Good morning and welcome to Nexa Resources Third Quarter 2022 Conference Call. All participants will be in listen-only mode. This event is being recorded and is also being broadcast via webcast and may be accessed through Nexa's Investor Relations website where the presentation is also available. After today's presentation, there will be an opportunity to ask questions. Remember that the participants of the webcast will be able to register via website questions, simply type your question in the box and click sent, and that will be answered soon. I would now like to turn the conference over to Ms. Roberta Varella, Head of Investor Relations, for opening remarks. Please go ahead.

Good day and good afternoon, everyone, and welcome to Nexa Resources third quarter 2022 earnings conference call. Thanks for joining us today. During the call, we will be discussing the company's performance as per the earnings release that we issued yesterday. We encourage you to follow along with this on-screen presentation through the webcast. Before we begin, I'd like to draw your attention to Slide number 2, as we will be making forward-looking statements about our business, and we just ask that you refer to the disclaimer and the conditions surrounding those statements. It's now my pleasure to introduce our speakers. Joining us today is Ignacio Rosado, our CEO; José Carlos del Valle, our CFO; Leonardo Coelho, our Senior Vice President of Mining. So now I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Thank you, Roberta, and thanks to everyone for joining us this morning. Please let's move now to Slide number 3, where we will begin our presentation. Let me begin by saying that overall we experienced a challenging third quarter. A rapid deterioration of growth prospects coupled with rising inflation has resulted in tightening monetary policy, driving expectations of a global recession. The uncertainty of the macroeconomics affected the perspective of our industry as well as increased commodity prices volatility, which contributed to a significant pressure on base metal prices since the mid-second quarter of this year. Despite all these hurdles, we are delivering on production, costs, and CapEx in line with our guidance. We believe the fundamental value of zinc will continue to be strong, giving low physical inventory levels and a lower supply of metal in smelters in Europe. Nonetheless, we are taking appropriate actions to maintain a healthy balance sheet through the execution of our cost reduction programs, CapEx optimization, and improved cash flow generation strategy. Adjusted EBITDA decreased to $103 million in the third quarter of this year, mainly affected by the decreasing metal prices. José del Valle, our new CFO, will discuss all the effects influencing this number during his presentation. As part of our measures, we have also been working on reducing our corporate overhead. During July, we implemented actions to reduce our headcount and corporate costs that will generate annual savings in the range of $25 million to $30 million. In Aripuanã, we are focused on optimizing plant stability and recoveries while steadily increasing the plant throughput rate. The first batch of zinc, copper, and lead was successfully produced in the quarter. We are on track to achieve commercial production by December. Additionally, in light of our successful exploration program, we are expecting potential additions of new resources by the end of the year. Before going into details in the next slides, I would like to emphasize our strong balance sheet with a solid cash position of almost $150 million and a net debt to EBITDA ratio of 1.5x. Now moving to Slide number 4. In Slide number 4, regarding the operating performance of the mining segment, you can see that zinc production in the third quarter decreased to 76,000 tons because of the lower average grade in Cerro Lindo. This decrease was according to the mining plan for this period. At Cerro Lindo, we also had a scheduled maintenance at the plant to increase our reliability of thickeners and filter circuits, which reduced treated ore volume compared to the second quarter of this year. Following this lower treated ore, copper production in the third quarter also decreased by 5% year-over-year. Lead, on the other hand, increased to 15,000 tons as we accessed higher average grade areas in this quarter, and silver production remained relatively flat at 2.6 million ounces. For the fourth quarter, we expect zinc and copper production to increase compared to the third quarter, while total lead and silver production should be slightly lower. We want to emphasize that we are on track to achieve the mid to upper range of the production guidance for all metals for the whole year 2022. Now moving to the next slide. In Slide number 5, run-of-mine mining cost in the third quarter was $43 per ton compared to $41 per ton in the third quarter of last year, reflecting inflationary pressures on costs. Compared to the second quarter of this year, run-of-mine mining cash cost was relatively flat. Mining cash cost in this quarter increased to $0.57 per pound compared with $0.22 per pound in the third quarter of last year and $0.16 per pound in the second quarter of this year. In both cases, the main drivers were the decreasing byproduct credits and lower zinc volume. Cash cost guidance for 2022 is expected to be close to our annual guidance. Now moving to the smelting segment in Slide number 6. In Slide number 6, regarding the operating performance of the smelting segment in the third quarter, metal sales totaled 162,000 tons, up 4% year-over-year, and up 7% quarter-over-quarter following higher production volumes and improvement in lead times compared to previous periods. In both Peru and Brazil, production increased due to better performance and production stability. For the upcoming quarter, the smelter production is expected to remain stable compared to the third quarter of this year. Sales are expected to follow the same positive trend. Our smelting cash cost in the third quarter increased to $1.36 per pound compared to the same period of last year, mainly driven by higher LME prices. Compared to the second quarter of this year, however, cash cost decreased by 6% due to lower operating costs and higher volumes. Conversion costs in this third quarter were $0.26 per pound compared to the $0.23 per pound a year ago, and this was mainly driven by higher energy prices. Compared to the second quarter of this year, conversion costs decreased by 10%, mainly driven by lower variable costs. Now moving to Slide number 7. I will now give an update on the redesign program we recently implemented. We have revised our organizational structure and our internal processes to operate more efficiently. We made drastic changes in corporate headcounts and corporate overhead expenses and we expect to generate annual savings in the range of $25 million to $30 million. These actions not only look to optimize overhead, but also to improve organizational efficiency to focus more on supporting our operations and allow for more agile decisions. Now moving to Slide number 8, where we will discuss progress around Aripuanã. Ramp-up activities in Aripuanã mine are progressing, and we are focusing on steadily increasing the plant throughput rate and asset reliability. The milling utilization was expected to be between 30% to 40% in the third quarter and reached 32% at the end of the quarter. We expect to be at 70% by the end of this year. We believe we are on track to commence commercial production in December. At the end of September, there were approximately 646,000 tons of ore available in stockpiles, which is enough to cover five months of the estimated ramp-up period. Furthermore, the mine is already fully operational and underground mining activities are focused on developing and preparing new areas and increasing mineral reserves with our infill drilling campaigns. In the third quarter, we invested $9 million in Aripuanã, totaling $63 million in CapEx for the first nine months of this year, which includes a negative impact of the Brazilian real appreciation against the U.S. dollar of $5.4 million. The cumulative CapEx of the project since the beginning of construction is $629 million, and there are still minor investments to be made in the fourth quarter around $5 million due to additional contract expenses. Now moving to the next slide where I will give you an update on Aripuanã's exploration program. In Aripuanã, over 12,000 meters of infill drilling were completed at Ambrex and Babaçu exploration targets. The infill drilling campaign in Ambrex for 2022 has been completed in the third quarter, and the drill rigs were moved to Babaçu exploratory campaign to be completed during the fourth quarter. The latest drill holes indicated that the mineralization has been confirmed, which should support the conversion of Inferred to Indicated Mineral Resources. For the fourth quarter, that drilling campaign will focus on the exploratory program of the Babaçu target for resource definition and resource expansion at the northwest extension. In light of our successful exploration program, we are expecting potential addition of new resources by the end of this year. Now, I would like to turn over the call to José Carlos, who will present our financial results. José, please go ahead.

