spell up pinch your question.

Jens Spiess

Hello. Thanks for taking my question. I guess, on those lines, I conscionable wanted to ask, why didn’t you see Aripuanã successful your rate costs guidance and tally of excavation and costs guidance for 2023, considering that you will person sizeable volumes coming from that mine?

And secondly, looking astatine your rate travel statement, you had astir $18 cardinal disconnected accruals and impairment astatine that. Could you possibly elaborate connected what those are related to? And really overmuch are accruals and really overmuch are impairments?

Ignacio Rosado

So Aripuanã is not included successful nan rate flows guidance, because arsenic I was saying, during nan ramp up play we are adjusting our ore aliases works and this is simply a process, arsenic I was saying, we are astatine 60% way, successful nan coming months is going to spell up, truthful it is very difficult to foretell what is going to beryllium nan rate costs of Aripuanã, because it is successful nan ramp up.

In nan coming months, erstwhile we stabilize nan plants, and we trim each nan costs that we are improving correct now, because of nan ramp up, we tin springiness you much spirit connected Aripuanã. And that is why we couldn’t see that successful nan guidance.

Regarding nan 2nd question. I’m going to move it to Jose Carlos to reply that question.

Jose Carlos del Valle

Yes. I didn’t perceive you very well. Could you please repeat? I cognize you are referring to nan rate flow, right?

Jens Spiess

Exactly. The rate travel from operations wherever you reported a rate retired backmost into accruals and impairments. I think, it was $82 million. Just want to understand what that is related to and really overmuch is really accrual curl and really overmuch is impairment?

Jose Carlos del Valle

From what I tin retrieve that successful position of impairments, location are a number of things, chiefly 2 factors. There is an impairment reversal related to Cerro Pasco based connected nan caller script that we usage to measure nan assets. And this has to do pinch thing that we person mentioned earlier related to nan early of Cerro Pasco 1 nan imaginable integration of El Porvenir and Atacocha.

And successful position of impairments, we did a constitute down disconnected a Shalipayco and Puka astatine nan extremity of this year, which had a nett effect mixed pinch nan impairment reversal, related to Cerro Pasco. I’m not judge if that answers your question.

Jens Spiess

Yes, I mean, you person 2 lines. One says impairment nonaccomplishment of agelong lived assets is 32.5 million. I conjecture that is what you are saying.

Jose Carlos del Valle

Yes. That is really tied to that type improvement.

Jens Spiess

And past location is simply a 2nd statement that says changes successful accruals and different plus impairment that is 84 million. So conscionable want to understand. It is different.

Jose Carlos del Valle

Yes. Cerro Pasco is an impairment reversal was astir 82 cardinal if I retrieve correctly.

Jens Spiess

Okay. Alright, convey you.

Jose Carlos del Valle

Thank you.

Operator

[Operator Instructions] We do person an further mobility from [Alexandra Andrade] (Ph) from JPMorgan.

Unidentified Analyst

Thank you truthful overmuch for taking my question. Just a speedy 1 for me. Would you beryllium willing astatine each successful looking astatine M&A possibilities improved to summation your sync accumulation there? There is evidently been headlines complete nan caller plus that will beryllium for sale. So conscionable funny to spot what you deliberation there?

Ignacio Rosado

Thank you Alexandra. Actually we are a very progressive looking for opportunities successful zinc and copper successful older jurisdictions successful galore countries. Peru is going done a difficult business today. As you know, we person a very bully portfolio of golden marketplace standard, for example. So we measure nan projects and nan operating mines there.

But successful Peru today, arsenic you know, we person to beryllium cautious astir nan country. And fixed that our concentration, we person spent a batch of CapEx successful Aripuanã, and our attraction coming is to make judge that that Aripuanã ramp up a continues to advancement very well. We are concentrating our efforts coming successful making judge that this happens, and besides successful making judge that we tin summation nan accumulation particularly successful our pastoral complex. So today, moreover if we are progressive looking for opportunities today, we are cautious astir things.

Unidentified Analyst

Great, convey you

Roberta Varella

Continue nan questions from nan web. We person present 1 from [Victor Vidal] (Ph). Hi, Ignacio. Thanks for nan opportunity and congratulations for nan results. I person 2 questions. The first 1 pinch respect to Aripuanã volumes. The guidance for 2022 were not achieved and compared to nan method report, I person nan belief that metallic volumes successful nan caller guidance for 2023, 2025 are beneath nan imaginable and besides beneath nan past guidance. Are you being much blimpish aliases location was thing important alteration successful nan excavation exploration plan? If you are being much conservative, what is nan main motive? If location are changes successful nan mind exploration plan, these are related to a slower ramp up pinch little aliases being treated aliases related to little grades?

