Good morning. And welcome to Nexa Resources Third Quarter 2024 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. 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 third quarter 2024 earnings conference call. Thank you 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, José 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 third quarter results of 2024. Let's move to Slide number 3 where we will begin our presentation with the main highlights of the quarter. We are pleased with our third quarter and year-to-date results. We have delivered consistent operational performance and maintained financial discipline. Our commitment to cash flow generation initiatives has been a key driver supported by positive momentum in metal prices, especially zinc, which reinforces industry resilience and strengthens market fundamentals. With nine months behind us, we are on track to meet our full-year outlook. Zinc metal and oxide metals rose by 3% quarter-over-quarter supported by improved demand in our home markets. In mining production, zinc was relatively flat compared to last quarter while lead and silver increased by 2%, each driven by higher treated ore volumes and grades. Copper production decreased by 4% due to lower grade areas in the period. Our financial results were strong. Total consolidated net revenues for the third quarter reached $709 million, up by 9% year-over-year largely due to higher average LME prices. Adjusted EBITDA was $183 million, 111% higher than the $87 million reported in the same quarter last year with adjusted EBITDA margin of around 26%, expanding by 12 basis points. This performance was mainly driven by higher byproduct contribution, higher zinc prices, and lower mineral exploration and project evaluation expenses. Our net leverage ratio improved to 2.2 times, down from 2.7 times in the second quarter of this year and 3.1 times in the third quarter of last year. Regarding Aripuanã, I would like to provide further details later, but here are some key points. Aripuanã generated positive operating cash flow and marked its third consecutive quarter of EBITDA growth. Treated ore volumes rose significantly due to improved plant performance and stability. Notably, we reduced plant downtime and corrective maintenance, boosting operational efficiency. However, zinc production experienced a minor dip in the third quarter of this year compared to the second quarter, primarily due to lower grades and increases in talc levels in the flotation circuit. On the Cerro Pasco integration project, I am pleased to share that the tailings pumping system, a key step in Phase 1, is currently undergoing the internal approval process. I will provide more details in the upcoming slides. Additionally, as previously disclosed, we announced the sale of the Pukaqaqa greenfield project and a non-operational Peruvian subsidiary, Minera Pampa de Cobre, the owner of the Chapi mine. These sales align with our portfolio optimization strategy, prioritizing efficient capital allocation to high return assets. Now let's move to Slide number 4 to discuss our operating performance. Regarding the operating performance of the segment, zinc production reached 83,000 tons in the third quarter of this year, down by 5% year-over-year. This decline was primarily due to the absence of contributions from Morro Agudo along with lower zinc average grades, particularly at Vazante and El Porvenir. Compared to the second quarter of this year, zinc production remained relatively stable, supported by higher volumes from Vazante, El Porvenir, and Atacocha. This was partially offset by the absence of contributions from Morro Agudo and slightly lower volumes from Cerro Lindo and Aripuanã. In terms of cash costs in the third quarter of this year, the cash cost decreased to minus $0.01 per pound compared to $0.34 per pound in the third quarter of last year. This decrease was mainly attributed to lower treatment charges and higher byproduct contribution in the period. Compared to the second quarter of this year, mining cash cost also decreased by $0.04 per pound, driven by lower operating costs and slightly higher zinc volumes. The cash cost for the first nine months of the year has performed within our updated guidance range for the year. It is worth mentioning that last week we issued a press release informing the market of the reduction in our cash cost guidance for 2024, which reflects a 64% decrease from the previous guidance issued last February. This adjustment is supported by higher LME metal prices, year-to-date performance increased by products contribution and a slightly lower TCs. The cost per run of mine for the quarter was $46 per ton, up 6% year-over-year due to lower treated volumes resulting from the cessation of mining operations at Morro Agudo. This was partially offset by lower operating costs related to third party services, personnel, and energy. The cost per run of mine in the first nine months of the year performed within our unchanged guidance range for the year. Now moving to Slide number 5. Regarding the operating performance of the smelting segment, metal sales totaled 153,000 tons in the third quarter, down 1% from the third quarter of last year. Compared to the second quarter of this year, metal sales increased by 3%, driven by higher production volumes at Cajamarquilla and Três Marias, along with constructive demand in our domestic market. Consolidated smelting cash cost in the quarter was $1.16 per pound, up from $1.01 per pound in the third quarter of last year. This increase is mainly attributed to higher raw material costs resulting from increased zinc prices and lower TCs, as well as higher operating costs, which was partially offset by product contribution. When compared to the second quarter of this year, cash costs decreased by 3%, mainly explained by lower TCs, which was partially offset by the impact of lower zinc prices on our concentrate purchases and increased byproduct contribution. Our conversion cost was $0.32 per pound compared to the $0.29 per pound in the third quarter of last year, mainly due to higher operational costs related to maintenance expenses. This was partially