Thank you, Ignacio. Good morning and good afternoon to everyone. I will continue on Slide 10. Although our operations performed as expected in terms of production and costs, financial results were affected by the decrease in LME base metal prices over the last few months. As you can see, beginning with a chart on your upper left, total consolidated net revenues for the third quarter increased by 7% year-over-year due to higher average zinc LME price, metal sales, and lead volumes. However, compared to the second quarter of 2022, net revenues decreased by 15% as a result of the lower LME prices I mentioned a moment ago. Net revenues were also negatively impacted by a remeasurement adjustment in the silver streaming agreement we have for our Cerro Lindo mining unit registering a non-cash reduction of $11 million. Looking at the first nine months of this year, consolidated net revenues reached $2.2 billion versus $1.9 billion in the same period last year, an increase of 16%. In terms of EBITDA, during the last quarter, consolidated adjusted EBITDA decreased to $103 million. However, for the first nine months of this year, consolidated adjusted EBITDA increased by 5% to $598 million. It is important to highlight that this amount includes pre-operational expenses of $44 million related to Aripuanã. We now move to Slide 11, where I will explain in further detail. Adjusted EBITDA in the third quarter of 2022 was $103 million, 64% lower than in the previous quarter. This performance is mainly explained by $106 million related to lower LME prices and also to changes in market prices that result in mark-to-market adjustments. Second, the net negative hedge effect of $18 million, which is mainly due to hedge mark-to-market adjustments that result from lower LME prices in the second quarter of 2022. Here, accounting rules result in these adjustments being recognized in the company's P&L in advance of the physical sale of finished products. And third, lower by-product contributions due to the decrease in prices and volumes I mentioned earlier. Moving to the next slide, I'm now on Slide number 12. In the mining segment, the third quarter of 2022 net revenues totaled $241 million, down 13% versus the same period of last year. This is explained mainly by lower zinc and copper volumes in addition to the decrease in average LME prices of copper and lead which were partially offset by higher zinc prices. Also, in the first nine months of this year, net revenue for the mining segment totaled $933 million compared to the $842 million in the first nine months of 2021. This is mainly due to higher metal prices and lead volumes. Regarding EBITDA on your upper right, third quarter adjusted EBITDA for the mining segment was $45 million, a reduction of 51% year-over-year, mainly explained by lower prices of volumes, higher TCs, and the negative variation of $11 million related to pre-operating expenses in Aripuanã. Compared to the second quarter, adjusted EBITDA decreased by 69%, mainly driven by lower prices and volumes, which were partially offset by a decrease in other variable costs and mineral exploration expenses. Finally, adjusted EBITDA for the mining segment in the nine months ended in September of 2022 was $318 million compared to $331 million last year, mainly due to Aripuanã pre-operating expenses of $44 million incurred this year. Switching over to the smelting segment, net revenues in the third quarter totaled $616 million, an increase of 18% versus the third quarter of 2021, supported by higher LME prices and volumes. Compared to the second quarter of 2022, net revenues decreased by 9% mainly due to lower prices. Now for the first nine months of this year, revenue for the smelting segment totaled $1.8 billion compared to $1.5 billion in the same period last year, mainly due to higher metal prices. When we look at adjusted EBITDA for the third quarter of 2022, we see that the smelting segment reported $59 million, down 9% from the third quarter of 2021, mainly explained by the negative price effect of $15 million related to higher zinc prices and positive changes in metal prices that resulted in mark-to-market adjustments, an increase in operating costs, and the negative variation of $8 million related to the recognition of energy recovery costs that benefited the third quarter of 2021. This was partially offset by higher by-product contribution. Compared to the second quarter, adjusted EBITDA for the smelting segment decreased by 58%, mainly explained by the net negative hedge effect I mentioned earlier and also by lower prices. Finally, the smelting segment's adjusted EBITDA for the nine months ended September 2022 totaled $282 million compared to $241 million a year ago. Now moving to Slide 13 to discuss our investments. On the top left of the slide, we can see that in the third quarter we invested $85 million in CapEx, of which $9 million are directly associated with the construction of Aripuanã. In the first nine months of this year, CapEx totaled $265 million, of which $63 million was related to Aripuanã as well. During this period, we also invested $186 million in sustaining and HSE including $28 million of Aripuanã. It is also important to mention that the Brazilian real appreciation against the U.S. dollar had a negative impact of $14 million in the first nine months of this year. Based on these results and our projections for the year, we believe we will achieve our 2022 CapEx guidance of $385 million. Regarding mineral exploration and project evaluation, we invested a total of $24 million in the third quarter for a total of $64 million in the first nine months of the year. Now, I would like to emphasize that as part of our long-term strategy, we are focusing our efforts on replacing and increasing mineral reserves and resources supporting our organic growth. We are also maintaining guidance, expecting to finish 2022 at about $82 million. Now let's move on to the next slide in which I will discuss our cash flow generation in the first nine months of the year. I am now on Slide 14. So for the first nine months of 2022, starting from the $641 million of adjusted EBITDA without Aripuanã expenses and investments, we can see that cash flow provided by operations before working capital changes was $605 million. We then had $194 million related to interest paid and taxes and $157 million invested in sustaining CapEx. We also paid dividends of $62 million, including the amount distributed by our subsidiary Pollarix. Additionally, we invested $22 million in non-sustaining CapEx. Regarding Aripuanã, we invested approximately $200 million in the first nine months of the year including CapEx, pre-operational expenses, and working capital. It is important to mention that we had a negative net effect of $69 million due to the early redemption of our 2023 notes, partially offset by a new export credit facility. Additionally, foreign exchange effects on cash and cash equivalents were positive by $12 million. Finally, there was a working capital variation of $133 million, mainly due to higher LME prices on inventories and lower outstanding amounts of accounts payable. With all the effects presented in this slide, free cash flow was negative by $226 million during the first nine months of 2022. We expect to reverse most of the increases in inventory during the coming months. Now moving to Slide 15. In this slide, you can see that our liquidity remains strong and we continue to report a healthy balance sheet with an extended debt profile. By the end of the third quarter, our current available liquidity was approximately $838 million including our undrawn revolving credit facility of $300 million. It is important to mention that as of September 30th, the average maturity of our total debt was 4.9 years with a 5.7% average cost of debt. Finally, our leverage measured by net debt to adjusted EBITDA ratio was 1.5x compared to 1.3x at the end of the second quarter and 1.2x a year ago. With that, I would like to turn over the call back to Ignacio for his final remarks. Thank you.

