Good morning, and welcome to Nexa Resources Second Quarter 2024 Conference Call. All participants will be in a 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. I would now like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations, for opening remarks. Please go ahead.

Good morning, everyone, and welcome to Nexa Resources second quarter 2024 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 would like to draw your attention to Slide number 2, where we will be making forward-looking statements about our business and we ask you to refer to the disclaimer and the conditions surrounding those statements. It is now my pleasure to introduce our speakers. Joining us today is our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior Vice President of Mining Operations, Leonardo Coelho. So now, I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Thank you, Rodrigo, and good morning to everyone. Thanks for joining us today to go over our second quarter results of 2024. Please let's move to Slide number 3, where we will begin our presentation with the main highlights of the quarter. Let me start by saying that we had strong second quarter results. We have been witnessing positive momentum from commodity prices from the end of the first quarter, which has been sustained throughout the second quarter. Our solid operational performance and financial results reflect our commitment to our strategy and our focus on executing our priorities, as well as our efforts to optimize key investments and initiatives. In the second quarter of 2024, consolidated net revenues were $736 million, up 27% quarter-over-quarter, mainly due to higher LME prices and increased smelting sales volume. Year-over-year, net revenues were up by 17%. Adjusted EBITDA in the second quarter of this year was $200 million, 64% higher compared to the $123 million in the last quarter. This performance was attributed to higher byproduct contribution, higher zinc prices, and increased smelting sales volume. Compared to the second quarter of last year, adjusted EBITDA increased by 180% from $72 million. Our net leverage ratio in the second quarter of 2024 was 2.72 times versus 3.75 times in the first quarter of this year and 2.83 times in the second quarter of last year. These results reinforce our commitment to our strategy and our healthy and steady business fundamentals. Now let me talk about the operational performance of Aripuana. Throughout April, May, and June, the plant increased utilization rates, delivered stable concentrate quality, and improved metallurgical recoveries that contributed to a solid adjusted EBITDA. In June, we achieved positive operational cash flow generation. These factors confirm the transition of Aripuana to an ongoing operation. I will dive deeper into the key drivers of Aripuana later on in the presentation. Let me also emphasize that our Cerro Pasco integration project continues to advance on all fronts and we expect its approval in the upcoming months. Our brownfield exploration program in the second quarter advanced towards expanding our portfolio and aims to add increasing the life of our mines. That said, our drilling strategy for this year is on track. We are focused on near mine expansion, brownfield, and infield drilling. As previously disclosed, we announced the divestment of our Morro Agudo operation at the beginning of April. And on July 1, we announced the closing of the sale transaction. Under these conditions, mining activities ceased at the end of April. The sale of Morro Agudo is an important step in our portfolio optimization, which is a central part of our strategy to improve cash flow generation and returns. This focus allows us to concentrate our efforts on our most attractive operations. Additionally, in April, we concluded important transactions in line with our liability management strategy. These transactions included extending our debt profile through the issuance of new debentures and bonds, as well as conducting tender offers. This strategic move allowed us to optimize our financial structure, diversify our funding sources, and enhance our liquidity position. Jose Carlos will provide more detail on this topic in his presentation. Now let's move to Slide number 4 to discuss our operating performance. Regarding the operating performance of the mining segment, zinc production reached 83,000 tons in the second quarter of this year, up 2% year-over-year, primarily due to higher zinc average grades, particularly at Cerro Lindo. Compared to the first quarter of this year, zinc production decreased by 5% due to lower volumes from the Peruvian mines and the absence of contributions from Morro Agudo in May and June of this year following the sale of this asset. In terms of cash cost in the second quarter of this year, it decreased to $0.03 per pound compared to $0.37 per pound in the second quarter of last year. This decrease was mainly due to higher byproduct contribution, driven by higher copper and lead prices and lower treatment charges in the period. Compared to the first quarter of 2024, mining cash cost decreased by $0.24 per pound, impacted by lower treatment