Ignacio Rosado

Yes, no, I would opportunity that you cognize that during that play of ramp up, we are ever facing pinch immoderate problems. So far, we don’t person immoderate fatal flaws. And arsenic I was saying, Aripuanã is progressing towards being successful afloat accumulation towards nan extremity of - I mean, during nan 2nd half of this year. However, we person to beryllium blimpish successful our projections for this year. We are being conservative, but again, it is advancing successful a coagulated way.

As we informed successful our net release, Aripuanã is accrued successful its life of mine. The [indiscernible] body, they show that we tin summation reserves of much aliases little 35%. So pinch this and nan imaginable that we spot successful [indiscernible] successful deposits, we judge that successful 2024, we tin perchance summation nan capacity aliases nan accumulation of Aripuanã.

However, this is early days and we alternatively comply pinch a what we spot today. And that is why we are trying to beryllium conservative. But again Aripuana is going done a play that is very coagulated successful advancing towards a afloat product.

Roberta Varella

If I whitethorn besides inquire astir CapEx pinch respect to Aripuanã, I would for illustration to understand amended is sustaining CapEx needs. I noticed you expected summation successful sustaining CapEx successful 2022 to 2023 related to this mine. Could you supply much specifications connected this matter and your position connected this statement going forward?

Ignacio Rosado

Yes. We published a number of 54 cardinal successful Aripuanã. A portion of it is sustaining. Today is almost 40 cardinal and $14 cardinal was related immoderate issues astir nan tailings, okay. However, it is easy again to opportunity what is going to beryllium nan sustaining CapEx for Aripuanã because today, fixed that we are successful nan ramp up period, we person a batch of contractors, we are trying to make judge that, nan works and nan excavation is fresh for afloat production. So we person immoderate further costs and further CapEx that we are incurring to make judge that Aripuanã is successful afloat accumulation during nan 2nd half of nan year.

Having said that, this 54 cardinal is simply a number that is going to beryllium optimized successful 2024. And I judge that, during nan 2nd half of nan year, we tin springiness you much spirit astir what is going to beryllium nan sustaining CapEx connected a yearly ground going forward.

Roberta Varella

Next mobility comes from [Isabella Vasconcelos] (Ph) from Bradesco. Thank you for each nan detail. Three questions. Could you punctual america please nan TC level expected for 2023? How has nan ramp up of Aripuanã been versus first expectations? Have location been larger challenges, affirmative surprises and regarding superior allocation, is expanding copper accumulation is still a strategical focus?

Ignacio Rosado

I will commencement pinch nan past one. The copper accumulation is still strategically important for us. We said that, we want to diversify much from zinc. We deliberation it is increasing and it is going successful a coagulated measurement going forward. But we judge that, a operation of copper accumulation successful our full accumulation is very important. And for that, we are looking for many, galore opportunities successful different countries.

Regarding nan TCs, we usually don’t people TCs. What we tin opportunity is that, astatine nan extremity of this twelvemonth and nan opening of this twelvemonth that TCs were going up because of this bottlenecking accumulation successful Europe, because of nan power crises successful Europe.

So astir smelters [indiscernible] were not producing. Today power prices are going down, and coming China is benignant of opening correct now to nan world. So nan TC levels, we each cognize what will hap pinch them. So I would opportunity that, it was - they were a small spot higher towards nan extremity of nan twelvemonth and this year, it mightiness spell down. We don’t cognize astatine which level during nan remainder of 2023.

Regarding nan 3rd question, I don’t know. Could you repeat.

Roberta Varella

It was astir nan superior allocation. Extra spending - sorry, nan ramp up of Aripuanã, because you commencement pinch nan 3rd 1 there.

Ignacio Rosado

Yes. It is very adjacent to what we expected. I guess, immoderate facet that is important to mention successful measuring Aripuanã is nan rainy season, January and February and portion of March successful Aripuanã nan rainy play is very strong. So sometimes it is difficult for america to task nan advancement curve that is simply a akin to what we person aliases achieved.

We had successful our plans to scope 70% successful February, we are adjacent to that, we are much than 60%. And arsenic I was saying, we don’t spot immoderate further travel going forward. So we are very assured that during nan 2nd half of this year, we will beryllium astatine afloat capacity.

Roberta Varella

Next mobility comes from [indiscernible] from Scotiabank. Can you please update america connected nan business of Peruvian operations and if you are seeing immoderate effect of roadworthy blockades and protests?