offset by the positive impact of foreign exchange variations in the period. Compared to the second quarter of this year, conversion cost increased by 6%, driven by higher variable and one-off energy costs in Cajamarquilla, which were partially offset by a decrease in maintenance expenses. I want to highlight that both cash costs and conversion costs in the first nine months of 2024 performed within our unchanged guidance range for the year. Now moving to Slide number 6 where we will start talking about Aripuanã. The third quarter of 2024 was another important quarter for Aripuanã. We achieved positive adjusted EBITDA for the third consecutive quarter and recorded our first full quarter of positive operating cash flow. This improved financial performance was driven by our ongoing efforts to enhance operational efficiency alongside a strong zinc price environment. In terms of production, as I mentioned in the first slide, we noted a significant improvement in treated ore volumes by 12% in September compared to the second quarter of this year and a remarkable 27% increase compared to the first quarter of this year. However, the performance of our tailings filters is currently limiting our capacity to exceed 90%. Throughout the year, we have been actively working to enhance tailings filter performance. However, due to operational limitations of the existing filters, we have decided to acquire a fourth filter, which is expected to be delivered in 2025. This addition will significantly boost our filtering performance and support further production increase. We also made meaningful progress in reducing plant downtime, achieving our lowest levels to date with a 33% decrease compared to the second quarter of this year and 40% compared to the first quarter of this year. Moreover, we maintain a stable concentrate quality within commercial specifications. It is important to note that during this quarter, average recoveries for zinc and lead were impacted by lower average grades and increased talc levels in the flotation circuits. In terms of metal production, we experienced flat zinc output, increasing copper production, and a decrease in lead. Looking ahead, we anticipate further increases in treated ore and throughput rates, higher metal recoveries, and cost reductions, all aimed at improving our results. Now moving to Slide number 7, where we will talk about the advancements of the Cerro Pasco integration project. In this slide, I would like to highlight our progress with the Cerro Pasco integration project. As discussed in our previous calls, this project has the potential to unlock significant value for Nexa. In the third quarter of this year, we made important strides across various work fronts, including the start of the approval process for the tailings pumping system. The execution involves the construction of a tailings treatment plant in El Porvenir and a 6-kilometer tailings pipeline connecting the El Porvenir plant to the tailings storage facilities in Atacocha. In addition to the tailings pumping system, Phase 1 includes investments to raise the El Porvenir tailings dam, which is already underway as part of El Porvenir's regular sustaining CapEx. It also considers future investments to elevate Atacocha's tailings facility. The whole phase is to significantly extend the operational capacity of the tailings storage facilities at the Pasco complex, prolonging operations. In the next slide, I will provide further details on the tailings pumping system. Now moving to Slide number 8. As said before, the key benefit of this investment is a substantial increase in tailings storage capacity at the Pasco complex, allowing us to operate for over 10 years. The estimated execution period for this project is two years from 2025 to 2026 with an expected operational start in the first half of 2027. The total investment for this initiative is estimated to be between $85 million and $90 million, distributed over two years of execution. Key components of the system include a thickener area, water clarification and reagent systems in El Porvenir, as well as the tailings pumping and transportation system, along with the necessary electrical infrastructure. We are confident in the potential this investment brings to our operations, the subsequent phases of the project, and the sustainability of the Pasco complex. I will turn the call over to José 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 from the chart in the upper left, total consolidated net revenues for the third quarter increased by 9% year-over-year. This increase was primarily driven by higher LME metal prices with the exception of lead, although it was partially offset by slightly lower smelting sales volume and a lower net premium. When compared to the second quarter of 2024, net revenues decreased by 4%, driven by lower LME base metal prices and lower byproduct contribution, partially offset by increased smelting sales volume and higher net premium. For the first nine months of 2024, net revenues totaled $2.03 billion, up by 4% from the same period a year ago. In terms of profitability, consolidated adjusted EBITDA for the third quarter of 2024 reached $183 million, up from $87 million a year ago. This improvement was mainly attributed to higher byproduct contribution, increased zinc prices and higher margins in Aripuanã. Compared to the second quarter of 2024, adjusted EBITDA decreased by 11%, driven by lower base metal prices and lower byproduct contribution, partially offset by an increase in smelting sales volume. For the first nine months of 2024, adjusted EBITDA totaled $517 million, a remarkable 75% increase compared to the same period last year. This growth was primarily driven by higher byproduct contribution, increased zinc prices, and higher margins in Aripuanã. Additionally, lower costs and reduced mineral exploration and project evaluation expenses contributed to this increase. Finally, it is worth noting that our consolidated adjusted EBITDA margin increased to 26% in the third quarter of 2024, representing a 12 basis point improvement compared to the third quarter of 2023, although decreased by 2 basis points compared