0001713930 ifrs-full:VehiclesMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2023-12-31

 

As filed with the Securities and Exchange Commission on March 17, 2022.27, 2024.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGEEXCHANGE ACT OF 1934

For the fiscal year ended: December 31 2021, 2023
Commission file number: 001-38256

NEXA RESOURCES S.A.

(Exact name of Registrant as specified in its charter)

Grand Duchy of Luxembourg

(Jurisdiction of incorporation or organization)

Rodrigo MenckJosé Carlos del Valle

Senior Vice President of Finance and Group Chief Financial Officer
Phone: +3522826 37 27

37A, Avenue J.F. Kennedy
L-1855, Luxembourg
Grand Duchy of Luxembourg

(Address of principal registered office)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common shares, each with par value of US$1.00NEXANew York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each class of stock of Nexa Resources S.A. as of December 31, 20212023 was:

132,438,611common shares, each with par value of US$1.00

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No þ

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes oNo þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No

o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No

o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer oAccelerated filer þNon-accelerated filer oEmerging growth company o

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. þx

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board þ Other

U.S. GAAP
International Financial Reporting Standardsas issued by the International Accounting Standards Board þOther  i

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o Item 18

o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes Noo No þ

 

 ii
 

Table of contents

TABLE OF CONTENTS

Page

 Form 20-F cross reference guideiiiiv
 Forward-looking statements1
 About the Company3
 Presentation of financial and other information4
 Risk factors6
I.Information on the Company2229

 Business overview2229
 Mining operations2735
 Smelting operations6278
 Other operations6582
 Mineral Reserves and Resources7087
 Capital expenditures82102
 Environmental, social and governance (“ESG”)83103
 Regulatory matters89112
II.
II.Operating and financial review and prospects95119

 Overview95119
 Results of operations107130
 Liquidity and capital resources120142
 Critical accounting estimates126148
 Risk management129151
III.Share ownership and trading132156
 Major shareholders132156
 Related party transactions133157
 Distributions135159
 Trading markets137161
 Purchases of equity securities by the issuer and affiliated purchasers138162
IV.Corporate governance, management and employees139163
 Corporate governance139163
 Board of directors144168
 Executive officers and managementManagement committee154178
 Executive and director compensation158
Employees162182
  Employees187
V.Additional information163188
 Legal proceedings163188
 Articles of association164190
 Taxation168194
 Exchange controls and other limitations affecting security holders176203
 Evaluation of disclosure controls and procedures177204
 Internal control over financial reporting178205
 Principal accountant fees and services179206
 Information filed with securities regulators180207
 Glossary181208
 Exhibits184211
 Signatures185212
 Nexa Resources S.A. Financial Statements186213

 

 
iiiii 

Form 20-F Cross Reference Guide

Form 20-F cross reference guide

ItemForm 20-F captionLocation in this reportPageForm 20-F captionLocation in this reportPage
1Identity of directors, senior management and advisersNot applicableIdentity of directors, senior management and advisersNot applicable
2Offer statistics and expected timetableNot applicableOffer statistics and expected timetableNot applicable
3Key information  Key information  
3A ReservedNot applicable3A ReservedNot applicable
3B Capitalization and indebtednessNot applicable3B Capitalization and indebtednessNot applicable
3C Reasons for the offer and use of proceedsNot applicable3C Reasons for the offer and use of proceedsNot applicable
3D Risk factorsRisk factors63D Risk factorsRisk factors6
4Information on the Company  Information on the Company  
4A History and development of the CompanyAbout the Company, Business overview, Capital expenditures3, 22, 824A History and development of the CompanyAbout the Company, Business overview, Capital expenditures3, 29, 102
4B Business overviewBusiness overview, Mining operations, Smelting operations, Other operations, Mineral Reserves and Resources, Regulatory matters22, 27, 62, 65, 70, 894B Business overviewBusiness overview, Mining operations, Smelting operations, Other operations, Mineral Reserves and Resources, Regulatory matters29, 35, 78, 82, 87, 112
4C Organizational structureBusiness overview, List of Subsidiaries22, Exhibit 84C Organizational structureBusiness overview, List of Subsidiaries29, Exhibit 8
4D Property, plants and equipmentMining operations, Smelting operations, Other operations, Capital expenditures, Regulatory matters27, 62, 65, 82, 894D Property, plants and equipmentMining operations, Smelting operations, Other operations, Capital expenditures, Regulatory matters35, 78, 82, 102, 112
4AUnresolved staff commentsNoneUnresolved staff commentsNone
5Operating and financial review and prospects  Operating and financial review and prospects  
5A Operating resultsResults of operations1075A Operating resultsResults of operations130
5B Liquidity and capital resourcesLiquidity and capital resources1205B Liquidity and capital resourcesLiquidity and capital resources142
5C Research and development, patents and licenses, etc.Business overview225C Research and development, patents and licenses, etc.Business overview29
5D Trend informationResults of operations1075D Trend informationResults of operations130
5E Critical Accounting EstimatesCritical Accounting Estimates1265E Critical Accounting EstimatesCritical Accounting Estimates148
6Directors, senior management and employees  Directors, senior management and employees  
6A Directors and senior managementBoard of directors, Executive officers and management committee144, 1546A Directors and senior managementBoard of directors, Executive officers and Management committee168, 178
6B CompensationExecutive and director compensation1586B CompensationExecutive and director compensation182
6C Board practicesCorporate governance, Board of directors139, 1446C Board practicesCorporate governance, Board of directors163, 168
6D EmployeesEmployees1626D EmployeesEmployees187
6E Share ownershipBoard of directors—Share ownership1536E Share ownershipBoard of directors—Share ownership177
6F Disclosure of a registrant’s action to recover erroneously awarded compensationNot applicable
7Major shareholders and related party transactions  Major shareholders and related party transactions  
7A Major shareholdersMajor shareholders1327A Major shareholdersMajor shareholders156
7B Related party transactionsRelated party transactions1337B Related party transactionsRelated party transactions157
7C Interests of experts and counselNot applicable7C Interests of experts and counselNot applicable
8Financial information  Financial information  
8A Consolidated statements and other financial informationNexa Resources S.A. Financial statements, Distributions, Legal proceedings186, 135, 1638A Consolidated statements and other financial informationNexa Resources S.A. Financial Statements, Distributions, Legal proceedings213, 159, 188
8B Significant changesNot applicable8B Significant changesNot applicable
9The offer and listing  The offer and listing  
9A. Offer and listing detailsTrading markets1379A. Offer and listing detailsTrading markets161
9B Plan of distributionNot applicable9B Plan of distributionNot applicable
9C MarketsTrading markets137
9D Selling shareholdersNot applicable
9E DilutionNot applicable
 
iiiiv 

Form 20-F Cross Reference Guide

 

9C MarketsTrading markets161
9D Selling shareholdersNot applicable
9E DilutionNot applicable
9F Expenses of the issueNot applicable9F Expenses of the issueNot applicable
10Additional information  Additional information  
10A Share capitalNot applicable
10A Share capitalNot applicable10B Memorandum and articles of associationArticles of association190
10B Memorandum and articles of associationArticles of association16410C Material contractsBusiness overview, Results of operations, Related party transactions29, 130, 157
10C Material contractsBusiness overview, Results of operations, Related party transactions22, 107, 13310D Exchange controlsExchange controls and other limitations affecting security holders203
10D Exchange controlsExchange controls and other limitations affecting security holders17610E TaxationTaxation194
10E TaxationTaxation16810F Dividends and paying agentsNot applicable
10F Dividends and paying agentsNot applicable10G Statement by expertsNot applicable
10G Statement by expertsNot applicable10H Documents on displayInformation filed with securities regulators207
10H Documents on displayInformation filed with securities regulators18010I Subsidiary informationNot applicable
10I Subsidiary informationNot applicable10J Annual Report to Security HoldersNot applicable
11Quantitative and qualitative disclosures about market riskRisk management129Quantitative and qualitative disclosures about market riskRisk management151
12Description of securities other than equity securitiesNot applicable Description of securities other than equity securitiesNot applicable
13Defaults, dividend arrearages and delinquenciesNot applicableDefaults, dividend arrearages and delinquenciesNot applicable
14Material modifications to the rights of security holders and use of proceedsNot applicableMaterial modifications to the rights of security holders and use of proceedsNot applicable
15Controls and proceduresEvaluation of disclosure controls and procedures, Internal control over financial reporting177, 178Controls and proceduresEvaluation of disclosure controls and procedures, Internal control over financial reporting204, 205
16AAudit committee financial expertBoard of directors—Committees of our board of directors—Audit committee149Audit committee financial expertBoard of directors—Committees of our Board of directors—Audit committee173
16BCode of ethicsCorporate governance—Code of conduct139Code of ethicsCorporate governance—Code of conduct163
16CPrincipal accountant fees and servicesPrincipal accountant fees and services179Principal accountant fees and servicesPrincipal accountant fees and services206
16DExemptions from the listing standards for audit committeesNot applicableExemptions from the listing standards for audit committeesNot applicable
16EPurchases of equity securities by the issuer and affiliated purchasersPurchases of equity securities by the issuer and affiliated purchasers138Purchases of equity securities by the issuer and affiliated purchasersPurchases of equity securities by the issuer and affiliated purchasers162
16FChange in registrant’s certifying accountantNot applicableChange in registrant’s certifying accountantNot applicable
16GCorporate governanceCorporate governance139Corporate governanceCorporate governance163
16HMine safety disclosureNot applicableMine safety disclosureNot applicable
16KCybersecurityRisk management151
16JInsider trading policiesExecutive and Director Compensation182
17Financial statementsNot applicableFinancial statementsNot applicable
18Financial statementsNexa Resources S.A. Financial statements186Financial statementsNexa Resources S.A. Financial Statements213
19ExhibitsExhibits184ExhibitsExhibits211

 

 
ivv 

Forward-Looking Statements

Forward-looking statements

This annual report includes statements that constitute estimates and forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act, as amended, or Exchange Act. The words “believe,” “will,” “may,” “may have,” “would,” “estimate,” “continues,” “anticipates,” “intends,” “plans,” “expects,” “budget,” “scheduled,” “forecasts” and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements refer only to the date when they were made, and we do not undertake any obligation to update or revise any estimate or forward-looking statement due to new information, future events or otherwise, except as required by law. Estimates and forward-looking statements involve risks and uncertainties and do not guarantee future performance, as actual results or developments may be substantially different from the expectations described in the forward-looking statements.

These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations, and those of our officers and employees, with respect to, among other things: (i) our future financial or operating performance; (ii) our growth strategy; (iii) future trends that may affect our business and results of operations; (iv) the impact of competition and applicable laws and regulations on our results; (v) planned capital investments; (vi) future of zinc or other metal prices; (vii) estimation of mineral reserves; (viii) mine life; and (ix) our financial liquidity.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results and developments may be substantially different from the expectations described in the forward-looking statements for several reasons, many of which are not under our control, among them the activities of our competition, the future global economic situation, weather conditions, market prices and conditions, exchange rates, and operational and financial risks. The unexpected occurrence of one or more of the abovementioned events may significantly change the results of our operations on which we have based our estimates and forward-looking statements. Our estimates and forward-looking statements may be influenced by the following factors, including, among others:

·the cyclical and volatile prices of commodities;
·the changes in the expected level of supply and demand for commodities;
·foreign exchange rates and inflation;
·the risks and uncertainties relating to economic and political conditions in the countries in which we operate;
·changes in global market conditions;
·the impact of expanded regional or global conflict, including the conflicts between Russian and Ukraine and the Israel-Hamas conflict, and the resulting potential impacts on supply and demand for commodities, global security concerns, and market volatility;
·outbreaks of contagious diseases or health crises impacting overall economic activity regionally or globally, includingsuch as the duration and scope of, and uncertainties associated with, the coronavirus and its variants (“COVID-19”) pandemic, and the continuedpotential impact thereof on commodity prices and exchange rate variations in the currencies to which we are exposed to, our business and operating sites, and the global economy and any related actions taken by government and businesses in response to the COVID-19 pandemic, as well as our ability to contain and mitigate the risk of spread or major outbreak of COVID-19 at our operating sites;economy;
·increasing demand and evolving expectations from stakeholders with respect to our environmental, social and governance (“ESG”) practices, performance and disclosures;
·the impact of climate change on our operations, workforce and value chain;
·environmental, safety and engineering challenges and risks inherent to mining;
·disclosures, including the ability to meet energy requirements while complying with greenhouse gas emissions regulations and other energy transition policy changes and laws in the countries in which we operate;
·the impact of climate change on our operations, workforce and value chain;
·environmental, safety and engineering challenges and risks inherent to mining;
 
1

Forward-Looking Statements

·severe natural disasters, such as storms and earthquakes, disrupting our operations;
·operational risks, such as operator errors, mechanical failures and other accidents;
·the availability of materials, supplies, insurance coverage, equipment, required permits or approvals and financing;
·supply-chain and logistic related interruptions, including impacts to international freight and transportation networks;
·the implementation of our growth strategy, the availability of capital and the risks associated with related capital expenditures;
·failure to obtain financial assurance to meet closure and remediation obligations;
·the possible material differences between our estimates of Mineral Reserves and Mineral Resources and the mineral quantities we actually recover;
·the possibility that our concessions may be terminated or not renewed by governmental authorities in the countries in which we operate;
·the impact of political and government changes in the countries in which we operate, and the effects of potential new legislation, andincluding changes in taxation;taxation laws and any related agreements that Nexa has entered or may enter into with local governments;
·legal and regulatory risks, including ongoing or future investigations by local authorities with respect to our business and operations, as well as the conduct of our customers, along with the impact to our financial statements regarding the resolution of any such matters;
·labor disputes or disagreements with local communities or unions in the countries in which we operate;
·loss of reputation due to unanticipated operational failures or significant occupational incidents;
·failure or outage of our digital infrastructure or information and operating technology systems;
·cyber events or attacks (including ransomware, state-sponsored and other cyberattacks) due to negligence or IT security failures;
·the future impact of competition and changes in domestic and international governmental and regulatory policies that apply to our operations; and
·other factors discussed under “Risk Factors.”

Considering the risks and uncertainties described above, the events referred to in the estimates and forward-looking statements included in this report may or may not occur, and our business performance and results of operation may differ materially from those expressed in our estimates and forward-looking statements, due to factors that include but are not limited to those mentioned above.

These forward-looking statements are made as of the date of this annual report, and we assume no obligation to update them or revise them to reflect new events or circumstances. There can be no assurance that the forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

 

 
2

About the Company

About the Company

We are a large-scale, low-cost, integrated zinc producer with over 6065 years of experience developing and operating mining and smelting assets in Latin America. We currently own and operate fivesix long-life underground polymetallic mines—mines – three located in the Central Andes of Peru, and two located in the state of Minas Gerais in Brazil—Brazil, and we expect to complete construction atone in the state of Mato Grosso in Brazil, the Aripuanã Project, our sixth underground mine, currently in Mato Grosso, Brazil, and ramp up is scheduled for the third quarterramp-up phase as of 2022.the date of this annual report.

Nexa Resources S.A. is a public limited liability company (société anonyme) incorporated under the laws of Luxembourg on February 26, 2014. Our registered office is located at 37A, Avenue J.F. Kennedy, L-1855, Luxembourg, Grand Duchy of Luxembourg, and we are registered with the Luxembourg Trade and Companies Register under number B185489. Our telephone number at this address is +352 28 26 37 27.3727. Our main office outside of Luxembourg is located at Avenida Engenheiro Luís Carlos Berrini, n° 105, 6th floor, São Paulo, State of São Paulo, Brazil. Our website is www.nexaresources.com. None of the information available on our website is incorporated in this annual report and it should not be relied upon in deciding to invest in our common shares.

 

 
3

Presentation of Financial and Other Information

Presentation of financial and other information

Certain definitions

Unless otherwise indicated or the context otherwise requires, the terms below are defined in the following manner.

·“Nexa,” “we,” “us” and “our” or similar terms refer to Nexa Resources and, unless the context otherwise requires, its consolidated subsidiaries;
·“Nexa Resources” refers to Nexa Resources S.A., a Luxembourg public limited liability company (société anonyme);
·“Nexa CJM” refers to our subsidiary Nexa Resources Cajamarquilla S.A. (previously known as Votorantim Metais—Cajamarquilla S.A.), a corporation organized as a sociedad anónima under the laws of Peru;
·“Nexa Brazil” refers to our subsidiary Nexa Recursos Minerais S.A. (previously known as Votorantim Metais Zinco S.A.), a corporation organized as a sociedade anônima under the laws of Brazil;
·“Nexa Peru” refers to our subsidiary Nexa Resources Peru S.A.A. (previously known as Compañía Minera Milpo S.A.A.), a corporation organized as a sociedad anónima abierta under the laws of Peru and publicly traded on the Lima Stock Exchange;
·Enercan”Pollarix” refers to our subsidiary Campos Novos EnergiaPollarix S.A., a corporation organized as a sociedade anônima under the laws of Brazil;
·“VSA” refers to our controlling shareholder Votorantim S.A., a corporation organized as a sociedade anônima under the laws of Brazil;
·the “Votorantim Group” refers to our controlling shareholder VSA and, unless the context otherwise requires, its consolidated subsidiaries;
·the “real,” “reais” or “R$” refers to the Brazilian real, the official currency of Brazil;
·sol,” “soles” or “S/.” refers to the Peruvian sol, the official currency of Peru; and

In addition, the meaning of other defined terms used in this report are set out in “Glossary.”

Financial information

Our consolidated financial statements as of December 31, 20212023 and 20202022 and for each of the three years ended December 31, 20212023 are included in this annual report. Our consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”)IFRS accounting standards and interpretations, as issued by the International Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (“IFRS Accounting Standards”). References in this report to “our consolidated financial statements” are to our consolidated financial statements as of December 31, 20212023 and 20202022 and for each of the three years ended December 31, 2021,2023, and the related notes thereto included elsewhere in this report.

The financial information presented in this report should be read in conjunction with our consolidated financial statements, including the related notes, and the section of this report titled “Operating and financial review and prospects.”

The main consolidated companies included in our consolidated financial statements are:

·Nexa CJM – a Peruvian company that is 99.997% directly and indirectly owned by Nexa Resources and is mainly engaged in smelting zinc contained in concentrate. Nexa CJM’s functional currency is the U.S. dollar.
4
Forward-Looking Statements
·Nexa Peru – a Peruvian company that is 83.554%83.48% directly and indirectly owned by Nexa Resources and is mainly engaged in exploring, extracting, producing and trading zinc, copper and lead concentrates, extracted from its own three mining sites. Nexa Peru’s functional currency is the U.S. dollar. Nexa Peru is a public company with its shares listed on the Lima Stock Exchange.
4

Presentation of Financial and Other Information

·Nexa Brazil – a Brazilian company that is 100% owned by Nexa Resources and is mainly engaged in exploring, extracting and producing zinc, copper and lead concentrates, and smelting zinc contained in concentrate with operations in the statestates of Minas Gerais.Gerais and Mato Grosso. Nexa Brazil’s functional currency is the real.

Non-IFRS Accounting Standards measures

OurFor a discussion of how our management uses non-IFRS Accounting Standards measures such as Adjusted EBITDA and cash cost, among other measures, for internal planning and performance measurement purposes. We believe these measures provide useful information about the financialan additional measure of operational performance of our operations that facilitates period-to-period comparisons on a consistent basis. Management uses Adjusted EBITDA internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Management believes that Adjusted EBITDA is a useful measure of our performance because it reflects our cash generation potential from our operational activities excluding impairment of non-current assets and other miscellaneous adjustments, if any, for the period. These measures should not be considered individually or as a substitute for net income or operating income, as indicators of operating performance, or as alternatives to cash flow as measures of liquidity. Additionally, our calculation of Adjusted EBITDA and other non-IFRS measures may be different from the calculation used by other companies,Company’s business, including our competitors in the mining industry, so our measures may not be comparable to those of other companies. See “Results of Operations” for a discussion of our use of non-IFRS measures in this report, including the reasons why we believe this information is useful to management and to investors, and aAdjusted EBITDA, reconciliation to thewith most comparable IFRS measures.Accounting Standards figures and changes made in 2023, see “Operating and financial review and prospects—Results of Operations—Non-IFRS Accounting Standards measures and reconciliation.”

All forward-looking non-IFRS Accounting Standards financial measures in this document, including cash cost guidance, are provided only on a non-IFRS Accounting Standards basis. This is due to the inherent difficulty of forecasting the timing or number of items that would be included in the most directly comparable forward-looking IFRS Accounting Standards financial measures. As a result, reconciliation of the forward-looking non-IFRS Accounting Standards financial measures to IFRS Accounting Standards financial measures is not available without unreasonable effort and we are unable to assess the probable significance of the unavailable information.

Country, market and industry information

This report contains and refers to information and statistics regarding the countries in which we operate and the markets for the metals we produce. This data is obtained from independent public sources, including publications and materials from participants in the industry, such as Wood Mackenzie and from governmental entities such as the Brazilian Central Bank, Bloomberg Finance L.P., London Metal Exchange (“LME”), London Bullion Market Association (“LBMA”), Brazilian Ministry of TreasuryEconomy (Ministério da FazendaEconomia), Brazilian Ministry of Mines and Energy (Ministério de Minas e Energia, or “MME”), National Mining Agency (Agência Nacional de Mineração, or “ANM”), Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística, or “IBGE”), the Getulio Vargas Foundation (Fundação Getúlio Vargas, or “FGV”), the Peruvian Stock Market Superintendency (Superintendencia del Mercado de Valores), the Peruvian Central Bank, the Peruvian Ministry of Economy and Finance (Ministerio de Economía y Finanzas) and the Peruvian National Institute of Statistics and Informatics (Instituto Nacional de Estadística e Informática). Some data is also based on our estimates, which are derived from our review of internal reports, as well as independent sources.

Volume information

All tonnage information in this report is expressed in metric tonnes, unless stated otherwise, and all references to ounces are to troy ounces, in each case, unless otherwise specified.

 
5

Risk Factors

Risk factors

Nexa and its operations are exposed to several inherent risks and uncertainties, including those described below. The risks described below are not the only ones that we face. Additional risks that we do not presently consider material, or of which we are not currently aware, may also affect us. Our business, results of operations, financial condition and cash flows could be materially and adversely affected if any of these risks materialize. You should carefully consider these risks with respect to an investment in Nexa. This section is divided in two sub-sections: the “Risk Factors Summary”, which provides a brief summary of our Risk Factors and “Detailed Risk Factors,” providing detailed information in relation to each Risk Factor identified.

Risk Factors Summary

The following summarizes the main risks to which we are subject. You should carefully consider all of the information discussed below in “Item 3—Key Information—Risk Factors—Detailed Risk Factors” in this annual report for a comprehensive description of these and other risks.

Business risks

·Our business is highly dependent on the international market prices of the metals we produce, which are both cyclical and volatile.
·Changes in the demand for the metals we produce, including as a result of the cyclicality of global economic activity, could adversely affect our sales volume and revenues.
·Adverse economic developments in China could have a negative impact on our revenues, cash flow and profitability.
·The mining industry is highly competitive.

Operational risks

·The mining business is subject to inherent risks, some of which are not insurable.
·We may be materially adversely affected by challenges relating to slope and stability of underground openings.
·Our projects are subject to operational risks that may result in increased costs or delays that prevent their successful implementation.
·We may be adversely affected by the failure or unavailability of adequate infrastructure and skilled labor.
·The failure of a tailings dam could negatively impact our business, reputation and results of operations, and the implementation of associated regulations and decommissioning processes may be expensive.
·A disruption in zinc concentrate supply could have a material adverse effect on our production levels and financial results.
·Inadequate supply of zinc secondary feed materials and zinc calcine could affect the results of our smelters.
·Interruptions of energy supply or increases in energy costs may materially adversely affect our operations.
·Shortages of water supply due to permitting, licensing, and other governmental regulations, explosives, critical spare parts, maintenance service and new equipment and machinery may materially adversely affect our operations and development projects.
·There are unique risks inherent to the development of underground mines, which may have a material adverse impact on our cash flows.
·We may be adversely affected by labor disputes, may be liable for certain payments to individuals employed by third-party contractors and may be subject to misconduct by our employees or third-party contractors.
·The nature of our business includes risks related to litigation and administrative proceedings that could materially adversely affect our business and financial performance in the event of unfavorable rulings.

Financial risks

·Our financial position and results of operations may be materially adversely affected by currency exchange rate fluctuations.
·Fluctuations in interest rates could increase the cost of servicing our debt, affect returns on our financial investments and negatively affect our overall financial performance.
6
Risk Factors
·We may engage in hedging activity that may not be successful and may result in losses to us.
·Our business requires substantial capital expenditures and is subject to financing risks.
·We are exposed to credit risk in relation to our contractual and trading counterparties as well as to hedging and derivative counterparty risk, and our results of operations may be negatively impacted by increases in expected credit losses.
·Any acquisitions or divestitures we make may not be successful or achieve the expected benefits.
·Changes in the assumptions underlying the carrying amount of certain assets could result in impairment charges.
·We might not be able to pay the principal and interest amounts on our debt obligations in case they are accelerated as a result of the noncompliance with the restrictive covenants and clauses of our debt contracts.

Risks related to our Mineral Reserves and Resources

·Our estimates of Mineral Reserves and Resources may be materially different from the total mineral quantities we actually recover, and changes in metal prices, operating and capital costs, and other assumptions used to calculate these estimates may render certain Mineral Reserves and Resources uneconomical to mine.
·We depend on our ability to replenish our Mineral Reserves for our long-term viability.
·Our mineral exploration efforts are highly speculative in nature and may be unsuccessful.

Health, safety and environmental risks

·Health, safety and environmental laws and regulations, including regulations pertaining to climate change, may increase our costs of doing business, restrict our operations or result in the imposition of fines or revocation of permits.
·ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.
·Failure to meet environmental, social, and governance expectations or standards or achieve the Company’s environmental and social related goals could adversely affect its business, reputation, brand, results of operations, and/or financial condition.
·Natural disasters and climate change could affect our business.
·Global or regional health considerations, including the outbreak of a pandemic or contagious disease, such as the COVID-19 pandemic, have impacted and could continue to impact our business, financial condition and results of operations.

Political, economic, social and regulatory risks

·Political, economic and social conditions in the countries in which we have operations or projects, or in which we do business, could adversely impact our business, financial condition results of operations and the trading price of our securities.
·Recent and potential changes in commercial and mining laws, including trends like resource nationalism, may significantly impact our mining operations.
·Our mineral rights may be terminated or not renewed by governmental authorities.
·Our operations depend on our relations and agreements with local communities, and new projects require carrying out a prior consultation procedure.
·Changes in tax laws, and any related tax agreements we have entered into or may enter into with local governments, may increase our tax burden and, as a result, could adversely affect our business, financial position and results of operations.
·Our business, financial position and results of operations may be adversely affected by inflation.
·We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations in various jurisdictions. Any violations of any such laws or regulations could have a material adverse impact on our reputation and results of operations and financial position.
·Political and social opposition to mining activities generally in the regions we operate could adversely impact our business and reputation.
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Risk Factors
·Differing interpretations of agency regulations or court rulings and the application of such laws and regulations could result in unintended non-compliance and may have a material effect on our business, results of operations, and financial position.
·Regulation of other activities

Risks relating to our corporate structure

·VSA has substantial control over us, which could limit our shareholders’ ability to influence the outcome of important corporate decisions.
·Dividends or other distributions paid by us on our common shares will generally be subject to Luxembourg withholding tax.
·The rights of our shareholders, and the responsibilities of VSA as our controlling shareholder, are governed by Luxembourg law and differ in some respects from the rights and responsibilities of shareholders under the laws of other jurisdictions, including the United States and Canada, and shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. corporation.
·Our ability to pay dividends or other distributions and repurchase shares is subject to several factors and conditions.
·It could be difficult for investors to enforce any judgment obtained outside Luxembourg against us or any of our associates.

Detailed Risk Factors

Nexa and its operations are exposed to several inherent risks and uncertainties, including those described below.

Business risks

Our business is highly dependent on the international market prices of the metals we produce, which are both cyclical and volatile.

Our business and financial performance is significantly affected by the market prices of the metals we produce, particularly the market prices of zinc, copper, silver, lead and, to a lesser extent, gold. Historically, prices of such metals have been subject to wide fluctuations and are affected by numerous factors beyond our control, including international economic and political conditions, the cyclicality of consumption, actual or perceived changes in levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by users, actions of participants in the commodities markets and currency exchange rates. We cannot predict whether, and to what extent, metal prices will rise or fall in the future.

The COVID-19 pandemic has had a material impactIn 2023, international prices decreased for zinc, copper and lead, and increased for silver and gold as compared to their respective 2022 averages. Overall, there continued to be downward pressure on the global economy. In 2021, demand and international market prices infor the base metals we produce, rebounded frommainly driven by the low levels reached in the first halfpersistence of 2020, as progress has been made in containing the COVID-19 pandemic. The emergence of new variants of COVID-19negative external factors including inflation and further outbreakshigh interest rates, residual economic impacts on key sectors of the pandemic, however, continue to affectChinese economy, especially civil construction and real estate market, and ongoing variable global macroeconomic conditions contributingrelating to increasedconflicts between Russia and Ukraine and the Israel-Hamas conflict.

Mine supply also contributed to the volatility of zinc prices in metal2023. The sharp drop in prices and demand for our products.from the first to the second quarter, combined with higher levels of production costs around the world, caused a series of zinc mine closures during 2023, as some assets were operating on negative margins. None of Nexa’s mines closed or reduced production in 2023 because of the drop in prices. However, these other mine closures caused zinc prices to slightly rise, especially at the end of 2023, as well as caused the Chinese spot treatment charges to significantly drop throughout the year compared to the 2022 average. There are still assets that may have negative margins at current zinc prices, so further closures of other mines around the globe remains a possibility in 2024.

The recent invasion ofongoing conflict between Russia and Ukraine, by Russia, the resulting conflict, and retaliatory measures by the global community have created global security concerns, including the possibility of expanded regional or global conflict, which have had, and are likely tomay continue to have, adverse impacts around the globe. PotentialThe fluctuating value of the US dollar, resulting in part from global conflicts, also directly impacts commodities prices.

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Risk Factors

Also, on October 7, 2023, Hamas, a terrorist group in control of Gaza, carried out a surprise attack on Israeli cities and towns near the Gaza strip. Following this terrorist attack, Israel declared war on Hamas and other terrorist organizations in Gaza. The military conflict is ongoing, and its length and outcome are highly unpredictable. Further escalation of this conflict could lead to significant disruptions, which could have a material adverse effect on our business, financial position, results of operations and cash flows.

Continued ramifications of these global conflicts include disruption of the supply chain, which has led, and may impactcontinue to lead, to impacts on production, investment, and demand and prices for our products,products; higher and more volatile prices for commodities, including oil and gas, volatility in commodity prices, andgas; disruption of global financial markets, and further exacerbatingexacerbation of overall macroeconomic trends, including high inflation and rising interest rates. However, asFor more information see “Operating and Financial Review and Prospects—Overview”. As of the date of this report, we cannot predict the conflicts between Russia and Ukraine and in the Middle East have had no material impact that this conflict will have on our business and operations. However, the conflicts are still ongoing, and we cannot predict the future impact they may have. We continue to monitor developments related to this conflictthese conflicts as of the day of this report.

Future declines in metal prices, whether related to the ongoing impact of the COVID-19 pandemic or otherwise, and especially with respect to zinc, copper, silver and lead prices, could have an adverse impact on our results of operations and financial position, and we might consider curtailing or modifying certain operations, selling certain operations or not proceeding with our sustaining and/or growth strategy. In addition, we may not be able to adjust production volume in a timely or cost-efficient manner in response to changes in metal prices. Lower utilization of capacity during periods of weak prices may expose us to higher unit production costs since a significant portion of our cost structure is fixed in the short-term due to the high capital intensity of mining operations. Conversely, during periods of high prices, our ability to rapidly increase production capacity may be limited, which could prevent us from selling more products. Moreover, we may be unable to complete expansions and greenfield projects in time to take advantage of rising prices for zinc, copper, lead or other products.

Changes in the demand for the metals we produce, including as a result of the cyclicality of global economic activity, could adversely affect our sales volume and revenues.