Thank you, José. I am now on Slide 17. We recently announced our new targets and long-term commitments on our ESG strategy, which includes commitments across areas such as water usage and disposal, safety and workplace, and a reduction of CO2 equivalent emissions in line with the sustainable development goals of the United Nations. In addition, topics such as waste and dams management, local development, decommissioning, and human rights are also included in Nexa's ESG strategy. Here you can see our ESG structure covering climate change, natural capital, health, safety, and wellbeing, and plurality, with targets to be achieved by 2030, 2040, and 2050. Our determination to be assessed based on the strictest international standards is in line with our principles to operate with transparency and ethics while creating a positive impact on the environment. We also want to emphasize that we launch our new purpose: mining that changes with the world, which will guide all our initiatives. For more information about our targets and commitments, please visit our new ESG page under the institutional website. Now turning to our last slide, I would like to close this presentation by briefly reinforcing our priorities not only for the rest of 2022 but for next year. Aripuanã is our first greenfield project, and we are very proud to have completed this project in a very challenging global environment. As I mentioned earlier, we are in the ramp-up stage and we should achieve commercial production in the coming months. Our exploration strategy is focused on increasing mineral resources to rapidly extend the life of the mine. Despite a complex macro outlook, our focus on cost control, efficiency, and cash flow generation is aimed to allow us to achieve a healthy balance sheet as we remain confident that the long-term dynamics of our industry are promising, as the fundamental value for zinc and other base metals is strong. Looking forward, we will continue to invest in our business for the long term. We generate cash flow while increasing the life of the mine of our assets and focus on our people, our communities, and our sustainability agenda. Thank you all for attending this presentation. With that, we will be happy to take your questions.

