Nexa Resources S.a. · NYSE:NEXA
Nexa Resources — Investor Presentation (May 2022)
45 slides from Nexa Resources's investor presentation, May 2022
Slide 1: From the world of mining to the world of people
From the world of mining to the world of people Presentation May, 2022
Slide 2: Disclaimer
Disclaimer Important information concerning this presentation This presentation, prepared by Nexa Resources S.A. (herein referred to as the “Company” or “Nexa”), is solely for informational purposes. Disclosure of this presentation, its contents, extracts or abstracts to third parties is not authori
Slide 3: Nexa | Overview
Nexa | Overview We are a leading large-scale, low-cost integrated zinc producer with over 60 years of experience developing and operating mining and smelting assets in Latin America Top Zinc Producers1 Top Smelters Producers1 (000 ton) (000 ton) Glencore 1,176 Korea Zinc 1,190 Hindustan Zinc 795 Tra
Slide 4: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 4
Slide 5: Nexa | Solid business model
Nexa | Solid business model Partially integrated platform Mining Smelting Total Throughput Capacity: Total Capacity: 634 ktpa Zn(1) 45 ktpd(1)(2)(3) Cerro Lindo Cajamarquilla Flagship mines Vazante Aripuanã Três Marias El Porvenir C. Pasco Atacocha Juiz de Fora Morro Agudo (1) Data as of 2021; (2) C
Slide 6: Nexa Mining | Aripuanã
Nexa Mining | Aripuanã Project update (1Q22) ✓ 100% overall physical progress ✓ Mechanical completion concluded ✓ Commissioning process (over 75% progress) ▪ On track to start commercial production in 3Q22 ▪ Approximately 630kt of ore was stockpiled (3.3 months of production) ▪ Total CAPEX Guidance
Slide 7: Nexa Mining | Aripuanã
Nexa Mining | Aripuanã World-class polymetallic mine located in the northwest corner of the Mato Grosso state, Brazil ▪ Over 8,000(a) meters drilled in 2021 ▪ Thick massive sulfide intersections confirmed at the deep northwest extension of Babaçu Target ▪ For 2022 we plan to drill 34,000 meters, 9,0
Slide 8: Nexa Mining | Aripuanã Estimated Production
Nexa Mining | Aripuanã World-class underground polymetallic mine located in the northwest corner of the Mato Grosso state, Brazil Upper range Zinc Copper Lead Silver (000 ton) (000 ton) (000 ton) (million OZ) Lower range 77 6.9 24 1.7 1.8 20 Production 56 Estimated 4.4 23 2.3 8 1.5 1.7 51 60 5.4 19
Slide 9: Nexa Mining | Cerro Lindo
Nexa Mining | Cerro Lindo World-class polymetallic mine Zinc Copper Lead Silver (000 ton) (000 ton) (000 ton) (million OZ) 29 7.7 7.9 3.8 1.0 0.9 0.9 1.1 0.9 25 25 6.8 6.9 6.7 3.4 3.2 3.3 21 23 Production 2.5 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2
Slide 10: Nexa Mining | Cerro Lindo
Nexa Mining | Cerro Lindo Exploration strategy PUCASALLA ORCOCOBRE CERRO LINDO ▪ Over 90,000(a) meters drilled in 2021 ▪ New discovery of VMS mineralization at the Pucasalla target. Potential LOM extension. CERRO LINDO 1Q22 - MAIN INTERSECTIONS Hole_id Length Zn% Pb% Cu% Ag g/t ▪ 2022e: we plan to d
Slide 11: Nexa Mining | Vazante
Nexa Mining | Vazante World-class polymetallic mine Zinc Lead Silver (000 ton) (000 ton) (million OZ) 36 36 34 35 0.5 0.1 0.1 0.1 0.4 0.4 0.1 0.4 Production 25 0.1 0.2 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 ✓ Located in the state of Minas Gerais, Brazil ✓ Years in
Slide 12: Nexa Mining | Vazante
Nexa Mining | Vazante World-class polymetallic mine located in the state of Minas Gerais, Brazil ▪ Over 73,000(a) meters drilled in 2021 ▪ Exploratory drilling continues to confirm the extension of the ore bodies in Extremo Norte ▪ Deep-high grade mineralization confirmed at Lumiadeira ▪ For 2022, w
Slide 13: Nexa Mining | Cerro Pasco
Nexa Mining | Cerro Pasco Zinc Lead Silver (000 ton) (000 ton) (million OZ) 16 16 17 14 5.7 5.4 5.2 5.7 Cerro Pasco 13 4.0 4.2 4.1 4.0 3.5 Production (Peru) 2.2 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 ✓ El Porvenir and Atacocha mines, located in Peru ▪ Over 65,000(
Slide 14: Mining | Overview
Mining | Overview Production profile C1 Cash Cost (USD/tZnC) 4.000 59% 2.000 ▪ Large scale, modern and mechanized, increasing 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% productivity -2.000 -4.000 ▪ New projects should further improve our position in the -6.000 global cash cost curve -8.000 Greenf
Slide 15: Smelting | Overview