Our revenues depend on the volume of metals we sell (and, to a lesser extent, the volume of metals produced by others that are smelted in our facilities), which in turn depend on the level of industrial and consumer demand for these metals. An increase in the production of zinc, copper, silver and lead worldwide, along with a reduction in demand for these metals, due to changes in technology, industrial processes or consumer habits, including increased demand for substitute materials, economic slow-downs or other factors, may have the potential to impact these metal prices. In 2023, international prices decreased for zinc, copper and lead, and increased for silver and gold as compared to their respective 2022 averages. The impact of price decreases may also compromise the profitability of smelters, as we might consider reducing the volume of metals we sell and therefore materially adversely impact our operational results and financial position. Even if our volumes are not affected by reduced prices, this decrease can impact our revenues.

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Risk Factors

The mining industry has historically been highly volatile largely due to the cyclical nature of industrial production, which affects the demand for minerals and metals. Demand for minerals and metals thus generally correlates to macroeconomic fluctuations in the global economy. Changes in the demand for the metals we produce could adversely affect our sales volume and revenues.

Adverse economic developments in China could have a negative impact on our revenues, cash flow and profitability.

China has been the mainprimary source of global demand for commodities over the last few years. According to Wood Mackenzie, in 2021,2023, Chinese demand represented 50%51% of global demand for refined zinc and 52%56% of global demand for refined copper. Any slowdown in China’s economic growth that is not offset by increased demand or reduced supply from other regions could have an adverse effect on demand for our products or commodity prices and result in lower revenues, cash flow and profitability.

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Risk Factors

The mining industry is highly competitive.

We face competition from other mining, processing, trading and industrial companies in Brazil, Peru and around the world. Competition principally involves the following factors: sales, supply and labor prices; contractual terms and conditions; attracting and retaining qualified personnel; and securing the services, supplies and technologies we need for our operations. Slower development in technology and innovation could impact costs, productivity and competitiveness. In addition, mines have limited lives and, as a result, we must seek to replace and expand our mineral reserves by acquiring new properties. Significant competition exists to acquire mining concessions, land and related assets. We cannot assure shareholders that competition will not adversely affect us in the future.

The international trade environment faces increasing uncertainty. Potential changes to international trade regulations and agreements, as well as other political and economic arrangements (including direct or indirect subsidies), may benefit competitors operating in countries other than where our mining operations are currently located. These changes could also adversely affect the prices we pay for the supplies we need and our export costs when we engage in international transactions. We cannot assure shareholders that we will be able to compete based on price or other factors with companies that in the future may benefit from favorable regulations, lower cost of capital, trading or other arrangements or that we will be able to maintain the cost of the supplies that we require as well as our export costs.

Operational risks

The mining business is subject to inherent risks, some of which are not insurable.

The business of mining zinc, copper, silver, lead and other minerals is generally subject to numerous risks and hazards. Hazards associated with underground mining operations include underground fires and explosions, including those caused by flammable gas, gas and coal outbursts, cave-ins or falls of ground, rock falls, openings collapse, lack of oxygen, air pollution, tailings dam failures or other discharges of tailings, hazardous substances and materials, gases and toxic chemicals, water ingress and flooding, sinkhole formation, ground subsidence, and other accidents and conditions resulting from underground mining activities, such as drilling, blasting, removing and processing material. In addition, we may encounter geotechnical challenges as we continue with and expand our mining activities, including the possibility of failure of underground openings. For example, see “Mining Operations—Vazante—Operations and infrastructure.” We could incur additional expenses in connection with preventive and remediating measures related to underground openings, which could materially adversely affect results of our operations and financial position.

Such occurrences could result in damage to, or destruction of, our properties or production facilities, third-party property, human exposure to pollution, personal injury or death, environmental and natural resource damage or contamination, delays in mining, monetary losses and legal liability. In addition, any such occurrences could adversely affect our reputation. Damages to our reputation could result in additional environmental and health and safety legal oversight, and authorities could impose more stringent conditions in connection with the licensing process of our projects and operations. In addition, our customers may be less willing to buy metals from us if we have been subject to significant adverse publicity. We maintain insurance typical in the mining industry, and in amounts that we believe to be adequate, but which may not provide complete coverage in certain circumstances. Insurance against certain risks (including certain liabilities for environmental contamination, tailings dam failures and other hazards as a result of exploration, and production)production or extreme weather) may not be generally available or is uneconomical to afford. If we incur significant liability for which we are not fully insured, we may not be able to finance the uninsured liability amount on acceptable terms to us or at all, and we could be required to divert a significant portion of our cash flow from normal business operations. This could have a material impact on our financial position.

We could also incur additional expenses due to failures in our industrial drainage system or other environmental control equipment. Any such failures could also have adverse impacts on the environment, which could lead to adverse climate changes and further impact our reputation if we are found to contribute, or there is a perception that we have contributed, to adverse environmental impacts in the areas in which we operate.

 
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Risk Factors

We may be materially adversely affected by challenges relating to slope and stability of underground openings.

Our underground mines get deeper, and our waste and tailings deposits increase in size as we continue with and expand our mining activities. This presents certain geotechnical challenges, including the possibility of failure of underground openings. If we are required to further reinforce such openings or take additional actions to prevent such a failure, we could incur additional costs and expenses, and our operations and stated mineral reserves could be negatively affected. We have taken actions we consider appropriate to maintain the stability of underground openings, but additional actions may be required in the future. Unexpected failures or additional requirements to prevent such failures may materially adversely affect our costs and expose us to health, safety and other liabilities in the event of an accident, as well as adversely impact our reputation. These developments may in turn materially adversely affect the results of our operations and financial position, as well as potentially diminish our stated mineral reserves.

Our projects are subject to operational risks that may result in increased costs or delays that prevent their successful implementation.

We invest in sustaining and increasing our mine and metal production capacity and developing new operations. Our projects are subject to several risks that may materially adversely affect our growth prospects and profitability, including the following:

·we may encounter delays or higher than expected costs in completing technical and engineering studies and obtaining the necessary equipment, machinery, materials, supplies, labor or services, in project execution by third-party contractors and in implementing new technologies to develop and operate a project;
·we may experience delays in commencing and/or ramping up the operations of a new project or the expansion of an existing operation;operation to its design capacity;
·our efforts to develop projects according to schedule may be hampered by a lack of infrastructure, including a reliable power supply;
·we may fail to obtain or renew, or experience delays or higher than expected costs in obtaining or renewing, the required agreements, authorizations, licenses, approvals and permits to develop a project, including the prior consultation procedure and agreements with local communities;
·changes in market conditions or regulations may make a project less profitable than expected at the time we initiated work on it;
·accidents, natural disasters, labor disputes, equipment failures, water shortages, logistical issues, interruption of energy supply and increase in energy costs;
·adverse mining conditions may delay and hamper our ability to produce the expected quantities and qualities of minerals upon which the project was budgeted;
·mineral reserves and resources are estimates based on the interpretation of limited sampling data and test work that may not be representative of the deposits as a whole, or the technical and economic assumptions used in the estimates may prove to be materially different when the deposits are mined, that could result in materially different economic outcomes; and
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Risk Factors

·conflicts with local communities, unions and/or strikes or other labor disputes may delay the implementation or the development of projects.

We may be adversely affected by the failure or unavailability of adequate infrastructure and skilled labor.

Our mining, smelting, processing, development and exploration activities depend to a large degree on adequate infrastructure. The regions where certain of our current operations, projects and prospects are located are sparsely populated and difficult to access. We require reliable roads, bridges, power sources and water supplies to access and properly conduct our operations. As a result, the availability and cost of this infrastructure affects capital and operating costs and our ability to maintain expected levels of production and sales. We could also experience an increase in transit-related accidents due to the need to transport employees to remote areas. Unusual weather, such as excessive rains and flooding, or other natural phenomena, sabotage, government or external interference (including protest activities from local communities that may lead to temporary suspensions of our projects) in the maintenance or provision of such infrastructure could impact the development of a project, reduce mining volumes, increase mining or exploration costs or delay the transportation of raw materials to the mines and projects or concentrates to the customers. See “Risk factors—Health, safety and environmental risks—Natural disasters and climate change could affect our business.”

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Risk Factors

In addition, the mining industry is labor intensive, and our success depends to a significant extent on our ability and our contractors’ ability to attract, hire, train and retain qualified employees, including our ability and our contractors’ ability to attract employees with the necessary skills in the regions in which we operate. We could experience increases in our recruiting and training costs and decreases in our operating efficiency, productivity and profit margins if we are unable to attract, hire and retain a sufficient number of skilled employees to support our operations.

The failure of a tailings dam could negatively impact our business, reputation and results of operations, and the implementation of associated regulations and decommissioning processes may be expensive.

Mining companies face inherent risks in their operations of tailings dams—structures built for the containment of the mining or industrial waste, known as tailings—that exposes us to certain risks. Our tailings dams include, in some cases, materials that could increase the hazard potential in the event of unexpected failure. If any such risks were to occur, this could lead to negative environmental effects and materially adversely affect our reputation and our ability to conduct our operations and could make us subject to liability and, as a result, have a material adverse effect on our business, financial position and results of operations.

In addition, the changes in regulation that occurred as a result of recent dam failures, like those that have occurred in Brazil, could increase the time and costs to build, operate, inspect, maintain and decommission tailings dams, obtain new licenses or renew existing licenses to build or expand tailings dams, or require the use of new technologies. NewBrazilian laws in Brazil include a requirement for obtaining an environmental license for new dams or for the raising of existing dams. As part of the process, companies must present a proposal for an environmental bond with the purpose of guaranteeing the socio-environmental recovery in the event of an accident or the deactivation of the dam. New

In December 2023, the State of Minas Gerais published State Decree No. 48,747/2023, regulating the environmental recovery policies that companies are required to have in place in the event of an accident or deactivation of a dam, pursuant to a prior state law passed in 2019. Under State Decree No. 48,747/2023, any dams that meet the requirements established under the 2019 Dam Safety Policy law must have an environmental guarantee policy in place. Nexa estimates that it will require US$27.3 million to cover the applicable dams under this policy. The guarantee can be made by one of the following methods: (i) cash deposit; (ii) bank deposit certificate – (“CDB”); (iii) bank guarantee; or (iv) guarantee insurance. The Company has until March 29, 2024 to submit an environmental recovery proposal and must contract for 50% of the policy by December 31, 2024, 25% by December 31, 2025 and 25% by December 31, 2026. For more information on State Decree No. 48,747/2023 and its impact on Nexa, see “Information on the Company—Mining operations—Tailings disposal” and Notes 27 and 32(b) of our consolidated financial statements.

The Company has been conducting engineering studies to confirm the construction method of old inactive industrial waste containment structures that have been closed for more than 20 years. None of them contain mining tailings, water or liquid waste. Based on results of the conceptual engineering studies, Nexa recognized a provision for dams obligations in the amount of US$7.0 million in its financial statements for the year ended December 31, 2023 and the Company may reserve additional amounts related to estimated costs of anticipated additional obligations in relation to these closed dams, which could have a material impact on the Company’s financial position.

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Risk Factors

Certain regulations, such as those enacted in Brazil duringby ANM between 2020 and 2023, may also impose more restrictive requirements that may exceed our current standards, including mandated compliance with emergency plans and increased insurance requirements and premiums, or require us to pay additional fees or royalties to operate tailings dams. We may also be required to facilitate the relocation of communities and facilities impacted by tailings dam failures. Moreover, insurance coverage for damages resulting from tailings dams’ failure may not be available. For more information see “Information on the Company—Mining operations—Tailings disposal.”

A disruption in zinc concentrate supply could have a material adverse effect on our production levels and financial results.

A portion of the zinc concentrate used byprocessed in our smelters is obtained from third parties, and we may be adversely affected if we are not able to source adequate supplies of zinc for such operations. In 2021, 47.1%2023, 49.6% of the zinc concentrate used byprocessed in our smelters was obtained from third parties, with the remainder supplied by our own mining operations. The availability and price of zinc concentrate used by our smelters may be negatively affected by several factors largely beyond our control, including interruptions in production in our mines or by our suppliers, decisions by suppliers to allocate supplies of concentrate to other purchasers, price fluctuations and increasing transport cost.

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Risk Factors

In addition, the efficiency of a smelter’s production over time is affected by the mix of the zinc concentrate qualities and grades it processes. In circumstances where we cannot source adequate supplies of the zinc concentrate qualities and grades that comprise the most efficient mix for our smelters, alternative types of concentrate may be available, but the use thereof may increase our costs of production or reduce the productivity of our smelters and adversely affect our business, results of operations and financial position.

Inadequate supply of zinc secondary feed materials and zinc calcine could affect the results of our smelters.

Zinc sourced from suppliers of secondary feed materials represented approximately 19.3%16.5% of the zinc content used by our Juiz de Fora smelter in 2021.2023. The use of zinc secondary feed material is a competitive advantage in relation to the use of zinc concentrate, mainly due to lower acquisition costs and, to a lesser extent, operational gains. In addition, since 2021 we have recently incorporated zinc calcine processed by third parties into our operations to increase the production in our smelters. Our smelters then use this zinc calcine processed by third parties to produce additional refined zinc products that they would not produce were they to rely solely on other inputs. To the extent we are unable to obtain adequate supplies of zinc secondary feeds or zinc calcine, or if we must pay higher than anticipated prices of these inputs, our business, results of operations and financial position may be adversely affected. In 2021, one of our calcine supplierssupplier in Peru shutdownshut down its facility, whichfacilities, impacting our smelter production. In 2021, 2022 and 2023, we expectwere able to have a negative impact on production in 2022 due to long-termpartially offset the reduction in calcine availability.availability through the development and consumption of new sources of raw material, such as third party waelz oxide, however, we cannot assure shareholders that we will be able to have secure access to the raw materials required for our operations in the future. For more information, see “Information on the Company—Smelting Operations—Smelter sales”sales.”

Interruptions of energy supply or increases in energy costs may materially adversely affect our operations.

Energy is an important component of our production costs. In Peru, we obtain almost all electric power for our operations from third parties through electricityenergy supply contracts. Although we are party to a long-term power purchase agreement with Electroperú S.A., we cannot assure youensure that we will have secure access to energy sources in Peru at the same prices and conditions in the event of any interruption or failure of our sources of electricity,energy, failures or congestion in any part of the Sistema Eléctrico Interconectado Nacional (“SEIN”) or, any failure to renew or extend our other existing electricityenergy supply contracts.contracts, or due to any regulatory changes that may impact energy rates. Between May and September 2023, there was an increase in spot prices, mainly explained by the lack of rain in central Peru, given the most energy consumption in the country comes from hydroelectric plants. In addition, the shutdown of certain Peruvian natural gas processing plants due to maintenance occurred in July 2023, led to increase in energy costs reaching US$180/MWh, which was the highest rate in fifteen years. This increase in energy prices in part resulted from inefficient energy generation in the SEIN, which currently lacks renewable energy projects (i.e., hydroelectric, wind and solar). These types of renewable projects are expected to lower the prices that energy generators are able to offer to large industrial users.

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Risk Factors

In Brazil, we obtain electric power for our operations from hydroelectric plants grouped into several legal entities—which are directly or indirectly jointly owned by us, our controlling shareholder and its affiliates—pursuant to long-term power purchase agreements. Self-productionIn 2023, self-production plants represent 92.7%represented 86.8% of energy supply, in terms of energy acquired via energy purchase and sale contracts. Furthermore, our energy costs under these agreements could increase in the event of differences in the hydrology forecast due to these hydroelectric plants share of the hydrological risk, in addition to payment of higher energy taxes. For more information, see “Information on the Company—Other operations—Power and energy supply.”

The prices forPrices and availability of energy resources for our operations may be subject to changechanges or curtailment due to, among other things, new laws or regulations, the imposition of new taxes or tariffs, supply interruptions, equipment damage, volatility and increase in worldwide price levels for energy and related components, market conditions and any inability to renew our existing supply contracts. Disruptions in energy supply or increases in costs of energy resources could increase our production costs and have a material adverse effect on our financial position and results of operations.

Shortages of water supply due to permitting, licensing, and other governmental regulations, explosives, critical spare parts, maintenance service and new equipment and machinery may materially adversely affect our operations and development projects.

Our mining and smelting operations require the use of significant quantities of water for extraction activities, processing and related auxiliary facilities. Water usage, including extraction, containment, and recycling requires appropriate permits, which are granted by regulatory authorities in Brazil and Peru. The available water supply may be adversely affected by shortages or changes in governmental regulations. We cannot assure shareholders that water will be available in sufficient quantities to meet our future production needs or will prove sufficient to meet our water supply needs. In addition, we cannot assure shareholders that we will maintain our existing licenses related to water rights, particularly if political changes lead to additional regulatory requirements or review of existing licenses. A reduction in our water supply could materially adversely affect our business, results of operations and financial position. In addition, if we have not yet obtainedare unable to obtain the necessary licenses with respect to water rights to supportuse, we may be prevented from pursuing some of our planned expansion projects, and our inability to obtain those rights could prevent us from pursuing those expansions.

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Risk Factors

projects.

In addition to water, our mining operations require intensive use of equipment and machinery as well as explosives. To be able to acquire and use explosives, we must first obtain the corresponding authorizations, which are granted by the relevant regulatory authorities in Brazil and Peru. A shortage in the supply of key spare parts, adequate maintenance service, new equipment and machinery to replace old ones and cover expansion requirements, or explosives, including due to the inability to deliver such water, energy, supplies, critical spare parts, explosives, or equipment and machinery to our operations, or regulatory change impacting our ability to obtain authorization for the acquisition of such materials, could materially adversely affect our operations and development projects.

There are unique risks inherent to the development of underground mines, which may have a material adverse impact on our cash flows.

The development of underground mines is subject to other unique risks including, but not limited to, underground floods, issues relating to ventilating harmful gases, fall-of-ground accidents, and seismic activity resulting from unexpected or difficult geological conditions. While we anticipate taking all measures to safely operate, there is no assurance that the effect of these risks will not cause schedule delays, revised mine plans, injuries to persons and property, and/or increased capital costs, any of which may have a material adverse impact on our cash flows.

We may be adversely affected by labor disputes.

Mining is a labor-intensive industry. We depend on more than 13,00014,000 workers, including employees and contractors, to carry out our operations. A portion of our employees are unionized. We cannot assure that we will not experience work slowdowns, work stoppages, strikes or other labor disputes in the future, particularly in the context of the annual renegotiation of our collective bargaining agreements.

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Risk Factors

We may also be affected by labor-related disputes that broadly develop in the countries in which we operate. Strikes and other labor disruptions at any of our operations could have a material adverse effect on our business, financial position and results of operations.

We may be liable for certain payments to individuals employed by third-party contractors.

Under Peruvian law, we may become responsible under certain circumstances to pay mandatory labor benefits or other obligations to personnel employed by our third-party contracts or sub-contractors. Although we believe that we are in substantial compliance with Peruvian labor laws, we cannot assure shareholders that any proceedings initiated by outsourced employees will be resolved in our favor and that we will not be liable for any mandatory labor benefits or for-profit sharing benefits. In addition, the Peruvian government is reviewingbeginning of 2022, a new law that proposeswas published in Peru prohibiting companies from outsourcing core operational activities. More than 70% of our Peruvian workforce is employed by third party contractors. In July 2023, the law was deemed to eliminate outsourcing of main operational activities, with the aim of contracting workers directlybe unconstitutional because it was determined to be an unenforceable bureaucratic barrier by the company. If passed, this law would affectNational Institute for the mining sector and other economic sectors in the country that have a significant percentageDefense of outsourced workforce. The above-mentioned bill of law is under review by the CongressCompetition and the Executive Branch. SeeProtection of Intellectual Property (“INDECOPI”), and therefore is not expected to have any material impact on Nexa. In addition, a lawsuit was initiated by Nexa which is seeking to declare the unconstitutionality of the aforementioned law. However, any future laws or regulations that would make Nexa responsible under Peruvian law for paying mandatory labor benefits or for-profit sharing benefits for individuals employed by third-party contractors could have an adverse impact on our business, financial position and results of operations. For more information, see “Information on the Company—Regulatory matters—Peruvian regulatory framework—Regulation of other activities.”

Under Brazilian law, outsourcing is also permitted if certain requirements are met. In addition, Brazilian law provides that the contractor will be held liable on a secondary basis if the outsourced or subcontracted companies do not fulfill their labor obligations. In cases where the outsourced or subcontracted companies do not pay the workers the labor sums they are entitled to, the contractor is responsible for those payments. These payments may have an adverse effect on our results of operation and financial position.

We may be subject to misconduct by our employees or third-party contractors.

We may be subject to misconduct by our employees or third-party contractors, such as theft, bribery, sabotage, fraud, insider trading, violation of laws, slander or other illegal actions. Any such misconduct may lead to fines or other penalties, slow-downs in production, increased costs, lost revenues, increased liabilities to third parties, impairment of assets or harmed reputation, any of which may have a material adverse effect on our business, results of operations or financial position.

The nature of our business includes risks related to litigation and administrative proceedings that could materially adversely affect our business and financial performance in the event of unfavorable rulings.

The nature of our business exposes us to various litigation matters, including civil liability claims, environmental matters, health and safety matters, regulatory and administrative proceedings, governmental investigations, tort claims, contract disputes, labor matters and tax matters, among others. We cannot assure shareholders that these or other legal proceedings will not have a material adverse effect on our ability to conduct our business or on our financial position and results of operations, through distraction of our management team, diversion of resources or otherwise. In addition, although we establish provisions as we deem necessary in accordance with IFRS as issued by the IASB,Accounting Standards, the level of provisions that we record could vary significantly from any amounts we actually pay, due to the inherent uncertainties in the estimation process.

Any tax-related investigations carried out by state or local governments may result in a material impact on our business, results of operations and financial condition.

In 2023, Nexa cooperated with the investigation carried out by the Fiscal Office of the State of Minas Gerais and the Public Ministry of Minas Gerais (the “MG Authorities”) of the practices of certain of our former customers with respect to commercial and value added tax (“VAT”), as well as our relationship with such former customers, that could result in liabilities for all parties involved in the commercial relationship. In the third quarter of 2023 and the first quarter of 2024, Nexa and the MG Authorities reached a resolution pursuant to which Nexa, without admitting primary responsibility for the resolved claims, agreed to make certain tax payments, including interest and penalties, to the State of Minas Gerais on behalf of certain former customers that allegedly failed to properly comply with their tax obligations. This resolution concluded the MG Authorities' investigation with respect to the Company, and the Company does not expect any further developments or provisions with respect to these matters. For more information about this investigation and its resolution, see “Additional Information—Legal Proceedings—Other legal proceedings.” For information on the financial effects of the resolution, see Note 9(iv) to our consolidated financial statements. The effects of any future tax-related investigations may have a material impact on our business and financial condition.

 
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Risk Factors

We could be harmed by a failure or interruption of our information technology systems or automated machinery, including system security breaches or other cybersecurity attacks.attacks, and we may expend significant resources to modify and improve our cybersecurity measures.

We rely on ourinternal and external information technology systems and automated machinery to effectively manage our production processes and operate our business. Any failure of our or third parties’ information technology systems and automated machinery to perform as we anticipate could disrupt our business and result in production errors, processing inefficiencies and the loss of sales and customers, which in turn could result in decreased revenue, increased overhead costs and excess or out-of-stock inventory levels resulting in a material adverse effect on our business results.

In recent years, there has been an increase in the number of cyberattacks in industrial and othercorporate environments. The tactics designedand techniques used by cybercriminals to gain access to and exploit sensitive information by breaching mission critical systems of large organizations have increasedevolved in volume and sophistication. We are dependent on internal information systems, and we are vulnerable to failure of these systems, including through system security breaches, data protection breaches or other cybersecurity attacks. We couldmay be exposed to a cyberattack through an internal breach from servers connected to our internal network or an external breach due to disruptionscyberattacks stemming from unauthorized access to our internal systems, which could impact our ability to operate our existing systems.vulnerabilities in critical systems, malware, espionage and sabotage. If these events occur, including a cyberattack causing a loss of critical data, unscheduled downtime/degradation of operations, or the disclosure or use of confidential information, these events could have a material adverse effect on our reputation and market value, which could adversely impact our results of operations. Additionally, we may incur additional costs and expend significant resources in continuing to modify and improve cybersecurity measures and investigate and remediate any weaknesses in our information technology systems.

In addition, privacy, data privacy isprotection and cybersecurity are subject to frequently changing rules and regulations. The European Union’s General Data Protection Regulation (“GDPR”) took effect in 2018 and introduced increased regulations relating to personal data security. The GDPR requires companies to satisfy new requirements regarding the handling of personal and sensitive data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. In 2011, Peru enacted the Law for Personal Data Protection No. 29,733, the Ley de Protección de Datos Personales (“LPDP”) and in 2018, the Brazilian president signed Law No. 13,709, the Lei Geral de Proteção de Dados (“LGPD”). Both the LGPD and LPDP represent comprehensive data protection laws, establishing detailed rules for the collection, use, processing and storage of personal data and affecting all economic sectors, including the relationship between customers and suppliers of goods and services, employees and employers and other relationships in which personal data is collected, whether in a digital or physical environment.

In July 2023, the SEC adopted new cybersecurity disclosure rules for public companies that require disclosure regarding cybersecurity risk management (including the corporate board’s role in overseeing cybersecurity risks, management’s role and expertise in assessing and managing cybersecurity risks, and processes for assessing, identifying and managing cybersecurity risks) in annual reports. These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 6-K promptly after the incident is disclosed or otherwise publicized in a foreign jurisdiction, any stock exchange, or to security holders. Such scrutiny from the SEC increases the risk of investigations into the cybersecurity practices, and related disclosures, of companies within its jurisdiction, which at a minimum can result in an increase in administrative costs, distraction of management and diversion of resources for targeted businesses. Any noncompliance with the GDPR, the LGPD, the LPDP, the SEC cybersecurity rules, or any other cybersecurityprivacy, data protection and data privacycybersecurity regulations could result in proceedings or actions against us by governmental entities, the imposition of fines or penalties and damage to our reputation, which could have an adverse effect on us and our business, reputation and results of operations.

16
Risk Factors

Financial risks

Our financial position and results of operations may be materially adversely affected by currency exchange rate fluctuations.

Our revenues are primarily denominated in U.S. dollars, and certain portions of our operating costs, principally labor costs, are denominated in reais and soles. Accordingly, when inflation in Brazil and Peru increases without a corresponding devaluation of the real or sol, our financial position, results of operations and cash flows could be materially adversely affected. See “Operating and Financial Review and Prospects—Key factors affecting our business and results of operations—Macroeconomic conditions of the countries and regions where we operate” for a discussion of inflation in 2021.2023.

Given the structure of our operations, a decrease in the value of the U.S. dollar relative to the foreign currencies in which we incur costs generally could have a negative impact on our results of operations or financial position. Our foreign currency exposures increase the risk of volatility in our financial position, results of operations and cash flows. We cannot assure shareholders that currency fluctuations, or costs associated with our hedging activities (including fluctuations in exchange rates contrary to our expectations), will not have an impact on our financial position and results of operations.

12

Risk Factors

Fluctuations in interest rates could increase the cost of servicing our debt, affect returns on our financial investments and negatively affect our overall financial performance.

Some of our indebtedness bears interest based on variable interest rates, including the London Interbank OfferedSecured Overnight Financing Rate, or LIBOR.SOFR. As of December 31, 2021, 21%2023, 29.7% of our debt was variable rate debt. Such variable rates have fluctuated in response to changes in economic growth, monetary policy and governmental regulation. A significant increase in underlying interest rates, particularly in LIBOR,SOFR, could have a material adverse effect on our financial expenses and materially adversely affect our overall financial performance. In July 2017, the Financial Conduct Authority (“FCA”) announced its intention to phase out LIBOR by the end of 2021. However, on March 5, 2021, the FCA announced that most tenors of U.S. Dollar LIBOR would continue to be published through June 30, 2023, extending the previously announced deadline of December 2021. For more information, on the potential impact of fallback rates on our relevant LIBOR-based debt, see “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Debt” and Note 5 (b) to our consolidated financial statements..

We may engage in hedging activity that may not be successful and may result in losses to us.

We may use foreign exchange and metal commodity non-deliverable forwards to reduce the risk associated with currency and metal price volatility. However, our hedging activities could cause us to lose the benefit of an increase in the prices of the metals we produce if they increase over the price level of hedge positions, or the benefit of an increase in the currency price. The cash flows and the mark-to-market values of our production hedges can be affected by factors such as the volatility of currency and the market price of metals, which are not under our control.

Our hedging agreements contain events of default and termination events that could lead to early close-outs of our hedges such as failure to pay, breach of the agreement, misrepresentation, default under our loans or other hedging agreements and bankruptcy. In the event of an early termination of our hedging agreements, the relevant hedge positions would be required to be settled at that time. In that event, there could be a lump sum payment to be made either to or by us. The magnitude and direction of such a payment would depend upon, among other things, the characteristics of the particular hedge instruments that were terminated and the relevant market prices at the time of termination. Any of the factors described above could have a material adverse effect on our financial position, results of operations or cash flows. See “Operating and financial review and prospects—Risk management—Financial risk—Metal price sensitivity.”

17
Risk Factors

Our business requires substantial capital expenditures and is subject to financing risks.

Our business is capital intensive. Exploration for and exploitation of mineral deposits, maintenance of machinery and equipment and compliance with applicable laws and regulations require substantial capital expenditures. We must continue to invest capital to maintain and potentially expand our existing brownfield operations, develop our greenfield projects pipeline in order to sustain and grow production, in addition to carrying out investments in sustaining, health, safety and environment. In 2021,2023, we invested US$507.9309.0 million in capital expenditures, US$257.6292.8 million of which was in relation to the Aripuanã project.sustaining investments. We depend partially on our operating cash flows for maintenance ofto support our capital expenditures. See “Information on the Company—Capital expenditures.”

No assurance can be given that we will be able to maintain our production levels or generate sufficient cash flow, capitalize on a sufficient amount of our net income or have access to sufficient investments, loans or other financing alternatives to finance our capital and other projects expenditure program at a level necessary to sustain and grow our current exploration and exploitation activities. Any equity or debt financing, if available, may not be on terms that are favorable to us. If our access to external financing is limited, we may not be able to execute our strategy, which could adversely affect our business, financial position and results of operations.

We are exposed to credit risk in relation to our contractual and trading counterparties as well as to hedging and derivative counterparty risk.risk, and our results of operations may be negatively impacted by increases in expected credit losses.

We are subject to the risk that the counterparties with whom we conduct our business (in particular our customers) and who are required to make payments to us are unable to make such payment in a timely manner or at all. Credit risk is present in our hedging operations, customer operations and cash management operations. If amounts that are due to us are not paid or not paid in a timely manner, this may impact not only our current trading and cash-flow position but also our financial and business position. In addition, our derivatives, metals hedging, and foreign currency and energy risk management activities expose us to the risk of default by the counterparties to such arrangements. Any such default could have a material adverse effect on our business, financial position and results of operations.

13

Risk Factors

We hold a significant balance of accounts receivable and, therefore, provide an allowance to cover the portion of this amount that may not be received due to customer default. We record expected credit losses at an amount considered sufficient to cover estimated losses in the realization of receivables, taking into account our historical losses and internal risk classification of our customers, although we cannot guarantee that these amounts are sufficient to cover any losses. Additionally, delays in payment cycles from significant customers may adversely affect our liquidity and our ability to obtain financing for working capital, such as receivables sales.

Any acquisitions or divestitures we make may not be successful or achieve the expected benefits.

We regularly consider and evaluate opportunities to acquire assets, companies and operations.operations, as well as constantly review our portfolio of projects and assets in operation. There can be no assurance that we will be able to successfully integrate any acquired assets, companies or operations.operations, nor guarantee success in connection with any divestment or sale of an operational or non-operational project or asset. In addition, any additional debt we incur to finance an acquisition may materially adversely affect our financial position and results of operations. If future acquisitions are significant, they could change the scale of our business and expose us to new geographic, political, operating and financial risks. Similarly, any divestitures we make may not have the anticipated positive impacts and could lead to an impairment charge or other material adverse effects on our business, financial position, and results of operations.

Changes in the assumptions underlying the carrying amount of certain assets could result in impairment charges.