to the second quarter of 2024. Now let's move to the next Slide number 10. On the top left of the slide, we can see that in the first nine months of 2024, we invested $191 million in CapEx with nearly all of this amount directed towards sustaining activities, including mining development and tailing storage facilities. In line with our ongoing capital allocation strategy, we have reduced our capital expenditures guidance by $11 million, updating the figure from $311 million to $300 million. With respect to mineral exploration and project evaluation, we invested a total of $45 million in the first nine months of 2024, with $28 million allocated specifically to mineral exploration and mine development to support our exploration activities. Following the typical pattern we observe each year, we expect our investments to increase in the fourth quarter of 2024. Therefore, 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 with the $183 million of adjusted EBITDA net of non-operational items, we generated a strong cash flow from operations before working capital variations totaling $198 million in the quarter. We then paid $38 million related to interest and taxes and invested $55 million in total CapEx in our operation. Additionally, loans and investments had a negative impact of $6 million, primarily due to premiums paid on our bond repurchase program along with payments for loans, financing, and lease liabilities. These effects were partially offset by the cash dividend received from Enercan and net sales of financial investments. We also paid $7 million in contractual dividends to non-controlling interests. Furthermore, we had a positive impact of $2 million from foreign exchange variations on our cash and cash equivalents, driven by the appreciation of the Brazilian real against the US dollar during the period. Finally, we had a negative effect of $43 million related to working capital. Despite a negative year-to-date position, we remain focused on implementing initiatives, such as enhanced residual management, to reverse this position in the next quarter. Combining all these effects, our free cash flow generation in the third quarter of 2024 amounted to $51 million. Now moving to Slide number 12. In this slide, you can see that our liquidity has improved and remains healthy and we continue to maintain a sound balance sheet with an improved and extended debt maturity profile. At the end of the third quarter of 2024, our available liquidity was approximately $845 million, which includes our undrawn sustainability linked revolving credit facility of $320 million. Regarding our overall debt profile, the average debt maturity in the third quarter of 2024 was 5.7 years, resulting in an average cost of debt of 6.36%. Importantly, as of September 30th, our total cash position is sufficient to cover all obligations maturing over the next 3.9 years. In terms of leverage, our net debt to adjusted EBITDA ratio decreased from 2.7 times to 2.2 times quarter-over-quarter. This decline is primarily attributed to the increase in adjusted EBITDA over the last 12 months and a reduction in net debt. We will remain attentive to market conditions, continuously evaluating options to optimize our financial structure, diversify our funding sources and enhance our liquidity position. Maintaining a maturity profile aligned with the long life of our assets and achieving the most competitive cost is our utmost priority. The extension of our debt profile is part of our ongoing optimization efforts and reflects our commitment to proven financial management and confidence in the long-term prospects of our business. Moving now to Slide 13. Regarding the same market fundamentals, it is now noteworthy that in the third quarter of 2024, the LME zinc price averaged $2,779 per ton, up by 14% from the third quarter of 2023 and down 2% from the second quarter of 2024. As anticipated, the fundamentals for zinc remain solid and constructive, providing positive support for prices with recent levels exceeding $3,000 per ton. These fundamentals are underpinned by a trend that began this year when low zinc prices in the second half of 2023 prompted some players to cut zinc production. This decision adversely affected global concentrate supply, resulting in decreased treatment charges. As illustrated in the lower part of the slide, TCs have been sharply declining since September 2023. Spot TCs in China have been trading at negative levels since mid-June to July this year, which has begun to adversely impact smelters' margins by increasing raw material costs. Consequently, in August, a group of Chinese smelters, part of the China zinc smelter purchase team, announced potential cuts to metal production due to tighter supplies of zinc concentrate and low TCs. Given this scenario, we expect metal production in 2024 to be lower than in 2023. In our view, these market conditions are unlikely to dissipate quickly, continuing to provide positive support for prices. Moving now to Slide 14. In the third quarter of 2024, copper price averaged $9,210 per ton, up by 10% from the third quarter of 2023 and down 6% from the second quarter of 2024. In the short term, copper prices are expected to remain positively supported by China's economic stimulus, which could provide additional support to copper demand along with a still tight concentrate market. For silver, the price averaged $29 per ounce in the third quarter of 2024, up by 25% from the third quarter of 2023 and 2% from the second quarter of 2024. The short term fundamentals for silver are also positive, driven by the energy transition and concerns about future silver availability as most silver is produced as a byproduct of other metals and relies on new mine projects coming online. Nexa is a significant silver producer with annual production estimated to be around 11 million to 13 million ounces according to our 2024 guidance. Looking ahead, copper and silver prices are expected to remain positively supported by US monetary policy, economic stimulus in China, and efforts related to the energy transition. Now I will hand over the presentation back to Ignacio for his final remarks.