We will now begin the question-and-answer session.

So we have a question from the web. Could you please provide more color about the fourth quarter? What's your expectation in terms of zinc prices and demand?

Yes. I guess, first of all, I would like to mention that in the third quarter, in terms of production costs and CapEx, we have been able to manage the business. And if you see our EBITDA, that has a misexpectation, has a lot of financial changes that we have been explaining in this report and in the presentation, but I would like to emphasize that it has been influenced by an $11 million update on our silver stream. This is annual cash. The market doesn't have that; we have $15 million in Aripuanã every month now that we are in the ramp-up period and in pre-operation. We also have this difference of $18 million due to the volatility of the hedge that we have to update the mark-to-market every month and every quarter. In the smelter, we have a difference in the buying price from our mines and selling our concentrate given that we don't hedge our production from the mines. So based on that, we have between $60 million to $70 million in the third quarter that influenced EBITDA, so it should be higher otherwise, given that our operations have been right on track. In the fourth quarter, we don't see any of our operations performing differently. We see that we will achieve the budget and the guidance to the market, so that’s going to be the case. Regarding prices, we don't know what could happen with prices. The market is now weak on prices. Still, we believe that the fundamental value of zinc in the short term should be strong. As of today, we don’t have - we have lower inventories of metal, three smelters in Europe; one has stopped, which are 700,000 tons of metal. So we see that on the thesis and we see that on the premiums that are present today. Therefore, we believe there is a fundamental price of zinc that will support the fourth quarter, but you never know. So from a company point of view, we are on track to achieve the guidance, as we said on production cost and CapEx, and we expect some recoveries on the price of zinc. I would say that in terms of the year, Nexa will achieve on all the variables that we control.