We periodically test whether our tangible and intangible assets have suffered any impairment, in accordance with the accounting policy stated in our consolidated financial statements. If our estimates of the recoverable amount of an asset change or are inaccurate, we may determine that impairment charges are necessary. While impairment does not affect reported cash flows, the decrease in the recoverable amount determined could have a material adverse effect on our results of operations. Assurances cannot be given as to the absence of significant impairment charges in future periods, particularly if market conditions deteriorate.

18
Risk Factors

We might not be able to pay the principal and interest amounts on our debt obligations in case they are accelerated as a result of the noncompliance with the restrictive covenants and clauses of our debt contracts.

Any default on the contracts governing our debts that is not remedied or waived by loan creditors or noteholders could result in the acceleration of the obligation to pay outstanding amounts owed to holders of such debts. If we are unable to generate sufficient cash flow from our operations and, therefore, unable to obtain the necessary resources to make the principal and interest payments on our debts as a result of such acceleration, our business, financial position and results of operations could be materially and adversely affected. For more information on restrictive covenants in our debt contracts, see “Operating and financial review and prospects—Liquidity and Capital Resources—Debt.”

Risks related to our Mineral Reserves and Resources

Our estimates of Mineral Reserves and Resources may be materially different from the total mineral quantities we actually recover, and changes in metal prices, operating and capital costs, and other assumptions used to calculate these estimates may render certain Mineral Reserves and Resources uneconomical to mine.

 

There is a degree of uncertainty attributable to the estimation of mineral reservesMineral Reserves and resources.Resources. Until mineral reservesMineral Reserves and resourcesResources are actually mined and processed, the quantity of metal and grades must be considered as estimates only and no assurance can be given that the indicated levels of metals will be produced. In making determinations about whether to advance any of our projects to development, we must rely upon estimated calculations for the mineral reservesMineral Reserves and mineral resourcesMineral Resources and grades of mineralization on our properties.

 

The estimation of mineral reservesMineral Reserves and resourcesResources is a subjective process that is partially dependent upon the judgment of the qualified personsQualified Persons preparing such estimates. The process relies on the quantity and quality of available data and is based on knowledge, mining experience, statistical analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available.

 

Our estimates of Mineral Reserves and Resources are based on geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis made as of the date of such estimates. We periodically update our mineral reservesMineral Reserves and resourcesResources estimates based on the conclusions of the relevant qualified personsQualified Persons with respect to new data from exploratory and infill drilling, results from technical studies and the experience acquired during the operation of the mine and metallurgical processing, as well as changes to the assumptions used to calculate these estimates.

 

Several of the assumptions used to calculate these estimates, including the market prices of commodities and foreign exchange rates, operating and capital costs and mining and metallurgical recovery rates, among others, can greatly fluctuate, which may result in significant changes to our current estimates. These changes may also render some or all of our proven and probable mineral reservesMineral Reserves and measuredMeasured and indicated mineral resourcesIndicated Mineral Resources uneconomic to exploit and may ultimately result in a reduction of mineral reservesMineral Reserves and resources.Resources.

 

In addition, inferred mineral resourcesInferred Mineral Resources have a greatmassive amount of uncertainty as to their existence and their economic and legal feasibility. You should not assume that any part of an Inferred Mineral Resource will be upgraded to a higher category or that any of the mineral resourcesMineral Resources not already classified as mineral reservesMineral Reserves will be reclassified as mineral reserves.Mineral Reserves.

 

14

Risk Factors

We depend on our ability to replenish our mineral reservesMineral Reserves for our long-term viability.

 

Mineral reservesReserves data is only indicative of future results of operations at the time the estimates are prepared and are depleted over time as we conduct our mining operations. We use several strategies to replenish and increase our Mineral Reserves that are depleted, including exploration activities and the acquisition of mining concessions. If we are unable to replenish our Mineral Reserves or develop our Mineral Resources, our business, results of operations and prospects would be materially adversely affected.

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Risk Factors

Our mineral exploration efforts are highly speculative in nature and may be unsuccessful.

 

Mineral exploration is highly speculative in nature, involves many uncertainties and risks and may be unsuccessful. It is performed to demonstrate the dimensions, position and mineral characteristics of mineral deposits, estimate mineral reservesMineral Reserves and resources,Resources, assess amenability of the deposit to mining and processing scenarios and estimate potential deposit value.

 

Substantial expenditures are required to establish proven and probable mineral reserves,Mineral Reserves, to determine processes to extract the metals and, if required, to construct mining and processing facilities and obtain permits to carry on mining activities. Therefore, once the mineralization is discovered, it may take several years from the initial exploration phases and mineral resourcesMineral Resources determination before production is possible, if at all, during which time the project’s feasibility may change adversely.

There are unique risks inherent to the development of underground mines, which may have a material adverse impact on our cash flows.

The development of underground mines is subject to other unique risks including, but not limited to, underground floods, issues relating to ventilating harmful gases, fall-of-ground accidents, and seismic activity resulting from unexpected or difficult geological conditions. While we anticipate taking all measures to safely operate, there is no assurance that the effect of these risks will not cause schedule delays, revised mine plans, injuries to persons and property, and/or increased capital costs, any of which may have a material adverse impact on our cash flows.

 

Health, safety and environmental risks

Health, safety and environmental laws and regulations, including regulations pertaining to climate change, may increase our costs of doing business, restrict our operations or result in the imposition of fines or revocation of permits.

Our mining activities are subject to Brazilian and Peruvian laws and regulations, including health, and safety and environmental matters. In March 2022, the Securities and Exchange Commission (“SEC”) proposed a new set of rules regarding disclosure and reporting requirements related to climate change. We will continue to monitor developments related to the new rules, which were adopted by the SEC on March 6, 2024, and subsequently temporarily halted by an administrative stay granted by the Fifth Circuit U.S. Court of Appeals on March 15, 2024. In January 2023, the Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 (the “Directive”) entered into force. The Directive modernizes and strengthens the rules concerning certain social and environmental information that the Company has to report, ensuring that investors and other stakeholders can accurately assess the Company’s social and environmental impact. European Union Member States, including Luxembourg, have until July 2024 to adopt the provisions of the Directive into their national law, as resulting obligations will be applied on a staggered basis. The Company will be required to comply with the Directive obligations starting in 2026 with respect to the accounts for the fiscal year ending on December 31, 2025. Additional matters subject to legislation include, but are not limited to, transportation, mineral storage, water use and discharge, use of explosives, hazardous and other non-hazardous waste, and reclamation and remediation measures. Our operations are subject to periodic inspections and special inspections in certain circumstances by governmental authorities and consultation with local communities. In Peru, the Congress began a revision process of a law to prohibit economic activities in the headwaters of basins, which are currently considered vulnerable areas that require protection and mitigation measures. However, the revision process lost momentum and has shown no sign of progress to date. If adopted, this law could have a material impact on our business and projects in case any new projects were to occur in headwaters of basins. For more information about these Peruvian environmental regulations, see “Information on the Company—Regulatory matters—Peruvian regulatory framework—Environmental regulations”. Compliance with these laws and regulations and new or existing regulations that may be applicable to us in the future could increase our operating costs and adversely affect our financial results of operations and cash flows. In Peru, the Government is currently reviewing laws to prohibit economic activities in the headwaters of the basin, which are currently considered vulnerable areas that require protection and mitigation measures.

Regulatory and industry response to climate change or other controls on greenhouse gas emissions, including limits on emissions from the combustion of carbon-based fuels, controls on effluents and restrictions on the use of certain materials, could significantly increase our operating costs and affect our customers and suppliers. Ongoing international efforts to address greenhouse gas emissions consist of controlling activities that may increase the atmospheric concentration of greenhouse gases. International agreements, like the Paris Agreement, Kyoto Protocol and COP26, are in different stages of negotiation and implementation. The measures included in such agreements may result in an increase of costs related to the installationimplementation of new controls aimed at reducing greenhouse gas emissions, the purchase of credits or licenses for atmospheric emissions and the monitoring and registration of greenhouse gas emissions generated by our operations. These measures could adversely affect our business, financial position and results of operations. In addition, the Brazilian government has initiatives to grant environmental licenses in connection with the license holder’s commitment to reducing greenhouse gases, especially in the state of Minas Gerais. As health, safety, and environmental regulations, requirements, best practices and industry standards are evolving and becoming stricter in Brazil, we may incur increased expenditures for compliance with these increasingly demanding requirements.

 
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Risk Factors

Pursuant to applicable environmental regulations and laws, we could be found liable for all or substantially all the damages caused by mining activities at our current or former facilities or those of our predecessors at disposal sites. We could also be found liable for all incidental damages due to the exposure of individuals to hazardous substances or other environmental damage, all of which could significantly and negatively affect our reputation. We cannot assure shareholders that our costs of complying with current and future environmental and health and safety laws and regulations, including decommissioning and remediation requirements, and any liabilities arising from past or future releases of, or exposure to, hazardous substances will not materially adversely affect our business, financial position and results of operations.

ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, andcould damage our reputation.reputation, and may increase costs.

There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow particularly asand change, and may continue to shift based on political conditions in the SEC considers new rulemaking related to ESG disclosure.countries in which we operate and do business. If our ESG practices fail to meet regulatory requirements, our medium- and long-term ESG commitments, or investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Directordirectors and employee diversity, human capital management, employee health and safety practices, product quality, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted, andimpacted. Additionally, our customers and suppliers may be unwilling to continue to do business or partner with us.

Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other sustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.

If we do not adapt to or comply with new regulations, or if we fail to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in Nexa, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business or financial condition.

In addition, our ESG practices and initiatives may result in increased operational costs, including monitoring and reporting costs, equipment costs, energy costs, and other costs to comply with our developing practices and initiatives. These additional costs could have a material impact on our business, results of operations and financial condition.

Failure to meet environmental, social, and governance expectations or standards or achieve the Company’s environmental and social related goals could adversely affect its business, reputation, brand, results of operations, and/or financial condition.

Nexa discloses information about its environmental, social and governance goals and initiatives in its annual sustainability report, other non-financial reports, information provided on its website, press statements, and other communications. This disclosure includes voluntary commitments made by the Company regarding greenhouse gas (GHG) emission reductions, water consumption, safety, and diversity.

21
Risk Factors

Execution and achievement of Nexa’s ESG and GHG goals within the currently estimated costs and expected timeline is subject to risks and uncertainties which include, but are not limited to, availability, development, and affordability of technology needed to keep our commitments; unplanned issues with design, operations, and technology; inability to obtain required permits or licenses; lack of necessary materials and parts; changing products to meet customer needs and their acceptance of environmentally sustainable supply chain solutions; shifts in public opinion and political leadership; our ability to follow new rules, taxes, orders, or regulations related to climate matters.

The Company maintains and will use its best efforts to continue to maintain standards aligned with stakeholder expectations for best practices, and comply with new environmental, social, and governance regulations and expectations, aiming to minimize potential harm to the Company’s reputation, minimize adverse impacts on its ability to attract and retain customers and talents, and minimize exposure to legal and regulatory proceedings.

Natural disasters and climate change could affect our business.

Natural disasters could significantly damage our mining and production facilities and infrastructure and may cause a contraction in sales to countries adversely affected due to, among other factors, power outages and the destruction of industrial facilities and infrastructure. In particular, the Central Andean region, where two of our mines are located, is prone to mudslides and earthquakes of varying magnitudes. Due to the El Niño weather phenomenon, Peru typically experiences extreme weather conditionsevents that ledlead to flooding and mudslides, and which could adversely affect our operations. In the past, extreme flooding and mudslides in Peru have interrupted the supply of metal concentrates from our mines and the supply of zinc products to our plants. The physical impact of climate change on our business remains uncertain, but we are likely to experience changes in rainfall patterns, increased temperatures, water shortages, rising sea and river levels, lower water levels in rivers due to natural or operational conditions, increased storm frequency and intensity as a result of climate change, which may adversely affect our operations. For example, in January 2022, the underground operationMarch 2023 production at the VazanteCerro Lindo mine was partially floodedsuspended for approximately two weeks due to unusually heavy rainfall levels and overflowing rivers caused by Cyclone Yaku, which affected the region, as well as other parts of the country. Operations resumed at full capacity in the state of Minas Gerais, which is expected to have a negative impact on zinc production.April 2023. For additional information, see “Information on the Company—Mining Operations—Vazante.Cerro Lindo.. Although we have insurance covering damages caused by natural disasters, extensive damage to our facilities and staff casualties due to natural disasters may not be covered by our insurer and/or could materially adversely affect our ability to conduct our operations and, as a result, reduce our future operating results.

In addition, the potential physical impact of climate change on our operations is highly uncertain and would be particular to the geographic circumstances of our facilities and operations. It may include changes in rainfall patterns, water shortages, rising sea and river levels, changing storm patterns and intensities and changing temperatures. These effects may materially adversely impact the cost, production and financial performance of our operations.

16

Risk Factors

Global or regional health considerations, including the outbreak of a pandemic or contagious disease, such as the ongoing COVID-19 pandemic, have impacted and could continue to impact our business, financial condition and results of operations.

The global economy has faced a number of challenges since the outbreak of the COVID-19 pandemic, including governmental measures enacted in responsedisruption to the pandemic, has had a material effect on the global economy, disrupting the financial markets, rising inflation, and creating increased volatility. In 2021, international pricesvolatility due to market expectations for our metals have steadily increased since the lows reached in the second halfa global recession. The emergence of 2020 and demand for our products has recovered as vaccines and other treatments for COVID-19 have been developed, however our production and financial results may continue to be affected by disruptions to our operations and volatility in metal prices and its impact on demand, particularly as new variants of COVID-19, emergethe outbreak of another contagious disease, or future pandemics and outbreaks of the pandemic continue to spread. See “—Our business, results and financial position are highly dependent on the demand for an international market price of the metals we produce, which are both cyclical and volatile” and “—Changes in the demand for the metal we producepublic crises could adversely affect our sales volume and revenues.” While vaccination rates have increased and effective treatments have been developed, the emergence of additional COVID-19 variants continues to present risks to our operations (including the ability of employees to be physically present at work), employee health and safety, mandatory operational closures and general macroeconomic activity. We cannot at this time forecast what policies will be implemented by governments to continue to addressactivity, including international market prices for the pandemic, or the pandemic’s ultimate duration, severity ormetals we produce, as well as have a severe impact to our business, our customers, or our supply chain. This material impact could continue for an extended period of time or impact our financial condition and results of operations and continued weak or worsening economic conditions could negatively impact demand for our products. Future pandemics and public crises could impact our business in a similar or worse manner. For additional information, see “Operating and Financial Review and Prospects—Overview—Executive Summary,” “Operating and Financial Review and Prospects—Overview—Key factors affecting our business and results of operations—COVID-19” and Note 1 to our consolidated financial statements.

22
Risk Factors

Political, economic, social and regulatory risks

Political, economic and social conditions in the countries in which we have operations or projects, or in which we do business, could adversely impact our business, financial condition results of operations and the trading price of our securities.

Political, economic and social conditions in the countries in which we have operations or projects, or in which we do business, may negatively affect our financial performance. Our business, financial position and results of operations may be affected by the general conditions of the Peruvian, Brazilian and other national political conditions, economies, economic recessions, price instability, exchange rate volatility, inflation, interest rates, and domestic regulatory and taxation policies. There can be no assurance that the countries in which we operate or do business will not face political, economic or social problems in the future or that these problems will not increase the volatility of the price of securities of issuers with operations in those countries, like us, or interfere with our ability to operate and service our indebtedness. For additional information, see “Operating and Financial Review and Prospects—Overview—Key factors affecting our business and results of operations.”

In all these countries, we are exposed to various additional risks over which we have no control, such as social unrest, bribery, cyberattacks, extortion, corruption, robbery, sabotage, kidnapping, civil strife, terrorism, acts of war and guerilla activities. These issues may adversely affect the economic and other conditions under which we operate in ways that could have a materially negative effect on our business.

Recent and potential changes in commercial and mining laws, including trends like resource nationalism, may significantly impact our mining operations.

Changes to the Brazilian and Peruvian regulatory framework that could be enacted in the future may result in an increase in our expenses, particularly mining royalties. In addition, anyroyalties and tax-related expenses, among others. Any changes in the interpretation of Brazilian or Peruvian mining laws and regulations, including changes to our concession agreement and changes in commercial rules and protections, may increase our compliance, operational or other costs. In December 2022, a new tax on mining operations was approved in the state of Mato Grosso, where the Aripuanã project is located. The Brazilian Supreme Court declared the tax unconstitutional, however in December 2023, a new tax replacing the previous tax was approved by the state of Mato Grosso.

In addition, there is a risk that resource nationalism in Brazil or Peru may result in operational limitations, local content requirements, and even expropriations and nationalizations. For additional information, see “Information on the Company—Regulatory matters—Brazilian regulatory framework—Mining rights and regulation of mining activities.”

17

Risk Factors

Our mineral rights may be terminated or not renewed by governmental authorities.

Our business is subject to extensive regulation in Brazil and Peru, including with respect to acquiring and renewing the required authorizations, permits, concessions and/or licenses from the relevant governmental regulatory bodies. We have obtained, or are in the process of obtaining, all material authorizations, permits, concessions and licenses required to conduct our mining and mining related operations.

In Brazil, we may need to renew exploration authorizations related to our Brazilian mining operations 60 days prior to their expiration date if we determine that we continue to have an economic or business interest in the area. If we fail to demonstrate the existence of technical and economically viable mineral deposits in an area covered by an exploration authorization, we may be required to return it to the federal government. The federal government may then grant exploration authorizations to other parties that may conduct other mineral prospecting activities at said area. With respect to mining concessions, there is no renewal requirement once we have obtained such concession. However, we must continue to assess the mineral potential of each mining concession to determine if the costs of maintaining the related exploration authorizations and mining concessions are justified by the results of operations to date. If such costs are not justified and we abandon the mine or suspend the mining activities without the formal consent of the regulatory authority for a period more than six months, we may lose the respective mining concessions. Alternatively, we may elect to withdraw or assign some of our exploration authorizations or mining concessions.

23
Risk Factors

In Peru, once mineral concessions are granted, they may not be revoked if the titleholder complies with two obligations, (1) payment of an annual fee and (2) either achievement of the minimum annual production target or expenditure of the equivalent amount in exploration or investments before the statutory deadline. If the production, expenditure or investment targets are not met, a statutory penalty must be paid. Accordingly, mineral concessions will lapse automatically if any of these obligations are not met within the statutory period. Mining concessions in Peru may be terminated if the concessionaire does not comply with its obligations.

These authorizations, permits, concessions and environmental licenses are subject to our compliance with conditions imposed and regulations promulgated by the relevant governmental authorities. While we anticipate that all required authorizations, permits, concessions and environmental licenses or their renewals will be granted as and when sought, there is no assurance that these items will be granted as a matter of course, and there is no assurance that new conditions will not be imposed in connection with such renewals. If we were to violate any of the foregoing laws and regulations or the conditions of our concessions, authorizations, and environmental licenses, including the failure to remove all residents who are within the self-rescue zone, we may be subjected to substantial fines or criminal sanctions, revocations of operating permits or licenses and possible closings of certain of our facilities.

 

Our operations depend on our relations and agreements with local communities, and new projects require carrying out a prior consultation procedure.

There are several local communities that surround our operations in Brazil and Peru, most of which we have entered into agreements with that provide for the use of their land for our operations. We also interact with regional and local governments and depend on our close relations with local communities and such governments to carry out our operations. From time to time, we may experience disputes with local communities and if our relations with the local communities and such governments were to deteriorate, or the local communities do not comply with the existing agreements or renew them upon expiration, it could have a material adverse effect on our business, reputation, properties, operating results, financial position or prospects. In addition, a disruption in the relations between the local communities, governments and other parties may affect us indirectly. For additional information, see “Mining Operations—Cerro Lindo—Production” and “Mining Operations—Atacocha—Production.”

We also may face certain risks in relation to artisanal mining near the areas in which we operate. The increase of artisanal mining activity or the failure of these artisanal miners to abide with our existent agreement may have an adverse effect on the development of our operations. For example, see “Mining Operations—Aripuanã—History.”

Furthermore, to develop new projects in the countries in which we operate on land owned by, or in the possession of, third parties, we need to reach an agreement with such third parties to use that land. Any delay or failure to reach such agreements or obtain governmental approvals for our new projects could result in a material adverse effect on our business, properties, operating results, financial position or prospects.

18

Risk Factors

Changes in tax laws, and any related tax agreements we have entered into or may enter into with local governments, may increase our tax burden and, as a result, could adversely affect our business, financial position and results of operations.

The Brazilian, Peruvian and Luxembourg governments from time to time implement changes to tax laws and regulations. Any such changes, as well as changes in the interpretation of such laws and regulations, or changes to former precedents on tax decisions by authorities or courts, may result in increases to our overall tax burden, which would negatively affect our profitability. Moreover, some tax laws may be subject to controversial interpretation by tax authorities, including, but not limited to, the regulation applicable to corporate restructurings. In the event an interpretation different than the one on which we based our transactions prevails, we may be adversely affected.

In addition, as a result of the VAT tax benefit adopted by Minas Gerais State on the commercialization of several products, including metallic zinc, there has been increased scrutiny by the tax authorities of companies incorporated in this State. For more information about the VAT tax benefit, see “Information on the Company—Regulatory Matters—Brazilian regulatory framework—Royalties and other taxes on mining activities.” See also “Additional Information—Legal Proceedings” for information about the investigation by the Fiscal Office of the State of Minas Gerais and the Public Ministry of Minas Gerais relating to the VAT-related practices of certain of Nexa’s former customers, as well as Nexa’s relationship with such former customers.

24
Risk Factors

On January 1, 2024, new transfer pricing regulations came into effect in Brazil, which adopted an arm’s length principle to transfer pricing similar to that of the Organization for Economic Co-operation and Development (OECD). Additionally, a substantial VAT tax reform for indirect and consumption taxes that eliminates existing federal, state and municipal indirect taxes and creates three classes of taxes was approved in Brazil in December 2023 and will begin as of 2026. The reform’s goals are simplification, competitiveness and uniformization of legislation, and a long and gradual transition period is expected from 2026 to 2033. The Company is currently assessing the impacts of the reform on its operations and there can be no assurance that these new regulations will not increase taxes for Nexa.

Additionally, the OECD’s Pillar Two tax reform, which establishes a global minimum effective tax rate of 15%, became effective in Luxembourg on January 1, 2024. See “Taxation—Luxembourg tax considerations” for more information about this tax regime and its potential impact on Nexa. Peru and Brazil have not yet enacted the Pillar Two legislation, however adopting this regime in either country could have a potential impact on our business, financial position and results of operations.

Further, we are engaged in ongoing tax-related matters with the Peruvian tax authorities (“SUNAT”) related to the stability agreement of Cerro Lindo’s operations. The Peruvian tax authority issued unfavorable tax decisions against the Company for the years-ended December 31, 2014, 2015, 2016 and 2017. As of the date of this annual report, SUNAT is now auditing the years-ended December 31, 2018 and 2019. Discussions with SUNAT are expected to evolve in 2024, including potential audits of the years-ended December 31, 2020 and 2021, which is the last fiscal year covered by the stability agreement. The Company continues to conclude that there are legal grounds to obtain a favorable outcome in these matters, however, the Company may have to pay the disputed amounts under discussion to continue the legal process either in the judicial or international arbitration levels which may impact Nexa’s results, cash flow and liquidity. For more information, see “Additional Information—Legal Proceedings” and Note 11(d) to our consolidated financial statements.

The Brazilian, Peruvian or Luxembourg governments may implement additional changes to tax regulations in the future, which could adversely affect our business, financial position, and results of operations.

Our business, financial position and results of operations may be adversely affected by inflation.

Certain of the countries in which we operate are still experiencing or have in the past experienced high levels of inflation in the past and may continue to experience high levels of inflation in the future, which may impact the cost of operation and domestic demand for our products. Inflationary pressures which have increasedsomewhat decreased globally during 20212023 compared to 2022 and which we expect to continuemay moderate further in 2022,2024, but still remain at high levels. This has impacted our operating margins and may curtailimpact our ability to access international financial markets and may lead to further government intervention in the economy, including the introduction ofmarkets. Further, government policies may be implemented that maycould materially adversely affect the overall performance of the national economy of the countries in which we operate, which in turn may materially adversely affect us. WeNexa. Furthermore, as we follow international market prices, we may not be able to adjust the prices we charge our customers to offset thepotential effects of inflation on our cost structure. In addition, although the functional currency for our Peruvian operations is the U.S. dollar, high rates of inflation could increase our operating costs and may further adversely impact our operating margins if we are not able to pass the increased costs on to consumers.

Beginning in the second half of 2021, rising inflation has impacted our operational, logistics, oil, and third-party contractor costs, and we expect these inflationary pressures to persist through 2022.

We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations in various jurisdictions. Any violations of any such laws or regulations could have a material adverse impact on our reputation and results of operations and financial position.

We are subject to anti-corruption, anti-bribery, anti-money laundering and other international laws and regulations and are required to comply with the applicable laws and regulations of Brazil, Peru, Luxembourg, Canada and the United States, among others. In addition, we are subject to economic sanctions regulations that restrict our dealings with certain sanctioned countries, individuals and entities. Our governance and compliance processes may not timely identify or prevent future breaches of legal, accounting or governance standards. We may be subject to instances of fraudulent behavior, corrupt practices and dishonesty by our affiliates, employees, directors, officers, partners, agents and service providers. Any violations by us of anti-bribery and anti-corruption laws, sanctions regulations or other standards could have a material adverse effect on our business, reputation, results of operations and financial position.

25
Risk Factors

Political and social opposition to mining activities generally in the regions where we operate could adversely impact our business and reputation.

Disputes with communities where we operate may arise from time to time. In some instances, our operations and mineral reserves are located on or near lands owned or used by indigenous people or other groups of stakeholders. Some of our mining and other operations are in territories where title may be subject to disputes or uncertainties, or in areas claimed for agriculture or land reform purposes, which may lead to disagreements with organized social movements, local communities and the government, and recentgovernment. Further social or political changes, particularly in Peru and Brazil, may lead to a potential increase the potential forin these claims. We may be required to consult and negotiate with these groups as part of the process to obtain licenses required to operate, to mitigate impact on our operations or to obtain access to their lands. Disagreements or disputes with local groups, including indigenous groups, organized social movements and local communities could cause delays or interruptions to our operations, adversely affect our reputation or otherwise hamper our ability to develop our reserves and conduct our operations. Protesters have taken actions to disrupt our operations and projects, and they may continue to do so in the future, which may harm our operations and could adversely affect our business. In recent years, Peru has experienced protests against mining projects in several regions. On several occasions, local communities have opposed these operations and accused them of polluting the environment and hurting agricultural and other traditional economic activities. For example, production at the Atacocha mine was temporarily suspended in January and June 2023, as well as in February 2024, due to blockades by local communities. For additional information, see “Mining Operations—Cerro Lindo—Production”Atacocha—Operations and “Mining Operations—Atacocha—Production.”infrastructure” Social demands and conflicts could have a material adverse effect on our business and results of operations and the economy in general of the countries in which we operate.

19

Risk Factors

Uncertainty in governmentalDiffering interpretations of agency interpretationregulations or court interpretationrulings and the application of such laws and regulations could result in unintended non-compliance.non-compliance and may have a material effect on our business, results of operations, and financial position.

The courts in some of the jurisdictions in which we operate may offer less certainty as to the judicial outcome of legal proceedings or a more protracted judicial process than is the case in more established economies. Businesses can become involved in lengthy court cases over simple issues when rulings are not clearly defined, and the poor drafting of laws and excessive delays in the legal process for resolving issues or disputes compound such problems. In addition, there may be limited or no relevant case law providing guidance on how courts would interpret such laws and the application of such laws to our contracts, joint ventures, licenses, license applications or other legal arrangements. Accordingly, there can be no assurance that contracts, joint ventures, licenses, license applications, tax agreements, or other legal arrangements will not be adversely affected by the actions of government authorities and the effectiveness of and enforcement of such arrangements in these jurisdictions. Moreover, the commitment of local businesses, government officials and agencies and the judicial system in these jurisdictions to abide by legal requirements and negotiated agreements may be more uncertain and may be susceptible to revision or cancellation, and legal redress may be uncertain or delayed. These uncertainties and delays could have a material adverse effect on our business and results of operations. Finally, certain interpretations of regulations and laws may lead to increasing governmental fines and sanctions, even for non-material violations of these rules and regulations. If Nexa is deemed to be in violation of agency regulations or court rulings, and is required to make payments in connection with the alleged violations, this may have a material impact on our business, results of operations and financial position.

Regulation of other activities.

We are subject to mining and environmental regulation related to, among other activities, the use of explosives, fuel storage, controlled substances, discharges, telecommunications, archeological remains and electricityenergy concessions. We are also subject to more general legislation on data privacy, labor, occupational health and safety, and peasant and indigenous communities, among others, that may adversely affect our business. See “Information on the Company—Regulatory matters—Brazilian regulatory framework” and “Information on the Company—Regulatory matters—Peruvian regulatory framework.

26
Risk Factors

Risks relating to our corporate structure

VSA has substantial control over us, which could limit our shareholders’ ability to influence the outcome of important corporate decisions.

As of March 17, 2022,27, 2024, VSA owns 64.68% of our issued and outstanding common shares. As a result, VSA can influence or control matters requiring approval by our shareholders, including the election of directors, the allocation of profits, the appointment of external auditors and the approval of mergers, acquisitions or other extraordinary transactions. VSA may also have interests that differ from our other investors and may vote in a way with which our other shareholders disagree, and which may be adverse to the interests of our other investors. Additionally, we may experience a lack of trading liquidity associated with VSA’s control over us.

In addition, we have entered into several shared services contracts and similar agreements with other entities in the Votorantim Group in order to achieve operational economies of scale. Since we rely on the Votorantim Group for negotiation, renewal and extension of these agreements, there can be no assurances that we will always have access to the services procured pursuant to these agreements at the same prices and conditions. See “Share ownership and trading—Related Party Transactions.”

Dividends or other distributions paid by us on our common shares will generally be subject to Luxembourg withholding tax.

Any dividends or other distributions paid by us on our common shares will be subject to a Luxembourg withholding tax at a rate of 15.0% unless an exemption or reduction in rate applies. The withholding tax must be withheld from the gross distribution and paid to the Luxembourg tax authorities. Under certain circumstances, distributions as share capital reductions or share premium reimbursements may not be subject to withholding tax, but there are no assurances that we will be able to make such distributions in the future. See “Additional Information—Taxation—Luxembourg tax considerations—Shareholders.”

20

Risk Factors

The rights of our shareholders, and the responsibilities of VSA as our controlling shareholder, are governed by Luxembourg law and differ in some respects from the rights and responsibilities of shareholders under the laws of other jurisdictions, including the United States and Canada, and shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. corporation.

Our corporate affairs are governed by our articles of association and by the laws governing limited liability companies organized under the laws of Luxembourg, as well as such other applicable local law, rules and regulations. The rights of our shareholders and the responsibilities of VSA as our controlling shareholder and of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the United States or Canada. There may be less publicly available information about us than is regularly published by or about U.S. or Canadian issuers. Also, Luxembourg regulations governing the securities of Luxembourg companies may not be as extensive as those in effect in the United States or Canada, and Luxembourg law and regulations in respect of corporate governance matters may not be as protective of non-controlling shareholders as corporation laws in the United States or Canada. Therefore, shareholders may have more difficulty protecting their interests in connection with actions taken by us, our directors and officers or our principal shareholders than they would as shareholders of a corporation incorporated in the United States or Canada.

Our ability to makepay dividends or other distributions on our commonand repurchase shares is subject to several factors and conditions.

The determination to pay dividends and the payment of dividends or other distributions (including reimbursements of share premium) will be subject to the approval of our boardBoard of directors and/or our shareholders, as applicable, and will depend on a number of factors, including, but not limited to, our cash balance, cash flow, earnings, capital investment plans, expected future cash flows from operations, our strategic plans and cash dividend distributions from our subsidiaries, as well as restrictions imposed by applicable law and contractual restrictions (although as of the date of this annual report there are no contractual restrictions on our ability to pay dividends or other distributions to our shareholders), LME metal prices and other factors our boardBoard of directors may deem relevant at the time. Luxembourg law also imposes certain requirements regarding distributions. For additional information, see “Share ownership and trading—Distributions.”