Smelting | Overview Locations and efficiency of our smelters are key to our competitive advantage Smelters Located Near Mines, Ports and Major Smelters Provide Strategic Advantage Population Centers ▪ Modernized equipment & processes Magistral ▪ Cajamarquilla is 5th largest smelter globally and the
Slide 16: Smelting Overview | Treatment charges
Smelting Overview | Treatment charges Locations and efficiency of our smelters are key to our competitive advantage Smelters – Profit Composition TCs Applied to our Smelters Purchases ▪ LME price affects both sales and COGS ▪ Our smelters use zinc concentrate supplied from our mines and from third-p
Slide 17: Nexa Smelting Segment
Nexa Smelting Segment Cajamarquilla (Perú) Três Marias (Brazil) Juiz de Fora (Brazil) Total Sales (000 ton) (000 ton)(1) (000 ton) (000 ton) 89 81 86 55 50 51 19 21 20 20 20 158 156 157 148 74 78 48 134 41 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21 1Q21 1Q22 4Q21 3Q21 2Q21
Slide 18: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 18
Slide 19: Nexa | Main Values
Nexa | Main Values We look beyond the present to deliver future value while building trust through responsible actions Safety Standards Energy Usage ✓ Over 80% of our energy ✓ High standards | Fatality consumption comes Prevention Program from renewable sources ✓ Ongoing technical training ✓ Reuse o
Slide 20: We are on a journey to build an ESG-focused mining company
We are on a journey to build an ESG-focused mining company 2010 2012 2014 2011 2013 2015 • Sustainability Department • Health and Safety • Material Issues • Environmental Management Management System • GRI Report System • Integrated Dam Management • Safety as a non- System negotiable value • GHG emi
Slide 21: People
people the solid basis for the transformation we need Plurality Agility to find new ways Key factor for innovation Enthusiasm to transform Aripuanã (Brazil): Sense of ownership effort to have women comprising 50% of the workforce
Slide 22: Governance | Our Board of Directors
Governance | Our Board of Directors Highly-experienced and diversified Board of Directors with 4 independent members, 2 of which being women Diego Cabrera Eduardo de Andrade Filho Daniella Dimitrov Edward Ruiz Luís Ermírio de Moraes Jaime Ardila Chairman João Henrique Schmidt Gianfranco Castagnola J
Slide 23: We are reinventing ourselves
We are reinventing ourselves Environmental management Legacy Circular economy ✓ ~80% of our total tailings are no We are shaping a future together with ✓ Paracatu: zero waste longer disposed in wet tailing dams our host communities ✓ Vazante: solution to reprocess ✓ ~100% of the energy consumption ✓
Slide 24: Tailing Disposal | Overview
Tailing Disposal | Overview Our priorities to dispose materials: ▪ 1st: convert part of the waste material into saleable Morro Agudo products Cerro Lindo & Pasco Complex (~50%) ▪ 2nd: use the tailings as backfill material Cerro Lindo and Vazante (²) ▪ 3rd: dry stack the tailings at surface ▪ 4th: de
Slide 25: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 25
Slide 26: Strategy
Strategy Grow steadily in Zinc and Copper, ensuring long-lasting value creation with optimal capital allocation ▪ Improve our operational performance while Cash capitalizing on high base metal prices generation ▪ Generating cash in our mines and smelters ▪ Expand our current resources through infill
Slide 27: Strategy | Mineral Exploration
Strategy | Mineral Exploration 2022 • Prioritization and Mineral • 10% Targets - Early- Continuous Discards Rights Stage Portfolio • Advance projects in advanced exploration for scoping study (Hilarión / Cañon Florida) • Short Term: Add resource to EARLY STAGE replenish mined reserves Zn • Medium Te
Slide 28: Pipeline 2022 | Mineral Exploration
Pipeline 2022 | Mineral Exploration EXPLORATION FEL 1 FEL 2 FEL 3 IMPLEMENTATION & OPERATION Scope Scope Potential Areas Exploratory Mineral Potential Resource Business Case Initial Exploration Development Definition EXECUTION OPERATION Definition Drilling Definition Definition Scoping Study Pre Fea
Slide 29: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 29
Slide 30: 1Q22 | Strong Performance
1Q22 | Strong Performance Consolidated Results Net Revenue1 +20% 678 722 Higher net revenue in 1Q22, mainly driven by higher LME prices, 603 across all metals. Compared to 4Q21, net revenue increased by 7% also driven by higher zinc and copper prices. 1Q21 4Q21 1Q22 Adjusted EBITDA +16% 208 Adj. EBI