The next question comes from Lawson Winder of Bank of America. Please go ahead. Lawson, your line is open. Did you mute on your end?

Oh, I apologize. Hello, I am here. Good morning. Ignacio, thank you for the update and your comments today. I wanted to ask about the language around full operation in Q2 2023. So in Q2, there was some pretty clear language that you expected Aripuanã to be fully operational at some point in Q2 2023, and I couldn't find that language in today's release, and I'd like to get your thoughts on the implications of that, please. Thank you.

Yes, no problem. What we said, and the message we sent was that towards when we finished the commissioning and we started the ramp-up period, and we indicated that in the fourth quarter we were coming on commercial production and we thought that the ramp-up period was going to last between six to eight months. That is still the case, but as you know, in the ramp-up period, you face some bottlenecks that sometimes you don't know because you are in the process of ramping up the plant. And this was the case. So at the end of September, we were supposed to be between 30% to 40% on our capacity on the plant and it was 32%, which was in the lower range, but we have been working on all of these bottlenecks, some drainage systems, some pumping equipment, and other variables in the mine that have been affecting us and made us stop the plant from time to time. But this is something that we are not facing fear of loss. We are still aiming to start commercial production in December. That is the case. If I were to tell you, we might be like, I don't know, 15 days to a month behind, but still, Aripuanã is ramping up and, as I said, we are ready to declare commercial production in December.

Okay. That's fantastic color. And then also - so is achieving nameplate capacity in Q2 of 2023 still achievable?

Yes. Yes. No, that's for sure. I guess we said also in the press release that towards the end of this year, we should be at 70%. The way we define commercial production is at least 60% of the plant on a four-week period has to be stable, and that means the concentrate that goes - the quality of the concentrate that goes to the smelters has to be commercial. So that's the way we define that. That is starting in December. So towards the end of December, it should be at 70%. I would say in the first three months of the year, it should be close to 90%. Yes, we will be at the end of the quarter or beginning of the second quarter at 100% of that.

Fantastic. Thank you for clarifying all that. I wanted to ask about the stream effect in the new mine plan. So, I mean, we haven't seen the documentation around the new mine plan. But is the implication of the stream effect that the negative impact of the stream is increased or reduced under the new mine plan?

No, I mean, this is for our company that the stream is good news, but also for us because you add more reserves and resources, and when you update a plan, you have to give up $11 million more based on an NAV analysis, so you have to adjust your part. But that said, you have also the zinc, the copper, and the lead that comes with that, along with the extension of the life of the mine of Cerro Lindo. So that's mainly the case.

Okay. That's very clear. Thank you. And then just one final question relating to Cerro Pasco and the CapEx around that. At the Investor Day in New York, you talked about investing $150 million in Cerro Pasco over the next few years. When do you expect that to start? And how much of that could end up in 2023?

Yes. We are still assessing that. And as I was saying, we have some upgrades of the shaft of El Porvenir. We have a small expansion of the plant of El Porvenir. We have to build a pumping system, a tailings pumping system from El Porvenir to Atacocha, and we have to develop Atacocha underground. The main objective of this debottleneck is to access resources from the underground from Atacocha and to use all of these infrastructures to create more opportunities, produce more, and generate more cash flow. So we are working on that and presenting this to our board during December during the budget season. We will get back to you before the year-end with investments that will come next year, but this is a four-year investment period. It will be clear for you at the beginning of next year how much we are investing in this project going forward.

Okay. I look forward to that. Thank you very much.

Thank you. Thank you.