27
Risk Factors

We are a holding company and have no material assets other than our ownership of shares in our subsidiaries. When we pay a dividend or other distribution on our common shares, in the future, we generally cause our operating subsidiaries, including subsidiaries that are not wholly-owned by Nexa, to make distributions to usthe parent company in an amount sufficient to fund any such dividends or distributions.distributions to Nexa’s shareholders. Although as of December 31, 2021,2023, there are no material contractual restrictions on our subsidiaries’ ability to make distributions, to us, their ability to do so is subject to, among other things, their capacity to generate sufficient earnings and cash flow and may also be affected by statutory accounting and tax rules in Brazil and Peru.

The determination to repurchase shares of our common stock is discretionary. Our ability to repurchase shares will depend on a number of factors, including, but not limited to, metal prices, restrictions imposed by applicable law, contractual restrictions, and other factors our Board of directors may deem relevant at the time. Our decision to repurchase shares could have a negative effect on the Company’s free cash flow and/or the liquidity of our common stock.

It could be difficult for investors to enforce any judgment obtained outside Luxembourg against us or any of our associates.

We are organized under the laws of Luxembourg. Furthermore, certain of our directors and officers reside outside the United States and Canada and most of their assets are located outside the United States and Canada. Most of our assets are located outside the United States or Canada. As a result, it may not be possible for investors to effect service of process upon us or our directors and officers within the United States, Canada, or other jurisdictions outside Luxembourg or to enforce against us or our directors and officers, judgments obtained in the United States, Canada or other jurisdictions outside Luxembourg. Because judgments of United States or Canadian courts for civil liabilities based upon the U.S. federal securities laws or Canadian securities laws may only be enforced in Luxembourg if certain requirements are met, investors may face greater difficulties in protecting their interest in actions against us or our directors and officers than would investors in a corporation incorporated in a state or other jurisdiction of the United States or Canada.

 
2128

Business Overview

I.Information on the Company

Business overview

Overview

We are a leading large-scale, low-cost integrated zinc producer with over 6065 years of experience developing and operating mining and smelting assets in Latin America.

We operate and own fivesix long life polymetallic mines, three located in the Central Andes of Peru, and two located in the state of Minas Gerais in Brazil. In 2022, we expect to complete construction at our sixth underground mine in Brazil the Aripuanã project, which is scheduled to ramp upand one located in the third quarterstate of 2022.Mato Grosso in Brazil.

Our operations are large-scale, modern, mechanized underground and open pit mines. Our mines are proximately located to one another, which creates efficiencies. Two of our mines, Cerro Lindo in Peru and Vazante in Brazil, are among the top 3040 largest zinc-producing mines in the world and, combined with our other mining operations, placed us among the top five producers of mined zinc globally in 2021,2023, according to Wood Mackenzie. In addition to zinc, which accounted for 59.6%54.5% of our mined metal production in 20212023 measured on a zinc equivalent basis, we produce substantial amounts of copper, lead, silver and gold as by-products, which reduce our overall costs to produce mined zinc. At Aripuanã, which is an underground polymetallic project containing zinc, lead and copper, located in the state of Mato Grosso, we estimate annual average production of approximately 70kt of zinc, 24kt of lead, 4kt of copper, 1.8Moz of silver and 14.5koz of gold, considering the current mine life of 11 years.

We also own a zinc smelter in Peru (Cajamarquilla) and two zinc smelters in Brazil (Três Marias and Juiz de Fora), which produce metallic zinc, zinc oxide and several by-products. We were the fifth largest producer of refined zinc globally in 2021,2023, according to Wood Mackenzie. Our smelters are the only units in Latin America (excluding Mexico), resulting in benefits from higher premiums. Cajamarquilla is the only operating zinc smelter in Peru and was the fifth largest globally in 20212023 by production volume, according to Wood Mackenzie. Peru is the second largest producer of mined zinc in the world, assuring long-term supply of zinc concentrates to Cajamarquilla. Given our proximity to concentrate producers (our own mines and third-party producers), we also benefit from freight parity.

In 2020, government authorities2023, we achieved our guidance despite a challenging global macroeconomic environment and Aripuanã, whose production was behind our initial plan. The persistence of high inflation and high interest rates, ongoing global conflicts, including the Russia-Ukraine war and the conflict in the countriesMiddle East, and uncertainties about the performance of key sectors of the Chinese economy, significantly increased commodity price volatility, contributing to a slowdown in which we operate implemented policies in response toglobal growth, and intensifying inflationary pressures throughout the COVID-19 pandemic that negatively affectedyear. Production of our financial position, results of operationsexisting mines were at the high end, or above guidance range, and cash flows. In particular, the state of emergency declared by the Peruvian governmentmetal sales were in the first half of 2020 led to the temporary suspension of our Peruvian operations through May 2020 as restrictions were imposed on non-essential industries, which included the mining sector. While conditions improved in the second half of 2020 and throughout 2021, COVID-19 and related government measures enacted to contain the spreadmiddle of the virus and emerging variants have affected, and are expected to continue to affect, our results of operations. For additional information, see “Risk Factors—Global or regional health considerations, including the outbreak of a pandemic or contagious disease, such as the ongoing COVID-19 pandemic, have had and could continue to have adverse effects on our business, financial condition and results of operations” and “Operating and Financial Review and Prospects—Overview—Key factors affecting our business and results of operations—COVID-19.”

We safely operated ourguidance range, while mining and smelting businesses throughout 2021cash costs were slightly above and in line with our guidance, respectively.

Mining production increased in 2023 as compared to 2022, this increase in the mining segment was mainly explained by better performance in the El Porvenir, Vazante, Morro Agudo and Aripuanã mines largely due to higher treated ore, despite lower production in both segments increasedthe Atacocha and Cerro Lindo mines. Production in the smelting segment decreased from 2020.2022, due to operational instabilities across our smelters as well as a slowdown in domestic demand.

In Peru, althoughJanuary 2023, protest activities by the Machcan community temporarily suspended operations at the Atacocha San Gerardo open pit mine for approximately one week. In June 2023, protest activities by the Machcan community again blocked access to the Atacocha San Gerardo open pit mine, temporarily suspending production for approximately one month. Finally, in February 2024 protests by the Joraoniyoc community temporarily suspended production at the Atacocha San Gerardo open pit mine for approximately three days. During the protests, mining activities were limited to critical operations with a minimal workforce to ensure appropriate maintenance, safety, and security. Even though production was temporarilytemporally suspended in March and September, and at Cerro Lindo in December due to communities’ blockades,during these periods, we were able to operate at high levels of capacity utilization rates throughout the year.

In Brazil, during a regular inspection itMarch 2023, production at the Cerro Lindo mine was identified thatsuspended for approximately two weeks due to unusually heavy rainfall levels and overflowing rivers caused by Cyclone Yaku, which affected the Extremo Norteregion, and other parts of the country. Nonetheless, following the successful underground mine presented above-normal ground displacementsdewatering process, operations resumed at full capacity in April 2023.

In 2023, zinc production increased by 12.4% compared to 2022, mainly due to the main ramp area and, as a preventive measure, production was suspended in mid-March. We were able to partially mitigate the decreaseincrease in production in Extremo Norte by increasing throughput at the Vazante mineAripuanã and reaching ore sorter circuit at maximum capacity to offset the grade drop. Extremo Norte underground mine production was resumed in December 2021 and is currently operating at normal utilization rates.

22

Business Overview

In 2021, ourVazante. Our mining operations produced 319.9333.2 thousand tonnes of zinc contained in concentrates, 29.633.4 thousand tonnes of copper contained in concentrates, 45.665.2 thousand tonnes of lead contained in concentrates, 8,808.310,300.7 thousand ounces of silver and 25.527.6 thousand ounces of gold, for a total of 537.0611.1 thousand tonnes of metal on a zinc equivalent basis.

In March 2021, one of our third-party raw material suppliers shut down its facility. We were able to partially offset this reduction

29
Business Overview

Total production (zinc metal + oxide) in calcine, as well as the supply reduction from Extremo Norte by sourcing raw materials from other suppliers. Metal production in 2021 increased 3.4%2023 decreased 3.2% compared to 2020.2022. Our smelters produced 607.6587.5 thousand tonnes of zinc metal and oxide available for sale in different formats and sizes during 2021,2023, along with by-products, including sulfuric acid, silver concentrate, copper cement and copper sulfate.

Our smelters process mostly zinc concentrate, 50.5%47.9% of which was sourced from our mines during 2021,2023, and 49.5%52.1% purchased from third parties or obtained as secondary raw material.material (excluding oxide). Approximately 100%94.5% of the total volume of the contained zinc in concentrates produced by our mines was processed by our own smelters in 2021,2023, with the remainder and all our copper and lead concentrates sold to third parties. We market our products in Latin America and globally, through our commercial offices in Luxembourg, the United States, Brazil and Peru. We also own energy assets (hydroelectric power plants) in both Brazil and Peru, which provide access to a reliable and competitive power supply.

In 2021, we also made significant progress on the Aripuanã project. In October 2021, we obtained the operating license and overall progress reached 99.3% at the end of December 2021. Nevertheless, the emergence of new variants of COVID-19 and related health protocols, along with heavy levels of rainfall experienced in the region, impacted our productivity (lower-than-anticipated workforce), which added additional pressure on costs and timeline. The Aripuanã ramp-up is now scheduled for 3Q22activities started in July 2022. In January and February 2023, the plant operated at approximately 57% of nameplate capacity. However, in March 2023, we decided to temporarily halt operations at the plant to clear some bottlenecks, related primarily to pumping and piping systems, and to improve the drainage configuration that presented some limitations after the rainy season, which occurred from December 2022 to March 2023. At the beginning of 3Q23, the plant performance was averaging 75% of nameplate capacity. We then observed design limitations in the capacity of the flotation pumping system, identified during the detection of bottlenecks in March 2023, which required resizing and upgrade along with certain plant processing facilities and systems, as well as the clean-up and upgrading of water treatment facilities. As a result, we reduced plant throughput and the total CAPEX wasplant performed at an average of 56% in 3Q23. Despite the reduction, we continue to prioritize metal recovery and concentrate quality and grades, aiming to achieve a stable operation. With this revised from US$575-595 millionplan, we achieved an average of 61% capacity utilization level in 4Q23 and expect to US$625 million.reach nameplate capacity in mid-2024.

In response2023, Nexa continued to demonstrate its commitment to ESG as well as its commitment to promoting safe and inclusive workplaces. For example, in April 2023, we committed to reducing CO2 emissions by using natural gas to replace diesel fuel in transport vehicles at mining sites in Peru. We also obtained authorization from the Regional Superintendence for the Environment of the State of Minas Gerais to use biofuel to replace fossil fuels in zinc oxide furnaces at the Três Marias smelter and expand the use of this biofuel to the global COVID-19 pandemic,remaining furnaces at this site over the years. In August 2023, in 2020line with our ESG commitments targeting net-zero greenhouse gas emissions by 2050, we createdimplemented the ON GRID solar system at our Cajamarquilla smelter, providing electric power from solar energy, resulting in a Crisis Committee,reduced footprint carbon emissions and promoting clean energy production. Further, in October 2023, Nexa announced the successful closing of a US$320 million sustainability-linked revolving credit facility, which includes all executive officers, certainreplaced Nexa’s 2019 US$300 million revolving credit facility that was set to mature in October 2024. This new revolving credit facility has a term of five years, remains undrawn and amounts drawn are subject to an initial interest rate of 1.60% plus Term SOFR. The applicable margin is subject to compliance with carbon reduction key general managers and personnelperformance indicators, reflecting the Company’s unwavering commitment to carry out preventive safety and health procedures in our operations and offices. The Crisis Committee remains in place and in 2021 met regularly to discuss the proper measures to be implemented and the ongoing impact of the COVID-19 pandemic in our operations and projects. Our COVID-19 associated costs during 2021 amounted to US$18 million. For more information, see “Operating and Financial Review and Prospects—Overview—Executive Summary—COVID-19” below.

reducing its carbon footprint.

History

We commenced operating in 1956 under the name “Companhia Mineira de Metais”, in the state of Minas Gerais, Brazil. After a series of restructurings in the subsequent fifty-eight years, in 2014, a new corporate governance model was implemented by our controlling shareholder VSA in the corporate group. VSA took on the roles of providing guidance and portfolio management, while its subsidiaries (including us) gained autonomy. The main consequence of this new corporate model was that the new governance structure demanded a higher level of empowerment and accountability of senior management, and the establishment of a boardBoard of directors at each company. In addition, in connection with the implementation of the new corporate governance model, VSA’s equity participations in Nexa CJM (formerly Votorantim Metais – Cajamarquilla S.A.) and Nexa Brazil (formerly Votorantim Metais Zinco S.A.) were transferred to Nexa Resources on June 18, 2014 and July 1, 2014, respectively.

In 2016, VSA reorganized the zinc, copper, aluminum and nickel businesses previously managed under the name Votorantim Metais S.A. The aluminum and nickel businesses of Votorantim Metais S.A. were consolidated under Companhia Brasileira de Alumínio, or CBA. The zinc and copper production units in Brazil and Peru were transferred to Nexa Resources. Following this reorganization, Nexa Resources became the holding entity solely responsible for the zinc and copper business and CBA became responsible for the aluminum and nickel businesses.

In October 2017, we completed our initial public offering and listed our common shares on the New York Stock Exchange (“NYSE”) and on the Toronto Stock Exchange (“TSX”) under the ticker symbol NEXA. In connection with becoming a public company, VM Holding S.A. changed its corporate name to Nexa Resources S.A. and our subsidiaries Votorantim Metais—Cajamarquilla S.A., Votorantim Metais Zinco S.A. and Compañía Minera Milpo S.A.A. changed their corporate names to Nexa CJM, Nexa Brazil and Nexa Peru, respectively.

 
2330

Business Overview

During the first halfFollowing receipt of 2021, Nexa acquired 30,550,512approval for a voluntary delisting of our common shares from the TSX in Canada, the last trading of Tinka Resources Limited and owns approximately 9% of the issued and outstandingour common shares ofon the company. Tinka Resources is progressing towards development ofTSX took place on November 30, 2021. Nexa received approval for the Ayawilca project (100% owned), one of the largest zinc projects in Peru with excellent resource expansion potential.

On November 9, 2021,delisting following an internal assessment of the relative advantages and disadvantages associated with our listing on the TSX in Canada, we announced Nexa’s intention to voluntarily delist its common shares from the TSX. In deciding to delist, we considered, among other things, the regulatory reporting burdens associated with the listing the minimal trading volumes on the TSX and the availability of an alternative market for theour common shares on the NYSE.TSX. Nexa subsequently announced that it received approval for a voluntary delisting from the TSX and the common shares were delisted from the TSX as of the close of trading on November 30, 2021. Nexa will remaincontinues to be a reporting issuer in each of the provinces and territories of Canada following the delisting and continuecontinues to file in Canada and disseminate to Canadian resident holders of the common shares its continuous and periodic disclosure documents until such time as it ceases to be obligated to do so. Furthermore, in 2022, Nexa intends to apply to cease to be a reporting issuer in Canada under Canadian securities laws subjectupon being in a position to the satisfaction ofsatisfy or obtain relief from applicable regulatory requirements.

Corporate structure and principal subsidiaries

Nexa CJM

Currently, Nexa Resources is the beneficial owner of 99.92%99.916% of the outstanding shares of Nexa CJM, and the remaining outstanding shares are owned by Nexa Recursos Minerais S.A. with 0.08%0.081% and by other minority shareholders holding 0.003% in aggregate.

Nexa Peru

Currently, Nexa Peru’s share capital consists of 1,257,754,353 common shares. In addition to common shares, Nexa Peru has issued investment shares that represent a participation in its net worth (patrimonio). Although the investment shares do not represent a participation in the capital of Nexa nor grant any voting rights, they grant their holders the right, among others, to participate in any dividend distributions and liquidation proceeds, pro rata to the percentage they represent in the total net worth of Nexa Peru; as well as to participate in any capital increases (in order to maintain the participation they represent in the total net worth) and the right to have their shares redeemed in certain circumstances. As of December 31, 2021,2023, approximately 67.02% of the investment shares are free float and 32.98% are treasury shares.

Both the common shares and the investment shares of Nexa Peru are registered with the Peruvian Public Registry of Securities (Registro Público del Mercado de Valores) and listed on the Lima Stock Exchange. As a result, Nexa Peru is required to comply with certain disclosure obligations such as filing quarterly and annual financial statements, reporting on material events (hechos de importancia) and disclosing information regarding the economic group to which it belongs.

The following table sets forth information concerning the ownership of the capital stock of Nexa Peru, excluding the investment shares.

Shareholder

Number

Share Capital (%)

Nexa CJM1,048,621,89683.37%
Nexa Resources2,277,6010.18%
Public float

206,854,856

16.45%

Total

1,257,754,353

100.0%

 

24

Business Overview

Nexa Brazil

On May 1, 2023, Nexa Brazil, which is 100% owned by Nexa Resources, holds directly and indirectly 100% ofmerged its wholly-owned subsidiary Mineração Dardanelos Ltda., which owns 100% of the Aripuanã project.Mine, into itself.

 

31
Business Overview

Producing mines and smelters

Our mines are:

·Cerro Lindo. Our Cerro Lindo mine is an underground mine located in Peru wholly-owned by Nexa Peru.Peru, which is 83.48% directly and indirectly owned by Nexa Resources. Operations began in 2007 and, in 2021,2023, the Cerro Lindo mine produced approximately 102.378.2 thousand tonnes of zinc contained in concentrates, 29.128.6 thousand tonnes of copper contained in concentrates, 12.813.0 thousand tonnes of lead contained in concentrates, 3,813.73,541.0 thousand ounces of silver contained in concentrates and 4.83.4 thousand ounces of gold contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity toof 21.0 thousand tonnes of ore per day.
·Vazante. Our Vazante mine is an underground and open pit mine located in Brazil wholly-owned by Nexa Brazil.Brazil, which is 100% owned by Nexa Resources. Operations began in 1969 and, in 2021,2023, the Vazante mine produced approximately 140.5145.7 thousand tonnes of zinc contained in concentrates, 1.61.4 thousand tonnes of lead contained in concentrates and 500.5575.6 thousand ounces of silver contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity of 4.65.0 thousand tonnes of ore per day.
·El Porvenir. Our El Porvenir mine is an underground mine located in Peru (part of the Cerro Pasco Complex) wholly-owned by Nexa Resources El Porvenir S.A.C., which is 83.48% directly and indirectly owned by Nexa Resources. Operations began in 1949 and, in 2021,2023, the El Porvenir mine produced approximately 51.455.8 thousand tonnes of zinc contained in concentrates, 0.50.4 thousand tonnes of copper contained in concentrates, 17.724.9 thousand tonnes of lead contained in concentrates, 3,467.24,270.5 thousand ounces of silver contained in concentrates and 8.7 thousand ounces of gold contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity of 6.5 thousand tonnes of ore per day.
·Atacocha. Our Atacocha mine is an underground and open pit mine located in Peru (part of the Cerro Pasco Complex) wholly-owned by Nexa Resources Atacocha S.A.A. (formerly Compañía Minera Atacocha)., which is 75.96% directly and indirectly owned by Nexa Resources. Operations began in 1938 and, in 2021,2023, the Atacocha mine produced approximately 8.58.2 thousand tonnes of zinc contained in concentrates, 8.711.1 thousand tonnes of lead contained in concentrates, 1,026.81,399.7 thousand ounces of silver contained in concentrates and 11.97.6 thousand ounces of gold contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity of 4.34.4 thousand tonnes of ore per day. In 2020, the mine was placed under a mandatory temporary suspension period in response to COVID-19. Due to the effects of COVID-19, and the uncertain macroeconomic scenario and our efforts to reduce costs and improve operational efficiency, we decided not to not resume the higher-cost Atacocha underground mine after the mandatory temporary suspension of our operations in Peru and we placed it under care and maintenance, which it remains to date.
·Aripuanã. Our Aripuanã mine is an underground mine located in Brazil wholly-owned by Nexa Brazil, which is 100% owned by Nexa Resources. Ramp-up activities at the Aripuanã mine began in July 2022, and the mine is currently in the ramp-up phase as of the date of this annual report. In 2023, the Aripuanã mine produced approximately 22.1 thousand tonnes of zinc contained in concentrates, 4.4 thousand tonnes of copper contained in concentrates, 6.3 thousand tonnes of lead contained in concentrates, 513.9 thousand ounces of silver contained in concentrates and 8.0 thousand ounces of gold contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity of 6.3 thousand tonnes of ore per day.
·Morro Agudo. Our Morro Agudo mine is an underground and open pit mine located in Brazil wholly-owned by Nexa Brazil.Brazil, which is 100% owned by Nexa Resources. Operations began in 1988 and, in 2021,2023, the Morro Agudo mine produced approximately 17.323.2 thousand tonnes of zinc contained in concentrates and 4.78.3 thousand tonnes of lead contained in concentrates. The ore mill feed material is treated at a concentrate plant that has a processing capacity of 3.4 thousand tonnes per day. On March 19, 2024, Nexa announced the suspension of its mining operations in the Morro Agudo Complex effective May 1, 2024 until further notice. The suspension is part of Nexa’s portfolio optimization process to improve free cash flow in line with the Company’s disciplined capital allocation framework, along with its long-term strategy to maximize value for the Company and its shareholders.
32
Business Overview

Our smelters are:

·Cajamarquilla. Our Cajamarquilla smelter, which is wholly-owned by Nexa CJM, which is 99.997% directly and indirectly owned by Nexa Resources, is located in Peru and began operating in 1981. It is currently the largest zinc smelter in Latin America and was the fifth largest zinc smelter in the world in 2021,2023, according to Wood Mackenzie. Cajamarquilla uses Roast-Leach-Electrowinning technology. With a nominal production capacity of 344.4 thousand tonnes of contained zinc per year, Cajamarquilla produced 328.1323.1 thousand tonnes of zinc metal available for sales in 20212023 and 305.4332.8 thousand tonnes in 2020.2022. In 2021, 36.9%2023, 27.2% of the zinc contained in raw material used by Cajamarquilla was sourced from our mines in Peru and 63.1%72.8% was purchased from third parties or obtained from secondary feed materials.
25

Business Overview

·Três Marias. Our Três Marias smelter, which is wholly-owned by Nexa Brazil, which is 100% owned by Nexa Resources, is located in Brazil and began operating in 1969. Três Marias processes zinc silicate concentrate from our Vazante mine and zinc sulfide concentrate from our Morro Agudo mineand Aripuanã mines and uses Roast-Leach-Electrowinning technology. With a nominal production capacity of 192.2 thousand tonnes of refined metal per year, Três Marias produced 198.4182.3 thousand tonnes of zinc metal and oxide available for sale in 20212023 and 202.8189.9 thousand tonnes in 2020.2022. In 2021, 82.8%2023, 87.3% of the zinc contained in raw materials used by Três Marias was sourced from our mining operations in Brazil and Peru and 17.2%12.7% was purchased from third parties or obtained from secondary feed materials.
·Juiz de Fora. Our Juiz de Fora smelter, which is wholly-owned by Nexa Brazil, which is 100% owned by Nexa Resources, is located in Brazil and began operating in 1980. This smelter uses Roast-Leach-Electrowinning and Waelz Furnace technologies. With a nominal production capacity of 96.9 thousand tonnes per year, Juiz de Fora produced 81.182.1 thousand tonnes of zinc metal available for sale in 20212023 and 79.484.2 thousand tonnes in 2020.2022. In 2021, 32.8% of2023, 41.7% the zinc raw material used byin Juiz de Fora was zinc concentrate sourced from our mining operations, 47.9%41.8% was purchased from third parties and 19.3%16.5% was obtained from secondary feed materials from electric arc furnace (“EAF”) and brass oxide.

Growth Projects

In addition to Nexa’s operating mines and smelters, a component of our business focuses on growth and exploration, which are activities associated with ascertaining the existence, location, extent or quality of a mineral deposit. Our growth and exploration activities encompass brownfield and greenfield projects. Brownfield projects are exploration or development projects near or within our existing operations, which can share infrastructure and management of our existing operations. Greenfield projects are exploration or development projects that are located outside the area of influence of our existing mine operations and/or infrastructure, which will be independently developed and managed from our existing operations. Most of our brownfield and greenfield projects are in the pre-feasibility or feasibility stages.

The evolution of a greenfield project until it reaches full/normal capacity can take decades. The steps that a project typically follows to reach full/normal capacity are: exploration (for mining projects), pre-feasibility, feasibility study, construction/execution, commissioning, ramp-up, and full/normal capacity. Aripuanã is the only greenfield project that Nexa has built in recent decades and was in the ramp-up stage throughout the entirety of 2023. We expect to reach nameplate capacity in mid-2024.

33
Business Overview

In addition to our operating mines and smelters, we have interests in fivethree greenfield mining projects in Peru (Shalipayco, Magistral,(Magistral, Hilarión Pukaqaqa and Florida Canyon Zinc) and twoone in Namibia, as well as a number of prospects in Peru, Brazil (Aripuanã, which is currently nearing completion with production expected to begin in 3Q22 and is considered a development stage property under subpart 1300 of Regulation S-K (“S-K 1300”), and Caçapava do Sul).Namibia. For more information about thesethe projects, please see “Information on the Company—Mining operations—Growth projects.” Nexa also owns 18.2% of the issued and outstanding shares of Tinka Resources Limited, which in turn owns 100% of the Ayawilca zinc-silver development project located 40 kilometers northwest of Cerro de Pasco in Central Peru.

 
2634

Mining Operations

Mining operations

Map 1. Mines, Projects and Prospects in Peru

Mapa

Descrição gerada automaticamente


Source:
Nexa Resources.

 
2735

Mining Operations

Map 2. Mines, Projects and Prospects in Brazil

Source: Nexa Resources.

The following table summarizes our concentrate production, metal contained in concentrate production in each metal and zinc equivalent production in each of our operating mines.

To calculate the zinc equivalent production for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, we convert the relevant metal contained in concentrate production used in the zinc equivalent grade based on the average benchmark prices for 2021,2023, namely, US$3,007.42,649.04 per tonne (US$1.361.20 per pound) for zinc, US$9,317.58,483.40 per tonne (US$4.233.85 per pound) for copper, US$2,206.22,137.18 per tonne (US$1.000.97 per pound) for lead, US$25.123.39 per ounce for silver and US$1,798.61,942.74 per ounce for gold.

 
2836

Mining Operations

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Treated Ore (in tonnes)12,330,46910,853,74013,001,53513,846,53012,343,01812,330,469
Mining Production—Metal Contained in Concentrate  
Zinc (in tonnes)319,950313,074361,061333,154296,403319,950
Copper (in tonnes)29,60728,15438,18433,38533,21929,607
Lead (in tonnes)45,56538,00951,34965,19457,44845,565
Silver (in oz) (1)8,808,2916,825,8828,900,99510,300,6729,974,4628,808,291
Gold (in oz)25,50116,17924,95527,62727,21625,501
Mining Production—Zinc Equivalent Production  
Cerro Lindo (in tonnes of zinc equivalent)236,629217,090281,870214,068241,438243,069
Vazante (in tonnes of zinc equivalent)151,911136,643146,222
El Porvenir (in tonnes of zinc equivalent)100,12166,744103,755121,164114,921104,283
Atacocha (in tonnes of zinc equivalent)30,63830,75050,16835,06838,76733,382
Vazante (in tonnes of zinc equivalent)145,869152,173142,571
Aripuanã (in tonnes of zinc equivalent)51,8151,676-
Morro Agudo (in tonnes of zinc equivalent)23,78031,20930,43537,04931,21830,110
Total537,038497,965608,799611,075564,663557,066

 

(1)Silver volumes include silver in lead concentrate produced in Vazante.

The following table summarizes the average ore grade for the periods indicated.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Average Ore Grade   
Zinc (%)2.983.283.162.892.782.98
Copper (%)0.310.330.370.340.340.31
Lead (%)0.510.490.520.660.620.51
Silver (in ounces per tonne)0.950.900.941.021.070.95
Gold (in ounces per tonne)0.0050.0040.0050.0050.005

 

Each mine consists of one mine, one treatment plant and related infrastructure. We summarize below information as of December 31, 20212023 for each of our five mines. For further information about our greenfield projects,six mines, including the Aripuanã project, for which mechanical construction is nearly completed and production is expected to commence in the third quarter of 2022, see “Greenfield projects—Aripuanã. For an overview of our reserves and resources, see “Mineral Reserves and Resources—Disclosure of Mineral Reserves and Resources”, “Mineral Reserves and Resources—Mineral Reserves” and “Mineral Reserves and Resources—Mineral Resources.”

Cerro Lindo

Location and means of access

The Cerro Lindo mine is an underground, polymetallic mine located in the Chavín District, Chincha Province, Peru, approximately 268 km southeast of Lima and 60 km from the coast. Access from Lima is available via the paved Pan American Highway south to Chincha, and then via an unpaved road up the ToparaTopará River valley to the mine site. Internal roadways connect the various mine site components. The approximate coordinates of the mine are 392,780m East and 8,554,165m North, using the Universal Transverse Mercator WGS84 datum and the projectmine site is located at an average elevation of 2,000 meters above sea level.

History

Several companies have held interests in the Cerro Lindo mine area, including BTX, Phelps Dodge, and Nexa Peru. Exploration work completed to date includes geological mapping, rock chip and soil sampling, trenching, ground geophysical surveys, and exploration, definition and underground operational core drilling. Feasibility studies were completed in 2002 and 2005, with mine construction commencing in 2006. Formal production started in 2007, and the mine has been operational since that date.

 
2937

Mining Operations

Title, leases and options

All mineral concessions are held in the name of Nexa Peru. The tenure consists of 68 mining concessions totaling approximately 43,750.243,827.8 hectares and one beneficiation concession, covering an area of 518.8 hectares.

Nexa Peru currently holds surface rights or easements for the following infrastructure at Cerro Lindo: mine site, access roads, power transmission line and water pipeline for the mine, old and new power transmission lines to Cerro Lindo, desalination plant, water process plant, and the water pipeline from the desalination plant to the mine site. There is sufficient suitable land available within the mineral tenure held by Nexa Peru for tailings disposal, mine waste disposal and installations such as the process plant and related mine infrastructure.

Cerro Lindo is currently subject to payment of royalties. The tax stability agreement expired on December 31, 2021.2021, and the historical applicability thereof is subject to certain disputes with tax authorities. For more information, see “Additional Information—Legal Proceedings—Other legal proceedings.” As of January 2022, Nexa Peru is required to pay royalties and special mining tax to the Peruvian government. For more information, see “Information on the Company—Regulatory matters—Peruvian regulatory framework.” As of December 31, 2021,2023, Nexa Peru had a total of six water licenses, one for use of seawater, and the remaining five for ground water extraction.

Cerro Lindo holds a number of permits in support of the current operations. The permits are Directorial Resolutions issued by the Peruvian authorities upon approval of mining environmental impact assessments filed by the mining companies. Nexa Peru maintains an up-to-date record of the legal permits obtained to date.

Mineralization

Cerro Lindo is classified as a volcanogenic massive sulfide (“VMS”) deposit. The Cerro Lindo deposit is 1,500 meters long, 1,000 meters wide, and has a current vertical development of 470 meters below the surface. Mineralization consists of at least 10 discrete mineralized zones. The Cerro Lindo deposit comprises lens-shaped massive bodies, composed of pyrite (50.0% to 90.0%), yellow sphalerite, brown sphalerite, chalcopyrite, and minor galena. Significant barite is present mainly in the upper portions of the deposit. A secondary-enrichment zone, composed of chalcocite and covellite, has formed near the surface where massive sulfides have oxidized. Silver-rich powdery barite remains at the surface as a relic of sulfide oxidation and leaching.

In 2023, mineral exploration in Cerro Lindo focused on extensions of known ore bodies to the southeast of Cerro Lindo and on the Pucasalla target, as well as starting drilling tests at the Patahuasi Millay target, located 500 meters to the northwest of Cerro Lindo mine. Underground activities in 2023 included drilling at OB-8 and OB-9 to extend the known mineralized bodies near the mine, at geophysical anomaly zones in Patahuasi Millay, as well as Pucasalla to find new mineralized zones through surface drilling.