charges and higher byproduct contribution. The cash cost in the first half of this year performed below the lower range of our guidance. The cost per run of mine for the quarter was $49 per ton, up 10% year-over-year due to lower treated ore volumes and up 7% quarter-over-quarter, mainly explained by higher third-party services and higher personnel costs. The cost per run of mine in the first half of this year was within our guidance. Now moving to Slide number 5. Regarding the operating performance of the smelting segment, metal sales totaled 148,000 tons in the second quarter of this year, down 1% from the second quarter of last year. Compared to the first quarter of this year, metal sales increased by 7%, driven by higher production volumes at Cajamarquilla and Juiz de Fora. Smelting cash cost in the second quarter of this year was $1.19 per pound compared to $1.12 per pound in the second quarter of last year. This increase is mainly attributed to higher raw material costs due to higher zinc prices and lower treatment charges. Compared to the first quarter of this year, cash costs rose by 21%, also impacted by higher zinc prices and lower TCs. Our conversion cost was $0.30 per pound compared to $0.32 per pound in the second quarter of last year due to improved operational efficiency in the period. Compared to the first quarter of this year, the conversion cost was relatively flat. I would like to highlight that both cash costs and conversion costs in the first half of this year performed within our guidance. Now moving to Slide number 6, where we will start talking about Aripuana. The solid operational performance of Aripuana and its improved financials marked an important advance in the second quarter. Our efforts focused on plant stabilization, continuous improvement of feed and utilization rates, enhancing metallurgical recoveries and concentrate quality, as well as reducing downtime hours. In June, the average utilization rate was 81%, with many days operating above 90%. Treated ore improved significantly by the end of the quarter reaching 133,000 tons, a 32% increase compared to March. In July, we expect to treat more than 140,000 tons of ore and we aim to achieve a target capacity of 160,000 tons per month by September. At current treatment levels and with improved grades from the Link and Ambrex orebodies, we anticipate further production improvements that will continue to improve our margins. Regarding Aripuana's financial performance, we noted a significant improvement in this quarter with positive adjusted EBITDA for the second consecutive quarter and positive operating cash flow in June. These are key milestones that reaffirm the asset's solid progress. Looking ahead, we expect further increases in plant feed and throughput rates, improved concentrate grades, higher metal recoveries, and cost reductions. In the next slide, we will provide more details on Aripuana's operational performance for the quarter. Now moving to Slide number 7. Starting with the capacity utilization in the upper left side, we noted that it performed at 81% in June based on the design capacity. When considering the 90 percentile for the month, the performance was 86%, indicating solid progress in plant reliability. In the upper right side, which shows plant downtime measured in days of corrective maintenance, we noted a significant decrease. This indicates also an important improvement in plant stabilization. At the bottom of the slide, both metallurgical recoveries and concentrate grades are performing at or near target levels, and in some cases, surpassing those levels. As mentioned earlier, this solid operational performance and improved financial results confirm the full transition to an ongoing operation and mark an important milestone in Aripuana. Now moving to Slide number 8. On this slide, I would like to highlight our progress with the advanced technical studies for the Cerro Pasco integration project. As we have discussed in previous calls, this project has the potential to unlock significant value for Nexa. We have made substantial progress across the four key work fronts, completing important steps such as engineering for the underground mine connection and the El Porvenir shaft upgrade. Additionally, we have advanced the engineering studies of the tailings pumping system, which will allow us to pump tailings from El Porvenir to Atacocha. Significant progress has also been executed on the plant's engineering assessment, which represents opportunities to enhance processing capacity. Support activities, including technical reviews and environmental studies and permits are also advancing as expected. In March, we issued a technical report on the joint operations of El Porvenir and Atacocha, reflecting some of the benefits of the integration project and resulting in an increase in the reserve base of the Cerro Pasco complex. We are moving forward with a project closely monitoring market conditions and expect to submit its approval in the coming months. Now I will turn the call over to Jose Carlos del Valle, our CFO, who will present our financial results. Jose, please go ahead.