Slide 31: 1Q22 | Results
1Q22 | Results By Segment Mining Net Revenue1 Cost ROM (US$/ton) 323 322 43.7 45.2 255 38.7 1Q21 4Q21 1Q22 1Q21 4Q21 1Q22 Smelting Net Revenue1 Conversion cost (US$/lb) 562 468 511 0.25 0.23 0.18 1Q21 4Q21 1Q22 1Q21 4Q21 1Q22 (1) Includes intersegment revenues 31
Slide 32: Mining segment
Mining segment 1Q22 results positively impacted mainly by higher LME prices and lower expenses +16% 11 127 110 31 11 1 3 US$ million (2) (3) (33) 4Q21 Volume Price effect TC FX By-products Other variable Min. Exp./ Other (1) 1Q22 and fixed Proj. Eval. costs + G&A Market-related Comments Mining Cash
Slide 33: Smelting segment
Smelting segment 1Q22 results positively impacted by higher LME prices and TCs and lower expenses +207% 7 0 82 20 9 US$ million 18 17 (2) 27 (12) (1) 4Q21 Volume Price effect Hedge TC FX By-products Other variable Other 1Q22 and fixed costs + G&A Market-related Comments Smelting Cash Cost (US$/lb) ▪
Slide 34: 1Q22 | Investments
1Q22 | Investments Capital expenditures 385 59 CAPEX was US$83 million in 1Q22. 16 Aripuanã ▪ Aripuanã amounted to US$27 million Others (1) 83 256 Sustaining (2) ▪ Essential sustaining (including HSE) investment of US$46 million 27 2 HSE 36 40 2022 estimated CAPEX remains unchanged at US$385 million
Slide 35: Free Cash Flow | 1Q22
Free Cash Flow | 1Q22 US$ million 227 18 Includes Nexa Peru Bond Full redemption (34) and the new export credit note (59) 208 (46) 88 (10) (27) (43) (50) 31 (156) (168) Adjusted Other non-Cash flows Interes Taxes Sustaining FCF Other Aripuanã Loans/ Dividends FX4 Working FCF EBITDA operational from
Slide 36: Liquidity and Indebtedness
Liquidity and Indebtedness Debt profile (as of March 31, 2022) Average debt maturity: 5.4 years @5.16% avg. cost Net Debt(2)/LTM Adj. EBITDA driven by: 899 Debt amortization schedule - (US$ million) (1) Total Debt: 1,704 804 1.73x RCF 300 1.53x 620 1,122 933 Cash 599 114 77 45 24 21 Cash 2022 2023 2
Slide 37: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 37
Slide 38: Market Fundamentals
Market Fundamentals Base metals are expected to remain at high levels in 2022 Zinc Copper Zinc concentrate supply3 LME average price¹ LME average price¹ US$/ton US$/ton Million ton 14.2 14.3 Demand : ~14 14.0 14.0 +37% +18% 13.8 13.8 13.8 13.3 3,754 9,699 9,997 13.1 13.0 3,364 8,504 12.9 2,750 12.3
Slide 39: Global Zinc Simplified Value Chain & Markets
Global Zinc Simplified Value Chain & Markets Market Market Drivers Raw Mining Recycling Applications Materials Co-Products concentrates (EAF dust, Dross…) Inputs (Ag/Pb Galvanizing¹ is the Concentrates, Consumer Goods Others main sector in Sulphuric Acid, Industrial Machinery global zinc Copper Ceme
Slide 40: Looking into the future
Looking into the future According to IZA (International Zinc Association), the main new applications being developed represent an additional +1 million tons/year in zinc consumption to be added gradual to the global market in the following years ZINC IN ZINC NUTRIENT GALVANIZED REBAR THERMAL SPRAY R
Slide 41: Agenda
Agenda Our mines and our smelters Our values and ESG Our growth strategy Financial performance Market Fundamentals Zinc value chain & main applications Nexa | 2022 priorities 41
Slide 42: Nexa | Priorities and Strategy
Nexa | Priorities and Strategy Complete the construction and start-up of Aripuanã’s mine and plant. Implement an aggressive drill program to increase LOM in the next 2 years Improve cash flow generation from operations and continue to deliver on guidance Invest in exploration in operating mines and
Slide 43: Thank you
thank you IR Contact: ir@nexaresources.com https://ir.nexaresources.com
Slide 44: Nexa | successful growth strategy
Nexa | successful growth strategy More than 60 years of experience of Milpo and Votorantim Metais Cerro Lindo expansion to 10 ktpd Completed expansion at Cajamarquilla from 160 kt Votorantim Metais Foundation of Acquired Mineradora Acquired Companhia Start-up of Cerro to 320 kt Acquired control incr
Slide 45: Votorantim | Nexa's Major Shareholder
Votorantim | Nexa’s Major Shareholder 35,536 employees 64.7% 100% 68% 100% 38% 50% 50% 100% Zinc & Financial Cement Aluminum Long Steel Electric Power Orange Juice Real Estate By-products services Net Revenue¹ US$8.8bn Adjusted ▪ # 5 metallic zinc ▪ # 1 in Brazil ▪ # 1 in Brazil ▪ # 2 in Argentina ▪