During 2021,2023, we completed approximately 90.027.5 km of diamond drilling in 29 drill holes, divided between surface and underground exploration and infill drilling.drillings. By the end of 2021, we drilled in our exploration program, 19.0 km in 262023, the drill holes from surface in Pucasalla target 4.2 km northwest from Cerro Lindo from March 2021, confirmingand its extensions confirmed evidence of sulfide mineralization with lens of sphalerite, galena and chalcopyrite in a dacite host rock with gangue of barite. In underground, we drilled 14.2 km in 33 drill holes, confirmingthe focus was to confirm the continuity of the east extension of themineralization in orebody OB-9OB-8 and the southeast extension of the orebody OB-5B. Pucasalla superficial bodies are located north of Topará River and near mine ore bodies are located to the south of the Topará River.OB-9.

During 2022,2024, we expect to complete a total of 38.723.1 km of exploratory drilling. Our objective in surface isgoals are to continue the exploratory drilling program to the northwest and east extension of Pucasalla, construction ofidentify new mineralized zones supported by new access and platforms to testconstruction in Patahuasi Millay, Pucasalla Sur and Festejo targets. In underground exploration we will drill towards the OB-9, OB-8, OB-6 extensions, and Festejo, Festejo Westcontinue extending the known orebodies such as OB-8 and Pucasalla Sur targets. OB-9.

In 2021,2023, we spent US$7.76.8 million in exploration expenses for Cerro Lindo, primarily associated with diamond drilling, geochemistry analysis and geological research works. We have budgeted US$8.97.8 million for the project during 20222024 to maintenance office,continue our exploration program, as data interpretations, geochemistry, geophysical and exploratory drilling campaign.

38
Mining Operations

Operations and infrastructure

The Cerro Lindo mine is completelysubstantially mechanized, using rubber-tired equipment for all development and production operations. There is no shaft; all access is through 15 portals servicing adits, drifts and declines. Ore is extracted from nine separate ore bodies and delivered to the process plant via a series of conveyors. All ore is commingled during transport to the concentrator stockpile; ore from different ore bodies is not segregated.

30

Mining Operations

We have completed construction of all key infrastructure required for mining and processing operations, including the underground mine, access roads, power lines, water pipelines, the desalination plant, offices and warehouses, accommodations, the process plant/concentrator, conveyor systems, waste rock facilities, temporary ore stockpiles, the paste-fill plant and the dry-stack tailings storage facilities. A new freshwater pipeline from the desalination plant on the coast to the mine was completed in February 2020 and is operational. The national grid supplies electrical power for the mine site.

In 2021,2023, we spent US$36.637.7 million on sustaining capital expenditures for Cerro Lindo, primarily associated with mine development, equipment replacement and other major infrastructure projects.

In March 2023, production at the Cerro Lindo mine was suspended due to heavy rainfall levels and overflowing rivers caused by cyclone Yaku, resulting in the partial flooding of some lower levels of the mine. In April 2023, Cerro Lindo resumed operations at full capacity. During the temporary suspension, Nexa remained focused on the security and reparation of the mine and took all measures to ensure the safety and well-being of its employees, contractors and host communities. The temporary suspension of the mine resulted in lower production in 2023 compared to 2022.

Production

The Cerro Lindo mine is in the production stage and has a treatment plant capacity of 21,000 tonnes of ore per day. The Cerro Lindo unit has an authorized capacity of 20,000 tonnes of ore per day, but Peruvian law allows units to operate at a capacity 5.0% higher than their authorized capacity.

In December 2021, the road access to the mine was disrupted by a local community group’s protest activity and production was suspended, consequently reducing ore throughput for four days.

The table below summarizes the Cerro Lindo mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated. Production in 20212023 was significantly higherlower than 20202022 primarily as a result of a two-week production suspension in March due to higher ore treated, since in 2020 operations were temporarily suspended due to the impact of mandatory government measures related to COVID-19.unusual heavy rainfall levels and lower grades.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Treatment ore (in tonnes)6,369,0445,482,2116,799,7475,991,1566,236,0586,369,044
Average ore grade  
Zinc (%)1.791.932.051.511.551.79
Copper (%)0.540.590.640.570.610.54
Lead (%)0.280.290.250.310.330.28
Silver (ounces per tonne)0.790.780.690.800.890.79
Gold (ounces per tonne)0.0020.0030.0020.002
Metal contained in concentrates production  
Zinc (in tonnes)102,27595,426126,31078,20984,392102,275
Copper (in tonnes)29,10227,82037,67828,58832,75829,102
Lead (in tonnes)12,84911,59012,25613,04215,64112,849
Silver (in oz)3,813,7312,938,9853,250,4793,540,9754,129,7363,813,731
Gold (in oz)4,8294,0204,4583,4184,1464,829
Cash Cost, net of by-product credits (in US$/t)(525.0)(8.7)356.0(138.6)(561.4)(530.1)
Cash Cost, net of by-product credits (in US$/lb)(0.24)(0.00)0.16(0.06)(0.25)(0.24)
Capital Expenditures (in millions of US$)40.627.750.5
Non-Expansion Capital Expenditures (in millions of US$)43.342.540.5

 

Mineral Reserves and Mineral Resources

The Cerro Lindo Mineral Reserves estimates are based on the definitions for Mineral Reserves in SK-1300 and the tables below are based on costs and modifying factors from the Cerro Lindo mine.

 
3139

Mining Operations

Cerro Lindo – Year End Mineral Reserves as of December 31, 20212023 (on an 83.48% Nexa attributable ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Proven20.291.610.6521.80.21-327.4132.114,21742.3-
Probable16.481.210.5922.90.20-198.797.012,12032.6-
Subtotal36.761.430.6222.30.20-526.1229.126,33774.9-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven21.831.680.6121.20.20-367.1132.614,86344.1-
Probable12.521.150.4525.20.24-144.356.810,15429.9-
Total34.361.490.5522.60.22-511.4189.425,01774.1-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table are reported on 83.48% Nexa attributable ownership.
3.3.The Qualified Person for the Mineral Reserves estimate is Cristovao Teofilo dos Santos, B.Eng., FAusIMM, a Nexa employee.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.

 

Cerro Lindo – Year End Mineral Reserves as of December 31, 20212023 (on a 100% ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Proven24.301.610.6521.80.21-392.2158.317,03050.6-
Probable19.741.210.5922.90.20-238.0116.214,51939.1-
Subtotal44.041.430.6222.30.20-630.3274.431,54989.7-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven26.151.680.6121.20.20-439.7158.817,80352.8-
Probable15.001.150.4525.20.24-172.968.112,16335.9-
Total41.151.490.5522.60.22-612.6226.929,96688.7-

 

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100% of the Mineral Reserves estimates for the property. Nexa owns 83.48%
3.3.The Qualified Person for the Mineral Reserves estimate is Cristovao Teofilo dos Santos, B.Eng., FAusIMM, a Nexa employee.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.

 

The Cerro Lindo Mineral Reserves are estimated at an NSR cut-off value of US$38.43/40.86/t processed. A number of incremental material (with values between US$29.13/32.99/t and US$38.84/t40.86/t) was included in estimate.included. A minimum mining width of 5.0m5.0 m was used, inclusive of extraction factors and dilution are applied based on stope type and location. The net smelter return (“NSR”) cut-off value is determined using the mineral reserve metal prices, metal recoveries, concentrate transport, treatment and refining costs, as well as mine operating costs. Metal prices used for Mineral Reserves are based on consensus, long term forecasts from banks, financial institutions and other sources. Mineral Reserves estimates are estimated usingbased on average long-term metal prices ofof: zinc: US$2,722.20/2,799.04/t (US$1.23/1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$1,997.21/2,000.29/t (US$0.91/lb); copper: Cu: US$7,288.26/t (US$3.31/lb) and silver: US$19.68/21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head gradegrades are 88.1%88.36% for Zn, 68.9%85.23% for Cu, 66.53% for Pb, are 86.6% for Cu, and 68.8%68.78% for Ag. The current life of mine (“LOM”) plan continues to 2029.

32

Mining Operations

2030.

Cerro Lindo – Net Difference in Mineral Reserves between December 31, 20212023 versus December 31, 20202022 (on an 83.48% Nexa attributable ownership basis)

 

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Proven(3.26)(74.6)(10.0)(1,576)(10.7)-
Probable(1.74)1.2(16.7)(521)0.5-
Subtotal(5.00)(73.4)(26.7)(2,097)(10.2)-

Notes:

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven(0.21)(0.9)(18.8)(4.9)(9.3)(6.5)(33)(0.2)(2.6)(5.7)--
Probable(0.03)(0.2)(13.2)(8.4)(5.5)(8.8)160.20.72.5--
Total(0.23)(0.7)(32.0)(5.9)(14.8)(7.2)(18)(0.1)(1.9)(2.5)--
1.
40
The total Mineral Reserves dated from December 31, 2020 considered an ownership basis of 80.16%.Mining Operations
2.The total Mineral Reserves dated from December 31, 2021 considered an ownership basis of 83.48%.

 

Cerro Lindo – Net Difference in Mineral Reserves between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

 

ClassTonnage(1)Contained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Proven(5.07)(109.2)(19.0)(2,672)(15.5)-
Probable(2.99)(8.4)(25.7)(1,251)(1.0)-
Subtotal(8.06)(117.6)(44.7)(3,923)(16.4)-

Notes:

1.The total Mineral Reserves data presented in this table are calculated on 100% basis. Nexa owns 83.48%.
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven(0.25)(0.9)(22.5)(4.9)(11.1)(6.5)(40)(0.2)(3.2)(5.7)--
Probable(0.03)(0.2)(15.8)(8.4)(6.6)(8.8)190.20.92.5--
Total(0.28)(0.7)(38.3)(5.9)(17.7)(7.2)(21)(0.1)(2.3)(2.5)--

 

In comparison to 2020,2022, Cerro Lindo’s Mineral Reserves haveslightly decreased by 0.7% in mass to total 41.2 Mt from 41.4Mt and decreased by 5.9% in zinc content (kt), mainly due to a 5.1% decrease in Mineral Reserves average head grade, as a result of the depletion in higher grade areas, lower grades in areas upgraded from mining, increase in NSRinfill drilling and a lower cut-off values and geotechnical issues related to deteriorating ground conditions.

grade. Mineral Reserve depletion during 2023 represented 6.0Mt containing 90.3kt of zinc.

Cerro Lindo – Year End Mineral Resources as of December 31, 20212023 (on an 83.48% Nexa attributable ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Measured3.241.930.6121.60.23-62.519.82,2497.4-
Indicated2.971.040.4828.10.26-30.914.32,6857.8-
Subtotal6.211.500.5524.70.24-93.434.14,93415.2-
Inferred6.871.400.2939.20.46-96.219.98,65931.6-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured3.671.930.6523.10.24-70.923.92,7288.8-
Indicated2.751.060.4724.40.22-29.212.92,1616.1-
Total6.431.560.5723.70.23-100.136.84,88914.9-
Inferred7.751.540.2532.60.42-119.319.48,11932.6-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources Tonnes and Contained Metal presented in this table are reported on 83.48% Nexa attributable ownership.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee.mill feed materials.

33

Mining Operations

 

Cerro Lindo – Year End Mineral Resources as of December 31, 20212023 (on a 100% Nexa ownership basis) (1)

 

OwnershipClassTonnageGradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Measured3.881.930.6121.60.23-74.923.72,6948.9-
Indicated3.561.040.4828.10.26-37.017.13,2169.3-
Subtotal7.441.500.5524.70.24-111.940.85,91018.2-
Inferred8.231.400.2939.20.46-115.223.910,37237.9-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured4.401.930.6523.10.24-84.928.63,26810.6-
Indicated3.301.060.4724.40.22-35.015.52,5897.3-
Total7.701.560.5723.70.23-119.944.15,85717.9-
Inferred9.281.540.2532.60.42-142.923.29,72639.0-
41
Mining Operations

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 83.48%.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee.mill feed materials.

 

The Cerro Lindo Mineral Resources estimates in the table above were completed using Datamine Studio RM (“Datamine”) and Seequent’s Leapfrog Geo (“Leapfrog”) software. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, underground mapping and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to 2.5 m lengths. Wireframes were filled with blocks sub-celled at wireframe boundaries. Blocks were interpolated with grade using the ordinary krigingOrdinary Krig (“OK”) and inverse distance cubedInverse Distance to the cube (“ID3”ID3) interpolation algorithms. Block estimates were validated using industry standard validation techniques. Classification of blocks used distance-based and other criteria. The Cerro Lindo Mineral Resources estimates were reported using all the material within resource shapes generated in Deswik Stope Optimizer (“DSO”) software. The estimate satisfied the minimum mining width of 4.0 m for resource shapes and used NSR cut-off value of US$38.84/40.86/t. NSR cut-off values for Cerro Lindo’s Mineral Resources estimateestimates are based on an average long-term zinc price ofmetal prices of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), a lead price of; copper: US$2,296.79/8,820.05/t (US$4.00/lb); lead: US$2,300.33/t (US$1.04/lb), a copper price of; and silver: US$8,381.50/t (US$3.80/lb) and a silver price of US$22.63/24.35/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head gradegrades are 88.1%88.36% for Zn, 68.9%85.23% for Cu, 66.53% for Pb, are 86.6% for Cu, and 68.8%68.78% for Ag.

Cerro Lindo – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on an 83.48% Nexa attributable ownership basis)

 

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Measured(0.29)(7.9)(3.8)250.3-
Indicated(0.56)(7.0)1.84600.8-
Subtotal2.68(14.9)(1.9)4861.1-
Inferred3.347.1(3.4)1,6477.1-

Notes:

1.The total Mineral Reserves dated from December 31, 2020 considered an ownership basis of 80.16%.
2.The total Mineral Reserves dated from December 31, 2021 considered an ownership basis of 83.48%.

34

Mining Operations

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(0.82)(18.2)(11.7)(14.2)(3.9)(14.1)(477)(14.9)(1.5)(14.1)--
Indicated0.062.4(1.7)(5.4)(0.3)(2.0)(53)(2.4)(0.4)(6.2)--
Total(0.75)(10.5)(13.4)(11.8)(4.2)(10.2)(530)(9.8)(1.9)(11.1)--
Inferred0.669.32.32.02.413.9(338)(4.0)0.72.1--

 

Cerro Lindo – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

 

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Measured(0.52)(12.9)(5.7)(80)0.0-
Indicated0.10(10.3)1.64400.5-
Subtotal(0.42)(23.2)(4.1)3600.6-
Inferred(0.48)4.1(5.2)1,6247.3-

Notes:

1.Mineral Resources data presented in this table are calculated on 100% basis. Nexa owns 83.48%.
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(0.98)(18.2)(14.1)(14.2)(4.8)(14.4)(572)(14.9)(1.8)(14.5)--
Indicated0.082.5(2.0)(5.4)(0.3)(1.9)(61)(2.3)(0.4)(5.2)--
Total(0.90)(10.5)(16.1)(11.8)(5.1)(10.4)(633)(9.8)(2.2)(10.9)--
Inferred0.799.32.82.02.813.7(401)(4.0)0.82.1--

 

In comparison to 2020,2022, Cerro Lindo’s Measured and Indicated Mineral Resources have slightly decreased by 10.5% in mass and by 11.8% in zinc content (kt), mainly due to changesthe conversion to Mineral Reserves. In comparison to 2022, Cerro Lindo’s Inferred Mineral Resources increased by 9.3% in mining constrainsmass and stope optimization.by 2.0% in zinc content (kt), due to infill and brownfield drilling.

42
Mining Operations

For additional information, see the Technical Report Summary on Cerro Lindo, filed as Exhibit 15.1 to Nexa’s annual report on Form 20-F/A for the year-ended December 31, 2020, as filed on November 4, 2021.

Vazante

Location and means of access

The Vazante mine is an underground and open pit, polymetallic mine located about 8.5 km from the municipality of Vazante, in the state of Minas Gerais, Brazil. The approximate coordinates of the mine are 17 57’ 33” S and a longitude of approximately 46° 49’ 42” W, within Zone 23S of the Universal Transverse Mercator coordinate system (Corrego Alegre Datum) at approximately 306,000m E and 8,016,000m N and the projectmine area has elevations ranging from 690 to 970 meters above sea level. Access from Brasilia is via federal highway BR-040 toward Paracatu. Internal roadways connect the various mine-site components. Concentrates are trucked about 250 km to the Três Marias smelter. The closest commercial airport is located in Brasilia. The Vazante municipal airport for light aircraft is adjacent to the mine site.

History

Mineralization was initially exploited by artisanal miners during the 1950s. Mechanized open pit mining and underground mining commenced in 1969 and 1983, respectively. The current primary ore types mined are hydrothermal zinc silicates and willemite. Initial mining operations exploited supergene calamine ores and a mixture of the zinc secondary minerals hemimorphite and smithsonite, which are derived from the weathering of silicate ore.

Title, leases and options

Nexa Brazil owns 100.0% of the Vazante project.mine. Mineral concessions are divided into core tenements, where the known mineral deposits are located and where we have active mining operations and the surrounding exploration concessions. Nexa Brazil holds onetwo mining concession application,applications, two mining concessions, and one group of mining concessions in the core area that havewith a total area of 2,120.82,174.5 hectares. The group of mining concessions comprises six mining concessions, totaling an area of 819.5 hectares. The Mineral Reserves and Resources are located within the limits of onetwo mining concession application and seven mining concessions with a total area of 1,894.31,864.6 hectares, which host the active mining operations. One mining concession (tenement # 14.840/14,840/1967), which is part of the group of mining concessions, has athe potential to host zinc and lead mineralization, however it does not yet have associated mineral reserves and resources.

Nearby the main area, Nexa Brazil also holds 4three exploration applications totaling 1,287.21,140.6 hectares, 6036 exploration authorizations totaling 47,050.525,647.1 hectares, one right to apply for mining concession totaling 344.5 hectares, one mining concession application totaling 190.0 hectares and one mining concession totaling 52.5 hectares, in addition to the core tenements.

Nexa Brazil holds surface rights sufficient to support the current operations. Some surface rights agreements require annual payments to the owners. ThreeTwo easements have been granted in support of the mining activities. There is sufficientSufficient suitable land is available within the mineral tenure held by Nexa Brazil for tailings disposal, mine waste disposal, and installations such as the process plant and related mine infrastructure.

35

Mining Operations

Brazilian companies that hold mining concessions are subject to a royalty payment imposed by the National Mining Agency. For more information, see “Information on the Company—Regulatory matters—Brazilian regulatory framework—Royalties and other taxes on mining activities.”

Nexa Brazil holds nine licenses for water management and water use in the operations. Nexa Brazil has lodged renewal applications, where applicable, for the water management.

The Vazante Operation holds several permits in support of the current operations. The main instrument to regulate the Vazante Operation is a set of operating licenses issued by the COPAM from the state of Minas Gerais. The licenses are active, some of them under renewal process.

43
Mining Operations

Mineralization

The Vazante and Extremo Norte zinc deposits are epigenetic zinc silicate deposits, and Vazante is one of the largest deposits of its type worldwide. Mineralization exists within a sequence of pelitic carbonate rocks belonging to the Serra do Poço Verde formation of the Vazante group. The major structural control is the Vazante fault.

Mineral exploration activities in 2023 were focused on expanding the mineralization of known ore bodies, such as Extremo Norte and Sucuri Norte, and identifying the continuity of mineralized bodies along the Vazante hydrothermal breccia. We are conducting ongoing tests to explore extensions of known mineralization, infillingintensifying drilling in areas near mine where nominimal data areis currently available, and identifying other areas where mineralization may be present. Examples of exploration successes using these methods within the Vazante mine area include our projects Lumiadeira, Ramp 29, and Deep Exploration.

In 2021,2023, we completed approximately 73.57.3 km of diamond drilling, divided between exploratory (7.5(1.3 km) and infill (66.0extension drilling (6.0 km) drilling.. The focus of the exploratorynear mine extension drilling was on the extension of the Vazante mine ore bodies, exploring the targets Lumiadeira,target Extremo Norte and Sucuri Norte.Norte, which confirmed the mineralized system and opened lateral and depth continuity. In addition, exploratory drilling at Varginha Norte andthe mineral exploration team continues to seek to identify new prospective areas, such as Vazante Sul, targetswhich confirmed the presence of a hydrothermalmineralized breccia with moderate Fe-rich carbonation alteration and punctual occurrences of willemite.more than 10 km from Vazante mine.

In 2021,2024, Nexa intends to continue extending the near mine orebodies such as Sucuri and Sucuri Norte, and to convert inferred resources into indicated resources in the BDMG area, which was acquired in 2022.

In 2023, we spent US$1.33.5 million on the Cerro Lindo brownfield projectsprogram for life of mine extension, including exploration project maintenancedrilling program and geological activities. In 2021,2023, we drilled 1612 exploration drill holes, totaling 7.547,5 meters.7.3 km. We have budgeted US$2.04.7 million for the projectmine during 20222024 and we expect to drill 7.000,0 meters.

12.4 km.

Operations and infrastructure

The Vazante operation consists of two mechanized underground mines, the Vazante Minemine and Extremo Norte Mine, currently operating at a rate of approximately 1.5 Mtpy. Production drilling operations have been performed by company personnel using a variety of drilling machines throughout the history of the Vazante mine.

The Vazante underground mine has been in operation since 1983 and is a fully mechanized mine using rubber-tired diesel equipment for development and production activities. Access is through two portals for Vazante and one portal for Extremo Norte. As development progresses at Extremo Norte, a connecting drift will be established from Vazante to Extremo Norte.

All infrastructure required for the current mining and processing operations has been constructed and is operational. This includes the underground mines, access roads, power lines, water pipelines, offices and warehouses, a process plant/concentrator, conveyor systems, waste rock facilities, temporary ore stockpiles, paste-fill plants, and tailings storage facilities.

The power supply to the Vazante operation is provided by one independent 138 kV transmission linesline that feedfeeds the site and that can provide up to 55 MW. There are two 30/40 MVA and one 18/23 MVA transformers in the surface substation at the Vazante Operation and power is distributed to other areas of the mine at 13.8 kV and 440 V via transformer secondariessecondary transformers to power mine equipment. The power demand by 2026 is expected to reach approximately 4655 MW as dewatering demands continue to grow. Companhia Energética de Minas Gerais S.A (“CEMIG”) is building a new transmission line from Paracatu to Vazante of 60 MW capacity, which is expected to be concluded in 2022. There are two 700 kVA diesel generators on site to provide backup power to pump water out of the mine in case of main line interruption. The price of electrical energy is budgeted at R$0.339/kWh for 2022.

36

Mining Operations

In 2021,2023, we spent US$28.628.0 million on sustaining capital expenditures for this property, primarily associated with mine development, ramp deepening in the “Extremo Norte”, equipment replacement and other major infrastructure. In addition, we invested US$3.42.5 million in capital expenditures related to the Vazante mine deepening, focusing on expansion. For more information, see “Information on the Company—Mining Operations—Growth Projects—Vazante mine deepening project.”

In March 2021, during a regular inspection of the Extremo Norte mine in Vazante, we identified that the area around the main access and the escape route of the mine presented above-normal ground displacements. The Extremo Norte mine requires dewatering of the aquifer for its operations, which leads to depressurization and may cause local disturbances in the rock mass around the mine. As a preventive measure, activities in this area were temporarily suspended. Mine activities restarted in the third quarter of 2021 and the rehabilitation plan was concluded ahead of schedule, allowing us to resume mine production during the fourth quarter of 2021.

In January 2022, the daily production of the underground operations at Vazante was reduced to 60% of its capacity due to heavy rainfall levels in the state of Minas Gerais. As a result of the heavy rainfall, Vazante’s underground mine received more water than it could pump to the surface, partially flooding the lower levels of the mine. The Extremo Norte underground mine was not affected and continued to operate at full capacity. Nexa took all necessary measures to support the mine, focused on precautions to ensure the safety of its employees and the host communities, and continued to monitor the rainfall scenario in Minas Gerais in order to ensure the safety of workers and the resumption of mine activities. As of the date of this report, dewatering process is still in progress and we expect operations to resume at full capacity in early April 2022.

44
Mining Operations

Production

The Vazante mine is in the production stage and has a treatment plant with a nominal design processing capacity of approximately 4,6005,000 tonnes of ore per day. The table below summarizes the Vazante mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated. Production in 2023 was higher than 2022 due to higher treated ore volumes and higher zinc grades.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Treatment ore (in tonnes)1,630,6901,622,9271,407,1991,633,3571,524,6371,630,690
Average ore grade  
Zinc (%)9.9810.4311.4510.199.979.98
Lead (%)0.350.360,310.330.35
Silver (ounces per tonne)0.670.630.570.670.630.67
Metal contained in concentrate production  
Zinc (in tonnes)140,500147,990139,041145,662131,527140,500
Lead (in tonnes)1,6161,3331,0151,4491,1601,616
Silver (in oz)500,549383,509333,141575,636473,578500,549
Cash cost, net of by-product credits (in US$/t)893.11,180.61,138.51,343.51,227.5900.2
Cash cost, net of by-product credits (in US$/lb)0.410.540.520.610.560.41
Capital Expenditures (in millions of US$)45.437.670.0
Non-Expansion Capital Expenditures (in millions of US$)29.141.942.0

 

Mineral Reserves and Mineral Resources

The Vazante Mineral Reserves estimates are based on the definitions for Mineral Reserves in SK-1300 and the tables below are based on costs and modifying factors from the Vazante mine.mine and Vazante Aroeira Tailings.

Vazante – Year End Mineral Reserves as of December 31, 20212023 (on a 100% ownership basis) (1)

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
100%Proven7.398.90 -17.20.25-657.6-4,09718.8-
Probable8.528.66 -10.60.19-737.6-2,89616.4-
Subtotal15.918.77 -13.70.22-1,395.2-6,99235.3-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven5.499.84-17.10.23-539.8-3,02312.5-
Probable7.968.00-9.90.21-636.7-2,52116.6-
Total13.448.75-12.80.22-1,176.6-5,54429.1-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100% of the Mineral Reserves estimates for the property. Nexa owns 100%.
3.3.The Qualified Person for the Mineral Reserves estimate is Vitor Marcos Teixeira de Aguilar, B.Eng., FAusIMM, a Nexa employee.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.
6.Mineral Reserves presented in this table include Mineral Reserves from Vazante mine and Vazante Aroeira Tailings.

 

37

Mining Operations

The Vazante Mineral Reserves estimates in the table above consider actual costs and modifying factors from the Vazante mine and Vazante Aroeira tailings, as well as operational level mine planning and budgeting. The dilution that has been applied is related to the selected mining method. The Vazante Mineral Reserves are estimated at a NSR cut-off grade of 4% Zn. The NSR cut-off value was determined using the mineral reserve metal prices, metal recoveries, transport, treatment and refining costs, as well as mine operating costs. The Vazante mine Mineral Reserves are estimated at a NSR cut-off value of US$66.31/t processed. A minimum mining width of 4.0 m was appliedm. Recoveries for the Vazante mine at average head grades are 87.19% for Zn, 23.93% for Pb, and average bulk density of 3.1 t/m3.42.00% for Ag. The Vazante Aroeira Tailings Mineral Reserves estimates in the table above consider actual costs and modifying factors from the Vazante Aroeira tailings, as well as operational level tailings storage facility (“TSF”) reclaiming plan and budgeting. The Vazante Aroeira Tailings Mineral Reserves are estimated usingat a NSR cut-off value of US$25.44/t processed. A minimum mining unit of 10m x 10m x 2m was applied. Recoveries for Vazante Aroeira Tailings at average long-term metal priceshead grades are 67.86% for Zn, 40.74% for Pb, and 42.00% for Ag. Metallurgical recoveries are

45
Mining Operations

accounted for in NSR calculations based on historical processing data and are variable as a function of zinc: Zn: US2,722.20/t (US$1.23/lb); lead: Pb: US$1,997.21/t (US$0.91/lb); and silver: US$19.68/oz (using an average long term Brazilian Real (R$) to U.S. dollar exchange rate of 4.98).head grade. Long-term metal prices used for Mineral Reserves are based on consensus and long-term forecasts from banks, financial institutions and other sources. Metallurgical recoveriesMineral Reserves estimates are accounted for in NSR calculations based on historical processing data,average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); lead: US$2,000.29/t (US$0.91/lb); and are variable as a function of head grade. Recoveries at Life of Mine average head grade are 84.7% for Zn, 22.1% for Pb, and 42.0% for Ag.silver: US$21.17/oz. The current LOM plan, based in our current reserves, continues to 2032.2031.

Vazante – Net Difference in Mineral Reserves between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

ClassTonnage (1)Contained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Proven(1.05)(51.3)-(29)(1.8)-
Probable0.289.7-(345)(1.0)-
Subtotal(0.78)(41.5)-(374)(2.8)-

Notes:

1.The total Mineral Reserves data presented in this table are calculated on 100% basis. Nexa owns 100%.
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven(1.33)(19.6)(140.8)(20.7)--(926)(23.4)(8.0)(39.0)--
Probable1.2819.115.52.5--(148)(5.6)1.27.6--
Total(0.06)(0.4)(125.2)(9.6)--(1,074)(16.2)(6.8)(19.0)--

 

In comparison to 2020,2022, Vazante’s Mineral Reserves have decreased by 0.4% in mass and by 9.6% in zinc content (kt), mainly due to geotechnical restrictions in a high-grade area (Lumiadeira). The decrease in mass was lower than the decrease in zinc content due to the conversion of 2.1Mt from Indicated Mineral Resources to Proven Mineral Reserves from the Vazante Aroeira Tailings. Mineral Reserve depletion through mining, changes in mining costs, and cut-off grades. The slightly increase in Probable Reserves is associated with changes in mineral resource interpretation and estimates.during 2023 accounted for 1.7Mt containing 184.3kt of zinc.

Vazante – Year End Mineral Resources as of December 31, 20212023 (on an 100% ownership basis) (1)

 

Ownership(2)ClassTonnageGradeContained Metal 
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
100%Measured2.343.63-6.40.12-84.9-4662.8-
Indicated2.945.53-3.40.07-162.7-3112.1-
Subtotal5.284.69-4.70.09-247.6-7774.9-
Inferred15.447.72-11.20.19-1,192.1-5,39530.0-
              
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured0.488.40-12.40.25-40.3-1911.2-
Indicated1.409.64-4.00.08-135.0-1821.1-
Total1.889.32-6.20.12-175.3-3732.3-
Inferred13.439.97-12.60.22-1,338.8-5,45629.1-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 100% of property.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM, a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexamill feed materials.
7.Mineral Resources employee.presented in this table include Mineral Resources from the Vazante mine and Vazante Aroeira Tailings.

 

38

Mining Operations

The Vazante Mineral Resources estimates in the table above were completed using Datamine and Leapfrog software. The Mineral Resources at Vazante comprise three styles of mineralization. The first style of mineralization is represented by the hypogene (Willemite) mineralized zones that are found in the underground portions of the Vazante and Extremo Norte deposits. The second style of mineralization is represented by the supergene (Calamine) mineralized zones found in the Cava 3A, Matas dos Paulistas, and Braquiara areas of the Extremo Norte and Vazante deposits. This supergene (Calamine) mineralization is referred to at the Vazante Operation as calamine mineralization and comprises a mixture of smithsonite and hemimorphite minerals. The third type of mineralization comprises tailings that are contained within the Aroeira TSF. The material found in the Aroeira tailings comprise a mixture of hypogene (willemite) and supergene (calamine) minerals.