Thank you, Ignacio. Good morning to everyone. I will continue on Slide 9. As you can see, beginning with the chart on your upper left, total consolidated net revenues for the second quarter increased by 17% year-over-year. This increase was primarily driven by higher LME metal prices and increased mining sales volumes, partially offset by lower net premiums and slightly lower smelting sales volume. Compared to the first quarter of 2024, net revenues increased by 27%, driven by higher LME metal prices and increased smelting sales volume. For the first six months of 2024, net revenues totaled $1.3 billion, up by 2% from the same period a year ago. In terms of profitability, consolidated adjusted EBITDA in the second quarter of 2024 was $200 million compared to $72 million a year ago. This improvement was mainly explained by higher mining sales volumes, improved performance in our Aripuana operation, higher byproduct contribution, lower variable costs, and higher zinc prices. Compared to the first quarter of 2024, adjusted EBITDA increased by 64%, driven by higher byproduct contribution, higher zinc prices, and increased smelting sales volume. In the first half of 2024, adjusted EBITDA reached $323 million, up by 58% compared to the same period a year ago. Finally, it's worth noting that our consolidated adjusted EBITDA margin increased to 27% in the second quarter of 2024, representing a 16 basis point improvement compared to the second quarter of 2023 and a 6 basis point improvement compared to the first quarter of 2024. Now let's move to Slide number 10. On the top left of the slide, we can see that in the first six months of 2024, we invested $138 million in CapEx, with nearly all of this amount directed towards sustaining activities, including mining development and tailing storage facilities. In line with this, our 2024 CapEx guidance for the year remains unchanged at $311 million. With respect to mineral exploration and project evaluation, we invested a total of $29 million, with $17 million allocated to mineral exploration and mine development to support our exploration activities. Following the typical pattern that we see every year, we expect our investments in these areas to accelerate in the second half of 2024. And thus, we are maintaining our 2024 guidance for exploration and project evaluation at $72 million. Now, let's move on to the next slide where I will discuss our cash flow generation for the quarter. Starting from the $200 million of adjusted EBITDA, net of non-operational items, we can see that we generated a solid cash flow from operations before working capital variations at $133 million in the quarter. We then paid $36 million related to interest and taxes and spent $67 million in total CapEx for our operations. Additionally, as part of our liability management strategy, we can see that loans and investments had a positive net impact of $146 million. This resulted from our new bond offering of $600 million, a debenture issuance of approximately $130 million, and a BNDES credit line of approximately $40 million. These were partially offset by loans and financing payments, including cash tenders for part of our bonds maturing in 2027 and 2028. Furthermore, we paid $4 million of contractual dividends to non-controlling interests. Then we had a negative impact of $6 million from foreign exchange variations in our cash and cash equivalents, driven by the depreciation of the Brazilian real against the U.S. dollars during the period. Finally, in line with typical annual trends, we saw a negative effect of $17 million related to working capital, a significant improvement from the negative $125 million in the first quarter. As in 2023, we expect this working capital effect to be reversed positively throughout the second half of the year. Combining all these effects, our free cash flow generation in the second quarter of 2024 was $149 million. Now moving to Slide number 12. In this slide, you can see that our liquidity remains healthy and we continue to present a sound balance sheet with an improved and extended debt maturity profile. At the end of the second quarter of 2024, our available liquidity was approximately $794 million, including our undrawn sustainability-linked revolving credit facility of $320 million. Regarding our overall debt profile, the average debt maturity in the second quarter of 2024 was 5.9 years, an increase from the 3.7 years reported in the first quarter of 2024. In line with our proactive approach to liability management, you may remember that we successfully extended our debt maturity profile at the beginning of the second quarter. This was achieved through the issuance of a new 10-year bond funding a cash tender offer for part of our existing notes that were due in 2027 and in 2028, while obtaining a six-year term ESG-linked debenture of approximately $130 million and a new credit line from BNDES of approximately $40 million for an 8-year term. As Ignacio mentioned at the beginning of his presentation, these transactions marked a significant milestone for the company. As a result, we now carry an average cost of debt of 6.61%. It is important to mention that as of June 30, our total cash position is sufficient to cover the payment of all obligations maturing over the next four years. In terms of leverage, as measured by the net debt to adjusted EBITDA ratio, this measure decreased from 3.7 times to 2.7 times quarter-over-quarter. This substantial decrease is primarily due to the increase in adjusted EBITDA over the last 12 months and to a reduction in net debt. These strategic moves have allowed us to optimize our financial structure, diversify our funding sources, and enhance our liquidity position. The extension of our debt profile is part of our ongoing optimization effort and reflects our commitment to prudent financial management and our confidence in the long-term prospects of our business. Following these transactions, we will remain attentive to market conditions and we continuously evaluate options to maintain a maturity profile that is in line with the long life of our assets and at the most competitive costs. Moving now to Slide 13. Regarding market fundamentals, it is noteworthy that in the second quarter of 2024, LME zinc price averaged $2,833 per tonne, up 12% from the second quarter of 2023 and 16% from the first quarter of 2024. This increase is primarily due to macroeconomic factors such as expectations of lower U.S. interest rates and expectations of Chinese government stimulus and fundamental factors such as tight concentrate market and low zinc inventories. The LME copper price averaged $9,753 per tonne in the second quarter of 2024, up 15% from the second quarter of 2023 and 16% from the first quarter of 2024, mainly attributed to bullish fund manager investments in addition to the macroeconomic factors mentioned a moment ago. Looking ahead, zinc prices are expected to remain positively supported by U.S. monetary policy, economic stimulus in China, and the current tight zinc concentrate market. In the mid- to long-term, the fundamental outlook for both zinc and copper prices remain positive. Moreover, investments in construction, infrastructure, and the automotive sectors are anticipated to continue to positively impact demand expectations for base metals, while growth in supply is expected to remain relatively limited.