Thank you, José Carlos. As we look to the remainder of the year, we are confident that zinc and copper prices will continue to receive strong support from global fundamentals, reinforcing our outlook for a robust close to 2024. The landscape shaping the base metals market, especially zinc, is characterized by stable demand, supply constraints, and a pivotal role zinc plays in galvanizing sustainable infrastructure. This is a metal at the heart of today's industrial growth and tomorrow's green innovations. Our commitment to enhancing productivity, efficiency, and performance across all operations remains steadfast. We are focused on extending the life of our mines and consistently improving our cash generation, all while prioritizing the safety of our people. We believe Nexa is very well-positioned to seize growth opportunities with a well-established business, a proven track record, and a strong commitment to stakeholder value creation. This concludes our remarks. Thank you for your support. Operator, we are ready to open the floor for questions.

The first question comes from Orest Wowkodaw with Scotiabank.

I wanted to get a little more color on the status of Aripuanã. You mentioned that you need another tailings filter that's coming next year. Can you give us more specifics, i.e., where is current throughput constrained until that new equipment is put in and when next year do you expect that to be operational?

So what we said is Aripuanã is already in operation today. Aripuanã processes between 130,000 to 140,000 tons per month, and this is equivalent to 90% of the capacity. So the problem that we faced with the filters is that we have a lot of fans and the capacity of the filters cannot absorb those fans, so it limits the capacity. This happened because this was a fast track project during the pandemic and COVID in a very isolated area so that the design of the filters that we had and implementation of them were not appropriate to the mineral that we are processing today. Having said that, the fourth filter is necessary. We knew this since February or March of this year so we have been doing tests to accommodate a fourth filter that has higher capacity and has the capacity to have a lower humidity of tailings. So we are ready to approve that. This is going to happen in the next two weeks. The implementation will take between 10 to 14 months. We are trying to fast track that and the cost might be between $12 million and $14 million. Once we approve it and we are executing the project, we will give more details on that. This filter will give us not only, let's say, full capacity, but we have some more capacity in the other parts of the process of Aripuanã. So if we are able to develop the mine, as we are expecting that, we might even increase production above the design capacity that it is today. So that's more or less where we are.

But does that imply then, it sounds like all of 2025 will be constrained at around 90%?

Yes. I mean, we are aiming to produce between 140 to 150 in all of 2025. And there's nothing we can do because the filter's manufacturing will take more or less six to eight months, but then we will have to run in parallel with the civil works. And we already have that detail but it won't take less than 10 to 15 months.

I assume that means there is now downside risk to your previous 2025 guidance at Aripuanã, which was $58 million to $72 million. Do you have any idea at this point how much impact that could have?

I would say that we are still fine-tuning the life of mine plan for next year. I would say that it will be safer for us to give you that information in our estimates that we provide in January. So for that, I would rather wait for that because it will be more accurate, and we are still fine-tuning all these plans.

And the next question comes from Carlos de Alba with Morgan Stanley.

So I just wanted to hear a little bit what's your view on the impact of the recent trends on TCRCs for Nexa. I know you have staggered your contracts over the next three years but nonetheless, you have some exposure. And so I wanted to get your take on that.