The Mineral Resource statementsResources estimates for the underground hypogene (willemite) mineralization are prepared within reporting panels prepared using the native functions and workflows available through the Deswik mine modellingDSO software package considering spatial continuity, a minimum width of 3.0m3.0 m and a NSR cut-off value of US$ 52.95/66.31/t for all resources shapes.Hypogene Mineralization (Willemite). The Mineral ResourceResources estimates for the supergene (calamine) mineralization are prepared using an open pit shell that considers appropriate metal prices, mining costs, metallurgical recoveries and geotechnical considerations. The Mineral Resources are estimated at anconsiderations with NSR cut-off value of US$20.33/23.13/t for soil and US$22.18/28.38/t for fresh rock and transition material. The Mineral Resource statementsResources estimates for the tailings at Vazante are reported considering the material with an NSR value of greater than US$20.62/29.40/t which lies above the original topographic surface. All NSR cut-off values for Mineral Resources at Vazanteestimates are estimated usingbased on average long-term metal prices ofof: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb),; lead: US$2,296.79/2,300.33/t (US$1.04/lb); and silver: US$22.63/oz using an average long term Brazilian Real (R$) to U.S. dollar exchange rate of 4.98).24.35/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at LOM averageaverage: hypogene head grades are 84.7%87.19% for Zn, 22.1%23.93% for Pb, and 42.0%42.00% for Ag, supergene (calamine) is 55.00% for Zn, and tailings are 67.86% for Zn, 40.74% for Pb, and 42.00% for Ag.

46
Mining Operations

Vazante – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on an 100% ownership basis)

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Measured(1.06)(231.4)-(912)(6.1)-
Indicated0.06(191.8)-(520)(3.9)-
Subtotal(1.00)(427.7)-(1,437)(10.1)-
Inferred1.59(942.5)-(4,205)(25.4)-

Notes:

1.The total Mineral Reserves data presented in this table are calculated on 100% basis. Nexa owns 100%.
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(0.15)(23.8)(12.1)(23.1)--(109)(36.3)(0.3)(20.0)--
Indicated(2.50)(64.1)(98.0)(42.1)--(676)(78.8)(6.5)(85.5)--
Total(2.65)(58.5)(110.1)(38.6)--(785)(67.8)(6.8)(74.7)--
Inferred(1.72)(11.4)(104.3)(7.2)--(728)(11.8)(0.1)(0.3)--

 

In comparison to 2020,2022, Vazante’s Inferred Mineral Resources have increaseddecreased by 11.4% in inferred areas,mass and decreased by 7.2% in zinc content (kt), mainly due to new interpretationgeotechnical restrictions. In comparison to 2022, Vazante’s Measured and Indicated Mineral Resources decreased by 58.5% in mass and decreased by 38.6% in zinc content (kt), mainly as a result of areas insidethe conversion to Mineral Reserves at tailings dams.

For additional information, see the Technical Report Summary on Vazante, filed as Exhibit 15.3 to Nexa’s annual report on Form 20-F/A for the year-ended December 31, 2020, as filed on November 4, 2021.

Cerro Pasco Complex

The Cerro Pasco Complex consists of the El Porvenir underground mine, which produces zinc, copper, lead, silver and gold; the Atacocha San Gerardo open pit mine, producing zinc, lead, silver and gold; and the Atacocha underground mine, which has been suspended since 2020 and remains under care and maintenance due to changesour efforts to reduce costs and improve our operational efficiency.

The Atacocha and El Porvenir mines are located in Peru, specifically in the province of Pasco, which is a region recognized for its intensive mineral resources estimation.economic activities, where many polymetallic mines have been operating for several decades.

El Porvenir is an underground mine with multiple accesses and a shaft where the mined ore is extracted and where workers and inputs are also transported. There are multiple accesses to the Atacocha underground mine from the surface and the mine is currently connected to the El Porvenir mine through two active tunnels located at 4070 and 3300 levels. These tunnels are used by operators of heavy mine equipment and conventional trucks, as well as for transporting mining crews between the Atacocha surface and the El Porvenir mine.

Currently, production from the Atacocha San Gerardo open pit mine feeds the Atacocha processing plant with a nominal throughput capacity of 4,400 tonnes of ore per day, while production from the El Porvenir underground mine feeds the El Porvenir processing plant with a nominal throughput capacity of 6,500 tonnes of ore per day. The slight decreaseAtacocha processing plant is expected to be decommissioned by 2027, when the Atacocha San Gerardo pit reaches the end of its mine life based on our current depletion schedule.

47
Mining Operations

Integration Project

The Cerro Pasco Complex integration project (“Integration Project”) involves the continued integration of the El Porvenir and Atacocha underground mines. The Cerro Pasco Complex is a material property for the purposes of S-K 1300 comprising the two mines, El Porvenir and Atacocha. The Integration Project is intended to continue to capture synergies between the two mining operations, as a result of their proximity and operational similarities, with ore from both the underground mines being processed at the El Porvenir processing plant. The goal of the Integration Project is to achieve cost and investment savings, thereby reducing the environmental footprint and extending the combined life of mine of the two mines.

The Integration Project has been developed over the past few years. The first stage involved the administrative integration of both mines, completed in measured2014. The second stage, completed in 2015, involved the integration of the tailings disposal system, which allowed the Atacocha plant to send its tailings to the El Porvenir dam in the short-term, thus contributing to the reduction of our environmental footprint. Operations of the integrated tailings disposal system began in 2016. The third stage, completed in 2016, involved the construction of a new 138-kilovolt (“kV”) energy transmission line connecting both mines, replacing the two previous 50 kV transmission lines. The fourth stage, concluded in 2019, involved the development of a 3.5 km tunnel connecting both underground mines, allowing us to initiate exploration programs in the integration zone between the two mines.

In 2021, modernization and indicated mineral resources are associateddebottlenecking studies to assess the mine deepening and the extension of the LOM of El Porvenir were postponed due to Nexa’s capital allocation strategy and the reassessment of the integration with the updateAtacocha underground mine. In 2022, we advanced the Integration Project with an optimization study to evaluate the increase in capacity of our tailings and El Porvenir shaft, in addition to enhancing the El Porvenir processing plant to potentially increase production and extend the life of mine of both mines.

In 2023, we continued to advance with the technical studies of the Integration Project, aiming to develop a robust organic growth option for Nexa. The technical studies for the Integration Project covered diverse areas, from mine planning to projects to sustain and expand production, such as studies for underground interconnection, shaft upgrade, engineering assessments, and key routes to increase capacity to provide a long-term solution for tailings disposal. A Front-End Loading 3 (“FEL3”) study to increase the El Porvenir hoisting was completed in 1Q23 and a FEL3 tailings pumping system study was also completed in 2Q23.

The Integration Project plan includes, among others areas: (i) the restart and rehabilitation of the Atacocha underground mine; (ii) the development of an approximately 2 km long connection tunnel (Tunnel 2900), which will connect the Atacocha underground mine to the bottom of the El Porvenir (Picasso) shaft, allowing the production from both underground mines to be hoisted and fed at the El Porvenir processing plant; (iii) the expansion of the Picasso shaft capacity to support production and extraction from both underground mines; (iv) the closure of the Atacocha processing plant, with the depletion of Atacocha’s open pit Mineral Reserves in 2027; and (v) the construction of a new tailings pumping and pipeline system, which will allow the tailings from the El Porvenir processing plant to be sent to the Atacocha tailings storage facility, providing for a long-term solution for our tailings disposal and supporting the extension of the mine life of the combined mines. Nexa also continues to advance on other work fronts related to the Integration Project, including to obtain the required environmental studies and permits.

As a result of the advancements in the technical studies in 2023, we increased the overall Mineral Reserves of the El Porvenir and Atacocha mines in the Cerro Pasco Complex. For additional information on the increase of Mineral Reserves, as described above.see “Information on the Company—Mining operations—El Porvenir—Mineral Reserves and Mineral Resources” and “Information on the Company— Mining operations—Atacocha—Mineral Reserves and Mineral Resources”.

For further information about our operations, infrastructure, production, and Mineral Reserves and Mineral Resources at the El Porvenir and Atacocha mines, see the Technical Report Summary on the Cerro Pasco Complex Integration, filed as Exhibit 15.2 of this annual report on Form 20-F. We expect to submit the Integration Project for formal approval by our Sustainability and Capital Projects (“SCP”) committee and our Board of directors in 2024 in order to establish the project’s governance such as: (i) implementation schedule; (ii) organizational chart; (iii) implementation of control routines; (iv) definition of responsibilities for each project component; and (v) cost management implementation.

48
Mining Operations

El Porvenir

Location and means of access

The El Porvenir mine is an underground, polymetallic mine located(located in the Cerro Pasco Complex) in the central Andes mountains region of Peru, specifically in the district of San Francisco de Asís de Yarusyacán, in the province of Pasco, Peru. The approximate coordinates of the mine are 367600m E, 8826850m N, using the Universal Transverse Mercator WGS84 datum, Z18S and the projectmine site is located at an average elevation of 4,200 meters above sea level. The mine is situated at kilometer 340 of the Carretera Central Highway (Lima—Huánuco route), 13 km from the city of Cerro de Pasco. The mine is located in the Central Cordillera zone, which contains the communities of Parán, Lacsanga and Santo Domingo de Apache.

39

Mining Operations

History

The El Porvenir mine began its operation as small-scale artisanal mine in 1949. We have been investing in the mine since then and, in 2012, production reached its current capacity of 6,500 tonnes per day. In 2013,2014, we commenced the integration process with the Atacocha mine. In 2015, El Porvenir tailings deposit was integrated with Atacocha’s. In 2016, we worked on integrating the energy supply between the two mines. In 2019, the two underground mines were connected allowing us to initiate an exploration programmine, as described above in the integration area. In 2020, in response to COVID-19 and based on our cost management strategy, the integration process was temporarily suspended and Atacocha’s underground operations were not resumed after the mandatory restriction period from the Peruvian Government was lifted in June. As of the date of this annual report, the Atacocha underground mine is suspended under care and maintenance, and we intend to review and update the integration plan throughout 2022. For additional information on the integration of the El Porvenir and Atacocha mines, see “Information on the Company—Mining operations—Growth projects—Operations—Cerro Pasco mining complex” below.Complex—Integration Project.

Title, leases and options

The El Porvenir mine is operated by Nexa Resources El Porvenir S.A.C., a subsidiary of Nexa Peru in which Nexa Peru has directly and indirectly a 100% equity interest.

The El Porvenir mine has a total of 25 concessions covering approximately 4,846.84,846.7 hectares, as well as a beneficiation plant, “Acumulacion Aquiles 101”. With respect to the surface property at El Porvenir project,mine, there is a mining site of 450.8 hectares, where the mining concession is located, as well as additional surface property where tailings dams/ponds, camps sites and other ancillary infrastructure are located.

Mining operations at the El Porvenir mine are subject to certain royalties payable by Nexa Resources El Porvenir S.A.C. For more information, see “Information on the Company—Regulatory matters—Peruvian regulatory framework—Royalties and other taxes on mining activities.”

The El Porvenir Mine holds several permits in support of the current operations. The permits are Directorial Resolutions issued by the Peruvian authorities upon approval of mining environmental management instruments filed by the mining companies. Nexa Peru maintains an up-to-date record of the legal permits obtained to date.

Mineralization

The El Porvenir mine is a typical skarn deposit. The mineralization occurs within the contact of the upper Triassic limestone (i.e., exoskarn) and the granodioritic-dacitic intrusive rocks (i.e., endoskarn). There are also recognized veins and replacement manto type, minor disseminated mineralization may occur within the intrusive units. West of the Milpo-Atacocha fault within the Goyllarisquizga Group, mineralization is characterized as veins and disseminations.

Four groups of vein/mineralized structures are reported. Structurally controlled veins are sub-vertical up to 150 meters long, with a vertical extent of 350 meters. Economic mineralogy is mostly comprised of galena, sphalerite, and tetrahedrite, as well as variable and lesser pyrite, quartz and rhodochrosite.

In 2021, we completed approximately 54.3 km of diamond drilling, divided between exploratory and infill drilling. The 2021Throughout 2023, the exploration program at El Porvenir was directedfocused on drilling in mineralized zones in the Integration target, seeking to increasing mineral resources,evaluate the mineralization continuity in strike and at depth, with the goal of extending the life of mine. In 2023, we drilled 16 drill holes totaling 9.3 km of exploration drilling, which confirmed the high-altitude zonesIntegration target extensions, with emphasis on the intermediate and lower levels of the mine (above the 3,700-meter level) in Sara Target and drilling the low-altitudeunit.

In 2024, we will continue to focus our efforts on expanding mineralized zones of the mine in Integración Target (below the 3,300-meter level). The exploration program in the Sara target identified silver, lead, zincintegration area, with the potential to extend existing Mineral Resources. We expect to also drill other satellite targets such as Don Lucho, Veta AM and gold mineralization along the strike, based on the surface and underground drilling program. The exploration program in the Integración target identified zinc, lead, silver and gold mineralization based on the underground drilling program, which is open for expansion.Porvenir 9.

49
Mining Operations

We spent approximately US$3.11.9 million on the El Porvenir brownfield projectprogram in 2021,2023, including in exploration project maintenancethe drilling program and geological activities. In 2021, we drilled 39 drill holes totaling 18.6 km at El Porvenir. We have budgeted US$3.31.6 million for the project during 20222024 activities, and we expect to drill 19.25.5 km.

40

Mining Operations

Operations and infrastructure

Most of the exploration is generally conducted simultaneously with underground development, which involves diamond core drilling and channel sampling following underground drifting.

The El Porvenir projectmine site consists of an underground mine, tailings pond, waste rock stockpiles, a process facility with associated laboratory and maintenance facilities and maintenance buildings for underground and surface equipment. Facilities and structures include a warehouse, office, change house facilities, main shaft, ventilation shaft, backfill plant, explosives storage area, hydroelectric power generation, power lines and substation, fuel storage tanks, a warehouse and laydown area and a permanent accommodation camp.

The electrical power supply for the projectmine comes from two sources: connection to the SEIN national power grid by a main substation located near the site, and the Candelaria Hydro, which consists of three turbines connected to the projectmine through the main substation by a transmission line. All other loads of the projectmine are fed from the main substation through overhead power lines. These power lines are used to deliver power to various locations to support activities during operation of the mine.

Site roads include main roads suitable for use by mining trucks that transport concentrates to Lima and service roads for use by smaller vehicles. The site roads are used by authorized mine personnel and equipment, with access controlled by Nexa Peru. An approximately 15-to-20-kilometer network of service roads was constructed to provide access to the underground mine, processing plant, tailings facility, waste rock stockpile, mine offices, workshops, mine camps and other surface infrastructure.

In 2021,2023, we spent US$32.968.7 million on sustaining capital expenditures for this property, primarily associated with mine development, the restoration of tailings dams, equipment replacement and other major infrastructure.

Production

The El Porvenir mine is in the production stage and has a treatment plant capacity of 6,500 tonnes of ore per day. The table below summarizes the El Porvenir mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated. Production in 20212023 was higher than in 20202022 due to higher treated ore treated, since in 2020 operations were temporarily suspended due to the impact of mandatory government measures related to COVID-19,volumes and higher operational stability of the plant.zinc grades.

 

For the Year Ended December 31,

 

2021

2020

2019

Treatment ore (in tonnes)2,077,5911,502,6182,120,765
Average ore grade   
Zinc (%)2.832.652.92
Copper (%)0.190.170.15
Lead (%)1.080.931.01
Silver (ounces per tonne)2.102.002.08
Gold (ounces per tonne)0.010.010.02
Metal contained in concentrate production   
Zinc (in tonnes)51,37534,86754,689
Copper (in tonnes)505334465
Lead (in tonnes)17,70010,85816,914
Silver (in oz)3,467,2272,315,1813,412,656
Gold (in oz)8,7255,89911,191
Cash Cost, net of by-product credits (in US$/t)875.11,338.01,372.9
Cash Cost, net of by-product credits (in US$/lb)0.400.610.62
Capital Expenditures (in millions of US$)36.512.932.9

 

For the Year Ended December 31,

2023

2022

2021

Treatment ore (in tonnes)2,220,0112,111,9612,077,591
Average ore grade   
Zinc (%)2.862.802.83
Copper (%)0.160.160.19
Lead (%)1.371.341.08
Silver (ounces per tonne)2.342.462.10
Gold (ounces per tonne)0.0110.0120.011
Metal contained in concentrate production   
Zinc (in tonnes)55,82551,56151,375
Copper (in tonnes)355266505
Lead (in tonnes)24,93723,19517,700
Silver (in oz)4,270,4634,195,6493,467,227
Gold (in oz)8,6969,2048,725
Cash Cost, net of by-product credits (in US$/t)630.6727.7832.2
Cash Cost, net of by-product credits (in US$/lb)0.290.330.38
Non-Expansion Capital Expenditures (in millions of US$)68.636.736.5

 

 
4150

Mining Operations

Mineral Reserves and Mineral Resources

The El Porvenir Mineral Reserves estimates are based on the definitions for Mineral Reserves in SK-1300 and the tables below are based on costs and modifying factors from the El Porvenir mine.

 

El Porvenir – Year End Mineral Reserves as of December 31, 20212023 (on an 83.48% Nexa attributable ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Proven2.773.700.2468.61.08-102.56.76,11929.8 -
Probable10.023.540.1969.81.03-354.619.422,466103.6-
Subtotal12.793.570.2069.51.04-457.126.228,585133.4-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven3.274.090.2475.21.29-133.87.97,90742.0-
Probable8.964.110.2272.11.17-368.720.020,759104.6-
Total12.234.110.2372.91.20-502.528.028,666146.6-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table are reported on 83.48% Nexa attributable ownership.
3.3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.

 

El Porvenir – Year End Mineral Reserves as of December 31, 20212022 (on a 100% ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Proven3.323.700.2468.61.08-122.88.17,32935.7-
Probable12.003.540.1969.81.03-424.823.326,912124.1-
Subtotal15.323.570.2069.51.04-547.531.334,242159.8-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven3.924.090.2475.21.29-160.39.59,47250.3-
Probable10.734.110.2272.11.17-441.624.024,867125.3-
Total14.654.110.2372.91.20-601.933.534,338175.7-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100% of the Mineral Reserves estimates for the property. Nexa owns 83.48%.
3.3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.

 

The El Porvenir Mineral Reserves estimates in the table above were prepared using Deswik Stope Optimizer (“DSO”)DSO software, mine design and scheduling software. Mining methods used are C&F mining, using unconsolidated rock fill and hydraulic backfill, and SLS using unconsolidated rock fill. NSR values were calculated using mineral reserve metal prices, metallurgical recovery and consideration of smelter terms, including revenue from payable metals, price participation, penalties, smelter losses, transportation, treatment, refining and sales charges. A minimum mining width of 5.0m was5.0 m for C&F mining and 4.0 m for SLS mining were used for reserves shapes and development design and are reported inclusive of extraction losses and dilution. The Mineral Reserves were estimated at a NSR cut-off values ranging from US$57.63/63.77/t to US$62.19/67.04/t for SLS areas and US$65.77/t to US$69.04/t for C&F areas depending on the zone and mining method.zone. Mineral Reserves estimates are estimated usingbased on average long-term metal prices ofof: zinc: US$2,722.20/2,799.04/t (US$ 1.23/1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$1,997.21/2,000.29/t (US$0.91/lb); copper: US$7,288.26/t (US$3.31/lb) and silver: US$19.68/21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head gradegrades are 89.59%89.21% for Zn, 77.74%14.60% for Cu, 80.01% for Pb, 14.29% for Cu, and 63%77.51% for Ag. The current LOM plan continues to 2028.2033. We continued to advance with the technical studies to optimize the integration of El Porvenir and Atacocha underground mines, and as a result of the advancements in the technical studies, we increased the overall Mineral Reserves of the Cerro Pasco Complex. For further information see “Information on the Company—Mining Operations—Cerro Pasco Complex—Integration Project.”

 
4251

Mining Operations

El Porvenir – Net Difference in Mineral Reserves between December 31, 2023 versus December 31, 2022 (on an 83.48% Nexa attributable ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.1554.255.370.53.476.23,28971.218.477.9--
Probable(1.86)(17.2)(19.2)(4.9)(0.8)(4.0)(2,084)(9.1)(10.0)(8.7)--
Total(0.71)(5.5)36.17.82.610.31,2054.48.46.1--

 

El Porvenir – Net Difference in Mineral Reserves between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

 

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Proven(0.24)(10.7)(0.9)250.3-
Probable1.9351.81.56,14335.0-
Subtotal1.6941.10.76,16835.3-

Notes:

1.The total Mineral Reserves dated from December 31, 2020 considered an ownership basis of 80.16%.
2.The total Mineral Reserves dated from December 31, 2021 considered an ownership basis of 83.48%.

El Porvenir – Net Difference in Mineral Reserves between December 31, 2021 versus December 31, 2020

ClassTonnage(1)Contained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Proven(0.44)(18.4)(1.4)(273)(1.1)-
Probable1.9147.00.96,54938.5-
Subtotal1.4728.6(0.5)6,27637.4-

Notes:

1.The total Mineral Reserves data presented in this table are calculated on 100% basis. Nexa owns 83.48%.

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.3854.266.370.54.176.23,94071.222.077.9--
Probable(2.23)(17.2)(23.0)(4.9)(1.0)(4.0)(2,495)(9.1)(12.0)(8.7)--
Total(0.85)(5.5)43.37.83.110.31,4444.410.16.1--

 

In comparison to 2020,2022, El Porvenir’s Mineral Reserves havedecreased by 5.5% in mass, while increased by 7.8% in zinc content (kt). The decrease in mass was mainly due to mine design improvements,the increase in metal prices and other exogenous factors, and addition of new mineralization domainsNSR cut-off values, while the increase in zinc content was mainly due to higher grades as a result of exploration diamondblock model improvements as well as additions from infill drilling. Mineral Reserve depletion during 2023 accounted for 2.2Mt containing 63.5kt of zinc.

 

El Porvenir – Year End Mineral Resources as of December 31, 20212023 (on an 83.48% Nexa Attributable ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Measured0.542.660.2060.70.85-14.41.11,0594.6-
Indicated2.532.960.2048.20.76-74.95.13,91919.2-
Subtotal3.072.910.2050.40.78-89.36.14,97923.8-
Inferred8.703.850.2169.20.95-334.918.319,35382.6-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured0.553.470.2757.70.95-19.11.51,0235.3-
Indicated2.693.250.2063.20.97-87.45.35,46026.0-
Total3.243.290.2162.20.97-106.56.86,48331.3-
Inferred9.233.830.2482.91.32-353.622.124,602121.9-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources Tonnes and Contained Metal presented in this table are reported on 83.48% Nexa attributable ownership.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified Personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee.mill feed materials.

 
4352

Mining Operations

El Porvenir – Year End Mineral Resources as of December 31, 20212023 (on a 100% ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
83.48%Measured0.652.660.2060.70.85-17.31.31,2695.5-
Indicated3.032.960.2048.20.76-89.76.14,69523.0-
Subtotal3.682.910.2050.40.78-107.07.45,96428.5-
Inferred10.423.850.2169.20.95-401.221.923,18399.0-
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured0.663.470.2757.70.95-22.91.81,2256.3-
Indicated3.223.250.2063.20.97-104.76.46,54031.2-
Total3.883.290.2162.20.97-127.68.27,76537.5-
Inferred11.063.830.2482.91.32-423.626.529,471146.0-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 83.48%.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee.mill feed materials.

 

The El Porvenir Mineral ResourceResources estimates in the table above were completed using Datamine and Leapfrog software. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, underground mapping and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to 2.0m1.0 m lengths. Wireframes were filled with blocks and sub-celling at wireframe boundaries. Blocks were interpolated with grade using the OK and ID3 interpolation algorithms. Block estimates were validated using industry standard validation techniques. Classification of blocks used distance-based and mineralization continuity criteria.

Mineral Resources at El Porvenir are reported using all the material within resource shapes generated in DSO software, satisfying minimum mining width of 4.0m4.0 m in areas with C&F stopes shapes and 3.0m3.0 m for SLS stopes. The Mineral Resources are estimated at a NSR cut-off grade values ranging from of US$57.45/63.77/t to US$60.39/67.04/t for SLS areas and US$ 59.24/65.77/t to US$62.1869.04/t for C&F areas depending on the zone. The NSR cut-off values for El Porvenir’s Mineral Resources estimates are based on an average long-term zinc price ofmetal prices of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), a lead price of; copper: US$2,296.79/8,820.05/t (US$4.00/lb); lead: US$2,300.33/t (US$1.04/lb), a copper price of; and silver: US$8,381.50/t (US$3.80/lb) and a silver price of US$22.63/24.35/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at LOM average head gradegrades are 89.59%89.21% for Zn, 77.74%14.60% for Cu, 80.01% for Pb, 14.29% for Cu, and 63%77.51% for Ag.

El Porvenir – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on an 83.48% Nexa attributable ownership basis)

 

 Contained Metal
ClassTonnageContained MetalTonnageZincCopperSilverLeadGold
ZincCopperSilverLeadGold
(Mt)(kt)(koz)(kt)(koz)
(Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured0.359.60.76812.8-0.2690.09.599.10.9150.436655.72.164.4-
Indicated1.4643.63.01,7439.6-0.155.810.213.20.24.879717.12.611.3-
Subtotal1.8253.23.62,42512.4-
Total0.4114.519.722.71.120.11,16321.94.717.7-
Inferred1.9190.52.42,24317.8-0.313.512.03.55.230.93,69517.728.230.1-

Notes:

1.The total Mineral Resources dated from December 31, 2020 considered an ownership basis of 80.16%.
2.The total Mineral Resources dated from December 31, 2021 considered an ownership basis of 83.48%.

 

 
4453

Mining Operations

El Porvenir – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

ClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
Measured0.4211.30.87983.2-
Indicated1.7050.73.41,98011.1-
Subtotal2.1262.04.22,77814.3-
Inferred1.9596.22.11,83818.2-

Notes:

1.The Mineral Resources data presented in this table are calculated based on 100% interested. Nexa owns 83.48%.
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured0.3188.611.397.41.1157.143254.52.461.5--
Indicated0.185.912.313.30.34.995917.23.211.4--
Total0.4914.523.622.71.420.61,39121.85.617.6--
Inferred0.383.614.63.66.230.54,43917.733.930.2--

 

In comparison to 2020,2022, El Porvenir’s Inferred Mineral Resources have increased by 3.6% in mass and by 3.6% in zinc content (kt), mainly due to improvementsinfill drilling. In comparison to 2022, El Porvenir’s Measured and Indicated Mineral Resources increased by 14.5% in modelling with new structural datamass and the addition of new mineralization domains as a result of exploration diamond drilling near mine areas.by 22.7% in zinc content (kt), mainly due to infill drilling.

 

For additional information, see the Technical Report Summary on the Cerro Pasco Complex Integration, filed as Exhibit 15.2 of this annual report on Form 20-F.

Atacocha

Location and means of access

Atacocha is a polymetallic underground and open pit mine located(located in the Cerro Paso Complex) in the district of San Francisco de Asís de Yarusyacán, in the province of Pasco, Peru. The property is located at approximate coordinates of 367160m E, 88304000m8,830,400m N, using the UTM WGS84 datum, Z18S and approximately 4,050 meters above sea level.

History

The Atacocha mine began its operation as small-scale artisanal mine in 1936. We have been investing in the mine since then and, in 2012, production reached its current capacity of 4,500 tonnes per day. In 2014, we commenced the Integration Project with the El Porvenir mine, as described above in “Information on the Company—Mining operations—Cerro Pasco Complex—Integration Project.” In 2020, in response to COVID-19 and based on our cost management strategy, the Integration Project was temporarily suspended and Atacocha’s underground operations were not resumed after the mandatory restriction period from the Peruvian Government was lifted in mid-2020. As of the date of this annual report, the Atacocha underground mine is suspended under care and maintenance, and we expect to complete the Integration Project approval process with our technical committee and Board of directors in 2024.

Title, leases and options

The Atacocha mine is operated by Nexa Resources Atacocha S.A.A., which is controlled by Nexa Peru.

The Atacocha mine has a total of 147 concessions covering approximately 2,872.5 hectares, as well as a beneficiation plant, “Chicrin N° 2.” With respect to the surface property at the Atacocha project,mine, there is a mining site of 1,343.0 hectares, where the mining concession is located, as well as additional surface property where tailings dams/ponds, camps sites and other ancillary infrastructure are located. There are royalties’royalties payable in respect of mining operations at the Atacocha projectmine for the mining concessions held by Nexa Resources Atacocha S.A.A. For more information, see “Information on the Company—Regulatory matters—Peruvian regulatory framework—Royalties and other taxes on mining activities.”

The Atacocha mine holds a number of permits in support of the current operations. The permits are Directorial Resolutions issued by the Peruvian authorities upon approval of mining environmental management instruments filed by the mining companies. Nexa Peru maintains an up-to-date record of the legal permits obtained to date.

54
Mining Operations

Atacocha operates two mines: the Atacocha underground mine and the San Gerardo open pit mine. As discussed below under “—Production”, theThe underground mine is currently suspended butdue to our efforts to reduce costs and improve our operational efficiency and remains under care and maintenance. However, mining continues in the San Gerardo open pit mine. Both mining operations feed the Atacocha processing plant.

Mineralization

In 2021,2023, we spent approximately US$11.10.2 million on the Atacocha brownfield program for exploration maintenance. In 2023, we had no drilling activities at Atacocha. We have budgeted US$0.4 million for the program during 2024 for maintenance and data interpretations, including 3.0 km of the drilling campaign in the Integration target.

Operations and infrastructure

In 2023, we spent US$16.1 million on sustaining capital expenditures for this property, primarily associated with mine development, equipment replacement and other major infrastructure.

Mineralization Developments In addition to US$0.2 million to maintain the Mineral Exploration structure, a drilling program began in 2024 with the focus on continuing extending the mineralization of the integration target.

In 2021, we completed approximately 13.3 km of diamond drilling, divided between exploratory (3,145 meters) and infill (10,191 meters) drilling. The 2021 exploration programJanuary 2023, protest activities by the Machcan community temporarily suspended operations at the Atacocha was focused on increasing mineral near of San Gerardo open pit in two targets: Extension NW and Ayarragram based onmine for approximately one week. In June 2023, protest activities by the surface drilling program. The drilling program identified zinc, lead, copper, silver, and gold mineralization, which is open for expansion.

We spent approximately US$0.5 million onMachcan community again blocked access to the Atacocha brownfield projectSan Gerardo open pit mine, temporarily suspending production for approximately one month. Operations resumed at the end of July 2023 once protest activities ceased. Finally, in 2021, including exploration projectFebruary 2024 protest activities by the Joraoniyoc community blocked road access to the Atacocha San Gerardo open pit mine and suspended operations for approximately three days. In each instance, mining activities were limited to critical operations with a minimum workforce to ensure appropriate maintenance, safety and geological activities.security. Despite these blockages, the Atacocha mine operated at high levels of capacity utilization rates throughout the year and 2023. In 2021, we drilled 15 drill holes totaling 3.1 km at Atacocha. We have budgeted US$0.3 millioneach of these instances, the Company pursued active dialogue with the local community and authorities for a peaceful resolution to this situation. Nexa remains committed to complying with all existing agreements, pursuing an active dialogue with the project during 2022 for project maintenancecommunities and data interpretations, not including any drilling campaigns.

45

Mining Operations

Atacocha does not currently have any estimated Mineral Reservesauthorities, and is considered an exploration stage property under S-K 1300. Atacocha is not considered a material property for the purposessocial development of S-K 1300.all its host communities.

Production

The Atacocha mine has a treatment plant capacity of 4,3004,400 tonnes of ore per day. The table below summarizes the Atacocha mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated. Production in 20212023 was significantly higherlower than in 20202022 due to higher ore treated, since in 2020 operations were temporarily suspended due to the impact of COVID-19, and higher operational stability of the plant. In June 2020, once the Peruvian government allowed medium-sized mines to restart operations, we announced that Atacocha would resume operations at the San Gerardo open pit mine, but we decided that the higher-cost Atacocha underground mine would remain suspended due to our efforts to reduce costs and improve our operational efficiency, placing it under care and maintenance. As of the date of this annual report, the underground mine remains suspended.

In addition, in December 2020, a local community group’s protest activities blocked road access to the Atacocha mine, leading to the temporary suspension of operations at the San Gerardo open pit mine until January 2021, when operations were resumed. In March 2021, newproduction due to illegal protest activities blocked road accessoccurring in different periods throughout first half of 2023.