Thank you, Jose Carlos. I would like to conclude this presentation by sharing some important news in our sustainability agenda. As part of Nexa's circular economy initiatives, we completed our first commercial sale transaction in May, involving 26.4 tonnes of waste material from our Tres Marias smelter. This project aims to sell significant amounts of waste from our smelter by developing partnerships and evaluating viable technologies and trade routes for these materials. Additionally, in collaboration with the Brazilian Agricultural Research and the Brazilian Micro and Small Business Support Service, we are partnering to expand the Rural Practices Project in Vazante, Brazil. This initiative aims to enhance the income of 40 selected farmers by introducing new agricultural techniques and market strategies. This project demonstrates Nexa's commitment to improving local agricultural practices and supporting community development. Another notable achievement is that Nexa Peru was recognized for the third consecutive year as one of the 16 leading companies in sustainable practices by the Peruvian Stock Exchange for the 2024-2025 period. This recognition reflects Nexa's ongoing commitment to integrating ESG strategies into its operations and advancing responsible mining practices. These highlights underscore our commitment to operational excellence and transparency as well as our dedication to creating sustainable value for our shareholders and the communities where we operate. Looking at the remainder of the year, we will continue to focus on enhancing productivity, efficiency, and performance across operations and corporate areas while also prioritizing the safety of our people. We will maintain our disciplined focus on our priorities, including the further improvement of Aripuana's performance, the development of the Cerro Pasco integration project, delivering on guidance, extending the life of our mines, and consistently improving our cash generation. We believe that Nexa is well-positioned to maintain positive momentum. We have an established business with a proven track record and unwavering commitment to stakeholder value creation. This concludes our remarks. Thank you for your support. Operator, we are ready to open for questions.