The next question comes from Carlos De Alba of Morgan Stanley. Please go ahead.

Great. Thank you. Good morning everyone. If I may ask - I have a few, just on the first one, going through the release, there are a couple of things that we're struggling to reconcile. First on Aripuanã, the CapEx guidance for the year on expansion projects is $59 million. However, year to September, the first nine months according to the table in the release, you have already spent $63 million. So I wonder if you can help us to understand what if you're going to have negative CapEx in Aripuanã in the fourth quarter or what is taking place? The second point where we're struggling to reconcile is in the reconciliation of realized prices for the smelting business or for metal. The realized price was $1.1 per pound, there was no price adjustment, at least it was close to zero in that table. And that seems a little bit low based on the price - the price average that we have seen in the second quarter and in the third quarter. So if you could please help us to understand that would also be quite interesting. And then finally, regarding cost for the mining sector, the guidance, I think, the guidance for the year has remained unchanged. However, when we looked at the cash cost for the first nine months, it was $31 per pound, net of byproducts. The guidance for the year continues to be $0.28, but in the third quarter it was significantly higher than that. If you could help us understand what is going to drive what seems to be a very dramatic implied decrease in cash costs for the mining division, so that you can meet your guidance? Thank you.

Sure. No, thank you for the questions, Carlos. I will start with the cost. Yes. The third quarter on the C1 cash cost has been influenced by Cerro Lindo mainly, so Cerro Lindo, as I was explaining, had a lower throughput. We have lower zinc rates as well because of the mine plan. This lower throughput, lower zinc grade, and also lower copper grade because of the area of the mine that we were mining gave you a higher cost per ton due to the lower throughput, making low by-products in terms of the copper, which is very significant. This affected Cerro Lindo and affected the average of the rest of our mines. In the fourth quarter, Cerro Lindo is recovering throughput and its rates. So Cerro Lindo and the cost per ton is flat as well. So Cerro Lindo is going back to what we have in our budget. That's why we are confident that we will be in the range of what we have guided the market. And the rest of the mines have been performing very well. All our cost per ton, which are the ones that we control in the mines, towards the end of the year are in line with the budget and what we have presented to the market. If prices do not change, the by-products contribution should also remain stable, hence we are still informing the market that we will be within the projected range. So that's the first question.

Yeah, thanks. Thanks, Ignacio. Yes, that was clear. So the delta from the third quarter cash cost of $0.57 in the third quarter to get to the guidance of $0.29 for the year is basically driven by Cerro Lindo.

Exactly, exactly.

That's…

Yes, the first question regarding Aripuanã; again, yes, Aripuanã - the CapEx we have spent in Aripuanã is in reais, in Brazilian local currency, and there is an FX effect. So part of the FX effect was $5.4 million. So that influenced the difference that you mentioned. But having said that, you know that during the commissioning period before the ramp-up, we had some trouble with the thickeners in the zinc and copper, yes. We were commissioning those and we had some trouble and we needed to extend the contractors and bring the equipment providers for additional support, which increased our fixed costs. In Cerro Lindo, those contracts could be around $4 million to $5 million more. So that's where the CapEx of Aripuanã is right now. This is something that happened in June and we are - the high FX, I mean, is something that we cannot manage, but the commissioning part in terms of troubles that we experienced in June and July will impact the numbers we communicated to the market.

So, sorry, I'm not sure that I understood that. So the issues with the thickeners and other parts of the equipment are increasing CapEx by around $4 million for 2022 spent in Aripuanã?

Yes.

But that is more than offset by the currency effect in the fourth quarter that will therefore basically imply a reduction in CapEx in the fourth quarter in dollar terms.

Not necessarily, you know, because we don't know what that FX is going to be. What I'm trying to say is that from the number we provided in June is $5 million more because of CapEx, and from the number that we will close this quarter, it's $4 million more because of additional expenses related to the thickeners. The FX effect I don't know what's going to play.

Understood. So what is the FX that is implicit then in your guidance of $59 million guidance for 2022?