 

For the Year Ended December 31,

 

2023

2022

2021

Treatment ore (in tonnes)1,397,1921,353,6811,271,107
Average ore grade   
Zinc (%)0.770.890.88
Lead (%)0.930.970.82
Silver (ounces per tonne)1.211.051.01
Gold (ounces per tonne)0.0100.0150.014
Metal contained in concentrate production   
Zinc (in tonnes)8,1939,5528,522
Lead (in tonnes)11,11611,2048,708
Silver (in oz)1,399,6811,155,0021,026,783
Gold (in oz)7,55913,59311,947
Cash cost, net of by-product credits (in US$/t)(959.7)(1,566.2)(557.7)
Cash cost, net of by-product credits (in US$/lb)(0.44)(0.71)(0.25)
Non-Expansion Capital Expenditures (in millions of US$)16.24.511.6

55
Mining Operations

Mineral Reserves and Mineral Resources (Atacocha Underground)

The Atacocha Underground Mineral Reserves estimates are based on the definitions for Mineral Reserves in SK-1300 and the tables below are based on costs and modifying factors from the Atacocha Underground mine.

Atacocha Underground – Year End Mineral Reserves as of December 31, 2023 (on an 75.96% Nexa attributable ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven1.303.860.3484.91.45-50.04.43,53518.7-
Probable3.014.540.4377.71.29-136.612.87,50938.8-
Total4.304.330.4079.81.34-186.517.211,04457.5-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table are reported on 75.96% Nexa attributable ownership.
3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
5.The point of reference for Mineral Reserves in this table is mill feed materials.

Atacocha Underground – Year End Mineral Reserves as of December 31, 2023 (on a 100% ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven1.713.860.3484.91.45-65.85.74,65424.6-
Probable3.964.540.4377.71.29-179.816.99,88651.1-
Total5.664.330.4079.81.34-245.622.614,54075.7-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100% of the Mineral Reserves estimates for the property. Nexa owns 75.96%.
3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
5.The point of reference for Mineral Reserves in this table is mill feed materials.

The Atacocha Underground Mineral Reserves estimates in the table above were prepared using DSO software, mine design and scheduling software. Mining methods used are C&F mining, using unconsolidated rock fill and hydraulic backfill, and SLS using unconsolidated rock fill. NSR values were calculated using mineral reserve metal prices, metallurgical recovery and consideration of smelter terms, including revenue from payable metals, price participation, penalties, smelter losses, transportation, treatment, refining and sales charges. A minimum mining width of 5.0 for C&F mining and 4.0 m for SLS mining were used for reserves shapes and development design and are reported inclusive of extraction losses and dilution. The Mineral Reserves were estimated at a NSR cut-off of US$69.00/t for SLS areas and US$71.07/t for C&F areas depending on the zone. A number of incremental material (with values between US$45.09/t and US$69.00/t for SLS and values between US$47.16/t and US$71.07/t for C&F mining) was included in the estimate. Mineral Reserves estimates are based on average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); and silver: US$21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head grades are 89.30% for Zn, 15.73% for Cu, 80.02% for Pb, and 77.51% for Ag. The current LOM plan continues to 2033. The current LOM production planning goes from 2027 to 2033. We continued to advance with the technical studies to optimize the integration of El Porvenir and Atacocha underground mines, and as a result of the advancements in the technical studies, we increased the overall Mineral Reserves of the Cerro Pasco Complex. For further information see “Information on the Company—Mining Operations—Cerro Pasco Complex—Integration Project.”

56
Mining Operations

Atacocha Underground – Net Difference in Mineral Reserves between December 31, 2023 versus December 31, 2022 (on an 75.96% Nexa attributable ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.30-50.0-4.4-3,535-18.7---
Probable3.01-136.6-12.8-7,509-38.8---
Total4.30-186.5-17.2-11,044-57.5---

Atacocha Underground – Net Difference in Mineral Reserves between December 31, 2023 versus December 31, 2022 (on a 100% ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.71-65.8-5.7-4,654-24.6---
Probable3.96-179.8-16.9-9,886-51.1---
Total5.66-245.6-22.6-14,540-75.7---

In 2023, Atacocha’s Underground Mineral Reserves increased compared to 2022 due to the declaration of Mineral Reserves for the first time since 2019.

Atacocha Underground – Year End Mineral Resources as of December 31, 2023 (on an 75.96% Nexa Attributable ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured0.803.470.2755.00.98-27.62.11,4117.8-
Indicated1.913.300.3654.90.92-63.26.93,37917.6-
Total2.713.350.3354.90.94-90.89.04,79025.4-
Inferred6.124.090.5677.31.21-250.434.315,21674.1-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources Tonnes and Contained Metal presented in this table are reported on 75.96% Nexa attributable ownership.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
6.The point of reference for Mineral Resources in this table is mill feed materials.

57
Mining Operations

Atacocha Underground – Year End Mineral Resources as of December 31, 2023 (on a 100% ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured1.053.470.2755.00.98-36.42.81,85710.3-
Indicated2.523.300.3654.90.92-83.29.14,44823.2-
Total3.573.350.3354.90.94-119.611.96,30533.5-
Inferred8.064.090.5677.31.21-329.745.120,03197.5-

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 75.96%.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
6.The point of reference for Mineral Resources in this table is mill feed materials.

The Atacocha Underground Mineral Resources estimates in the table above were completed using Datamine and Leapfrog software. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, underground mapping and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to 2.0 m lengths. Wireframes were filled with blocks and sub-celling at wireframe boundaries. Blocks were interpolated with grade using the OK and ID3 interpolation algorithms. Block estimates were validated using industry standard validation techniques. Classification of blocks used distance-based and mineralization continuity criteria. Mineral Resources are reported using all the material within resource shapes generated in DSO software, satisfying minimum mining width of 4.0 m in areas with C&F stopes shapes and 3.0 m for SLS stopes. The Mineral Resources are estimated at a NSR cut-off grade values of US$69.00/t for SLS areas and US$71.07/t for C&F areas depending on the zone. Mineral Resources estimates are based on average long-term metal prices of: zinc: US$3,218.90/t (US$1.46/lb); copper: US$8,820.05/t (US$4.00/lb); lead: US$2,300.33/t (US$1.04/lb); and silver: US$24.35/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing plantdata and the San Gerardo open pit mine was temporarily suspended. Similar protests also led to temporary suspensionare variable as a function of operations during the third quarter. Throughout 2021, these protest activities amounted to, approximately,head grade. Recoveries at LOM average head grades are 89.30% for Zn, 15.73% for Cu, 80.02% for Pb, and 77.51% for Ag.

Atacocha Underground – Net Difference in Mineral Resources between December 31, 2023 versus December 31, 2022 (on an 75.96% Nexa attributable ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(1.30)(62.0)(60.1)(68.5)2.1100.0(3,916)(73.5)(24.1)(75.5)--
Indicated(1.36)(41.5)(72.5)(53.4)6.9100.0(4,611)(57.7)(29.2)(62.3)--
Total(2.66)(49.5)(132.6)(59.3)9.0100.0(8,527)(64.0)(53.3)(67.7)--
Inferred(0.04)(0.6)(23.7)(8.6)34.3100.0(1,024)(6.3)(3.5)(4.6)--

58
Mining Operations

Atacocha Underground – Net Difference in Mineral Resources between December 31, 2023 versus December 31, 2022 (on a 50-day suspension of operations.100% ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(1.71)(62.0)(78.9)(68.4)2.8100.0(5,144)(73.5)(31.7)(75.5)--
Indicated(1.79)(41.5)(95.7)(53.5)9.1100.0(6,083)(57.8)(38.4)(62.3)--
Total(3.50)(49.5)(174.6)(59.3)11.9100.0(11,227)(64.0)(70.1)(67.7)--
Inferred(0.05)(0.6)(31.2)(8.6)45.1100.0(1,350)(6.3)(4.7)(4.6)--

In Marchcomparison to 2022, new protest activities blocked road accessAtacocha’s Underground Inferred Mineral Resources decreased by 0.6% in mass and by 8.6% in zinc content (kt), mainly due to a classification revision. In comparison to 2022, Atacocha’s Underground Measured and Indicated Mineral Resources decreased by 49.5% in mass and by 59.3% in zinc content (kt), mainly due to the Atacocha San Gerardo open pit mine and,conversion to Mineral Reserves.

For additional information, see the Technical Report Summary on the Cerro Pasco Complex Integration, filed as of the dateExhibit 15.2 of this annual report on Form 20-F.

Mineral Reserves and Mineral Resources (Atacocha Open Pit)

The Atacocha Open Pit Mineral Reserves estimates are based on the production is temporarily suspended. Mining activitiesdefinitions for Mineral Reserves in SK-1300 and the tables below are limited to critical operationsbased on costs and modifying factors from the Atacocha Open Pit mine.

Atacocha Open Pit – Year End Mineral Reserves as of December 31, 2023 (on an 75.96% Nexa attributable ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven1.451.02-38.21.160.2514.8-1,77916.911.5
Probable1.880.97-32.41.140.2918.2-1,95821.417.4
Total3.330.99-34.91.150.2733.1-3,73738.228.9

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table are reported on 75.96% Nexa attributable ownership.
3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
5.The point of reference for Mineral Reserves in this table is mill feed materials.

Atacocha Open Pit – Year End Mineral Reserves as of December 31, 2023 (on a minimum workforce to ensure appropriate maintenance, safety100% ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven1.911.02-38.21.160.2519.5-2,34222.215.2
Probable2.470.97-32.41.140.2924.0-2,57728.122.9
Total4.380.99-34.91.150.2743.5-4,91950.338.1

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100% of the Mineral Reserves estimates for the property. Nexa owns 75.96%.
3.The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm.
4.Numbers may not add due to rounding.
5.The point of reference for Mineral Reserves in this table is mill feed materials.
59
Mining Operations

The Atacocha Open Pit Mineral Reserves estimates in the table above were prepared using DSO software, mine design and security.scheduling software. NSR values were calculated using mineral reserve metal prices, metallurgical recovery and consideration of smelter terms, including revenue from payable metals, price participation, penalties, smelter losses, transportation, treatment, refining and sales charges. The CompanyMineral Reserves were estimated at a NSR cut-off values of US$16.21/t. Mineral Reserves estimates are based on average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); lead: US$2,000.29/t (US$0.91/lb); silver: US$21.17/oz; and gold: US$1,630.93/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head grade are 70.44% for Zn, 83.97% for Pb, 75.76% for Ag, and 65.46% for gold. The current LOM plan continues to pursue active dialogue2027. We continued to advance with the local communitytechnical studies to optimize the integration of El Porvenir and authoritiesAtacocha underground mines, and as a result of the advancements in the technical studies, we increased the overall Mineral Reserves of the Cerro Pasco Complex. For further information see “Information on the Company—Mining Operations—Cerro Pasco Complex—Integration Project.”

Atacocha Open Pit – Net Difference in Mineral Reserves between December 31, 2023 versus December 31, 2022 (on an 75.96% Nexa attributable ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.45-14.8---1,779-16.9-11.5-
Probable1.88-18.2---1,958-21.4-17.4-
Total3.33-33.1---3,737-38.2-28.9-

Atacocha Open Pit – Net Difference in Mineral Reserves between December 31, 2023 versus December 31, 2022 (on a 100% ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven1.91-19.5---2,342-22.2-15.2-
Probable2.47-24.0---2,577-28.1-22.9-
Total4.38-43.5---4,919-50.3-38.1-

In 2023, Atacocha’s Open Pit Mineral Reserves increased compared to 2022 due to the declaration of Mineral Reserves for peaceful resolutionthe first time since 2019.

Atacocha Open Pit – Year End Mineral Resources as of this situation.December 31, 2023 (on an 75.96% Nexa Attributable ownership basis) (1)

 

For the Year Ended December 31,

 

2021

2020

2019

Treatment ore (in tonnes)1,271,1071,065,3631,505,428
Average ore grade   
Zinc (%)0.881.201.43
Copper (%)-0.050.08
Lead (%)0.821.151.30
Silver (ounces per tonne)1.011.391.52
Gold (ounces per tonne)0.010.010.01
Metal contained in concentrate production   
Zinc (in tonnes)8,5229,61416,668
Copper (in tonnes)0040
Lead (in tonnes)8,70810,21016,464
Silver (in oz)1,026,7831,184,7501,882,138
Gold (in oz)11,9476,2609,306
Cash cost, net of by-product credits (in US$/t)(428.6)17.81,052.0
Cash cost, net of by-product credits (in US$/lb)(0.19)0.010.48
Capital Expenditures (in millions of US$)11.615.311.8

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured1.371.28-31.40.870.1917.5-1,38111.98.4
Indicated2.951.05-29.00.900.2430.9-2,74726.522.7
Total4.311.12-29.80.890.2248.4-4,12838.431.1
Inferred1.291.27-32.71.150.2216.4-1,35714.99.1
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Mining Operations

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources Tonnes and Contained Metal presented in this table are reported on 75.96% Nexa attributable ownership.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
6.The point of reference for Mineral Resources in this table is mill feed materials.

Atacocha Open Pit – Year End Mineral Resources as of December 31, 2023 (on a 100% ownership basis) (1)

  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured1.801.28-31.40.870.1923.0-1,81815.711.0
Indicated3.881.05-29.00.900.2440.7-3,61634.929.9
Total5.681.12-29.80.890.2263.7-5,43450.640.9
Inferred1.701.27-32.71.150.2221.6-1,78719.612.0

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 75.96%.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee.
5.Numbers may not add due to rounding.
6.The point of reference for Mineral Resources in this table is mill feed materials.

 

Morro Agudo

The Morro Agudo Complex consists of anAtacocha Open Pit Mineral Resources estimates in the table above were completed using Datamine and Leapfrog software. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, underground mine and open pit polymetallic mine, as well as three deposits along what is known asmapping and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to 2.0 m lengths. Wireframes were filled with blocks and sub-celling at wireframe boundaries. Blocks were interpolated with grade using the Ambrosia Trend (Ambrosia Sul, Ambrosia Norte,OK and Bonsucesso).ID3 interpolation algorithms. Block estimates were validated using industry standard validation techniques. Classification of blocks used distance-based and mineralization continuity criteria. Mineral Resources are reported within resources open pit shell. The Morro Agudo mine site is situated on Traíras Farm, about 45km south of the municipality of Paracatu, Brazil,Mineral Resources are estimated at a latitudeNSR cut-off grade values of approximately -17 57’ 33” SUS$22.44/t. Mineral Resources estimates are based on average long-term metal prices of: zinc: US$3,218.90/t (US$1.46/lb); lead: US$2,300.33/t (US$1.04/lb); and silver: US$24.35/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a longitudefunction of approximately 46°49’42” W, within Zone 23Shead grade. Recoveries at Life of the Universal Transverse Mercator coordinate system (Corrego Alegre Datum). The Ambrosia Trend depositsMine average head grades are situated about 15 to 20km northeast of Paracatu.

Nexa Brazil owns 100.0% of Morro Agudo. The total Morro Agudo project area is about 80 km long70.44% for Zn, 83.97% for Pb, 75.76% for Ag, and 10 km wide at the widest extent and covers a significant strike extent of the lithologies that host mineralization at the Morro Agudo mine and along the Ambrosia Trend.

Nexa Brazil holds three granted mining concessions in the Morro Agudo mine area of approximately 1,446.1 hectares. In the Ambrosia Trend area, Nexa Brazil has three granted mining concessions totaling 2,495.8 hectares.65.46% for Au. 

 
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Mining Operations

Nearby the Morro Agudo mine siteAtacocha Open Pit – Net Difference in Mineral Resources between December 31, 2023 versus December 31, 2022 (on an 75.96% Nexa attributable ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(1.05)(43.5)(7.7)(30.7)--(1,490)(51.9)(12.8)(51.7)(11.1)(57.2)
Indicated(2.27)(43.5)(26.0)(45.7)--(2,288)(45.4)(22.6)(46.0)(9.2)(28.8)
Total(3.33)(43.5)(33.7)(41.1)--(3,778)(47.8)(35.4)(47.9)(20.3)(39.6)
Inferred(1.63)(55.8)(16.6)(50.2)--(1,619)(54.4)(14.6)(49.5)(9.7)(51.5)

Atacocha Open Pit – Net Difference in Mineral Resources between December 31, 2023 versus December 31, 2022 (on a 100% ownership basis)

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(1.39)(43.6)(10.2)(30.7)--(1,966)(52.0)(16.8)(51.7)(14.6)(57.0)
Indicated(2.99)(43.5)(34.2)(45.7)--(3,010)(45.4)(29.7)(46.0)(12.1)(28.8)
Total(4.38)(43.5)(44.4)(41.1)--(4,976)(47.8)(46.5)(47.9)(26.7)(39.5)
Inferred(2.14)(55.7)(21.8)(50.2)--(2,127)(54.3)(19.2)(49.5)(12.7)(51.4)

In comparison to 2022, Atacocha’s Open Pit Inferred Mineral Resources decreased by 55.7% in mass and Ambrosia trend areas, Nexa Brazil also holds 4 exploration applications totaling 972.3 hectares, 48 exploration authorizations totaling 41,388.0 hectares, three rights to apply for mining concession totaling 2,679.9 hectares, three mining applications totaling 2,167.4 hectares and one mining concession totaling 1,000.0 hectares,by 50.2% in addition to the core tenements.

The Morro Agudo operation holds several permits in support of the current operations. The main instrument to regulate the operation is a set of operating licenses issued by the Environmental Agency from the state of Minas Gerais. The licenses are active, some of them under renewal process.

The Ambrosia mine in Morro Agudo reached the end of its life of mine during the fourth quarter of 2020 and operations were suspendedzinc content (kt), mainly due to the uncertainties associated with the geological modellimits of the area, safety considerationspit shell constraint. In comparison to 2022, Atacocha’s Open Pit Measured and a greater movement of ore comparedIndicated Mineral Resources decreased by 43.5% in mass and by 41.1% in zinc content (kt), mainly due to the original plan.conversion to Mineral Reserves.

In 2021, we spent US$6.6 million on sustaining capital expenditures for this property, primarily associated with

For additional information, see the mine development and maintenance of plant and equipment.

Mineralization Developments

Exploration activities conducted to date have included geological mapping; rock chip, pan concentrate, stream sediment, and soil sampling; airborne and ground geophysical surveys and drilling. In 2021, the brownfield exploration program was directed towards intensifying the diamond drilling work at the Bonsucesso target, confirming zinc and lead mineralization along the strike of the mineralized zone and opening the potential to extend de mineralized bodies, totaling 8.3 km of exploratory drilling. In additional, Nexa performed additional 74 diamond drill holes in Morro Agudo mine with the purpose of Mineral Resources definition, totaling 10.8 km of infill drilling.

Our expenditures for the Morro Agudo brownfield project in 2021 were US$2.2 million directed towards drilling progressTechnical Report Summary on the Bonsucesso project, and its extensions, primarily related to exploratory drilling and geological activities. In 2021, we drilled 32 exploration drill holes, totaling 10.5 km, which includes 8.3 km of exploration drilling in Bonsucesso and regional targets, in addition to 2.2 km of in fill drilling. For 2022, we have budgeted a total of US$2.2 million in mineral exploration expenditures and we expect to drill 8.8 km.

Morro Agudo does not currently have any estimated Mineral Reserves and is considered an exploration stage property under S-K 1300. Morro Agudo is not considered a material property for the purposes of S-K 1300.

Production

The Morro Agudo mine has a treatment plant capacity of 3,400 tonnes of mill feed per day. The table below summarizes the Morro Agudo mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated.

 

For the Year Ended December 31,

 

2021

2020

2019

Treatment ore (in tonnes)982,0361,180,6211,168,396
Average ore grade   
Zinc (%)2.052.412.33
Lead (%)0.730.490.52
Metal contained in concentrate production   
Zinc (in tonnes)17.27825,17724,353
Lead (in tonnes)4.6914,0194,700
Silver (in oz)03,45822,581
Cash cost, net of by-product credits (in US$/t)1,841.21,726.92,076.7
Cash cost, net of by-product credits (in US$/lb)0.840.780.94
Capital Expenditures (in millions of US$)7.69.015.9

47

Mining Operations

Concentrate Sales

All the metal produced by our mines is processed into concentrates. Our mining operations sell the concentrates that they produce to third parties and to our own smelters pursuant to arm’s length transactions. Each mine bears the cost of transporting the concentrate to the point of sale where the smelter or trader purchases the concentrate. The smelter or trader pays the mine for the percentage of metals contained in the concentrate, net of charges for treating the concentrate and refining the metals. The typical payable percentage is 85% for zinc contained in concentrate minus treatment charges.

Growth projects

Vazante mine deepening project

One of our main brownfield projects is the Vazante Mine Deepening Project, which involves extending the mine life of Vazante mine from 2022 until 2028. The capital expenditures related to this project in 2021 totaled US$3.4 million and we expect to invest an additional US$2.0 million in 2022. This project began in 2013 and is expected to be completed in 2024.

In addition, we are conducting exploration activities below the mine’s current level of operation and alongside the ore body, which we believe will maintain the Vazante mine’s production at 135,000 tonnes of zinc per year until 2031. As part of this project, we are investing in ongoing exploration activities and infrastructure, including expansion of an underground pumping station, an increase in the capacity of the ventilation system, emergency paths, access ramps, electrical networks and substations. During 2020, we assembled and commenced operating the EB347 pumping station and during 2021, and the activities of CEMIG´s electric power line were still in progress. Due to hydrogeological studies based on the mine development review, phase 2 of the EB-140 has been rescheduled to 2023.

Bonsucesso

The Bonsucesso project is a brownfield underground mine project that belongs to the Morro Agudo complex (Ambrosia Trend) and is expected to extend the life of mine of the Morro Agudo complex. The project is located 8 km north of the Ambrosia Sul mine and approximately 60 km north of the Morro Agudo mine. The run-of-mine of Bonsucesso will feed the Morro Agudo processing plant.

The feasibility study was resumed in 2021 and is expected to be concluded in 2022. The total investments related to this project,Cerro Pasco Complex Integration, filed as of December 31, 2021, totaled US$11.7 million, which includes all project studies (from the scoping study to the feasibility study) and anticipated expenses related to construction and operating infrastructure. The mine will be treated as a satellite mine for the Morro Agudo complex considering that minimum operational facilities are expected at the site and that the Morro Agudo plant will be used for ore processing. In 2020, the project obtained the environmental approval for the installation phase.

In 2021, the exploration program was focused on the northern part (infill program) and the central and southern part (extension) of the Bonsucesso deposit, confirming mineral resources and extending the mineralization.

Our expenditures for this project in 2021 were US$2.2 million, which was primarily related to exploration and geological activities. In 2021, we drilled 32 exploration drill holes in Bonsucesso, including 20 exploratory drill holes in Bonsucesso ore bodies extension and 12 drill holes in the infill drilling program, totaling 10.5 km. We have budgeted US$2.2 million in mineral exploration in expenditures for 2022 and we expect to drill 8.8 km of extension and infill drilling for Mineral Resource expansion.

Pasco mining complex

The Pasco mining complex project involves the integration of the El Porvenir and Atacocha mines. The project is intended to capture synergies between the two mining operations resulting from their proximity and operational similarities, with the goal of obtaining costs and investment savings and reducing our environmental footprint.

48

Mining Operations

The integration project is being developed through four stages. The first stage involved the administrative integration of both mines, which was completed in 2014. The second stage involved the integration of the tailing disposal system, which consolidated the operations of the two mines with a single tailing disposal system and thereby helped reduce the environmental footprint. This stage was completed in 2015 and the integrated tailing disposal system commenced operations in the beginning of 2016. The third stage, which was completed in 2016, involved the construction of a new energy transmission line with a 138 kilovolt connection that supplies both mines, replacing the prior 50 kilovolt transmission lines. The development of 3.5 km connecting both underground mines, which is part of the fourth stage, was concluded in 2019.

Following the decree published by the Peruvian government that allowed medium-sized mines to resume their operations in June 2020, after the enforcement of a national state of emergency in response to the COVID-19 crisis, we announced the resumption of operations at the San Gerardo open pit mine but decided not to restart the higher-cost Atacocha underground mine, which was placed under care and maintenance. As of the dateExhibit 15.2 of this annual report the Atacocha underground mine remains suspended, and the decision to resume operations will depend on an improvement in the mine’s economic viability. In 2021, the modernization and debottleneck studies for El Porvenir to evaluate the deepening of the mine and extension of its life-of-mine were postponed due to the prioritization of the capital allocation strategy, and the reassessment of the integration with Atacocha underground mine.Form 20-F.

Mining greenfield projects

Project Name

Current Project Status

AripuanãIn execution
MagistralFeasibility study
PukaqaqaPre-feasibility study on hold
ShalipaycoPre-feasibility study on hold
HilariónExploration phase
Florida Canyon ZincExploration phase
Caçapava do SulSuspended

We summarize below certain information, including the outlook, for each of our greenfield projects. As of the date of this annual report, other than the Aripuanã Project none of our other greenfield projects have Mineral Reserves under S-K 1300.

Aripuanã

Location and means of access

 

The Aripuanã projectmine is located in the northwest corner of the Mato Grosso State in western Brazil, approximately 2,529 km by railroad and road to the Três Marias smelter, 2,831 km to the Juiz de Fora smelter or 2,660 km to the port of Santos. The approximate coordinates of the mine are 226,000m E and 8,888,000m N UTM 21L zone (South American 1969 datum) and the projectmine is located at an average elevation of 250 meters above sea level. The projectmine is accessible from the town of Aripuanã via a 25 km unpaved road, which is well maintained in the dry season. Aripuanã can be accessed from the state capital, Cuiabá, via a 16-hour drive (935 km) on paved and unpaved roads. The final 250 km between Cuiabá and Aripuanã are on unpaved roads.

 

The town of Aripuanã is also serviced by a paved airstrip suitable for light aircraft. There are no commercial flights travelling between Cuiabá and the town of Aripuanã, however. However, the site can be accessed via a three-hour chartered flight.

History

 

Aripuanã is a world-classan underground polymetallic projectmine containing zinc, lead and copper, located in the state of Mato Grosso, Brazil. In 2000, Dardanelos was created to represent a joint venture, or “contract of association,” between Karmin and Anglo American, with the intent of exploring the areas adjacent to the town of Aripuanã for base and precious metals. Anglo American and Karmin held 70% and 28.5% of Dardanelos, respectively, with the remaining interest (1.5%) owned by SGV Merchant Bank (SGV).

 
4962

Mining Operations

In 2004, the initial agreement between Karmin and Anglo American was amended to include Nexa Brazil’s participation. Nexa Brazil subsequently acquired 100% of Anglo American’s interest in the project. In 2007, Karmin purchased SGV’s interests, raising its participation to 30%. In 2015, Nexa Peru acquired 7.7% of Nexa Brazil’s interests in Dardanelos.

Up until 2019, Dardanelos was a joint venture between subsidiaries of Nexa (70%) and Karmin (30%), with Nexa acting as the operator. In 2019, Nexa purchased Karmin’s interest and became the sole owner of the project. As a result of this acquisition and following the transfer of the Dardanelos interest in the Aripuanã project from Nexa Peru to Nexa Brazil, Nexa Brazil became the owner of 100% of the Aripuanã project.mine.

In 2020, we reached an agreement with artisanal miners that are working adjacent to the property belonging to our Aripuanã project,mine, the ANM and the state government whereby Nexa assigned these artisanal miners an area to exercise their activities subject to certain conditions. The increase of artisanal mining activity or the failure of these artisanal miners to abide with our agreement may have an adverse effect on the development of our operations in Aripuanã.

In 2021, Nexa acquired two estates (584.9 hectares) located at the vicinity of the projectmine and concluded the process of documenting a third acquired in the past (100(100.0 hectares). The total land purchase of 684.9 hectares was required to meet the Rural Environmental Registration (CAR in Brazil) which requires areas of native vegetation that are not available within the area of enterprise.

In 2022, Nexa acquired six estates (1,332.4 hectares), located at the vicinity of the mine. The Rural Environmental Registry (CAR) was updated by Nexa and is in the process of being approved by the environmental agency and we still do not have a scheduled date for completion. On January 21,25, 2022, Nexa executedwe signed an Offtake Agreementofftake agreement with a third-party international player (the “offtaker”), in which it undertakesNexa agreed to sell 100% of the copper concentrate produced by Aripuanã for a 5-year period starting in February 2023 and limited to 30,810 tonnes, at the lower of current market price but subject toprices or a price cap. In September 2023, the parties agreed to amend the offtake agreement, which states that no penalty will be applied in case of delays in the agreed shipment schedule per year. However, if lower volumes are delivered in any year within the contract period, at the end of the contract period, the remaining balance will be shipped in a single additional delivery to total the 30,018 tonnes. The offtake agreement was structured to completely extinguish a previous existing future royalty obligation that Nexa had with the offtaker. Additionally, the Company opted to voluntarily and irrevocably designate the entire offtake agreement at fair value through profit and loss within the scope of IFRS Accounting Standards 9 rather than separate the value of the embedded derivative associated with the price cap, recognizing a non-cash accumulated gain of US$2.3 million in the income statement for the period ended on December 31, 2023. For further details on the offtake agreement, see Note 16 to our consolidated financial statements.

Ramp-up activities at the Aripuanã mine started in July 2022, and the mine continued production in the ramp-up phase for the duration of 2023. For further information, see “Project implementation”, below.

Titles, leases and options

 

The projectmine holds one mining concession in the core area that has a total area of 3,639.9 hectares, two mining concession applications (1,387.2 hectares), one right to apply for mining concession, (1,000.0 hectares), fifteen and nine exploration authorizations (52,436.4(27,025.9 hectares) and two exploration applications (7,864.7 hectares), totaling 66,328.2 hectares..

The Aripuanã projectmine holds surface rights sufficient to support the future operations. There is sufficient suitable land available within the mineral rights held by the Company for tailings disposal, mine waste disposal, and installations such as the process plant and related mine infrastructure.

The Aripuanã mine holds several permits and licenses supporting its current operations. The operating license issued by the Environmental Agency from the state of Mato Grosso is valid until October 2024 and will undergo the renewal process in 2024.

Mineralization

 

The Aripuanã region contains polymetallic VMS deposits with zinc, lead and copper, as well as small amounts of gold and silver, present in the form of massive mantles and veins, located in volcano sedimentary sequences belonging to the Roosevelt Group of Proterozoic age.

63
Mining Operations

Four main elongated mineralized zones have been defined in the central portion of the project:mine: (1) Arex, (2) Link, (3) Ambrex and (4) Babaçu. Limited exploration has identified possible additional mineralized bodies including Massaranduba, Boroca and Mocotó to the south and Arpa to the north.

The Aripuanã polymetallic deposits are typical VMS deposits associated with felsic bimodal volcanism. The individual mineralized bodies have complex shapes due to intense tectonic activity. Stratabound mineralized bodies tend to follow the local folds, however, local-scale, tight isoclinal folds are frequently observed, usually with axes parallel to major reverse faults, causing rapid variations in the dips.

Massive, stratabound sulphide mineralization as well as vein and stockwork-type discordant mineralization have been described on the property. The stratabound bodies, consisting of disseminated to massive pyrite and pyrrhotite, with well-developed sphalerite and galena mineralization, are commonly associated with the contact between the middle volcanic and the upper sedimentary units. Discordant stringer bodies of pyrrhotite-pyrite-chalcopyrite mineralization are generally located in the underlying volcanic units or intersect the massive sulphide lenses and have been interpreted as representing feeder zones.

In 2023, Aripuanã’s strategy aimed to increase throughput rate and asset reliability, reduce plant downtime, improve metal recoveries, concentrate grades and quality while consuming our ore stockpile inventory, which was supported by mineral exploration efforts to upgrade the Mineral Resources at the Babaçu target and expand our Mineral Reserves.

The exploratory drilling in 2023 was focused on the infill drilling of the Babaçu target, which is located southeast of the Ambrex orebody, extending the mineralization with high zinc, lead and copper content, which aimed to update the classification and conversion of resources into reserves, as well as starting drilling tests at the Massaranduba target, located southeast of Aripuanã mine.

In 2023, we spent a total of US$7.3 million on the Aripuanã mine, with US$2.0 million spent towards Aripuanã’s exploration program and US$5.2 million on an infill drilling campaign. The total investment included drilling, geological activities, geochemistry, and more. In 2023, we drilled 21.8 km of diamond drilling, including Babaçu infill drilling and Massaranduba exploratory drilling. For 2024, we expect to invest US$4.0 million in the brownfield exploration program to drill 9.0 km focused on the Massaranduba target to validate the presence of mineralization in the southeastern extension of the Aripuanã deposit.