We will now begin the question-and-answer session. Our first question comes from Lawson Winder with Bank of America Securities. Please go ahead.

Thank you, operator. And good morning, Ignacio and team. Thank you for the update as always. I wanted to just start off with your thoughts on the zinc market. So that was really helpful the color you provided. But just ask in particular about some new production coming on in Central Africa and in Congo, there's new production. And just your thoughts on whether or not that would be a concern of yours as you look out to the second half of this year and then 2025 as that asset starts to hit run rate capacity.

Thank you for the question, Lawson. We have been closely monitoring potential new productions. Some mines are about to increase concentrate supply in the coming months, including our Aripuana mine. However, we believe this increase will not be sufficient to offset the current tight concentrate market. Therefore, based on supply and demand fundamentals, we expect continued positive support for zinc pricing in the upcoming months. As mentioned in the presentation, we may experience some volatility, particularly due to the U.S. elections and anticipated Fed rate cuts. Nevertheless, we remain confident in the fundamentals of zinc both in the short term and in the mid to long term. We will continue to track potential new production and closely watch the Chinese market, as China plays a significant role in the zinc industry, and it's crucial to understand developments in zinc concentrate production and consumption there. Thank you again for your question.

Yes, adding to what Cammarosano mentioned, regarding the smelters, the TCs are currently very low, and in some instances, we are experiencing negative TCs, resulting in most smelters not being profitable. However, we are positioned in fortunate markets, specifically in Peru and Brazil, which places us close to the concentrate producers. Nevertheless, the market is quite tight, and we believe this situation cannot persist for many months. While some smelters are managing to remain profitable and adapt to the market conditions, this situation is not sustainable. Therefore, we anticipate that zinc prices will need to increase, or we will face a metal shortage in the upcoming months.

Okay. Thank you very much for that color. All very helpful. If I might, I'd like to also ask about capital allocation and how you guys are thinking about making a decision on investments in the Cerro Pasco expansion versus paying down debt and the continued ramp-up of Aripuana. I guess Aripuana, you're now expecting that to be EBITDA positive going forward. So does that now provide some additional flexibility with capital return? And then what's the timing of decision around Cerro Pasco.

Aripuana is starting to generate some revenue for the remainder of the year. Throughput capacity is expected to reach 80% to 90% of our target. Given stable recoveries and good quality of concentrates, we will begin to accumulate cash at Aripuana, which will no longer operate at a cash deficit. However, building Aripuana was challenging and required significant investment, resulting in high gross debt. Our priority in capital allocation is to reduce this debt. We anticipate that in the latter half of the year and into 2025, we will begin to see increased cash flow; part of this will be used to pay down debt, and some will go toward dividends, as we are committed to returning capital to shareholders in the long term. We also plan to invest in growth, with Pasco being our most advanced project, where we have two operations. There is considerable potential in the overlap of these two mines, and we aim to unlock resources at Atacocha that are currently inaccessible. We will utilize the infrastructure of El Porvenir to achieve this. The capital expenditure for this is set at $150 million, which we plan to approve in the coming months, likely before the end of the year. A key bottleneck is the pumping system needed to transport tailings from El Porvenir to Atacocha, which will extend the life of the tailings dam. We will need to approve equipment purchases due to long lead times. In the last quarter of this year, we will finalize the engineering for the shaft and tailings dam facility, and progressing with permits will enable us to officially approve the project within the next four months. This $150 million will be financed with our own cash, and we are exploring options for advancing sales of lead. In summary, our focus is on reducing debt, paying dividends as cash flow increases, and advancing the Pasco project with approvals in the coming months. These projects typically last two to three years and are crucial for enhancing future cash flow.

And the next question comes from Carlos De Alba with Morgan Stanley. Please go ahead.

Yeah. Good morning, Ignacio, Carlos and Rodrigo. Just maybe following on Cerro Pasco before I ask a question on Aripuana. So just to confirm, the $150 million CapEx that you mentioned is for the entire project or just for the first stage?

Yes. No. It's the entire project because I can give you color on that, if you want, but please go ahead.

Yeah. No. Can you talk a little bit about the CapEx for Cerro Pasco integration project in total? And if there are different stages, if you can add color to that and the pace of the disbursement because I think you mentioned that it could take potentially three years to complete the project. So if you can give us a little bit of color on the total CapEx and maybe the pace of disbursements in those three years, that'd be great.