Our budget was 5.5 reais per dollar and today it varies very much between 5.1 and 5.2, depending on the week and depending on growth. So it’s like, I don't know, it's around 2% or 3% less and that influences the cost. In the third quarter, the FX was - the budget from that we provided to the market was at 5.5, and we ended up at 5, so it was 2.5%. However, we do not know what the FX will be in the future.

Okay, thank you very much.

Thank you, Carlos.

So we have some questions here from the web. You mentioned that Nexa could acquire a new mine in LATAM. We would like to know which percentage of that you could acquire and if this transaction could affect dividend payments.

Yes, well, as I was saying in the final remarks of this presentation, we're now focused on finishing Aripuanã. Aripuanã is a very good mine. I mean we are in the ramp-up period and next year, we need to consolidate Aripuanã. So that's very important for us and it's our priority. In parallel, we are always active in the market looking for some mines that are in brownfield, at brownfield or producing mines, I would say, that are similar to the ones that we have, Cerro Lindo, Vazante, or Aripuanã, and we are active on that. Okay, but that doesn't mean that we are going to execute some transaction in the next few months because Aripuanã is the priority for us. But we are active on that. Regarding capital allocation, we see dividends as something that we will always pay, and the policy is there. We have been paying dividends in the last four or five years in that policy. Our financing for new growth will be between our cash flow and some debt. We have a capacity for debt, and I think the cash flow that will come in the next two, three, four years will help us that with debt to finance this new acquisition going forward. But for today, Aripuanã is what we need to focus on right now.

The next question comes from an investor. Do you expect EBITDA in the fourth quarter to be similar to the third quarter? Do you expect to distribute more dividends in the fourth quarter, what is your net leverage expectations for year-end and 2023?

Yes, I guess for closing the year, what I can say is that I don’t know what's going to be the EBITDA because we don't know where the prices are going. However, we are providing guidance on production costs and CapEx. That is something that we control, and I can assure you that this is going to be the case towards the end of the year. Depending on prices, we will have EBITDA for the rest of the quarter. So I cannot provide any information. Regarding 2023, we're putting together the budget, being conservative on prices because even if we believe that things could be strong in the short term, the world is going through a lot of noise and different factors and volatility. We don't know where the price of zinc, copper, lead, and silver is going to be. Thus, we are cautious on that, and we are trying to ensure that our operations with a low price perform effectively. We will present this to our board in December and provide the market with our outlook for 2023 at the end of December or in January, that's mainly what I can provide on this question.

The next question comes from an investor. At which net debt to EBITDA ratio would you start to feel uncomfortable? Additionally, would you try to be more conservative with cash uses given the current risk of global recession and lower metal prices?

Yes. No - we run scenarios. We have a very detailed strategic plan and we have run scenarios on leverage. I guess between 2.5 and 3x leverage is the limit for us. The scenarios we have run are lower, but still, we must be conservative in terms of leverage because you don't know about price fluctuations in the cycles. Okay, so 2.5 or 3x is the limit. As you were saying, we have to be conservative. We are working in a tight budget because we believe that 2023 could reflect a very conservative price scenario, and we are working on that. We are deploying all measures not only at our mines and smelters but at our corporate center and our initiatives to ensure that cash preservation is very important. That is the case. As I said, we will approve that with our board in December and provide the market with more details regarding this at the end of December or in January.

We have one more question here from an investor. I'd like to have some more color on your cost outlook for next quarter. Thank you.

Yes, very similar to what I said. Cerro Lindo influenced the third quarter, and in the fourth quarter, giving the cost per ton of our mines and the conversion cost of our smelter that we control we believe will be in line with what we control. If prices do not change, the by-products that influence the C1 cash cost will be very similar, so that’s why we are keeping our guidance for the fourth quarter. If prices go down, it might vary a little bit, but it should be in the range of what we believe it could be. That's why we are providing this guidance to the market.

This concludes our question-and-answer session. Now we will hand over to Ignacio for his final remarks. Mr. Rosado, please go ahead.

Thank you. Thank you everybody for attending our call and the Q&A session. I can only say that we are very committed to close the year from a production cost and capital perspective in a very disciplined way. I can assure you that the company is ready and prepared to be committed to a difficult 2023. We will provide more color towards the end of January. So thank you very much for attending, and we look forward to speaking to you soon.