The main question in the market today revolves around the current state of TCs, which are negative, presenting an unusual situation due to the shortage of zinc concentrates from 2023 and 2024, coupled with global smelting capacity limits. Smelters are having to pay miners to obtain and process concentrates. This predicament is likely not sustainable for many more months. Additionally, due to the ongoing recession in China and Europe, the premiums for selling metal are diminishing, reverting to the normal levels observed five years ago. As a result, smelters are witnessing a reduction in their two primary income sources, with TCs sometimes leading to negative outcomes. Most smelters are prepared to cut production, including Nexa, which is reviewing contracts to make informed decisions during this budgeting period. If acquiring concentrate at negative terms and selling at lower premiums proves unviable, production will be curtailed, though the exact percentage is yet to be determined. Following budget approval, we will engage with the market. This scenario is already impacting zinc prices, as the market is aware of it. With low zinc inventories, any production cuts could create market challenges despite the recession, potentially leading to price increases. I believe the market will adjust within the next three to six months, but 2025 will likely be a challenging year for smelters, presenting us with significant hurdles ahead.

But you have a very high level of vertical integration, right? What are your expectations for the vertical integration between concentrate and smelting capacity for 2025?

It's a very important question because at Cajamarquilla, 50% of the ore feeder comes from our mines, which means the benefits go to our own operations. The other 50% is sourced from the market, negatively affecting Cajamarquilla. In Brazil, a higher percentage, between 80% to 90%, of the concentrate comes from our mines, with the remaining 10% from the market. However, Brazil has to import this, which incurs additional costs, making the penalty for Brazil greater. The integration with our mines helps improve this situation, placing our smelters in a better position compared to the rest of the market.

And the next question comes from Lawson Winder with Bank of America.

I appreciate the updates today. May I ask on capital allocation, particularly M&A and in the context of your rising free cash flow? So I mean, despite the issues at Aripuanã, I mean, the other assets are remarkably offsetting those challenges and you are generating robust cash flow at this point. Where is your thinking in terms of timing of potential M&A? Is the focus still on copper? To what extent might you also consider M&A in the zinc space?

Yes, we are beginning to generate cash flow. Aripuanã is no longer consuming cash and is producing some, while the other mines are generating significant cash at current prices. Our priority is to reduce debt immediately, as our gross debt is high despite a net debt of 1.2 or 1.3, and we want to manage that because even competitive interest is a cost. We aim to minimize cash and lower gross debt over the next one or two years. Concurrently, we are investing in our mines, particularly in Pasco, where we are allocating $140 million. This includes $90 million for the pumping system and $50 million for mine integration and shaft upgrades over the next two years, which will increase production in Pasco. Additionally, we are discovering promising targets in Cerro Lindo, which is our most profitable mine, and anticipate next year being strong as we project an extended life for Cerro Lindo. We're still planning to purchase copper as the mines we are interested in have profiles similar to ours. We're looking at deals around $800 million for about 50,000 to 60,000 tons of copper. This strategy is appealing due to copper's lower volatility compared to zinc, and it will enhance our diversification and profile. We've been actively exploring the market for the past three years and have several options available. As we reduce debt, we will evaluate these opportunities for our capital allocation over the next three years. Fortunately, zinc and copper prices are strong, and all our mines are operating at full capacity except for Aripuanã, which is facing challenges. While smelters are currently struggling, I don't expect this to continue into 2026. Moving forward, we will generate cash flow, reduce debt, and seek growth opportunities.

And then if I could just follow-up on your release from two weeks ago on exploration. What is your current thinking on year end reserves, particularly at Cerro Lindo? Because you've highlighted the fact that you'd like to extend the lifeline there but also at Vazante and Aripuanã, do you expect that you can replace reserves or even better again this year?

Yes, let me clarify what I understand. In regard to Cerro Lindo, the OB-8 and OB-9 have been replacing our yearly reserves for the past year. We are currently drilling close to these deposits to extend the mine's life, and we estimate we have around eight to ten years of life remaining. This is an improvement compared to previous estimates, and the resources we are converting into reserves are still profitable and near our existing infrastructure. We are optimistic that the next decade at Cerro Lindo will resemble our current operations. Additionally, we've discovered promising anomalies near the infrastructure, including one at Pukaqaqa, which we started drilling. Although initial results were not as encouraging as we hoped, there’s another area nearby that we plan to drill in 2025, with an investment of $8 million, and we anticipate results by the end of that year. Early indications suggest this area might add 5 to 7 more years of mine life, making it a priority since Cerro Lindo remains our most profitable mine. Regarding Aripuanã, this project has faced several challenges during its development, including increased costs and setbacks during COVID. However, we are nearing the completion of this process, and recent drilling suggests we could have 30 to 35 years of reserves as we consolidate the surrounding mineral district. While we don’t need to continue drilling, it's essential to confirm the potential through infield resource drilling. We also need to mention Pasco, where we are looking to integrate two underground mines. The Atacocha mine is currently not operational due to resource conversion challenges, but connecting it with El Porvenir could significantly reduce capital expenditures and enhance profitability. The mineral values in the intersection between the two mines show promising potential. Once interconnected, we expect to boost the net smelter return per ton and overall profitability, giving Pasco a mine life of 10 to 20 years with better returns. These three operations are our priorities, and we plan to communicate our further strategies for them in 2025 and 2026.