The project we are discussing will take around three years and involves two main components. First, we need to modify studies to integrate the two mines, which are currently connected but need to be linked at a lower level of about 2 kilometers. This will require extracting mineral from Atacocha through the Porvenir shaft, a process that is expected to take at least two years. The second component is the pumping system, which is crucial for transporting tailings from El Porvenir to Atacocha. The tailings dam at El Porvenir will be at capacity in three years, so to continue operations, we need to move the tailings to Atacocha. The engineering for this part is projected to cost around $80 million, and we need to begin purchasing equipment soon due to long lead times. This project is expected to take about two years and will require $40 million in both 2024 and 2025. Additionally, we will need to upgrade certain parts of the El Porvenir shaft, which is generally efficient, but some upgrades are necessary and might cost between $15 million to $20 million. We also need to construct a water management plant near the tailings, which is estimated to cost between $20 million and $25 million. The remaining expenses will go toward integrating the two mines and developing them, which includes sustaining capital expenditures not accounted for in this current project budget. To summarize, we are looking at $80 million for pumping, $20-$25 million for water management, and $15-$20 million for shaft upgrades, with additional costs for integration. Overall, there's significantly more capital expenditure involved than just sustaining capital. The project itself is straightforward, and there's a significant opportunity with the net smelter return (NSR) of El Porvenir, currently at about $100-$110 per tonne. The goal is to increase this by extracting more mineral from Atacocha, which has resources expected to yield an NSR around $150. The integration has great potential as well, with grades indicating an NSR potentially exceeding $200, even before we confirm actual resources. Following the completion of the four components, we'll likely start drilling intersections next year to extract high-grade minerals and improve the net asset value of the mine. By the end of this year, we will probably announce the pumping system, and I expect to provide updates on all project components and their management at the start of next year. This gives you an overview of where we currently stand with the Cerro Pasco Complex project.

Great, Ignacio. Thanks for the color. And so the total CapEx is indeed $150 million, right?

Yeah. It's a total CapEx. I mean it might change a little bit probably because of the engineering, but it won't be material. It won't be material.

Right. Okay. And then moving on to Aripuana, sorry. So now that the operation of the mine has graduated to an operating mine, would you start disclosing cost for Aripuana and stop making the adjustment on the EBITDA for the ramp-up expenses?

Yeah. That's the idea. That's the idea. We have now moved to an operation and we will need to start disclosing that as well. Yes. That's the way it has to be from now on.

And would that start in the next quarter or until 2025?

No, next quarter. The idea is that third quarter, we'll start doing that.

Okay. Can you provide any updates now, or should we wait until you report the third quarter?

I think we have to wait because we don't know prices.

And the next question comes from Camilla Barder with Bradesco BBI. Please go ahead.

Hi. Just two quick questions on my side. First, on CapEx. Maybe still early to say, but could you talk about your expectations for CapEx next year? And secondly, you kept your guidance for costs this year unchanged, but it would be great to hear if you could provide some more color on how you see costs evolving through the second semester.

Hi, Camilla. Thank you for the question. This is Jose Carlos. I'm not sure if I caught everything correctly, but I'll do my best. The first question was about our CapEx expectations for next year. We always look beyond the current year and have an idea of what our CapEx will be. We are in the process of finalizing our projects and prioritizing all our initiatives. Therefore, we do not anticipate a significant reduction in CapEx. It should be in line with where we are today for 2024, likely in the low 400s range. I don't foresee major fluctuations in that regard. We have several projects and investments primarily for sustaining operations, and we need to address them in 2025. Could you please repeat your second question? I believe it was about costs, but I'm not sure if you had a specific question. I only caught the mention of costs, so a clarification would be helpful.

It was cost for the second half.

Cost for the second half, okay. Sure. As we mentioned in the earnings release, and I think we mentioned in the presentation as well, I mean we feel good about the cost levels that we are having mostly within guidance. So we – for now, we’re keeping our cost guidance and we don’t expect that – we’re not expecting right now that we will make a change. Obviously, things can change. But we feel comfortable that we are being able to be within the guidance that we provided, mitigate the impact of inflation that is still there in all of our operations, so always finding ways in which we can compensate for the pressure that we see in some of the inputs and in third-party services. So for now, we’re keeping things the way they are and we expect that we will be within the guidance.

Okay. Thank you.

And the next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Hi. Good morning. Two questions. Sorry, could you just clarify, did you say that we should anticipate CapEx for 2025 around $400 million, mostly sustaining? Did I hear that correct?

No. What I said was that we shouldn't expect a significant variation from what we have in 2024. And the guidance we have for 2024 is $412 million, so something in that same range.