Ignacio Rosado

Yes. Peru is going done a very difficult business successful nan past 2 aliases 3 months aft this governmental business has created a batch of sound and a batch of protests successful nan country. What I tin opportunity is that for our operations and pinch nan relationships that we person pinch full communities, we don’t spot immoderate problems successful accumulation interruption successful nan coming months.

Having said that, a blockages successful nan main highways successful nan state could impact accumulation of immoderate of nan important miners successful Peru. In our case, this hasn’t been nan case, only I would say, it could beryllium nan case. But fixed nan discourse of wherever nan authorities is managing each these conflicts successful a fixed nan discourse of what has happened successful nan country.

If location are immoderate blockages, I would opportunity that they shouldn’t beryllium worldly successful nan projection of our accumulation for nan 2023. So we don’t expect immoderate worldly changes successful that. As I was saying, we are very adjacent to our communities and we are trying to make judge that that is nan lawsuit successful nan remainder of 2023.

Operator

And our adjacent mobility is simply a follow-up mobility from Jens Spiess from Morgan Stanley. Please spell up pinch your follow-up.

Jens Spiess

Just connected Aripuanã, considering that you already reached commercialized production? Should we still expect ramp up and non operating expenses successful nan first 4th aliases will that driblet to zero and beryllium afloat reflected successful cost, because you already will person income there.

And secondly, do you foresee immoderate effect connected your taxation complaint owed to nan provisional measurement connected transportation pricing successful Brazil?

Jose Carlos del Valle

Yes. Jose Carlos here. On nan first portion of your mobility is going forward, obviously, we will show really nan ramp up continues to grow. We will proceed to show nan costs of nan concentrates arsenic we person done successful nan past and we will beryllium adjusting to nan nett realizable worth if needed. But we expect that nan costs nan portion costs will proceed to spell down arsenic capacity utilization increases complete time, truthful we will support way of that.

In position of mining tax, we person nary further news. There is an effect for our operations successful 2023. But that is based connected nan existent accusation is not truthful material, but we don’t person immoderate accusation connected thing further than that.

Jens Spiess

Okay, convey you.

Jose Carlos del Valle

Thank you.

Roberta Varella

We person different mobility from nan web from [indiscernible]. Good morning. Has your Cerro Lindo cognition has been affected by ongoing pockets successful immoderate locations successful Peru? Can you please explicate really logistics activity astir nan area? How metallic is transported and really consumables participate and exit nan area?

Jose Carlos del Valle

Alright. Jose Carlos present again. No luckily we person not been affected straight aliases Cerro Lindo location has not been impacted. There person been immoderate locates successful nan road southbound of wherever Cerro Lindo is located.

Transportation takes spot fundamentally by trucks that you consciousness spell and travel backmost from nan north. So nary effect whatsoever to Cerro Lindo correct now. And we proceed to that - we expect that to proceed pinch a bully narration pinch nan communities astir nan cognition arsenic well.

Roberta Varella

Another mobility from nan web from [indiscernible]. What is my life do you consciousness comfortable pinch successful Cerro Lindo?

Ignacio Rosado

The life of minus Cerro Lindo today, arsenic you tin spot successful nan position is 7 years. We person been replacing a year-over-year Cerro Lindo successful position of reserves, and arsenic I was saying, we are exploring a Puka Saya Norte successful Aripuanã successful Cerro Lindo, sorry. And we are having bully results.

So, truthful acold pinch this life of excavation and nan let’s opportunity nan findings that we are having Puka Saya Norte, we are a comfortable pinch what we have. However, nan scheme for each of our mines is that put immoderate priorities successful much infill drilling successful astir mines, truthful we tin widen nan life of nan mines successful each of them. And this is thing that is reflected successful nan CapEx that we are investing connected almost $11 cardinal related to this.

Operator

And ladies and gentlemen, pinch that we will beryllium closing today’s question-and-answer session. I would for illustration to move nan level backmost complete to Ignacio for last remarks. Please spell ahead.

Ignacio Rosado

Thank you. Thank you everyone for attending. We look guardant to merchandise our quarterly results successful April. We are very assured that each of our mines and smelters are moving successful nan correct guidance and we hopefully achieved nan guidance to 2023. Thank you again for participating and if you request to interaction america later connected pinch immoderate questions you tin do truthful by reaching Ignacio Rosado. Thank you again and person a bully day.

Operator

Ladies and gentlemen, that will reason today’s convention call. We convey you for attending today’s presentation. You whitethorn now disconnect your lines.

Editor: Naga



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