And just one follow-up. I appreciate you touching on the regional target at Cerro Lindo. So just on that target. What is the thinking right now in terms of what you'll spend on that in 2025? And then secondly, is that region subject to the silver stream?

No, it's not subject to a silver stream. Today, we have found a very big anomaly there and we put two drill holes more than a thousand meter drill holes that cross this big anomaly. We found similar to what we have in the OB-8, OB-9 and all the infrastructure that we have. What we are doing is putting in like five more drill holes with more than a thousand meters to start to delineate the shape of this anomaly. This is the beginning of what we are going to do. This is starting in January, as I said, $8 million. I would say towards June and December, we will have more information on those. Our team is conservative on that but you see their faces and they look happy. So we'll see what happens.

We have some follow-up questions from the audience in the web. So the first one comes from Matheus Moreira from Bradesco BBI. Hi, guys. Congratulations on the results. We have seen overall positive dynamics for zinc prices in the past few weeks, with continued tightness on the supply side. How do you see supply-demand dynamics going forward? I believe that Ignacio has already addressed this, but José Carlos will complement the question.

As you might remember, we've been anticipating this situation in previous calls expressing that we believed in the fundamentals of zinc and that we expected prices to increase at some point. So in the last few months, this has materialized. As Ignacio mentioned, we currently have a very tight concentrate market. The story for zinc continues to be more about supply. Even though we currently have soft demand in China, we are seeing constraints in terms of supply of concentrate. Just a couple of days ago, there was a publication by BMO, anticipating that zinc concentrate production for 2024 will actually be lower than zinc concentrate production in 2023. So it is very unlikely that prices will go back down to levels we saw last year at $2,400, $2,500. I think personally that these prices are a better reflection of market dynamics. Even though zinc demand grows at low single digits, it’s a very consistent demand growth. Based on the limitations that we have on supply in the concentrate market that may later translate to a metal market, because of the actions that could be taken by smelters, this situation of tightness could prevail for some time. With the potential growth of zinc going forward, supported also by its participation in the energy transition economy, we expect the fundamentals will continue to be strong, that supply will continue to be constrained, and that we should continue to have strong fundamentals. We don't know whether this will be at $3,000 or $3,200 or $2,800. But certainly, we don't see prices going back down to the lower levels we saw before. There could be some volatility along the way; it's never a straight line. But I think the dynamics that we're seeing will continue to evidence the strong fundamentals of the zinc market. Hope that answered the question.

We have one question. This is more connected to the leverage. So it's from Julian Rios from SMBC Nikko Securities. If the intention of the company is to reduce gross debt, do you have any specific type of liability management that you expect to undertake?

Yes, in general terms, and I think it's consistent with what we have explained before. We are in a cyclical industry. We will feel more comfortable with lower levels of leverage. There is part of the leverage that we control or that we can influence, and there is part of the leverage that we can't. We saw our net leverage levels peak in the first quarter of 2024. If I remember correctly, it was around 3.70, 3.75. This was mainly due to the decline in the price of the commodities that we sell. This situation is reverting because of the higher prices that we have, so we have better results and also, we are having better operational performance and a higher contribution from Aripuanã. That peak level of 3.7 is now at 2.2. With these operational levels and these prices, we continue to expect that trend to prevail going forward. We would like to be below two for sure. Our target would be something in the range between 1 and 1.5, so that it will give us the buffer to absorb the different cycles that we can see or shorter volatility that could still take place going forward. This is also in line with the comment made by Ignacio that we want to reduce gross debt, which will help us reduce our net leverage and also allow us to reduce the interest cost every year, which is significant for a company the size of Nexa. So that will continue to be a priority.

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

Thank you, Dave. Thank you very much, everyone for attending the call. We look forward to closing the year achieving all our targets and achieving guidance. We are very committed to that and we are very committed to our 2025 and 2026 challenges. We believe that Aripuanã will start performing and will become a very solid operation going forward. We believe that the Pasco project is going to give us a lot of upside. And we believe that we are well positioned to look for some other acquisitions moving forward. Thank you again. We look forward to hearing from you in the following quarters.

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