I'm sorry, Orest, just to clarify, in the calculation that I mentioned, we consider the CapEx, which our guidance for this year is $311 million, mostly for sustaining projects. We expect this level to remain the same next year, also under a scenario similar to what we have now. However, if we proceed with the Pasco integration project, we may increase the total CapEx because we will include the investment needed for Cerro Pasco next year as explained by Ignacio. So, the $400 million is a combination of CapEx and some operational expenditures that we internally categorize as CapEx. Just wanted to clarify to avoid any misunderstandings.

Yeah. Thank you. And just secondly, I'm just wondering, we previously heard some discussion about trying to diversify into copper and potentially looking at some copper acquisitions. Is that still on the table from a strategy perspective?

Yes, that is still a consideration. Our company is very competitive in underground mining, which we believe is one of our strengths. We already have copper projects in our portfolio, such as Cerro Lindo and Aripuana. We are actively searching for similar projects with higher copper content. The reason for this focus is that we can effectively exploit these types of deposits, and copper tends to be more stable than zinc in terms of price volatility. By focusing more on copper, we anticipate lower cash flow volatility. The fundamentals for copper are as crucial as those for zinc. Therefore, our plan is to incorporate more copper into our portfolio in the coming years.

There are no further questions from the phone. I will now transfer it over to Mr. Rodrigo to read questions from the webcast.

Okay. Thank you, operator. We have a couple of questions from the audience in the webcast. So I'm going to start with a question from Mr. Luis Ordonez. The question is, do our expectations that higher production levels and metal prices would continue in the coming quarters? Ignacio, can you jump in on this one?

Yeah. What we try to focus on is reliable production, reliable controlling of costs and reliable controlling of CapEx. So I can tell you that we are on track to achieving that for the second half of the year in the guidance that we gave. The levels of EBITDA are influenced by prices, no? Our view is that prices are going to remain similar to those of the second quarter. But volatility is there and we don't know. If prices remain, it might be the case that we might have these current levels of EBITDA, but we don't know that. But what we can confirm is that we are committed to our targets on production costs and CapEx that are the main components of the EBITDA.

Thank you, Ignacio. Following up on the question from Luis, we have another question from Luis. Does Nexa have a target for net leverage by the end of this year?

Yes. Thank you, Rodrigo, and thank you, Luis, for the question. I will talk in general because we have mentioned this before. We have a conservative approach to this. And obviously, in a mining company that has to go through the different cycles, you are subject to changes in some factors that you don't control. So you have to take that into consideration. We're setting a target. In the first quarter, we had high leverage exactly because of that because prices were low. And in the last 12 months, our EBITDA had suffered because of these low prices. As Aripuana starts contributing to our results and we have prices that are more in line with fundamentals, this leverage level is already coming down in a material way. And as Ignacio mentioned, one of our main objectives is to bring down the gross debt in as much as we accumulate cash, we will focus on bringing down the gross debt. So the combination of that will help us continue to reduce our leverage until we bring it down to levels below 1.5 times, which is something that we feel more comfortable with. And if our short to medium-term target is to have it back below 1.5 times.

Those were the questions from the audience. So we are all set here. I would like to thank you so much and hand over to Ignacio.

Okay. Thank you very much for the time. Again, in this quarter, I just want to reiterate that we are very focused on achieving guidance on production cost, CapEx, and trying to start reducing our gross debt. We are very happy with the advances on Aripuana. Aripuana has been a very, very difficult project to get. And now we are towards the end of the ramp-up and started making cash flow. Aripuana is a mine that is going to give us very good surprises in the coming years because it's a long-life asset with very good net smelting returns. We are very confident that Pasco is coming in the next three years. So with all of our mines: Pasco, Aripuana, Cerro Lindo, and Vazante, the priority is to extend the life of the mines and have stable cash flows going forward given our operational guidance. In the case of the smelters, given the location and given the market that we face, there are stable smelters, even in these difficult situations, we are making money. So the idea is to keep that going forward. Thank you very much, and we will speak to you soon in the next three months. Have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.