Ramp-up Activities

Ramp-up activities at the Aripuanã mine started in July 2022, and the mine continued in the ramp-up phase through 2023 and into 2024. Ramp-up activities continue to progress and are expected to conclude in mid-2024.

The commissioning of the paste fill circuit was completed in December 2022, the first tests of mine filling started in January 2023 and were concluded in February 2023, with the paste plant becoming fully operational only in 2024. In January and February of 2023, the processing plant performed at around 57% of nameplate capacity. Ramp-up activities focused on steadily increasing the plant throughput rate, asset reliability, as well as concentrate grades and quality. At the end of 2Q23, the plant performed at an average of 76% of nameplate capacity while the average utilization rate was 66%.

In March 2023, we decided to temporarily halt operations at the plant to address some design limitations in the capacity of the flotation pumping system, identified during the detection of bottlenecks, which required resizing and upgrade, along with certain plant processing facilities and systems, as well as the clean-up and upgrading of water treatment facilities, which contributed to a better resiliency during the rainy season (which typically occurs from December to March). Due to the aforementioned limitations, in 3Q23 we reduced plant throughput, and as a result, the utilization rate was also reduced in the period and the plant performed at an average of 56% in the quarter. Despite this reduction, our priority throughout 2023 was to continue improving metal recovery and concentrate quality and grades, aiming to achieve a stable operation and to minimize impacts related to the necessary extension of the ramp-up phase.

 
5064

Mining Operations

In 2021, the drilling campaign at Aripuanã focused on exploring the Babaçu mineralized zones4Q23, we achieved an average of 61% of capacity utilization level and confirmed the presence of mineralization along 0.2 km of the strike. We spent US$1.8 million on Aripuanã exploration, maintenance, and geological activities. In 2021, we drilled six drill holes, including Aripuanã brownfield program and infill drilling, totaling 5.6 km, plus 2.7 km of infill drilling. In additional, a total of 29.6 km was drilled in Aripuanã with the purpose of grade control in infill areas. For 2022, we expect to invest an additional US$3.0 millionreach nameplate capacity in a brownfield exploration program, drilling 9.0 km. An additional 25,000 meters of infill drilling is planned for the Ambrex and Link orebodies for Mineral Resources expansion and reclassification.

Project implementation

On October 7, 2021, the operating license for the Aripuanã project was granted.mid-2024. At the end of 4Q21, overall physical progress ofFebruary 2024, the project reached 99.3%. The commissioning process ofaverage capacity utilization rate was around 61%, maintaining similar levels as in 4Q23, given the beneficiation plant reached more than 40% of progress. The comminution systemusual rainy season period in the region, which impacted our dry disposal capacity. However, during this period the operational focus was to maintain concentrate quality and tailings flow are fully assembled, with mechanical completion and most testing done.

Among the delivered systems of the beneficiation plant are the following: crushing; crushed ore silo; grinding (SAG and ball mills); tailings thickener; tailings press filters; utilities systems (compressed air, raw water and water for fires). The environmental control systems, suchgrades, as well as the wetlands destined to receivingmetallurgical recovery rates.

At the water from the mines, treating the water from the tailings and waste stockpile, are already in operation.

In 2Q21, the total estimated CAPEX for the project was revised from US$547 million to US$575-595 million. Cost increases resulted primarily from, among other factors, impacts related to COVID-19 and scope change due to additional houses for our employees. Inflationary cost pressures were partially offset by cost initiative reductions and foreign exchange rate gains. The main impacts related to COVID-19 costs that impacted the project were:

·Increased accommodation costs for lodging due to reduced occupancy requirements per COVID-19 distancing protocols;
·Higher costs due to increased frequency of sanitization in lodgings, offices and vehicles;
·Quarantine protocols that varied through the different outbreaks of COVID-19;
·Additional buses for the transportation of Nexa’s team, contractors and subcontractors’ workforce to and from the site due occupancy requirements, which was reduced to 50% to comply with distancing protocols;
·Increase in testing procedures that varied through the different COVID-19 outbreaks;
·Increase of the team dedicated to COVID-19 prevention and combat;
·Increases in manpower due to the impact of these factors on productivity and the aim of maintaining the project’s intended schedule; and
·Claims from contractors due to COVID-19.

Abnormal rainfall levels and health protocols to combat the surgeend of COVID-19 variants have impacted our productivity (lower-than-anticipated workforce) in 4Q21 and beginning of 2022 and contributed to additional pressure on costs and the project timeline. Consequently, the total estimated CAPEX for the project was revised in February 2022 to US$625 million and ramp-up is now scheduled to commence in 3Q22 rather than 1Q22.

By year-end 2021,2023, approximately 552 kt106.6kt of ore was stockpiled. We also continued to make progress on related project infrastructure. This included placing lean concrete in the grinding area, constructing pipe rack foundations and assembling steel structures, laydown pipes and equipment, temporary buildings and laydown areas and constructing roads providing access to the site, as well as a water dam, beneficiation plant and waste ore stockpile. During 2021, we completed 100% of earthworks for the mine’s waste stockpile (Pile 2) (drainage and waterproofing).

Horizontal mine development reached an accumulated of 15,9007,474 meters developed for both mines (Arex and Link) by. As of the enddate of 2021.this filing, the mine is fully operational, and underground activities are focused on developing and preparing new areas for mining operations.

51

Mining Operations

The total headcount was more than 585As of December 31, 2023, 814 people were employed at Aripuanã. Of these employees, working in the operational areas.23.7% are women. We also implementedcontinued the qualification program for future mine and plant operating professionals, which had 283146 candidates enrolled in 2021,2023, of which approximately 19746 obtained professional qualifications in the areas of maintenance and automation, and geology and surveying. OfThe company hired 65.8% (96) of the total numberattendees from the qualification program, of participants, 42.6% werewhich 52.1% (50) are men and 47.9% (46) are women.

In 2021, we invested US$257.6 million inTo date, cumulative incurred expansion capital expenditures on the project with cumulative incurredmine total US$632.7 million, and we did not make any new expansion capital expenditures on the mine in 2023.

Operations and infrastructure

The Aripuanã operation consists of US$ 565.8 million sincetwo mechanized underground mines, the beginningArex Mine and Link Mine, with a rate of approximately 2.3 Mtpy. Production drilling operations have been performed by company personnel using a variety of drilling machines throughout the history of the construction.Aripuanã mine.

The Aripuanã underground mine has been in operation since 2019 and is a fully mechanized mine using rubber-tired diesel equipment for development and production activities. Access to the mine is through one portal for Arex and one portal for Link. The Aripuanã processing plant has been in operation since 2022.

All infrastructure required for the current mining and processing operations has been constructed and is operational. This includes the underground mines, access roads, power lines, water pipelines, offices and warehouses, a process plant/concentrator, conveyor systems, waste rock facilities, temporary ore stockpiles, paste-fill plants, and tailings storage facilities.

The Aripuanã mine is connected to the basic grid at 230 kV. The energy measurement and billing system takes place in SE Dardanelos, 20 km are covered at 69 kV to the unit. Power distribution is carried out at 13.8 kV and the unit has a 25/31 MW transformer. Currently, the power demand contracted with Energisa for the unit is 23 kV, on and off-peak. There are also five 750 kVA diesel generators.

In 2022,2023, we estimate that we will investspent US$5979.4 million in Aripuanã, which represents 9.4% of the US$ 625.0 million in total estimatedon sustaining capital expenditures for this property, primarily associated with ongoing ramp-up activities, mine development, construction of a waste pile, equipment replacement and other major infrastructure.

Production

The Aripuanã mine is in ramp-up phase and has a treatment plant with a nominal design processing capacity of approximately 6,300 tonnes of ore per day. The table below summarizes the project.

AsAripuanã mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated. Production in 2023 was higher than 2022 due to the continued progress of the date of this annual report, mechanical completion is expected to be completed in 2Q22, while commissioning is proceeding in parallel,ramp-up phase which was focused on steadily increasing the plant throughput rate, asset reliability, as well as concentrate grades and production is expected to begin in 3Q22. All safety measures and procedures to mitigate any potential further impact related to the global COVID-19 pandemic remain in place.quality.

65
Mining Operations

 

For the Year Ended December 31,

2023

2022

2021

Treatment ore (in tonnes)1,311,430100,114-
Average ore grade   
Zinc (%)3.312.44-
Copper (%)0.680.49-
Lead (%)1.050.00-
Silver (ounces per tonne)0.960.61-
Gold (ounces per tonne)0.0150.011-
Metal contained in concentrate production   
Zinc (in tonnes)22,099670-
Copper (in tonnes)4,443195-
Lead (in tonnes)6,3310-
Silver (in oz)513,91620,497-
Gold (in oz)7,954273-
Cash Cost, net of by-product credits (in US$/t)---
Cash Cost, net of by-product credits (in US$/lb)---
Non-Expansion Capital Expenditures (in millions of US$)60.168.4-

Mineral Reserves and Mineral Resources

The Aripuanã Mineral Reserves estimates are based on the definitions for Mineral Reserves in SK-1300 and the tables below are based on costs and modifying factors from the Aripuanã mine.

Aripuanã – Year End Mineral Reserves as of December 31, 20212023 (on a 100% ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
100.0%Proven8.973.800.2835.71.430.26340.725.410,279128.175.2
Probable12.823.470.1932.11.310.32445.024.613,216167.4132.8
Subtotal21.793.610.2333.51.360.30785.650.023,496295.5208.0
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Proven6.433.830.2133.81.400.28246.213.86,99390.057.1
Probable24.644.480.1342.41.730.211,105.031.833,610427.3167.3
Total31.074.350.1540.61.660.221,351.345.640,602517.2224.4

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions.
2.Mineral Reserves data presented in this table represents 100.0%100% of the Mineral Reserves estimates for the property. Nexa owns 100.00%100% of property.
3.3.The Qualified Person for the Mineral Reserves estimate is Vitor Ferraz Viana, B.Eng., FAusIMM, a Nexa employee.
4.Numbers may not add due to rounding.
4.5.The qualified personpoint of reference for the Mineral Reserves estimatein this table is SLR Consulting Ltd., an independent mining consulting firm.mill feed materials.

 

The Aripuanã Mineral Reserves estimates are based on modifying factors from the Aripuanã Project and based on threefour main orebodies: Arex, Link and Ambrex and the two main types of mineralization in the deposit are stratabound and stringer. The main commodities produced are zinc, copper, lead, copper, silver and gold. The dilution that has been applied is related to the selected mining method. The two main mining methods used at Aripuanã are longitudinal longhole retreat (“bench stoping”) and transverse longhole mining (vertical retreat mining, or “VRM”) with primary and secondary stope extraction. Dilution is applied on a percentage basis, with no grade applied to the diluting material. The NSR cut-off value wasfactors were determined using the mineral reservelong term metal prices, metalprice forecasts, metallurgical recoveries, transport, treatment, and refining costs, as well as mine operating cost. Thecosts. A break-even NSR cut-off value is US$47.91/63.40/t processed was estimated from forecasted operating costs and some incremental material between US$39.79/49.20/t and US$47.941/63.40/t was included. A minimum mining width of 4.0 m was used. The long-term prices derived are in line with the consensus forecasts from banks and independent institutions. The Mineral Reserves estimates are estimated using anbased on average long term zinc price of US2,722.20/long-term metal prices of: zinc: US$2,799.04/t (US$1.23/1.27/lb), lead price of; copper: US$1,997.21/7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb), copper price of; silver: US$7,288.26/t (US$3.31/lb), silver price of21.17/oz; and gold: US$19.68/oz and gold price of US$ 1,454.12/1,630.93/oz. Metallurgical recoveries are accounted for in NSR calculations based on metallurgical testworks and are variable as a function of head grade and oretype. Recoveries at Life of Mine average head gradegrades for stratabounda Mix of 80% Stratabound and 20% Stringer material are 89.4%90.06% for Zn, 83.3%60.00% for Cu, 84.92% for Pb, 59.3% for Cu, 76.0%68.00% for Ag, and 70.0% for Au. Recoveries at the LOM average head grades for stringer material are 87.8% for Cu, 50.0% for Ag, and 63.0%67.80% for Au. The current LOM plan continues to 2032.2036.

 
5266

Mining Operations

Aripuanã – Net Difference in Mineral Reserves between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

 

OwnershipClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
100%Proven(1.12)(36.0)(5.9)(1,396)(12.0)(19.4)
Probable(0.60)(38.2)(3.8)(995)(11.5)(8.7)
Subtotal(1.72)(74.2)(9.7)(2,391)(23.5)(28.1)

Notes:

1. The total Mineral Resources data presented in this table are calculated on 100% basis. Nexa owns 100%.

  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Proven(1.98)(23.5)(27.2)(9.9)(10.2)(42.7)(870)(11.1)(9.1)(9.2)(6.9)(10.8)
Probable2.9313.5349.146.25.420.610,44745.1148.753.411.37.2
Total0.953.2322.031.3(4.8)(9.5)9,57630.9139.536.94.42.0

 

In comparison to 2020,2022, Aripuanã’s Mineral Reserves have decreased,increased by 3.2% in mass and by 31.3% in zinc content (kt), mainly due to geotechnical and operational parameter relatedinfill drilling at the Babaçu area, focused on the conversion from Inferred Mineral Resources to pillars and differencesIndicated Mineral Resources, enabling the increase in cut-off values.Probable Mineral Reserves. Mineral Reserve depletion during 2023 accounted for 1.5Mt containing 43.9kt of zinc.

Aripuanã – Year End Mineral Resources as of December 31, 20212023 (on a 100% ownership basis) (1)

 

OwnershipClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
100.0%Measured0.441.790.3417.50.590.357.91.52482.65.0
Indicated2.802.180.3019.90.740.4861.08.41,79120.743.2
Subtotal3.242.130.3119.60.720.4668.99.92,03923.348.2
Inferred38.483.510.3335.51.290.551,350.6127.043,919496.4680.4
  GradeContained Metal
ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
 (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Measured0.352.600.3923.10.860.369.11.42603.04.1
Indicated5.193.950.1835.01.460.27205.09.35,84075.845.1
Total5.543.860.1934.21.420.28214.110.76,10078.849.2
Inferred38.753.470.3345.71.390.431,344.6127.956,935538.6535.7

Notes:

1.Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions.
2.Mineral Resources data presented in this table represents 100% of the Mineral Resources estimates for the property. Nexa owns 100.00%100% of property.
3.Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
4.4.The Qualified Person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM, a Nexa employee.
5.Numbers may not add due to rounding.
5.6.The qualified personpoint of reference for the Mineral Resources estimatein this table is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee.mill feed materials.

 

The Mineral Resources estimates for the Aripuanã Projectmine were completed for Babaçu, Arex, Ambrex and Link. The block models were created using Datamine and Leapfrog software. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to one meterone-meter lengths. Wireframes were filled with blocks measuring 5 meters by 5 meters by 5 meters for Arex, Link, and Ambrex, and 10 meters by 5 meters by 5 meters for Babaçú with sub-celling at wireframe boundaries. Blocks were interpolated with grade using the OK and ID3. Blocks estimates were validated using industry standard validation techniques. Classification of blocks was based on distance-based criteria. Potentially mineable shapes of underground mineral resources are generated using DSO software. The Mineral Resources of the Aripuanã projectmine are reported using a cut-off value of US$47.91/63.40/t. Mineral Resources estimates are estimated usingbased on average long-term metal prices ofof: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb); copper: US$8,820.05/t (US$4.00/lb); lead: US$2,296.79/2,300.33/t (US$1.04/lb); copper:silver: US$8,381.50/t (US$3.80/lb);24.35/oz and gold: US$1,672.24/oz and silver: US$22.63/1,696.11/oz. Metallurgical recoveries are accounted for in NSR calculations based on metallurgical test work and are variable as a function of head grade and oretype. Recoveries at the LOM average head grades for stratabound material are 89.4%90.06% for Zn, 83.3%84.92% for Pb, 59.3%60.00% for Cu, 76.0%75.10% for Ag, and 70.0%67.80% for Au. Recoveries at the LOM average head grades for stringer material are 87.8%88.68% for Cu, 50.0%50.00% for Ag, and 63.0%63.00% for Au.

 
5367

Mining Operations

Aripuanã – Net Difference in Mineral Resources between December 31, 20212023 versus December 31, 20202022 (on a 100% ownership basis)

 

OwnershipClassTonnageContained Metal
ZincCopperSilverLeadGold
(Mt)(kt)(kt)(koz)(kt)(koz)
100%Measured(2.48)(65.0)(9.6)(2,547)(24.7)(22.4)
Indicated(2.37)(35.3)(5.5)(1,230)(11.7)(27.8)
Subtotal(4.85)(100.3)(15.2)(3,777)(36.4)(50.2)
Inferred(0.97)44.0(4.3)1,01314.3(56.1)
  Contained Metal
ClassTonnageZincCopperSilverLeadGold
 (Mt)%(kt)%(kt)%(koz)%(kt)%(koz)%
Measured(0.05)(12.5)1.621.3(0.2)(12.5)(41)(13.6)0.27.1(1.0)(19.6)
Indicated2.64103.5147.4255.94.593.84,102236.054.9262.719.777.6
Total2.5987.8149.0228.94.367.24,061199.255.1232.518.761.3
Inferred0.200.5415.544.712.210.520,37255.7145.437.0(34.4)(6.0)

Notes:

In comparison to 2022, Aripuanã’s Inferred Mineral Resources increased by 0.5% in mass and increased by 44.7% in zinc content (kt) in 2023, mainly due to infill drilling at Babaçu resulting in higher average grades. In comparison to 2022, Aripuanã’s Measured and Indicated Mineral Resources increased by 87.8% in mass and increased by 228.9% in zinc content (kt) in 2023, primarily due to infill drilling at Babaçu resulting in higher average grades.

For additional information, see the Technical Report Summary on Aripuanã, filed as Exhibit 15.4 to Nexa’s annual report on Form 20-F/A for the year-ended December 31, 2020, as filed on November 4, 2021.

Morro Agudo

The Morro Agudo Complex consists of an underground mine and open pit, polymetallic mine, as well as three deposits along what is known as the Ambrósia Trend (Ambrósia Sul, Ambrósia Norte, and Bonsucesso). The Morro Agudo mine site is situated on Traíras Farm, about 45 km south of the municipality of Paracatu, Brazil, at a latitude of approximately -17 57’ 33” S and a longitude of approximately 46°49’42” W, within Zone 23S of the Universal Transverse Mercator coordinate system (Corrego Alegre Datum). The Ambrósia Trend deposits are situated about 15 to 20 km northeast of Paracatu.

Nexa Brazil owns 100% of Morro Agudo. The total Morro Agudo mine area is about 80 km long and 10 km wide at the widest extent and covers a significant strike extent of the lithologies that host mineralization at the Morro Agudo mine and along the Ambrósia Trend.

On March 19, 2024, Nexa announced the suspension of its mining operations in the Morro Agudo Complex effective May 1, 2024 until further notice. Between March 19 and April 30, 2024, mining activities will be reduced while limestone production activities will continue at full capacity. The suspension is part of Nexa’s portfolio optimization process to improve free cash flow in line with the Company’s disciplined capital allocation framework, along with its long-term strategy to maximize value for the Company and its shareholders. Nexa is committed to carrying out a structured process, aiming to minimize impacts on the business and, particularly, on its employees and host communities.

Nexa Brazil holds three granted mining concessions in the Morro Agudo mine area of approximately 1,446.1 hectares. In the Ambrósia Trend area, Nexa Brazil has three granted mining concessions totaling 2,495.8 hectares.

Nearby the Morro Agudo mine site and Ambrósia trend areas, Nexa Brazil also holds 44 exploration authorizations totaling 41,414.3 hectares, one right to apply for mining concession totaling 917.0 hectares, three mining applications totaling 2,167.4 hectares and one mining concession totaling 1,000.0 hectares, in addition to the core tenements.

The Morro Agudo operation holds several permits in support of the current operations. The main instrument to regulate the operation is a set of operating licenses issued by the Environmental Agency from the state of Minas Gerais. The licenses are active, some of them under renewal process.

68
Mining Operations

The Ambrósia mine in Morro Agudo reached the end of its life of mine during the fourth quarter of 2020 and operations were suspended due to the uncertainties associated with the geological model of the area, safety considerations and a greater movement of ore compared to the original plan.

In 2023, we spent US$2.8 million on sustaining capital expenditures for this property, primarily associated with the mine development and maintenance of plant and equipment.

Mineralization Developments

In 2023, no exploratory drilling was carried out in the Morro Agudo area, and for 2024 no exploration activity is expected.

Morro Agudo does not currently have any estimated Mineral Reserves and is considered an exploration stage property under S-K 1300. Morro Agudo is not considered a material property for the purposes of S-K 1300.

Production

The Morro Agudo mine has a treatment plant capacity of 3,400 tonnes of mill feed per day. The table below summarizes the Morro Agudo mine’s concentrate production, metal contained in concentrates produced and average grades for the periods indicated.

 

For the Year Ended December 31,

2023

2022

2021

Treatment ore (in tonnes)1,293,3831,016,568982,036
Average ore grade   
Zinc (%)1.992.062.05
Lead (%)0.860.850.73
Metal contained in concentrate production   
Zinc (in tonnes)23,16718,70017,278
Lead (in tonnes)8,3206,2474.691
Cash Cost, net of by-product credits (in US$/t)1,796.82,160.51,884.1
Cash Cost, net of by-product credits (in US$/lb)0.820.980.85
Non-Expansion Capital Expenditures (in millions of US$)3.06.87.6

Concentrate Sales

All the metal produced by our mines is processed into concentrates. Our mining operations sell the concentrates that they produce to third parties and to our own smelters pursuant to arm’s length transactions. Each mine bears the cost of transporting the concentrate to the point of sale where the smelter or trader purchases the concentrate. The smelter or trader pays the mine for the percentage of metals contained in the concentrate, net of charges for treating the concentrate and refining the metals. The typical payable percentage is 85% for zinc contained in concentrate and 97% for copper contained in concentrated minus treatment charges.

Growth projects

In addition to Nexa’s operating mines and smelters, a component of our business focuses on growth and exploration, which are activities associated with ascertaining the existence, location, extent or quality of a mineral deposit. Our exploration activities encompass brownfield and greenfield projects. Brownfield projects are exploration or development projects near or within our existing operations, which can share infrastructure and management of our existing operations. Greenfield projects are exploration or development projects that are located outside the area of influence of our existing mine operations and/or infrastructure, which will be independently developed and managed from our existing operations.

Vazante mine deepening project

One of our main brownfield projects is the Vazante mine Deepening Project, which involves extending the mine life of Vazante. The capital expenditures related to this project in 2023 totaled US$2.5 million and we expect to invest an additional US$2.4 million in 2024. This project began in 2013 and the completion of this project, which was expected to occur in 2024, was postponed due to our capital allocation strategy and is now expected to be completed in the second half of 2025.

69
Mining Operations

In addition, we are conducting exploration activities below the mine’s current operating level and alongside the orebody. As part of this project, we are investing in ongoing exploration activities and infrastructure, including expansion of an underground pumping station, an increase in the capacity of the ventilation system, emergency paths, access ramps, electrical networks and substations. During 2020 and 2021, we assembled and commenced operating the EB347 pumping station and progressed the activities of CEMIG’s electric power line; however, phase 2 of the EB-140 was rescheduled in 2022 due to hydrogeological studies. In 2023, we prepared the area to receive the equipment in accordance with the project’s specifications, in 2024 we expect to complete activities in accordance with the updated project schedule and we expect the pumps to be installed in the second half of 2025.

Cerro Pasco Complex Integration Project

The Cerro Pasco Complex Integration Project is one of our main brownfield projects, which involves the continued integration of the El Porvenir and Atacocha underground mines. The Integration Project is intended to continue to capture synergies between the two mining operations, as a result of their proximity and operational similarities, with ore from both the underground mines being processed at the El Porvenir processing plant. The goal of the Integration Project is to achieve cost and investment savings, thereby reducing the environmental footprint and extending the combined life of mine of the two mines. We expect to submit the project to the formal approval process with our Sustainability and Capital Projects (“SCP”) committee and our Board of directors in 2024. For further information see “Information on the Company—Mining Operations—Cerro Pasco Complex—Integration Project.”

Bonsucesso

The Bonsucesso project is a brownfield underground mine project that belongs to the Morro Agudo complex (Ambrósia Trend). The project is located 8 km north of the Ambrósia Sul mine and approximately 60 km north of the Morro Agudo mine.

In 2023, we had no exploratory activities in the Bonsucesso project and no activities are expected for 2024.

The feasibility study concluded in 2022 with no amount invested in 2023. The total investments related to this project, as of December 31, 2023, totaled US$12.8 million, which includes all project studies (from the scoping study to the feasibility study) and anticipated expenses related to construction and operating infrastructure.

The strategic review of our assets continues with initiatives to optimize our portfolio. We continue to assess risk-return alternatives and we are currently revisiting the project, taking into consideration our capital allocation strategy and our focus on free cash flow generation.

Mining greenfield projects

Project Name

Current Project Status

1.MagistralThe total Mineral Resources data presented in this table are calculated on 100% basis. Nexa owns 100%.Under Review
HilariónExploration phase
Florida Canyon ZincExploration phase

 

We summarize below certain information, including the outlook, for each of our greenfield projects. As of the date of this annual report, none of our greenfield projects have Mineral Reserves under S-K 1300.

Magistral

The Magistral mining project is located in the Ancash region of Peru, approximately 450 km northeast of the capital of Lima and approximately 140 km east of the port city of Trujillo. The Magistral property can be reached by vehicle by driving a total of 272 km from Trujillo, much of which consists of poorly maintained roads that traverse steep topography. The Magistral Project consists of a large, irregularly shaped block of contiguous concessions and two smaller, non-contiguous single concessions. The Magistral Project comprises 36 granted concessions, totaling 16,254.2 hectares. The project is an open pit copper mine with molybdenum concentrate as a byproduct.by-product. In 2016, ProInversión approved an initial feasibility study, which set forth production rates starting at 10 thousand tonnes per day and achieving 30 thousand tonnes per day. In 2016, the MINEM approved an environmental impact assessment (“EIA”), to process up to 30 ktpd. An EIA modification is currently in progress to adjustunder the location of some facilities.government approval process.

70
Mining Operations

Nexa Peru was awarded the contract to develop the Magistral mining project in 2011, which has been amended from time to time. Nexa made an initial payment of US$8.0 million to acquire the Magistral concessions, subject to a 2.0% NSR royalty upon production. Under the terms of the contract in 2016, Nexa Peru exercised the option by committing to invest a minimum 70% of declared initial capital expenditures by September 2024 and has previouslyas a result of the COVID-19 pandemic, this term was extended this period.by the government for an additional year, starting in September 2024. In 2023, new alignments were finalized and an additional 35 month extension period was approved by force majeure, extending the period until August 2028. Pursuant to the terms of this commitment with the Peruvian Government, to minimum investments levels in the project during this period, Nexa Peru would be required to pay a penalty inof 30% over the event it fails to investunexecuted minimum investment commitment. As of December 31, 2023, the specified amounts during this period.unexecuted minimum investment commitment was US$323.0 million, and if not completed the penalty exposition would be US$97.0 million. Nexa Peru currently holds a 100.0% interest in 15 of the 36 concessions, Nexa holds 21 concessions by way of a lease agreement entered into with Companía Magistral S.A.C., a company also controlled by Nexa Peru. We spent approximately US$5.40.5 million on the Magistral project in 2021. 2023.

The feasibility study of the Magistral project iswas conducted in the feasibility study phase2022 and engineering studies continue to progress.

In 2022,in 2023, we expect to advance further detailed engineering and optimization opportunities to mitigate the risk of project execution, and to approve advanced with the EIA amendment (“mEIA”),review process by responding to inquiries from the Ministry of the Environment (SENACE). We continue to assess strategic risk-return alternatives to the project by taking into consideration capital allocation decisions and free cash flow generation. In 2024, we expect the final decision relating to the EIA amendment request, which was submitted to SENACE in 4Q21.November 2023 for its assessment.

Mineralization Developments

The Magistral property is near the northeastern end of the Cordillera Blanca, a region that is underlain predominantly by Cretaceous carbonate and clastic sequences. These units strike north to northwest and are folded into a series of anticlines and synclines with northwest-trending axes.

The Cretaceous sedimentary rocks are bounded to the east by an early Paleozoic metamorphic terrane composed mainly of micaceous schist, gneissic granitoid and slate. The Cretaceous sedimentary sequence unconformably overlies these metamorphic rocks. The Cretaceous rocks are structurally overlain by black shale and sandstone of the Upper Jurassic Chicama Formation that were thrust eastwards along a prominent regional structure. The Chicama Formation was intruded by granodiorite and quartz diorite related to the extensive Cordillera Blanca batholith, which has been dated at 8.2 +/- 0.2 Ma. Several major structural features are evident in the Cretaceous sedimentary rocks in the Magistral region, including anticlines, synclines, and thrust faults. The trend of the fold axes and the strike of the fault’s changes from northwest to north near Magistral.

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Through the end of 2015, a total of approximately 101,900 m of surface diamond drilling has been completed in 486 drill holes. In addition, 14 short underground diamond holes were drilled for a total of 1,298.8 m in the San Ernesto, Arizona, and Sara zones between 1969 and 1973. In 1999, 2000, and 2001, Anaconda drilled 76 diamond drill holes totaling 24,640 m. All surface drilling from 2000 onward was carried out on northeast (035o) and northwest (305o) oriented sections. In 2004, Ancash Cobre (or Inca Pacific) completed 34 drill holes, totaling 7,985 m, and in 2005 Ancash Cobre (or Quadra) drilled 14,349 m in 60 holes. Milpo’s drilling in 2012 was contracted to Redrilsa Drilling S.A. (or Redrilsa). Since 2012, the drilling has been contracted to Geotecnia Peruana S.R. Ltda. (or Geotecnia Peruana).

Of the 71 holes drilled in 2013, six were drilled to gain geotechnical information and the remainder were infill holes. Drilling in 2014 consisted of a combination of infill, geotechnical, and metallurgical holes. The 2015 drilling consisted entirely of infill holes. No drilling program was carried out on the project during 2020 and 2021.

Exploration Developments

The Magistral property is near the northeastern end of the Cordillera Blanca, a region that is underlain predominantly by Cretaceous carbonate and clastic sequences. These units strike north to northwest and are folded into a series of anticlines and synclines with northwest-trending axes.

Since acquiring the Magistral project in 2011, Nexa has initiated a comprehensive exploration program consisting of geological mapping, prospecting and sampling, ground geophysical surveying, and diamond drilling. Geological mapping at a scale of 1:2,000 was completed in the Ancapata area and the area north-northeast of Magistral over an area of 386.50 hectares.Magistral. The objective was to verify and supplement the information available from Ancash Cobre’s exploration.

From October 2012 to January 2014, Arce Geofisico SAC was contracted to complete ground magnetic and Induced Polarization (IP) surveying over an area of 520 hectares covering the Magistral deposit and the adjoining Ancapata area. The objective was to characterize the geophysical signature of the Magistral deposit and to survey the Ancapata area. Work was completed on 100 m spaced lines oriented at N125°W. An initial 30 line-km survey was expanded to 55.1 line-km of IP and 57.25 line-km of ground magnetics in order to delineate chargeability and resistivity anomalies.

Through the end of 2015, a total of approximately 101,900 m of surface diamond drilling has been completed in 486 drill holes. In addition, 14 short underground diamond holes were drilled for a total of 1,298.8 m in the San Ernesto, Arizona, and Sara zones between 1969 and 1973. In 1999, 2000, and 2001, Anaconda drilled 76 diamond drill holes totaling 24,640 m. All surface drilling from 2000 onward was carried out on northeast (035o) and northwest (305o) oriented sections. In 2004, Ancash Cobre (or Inca Pacific) completed 34 drill holes, totaling 7,985 m, and in 2005 Ancash Cobre (or Quadra) drilled 14,349 m in 60 holes. Milpo’s drilling in 2012 was contracted to Redrilsa Drilling S.A. (or Redrilsa). Since 2012, the drilling has been contracted to Geotecnia Peruana S.R. Ltda.

Of the 71 holes drilled in 2013, six were drilled to gain geotechnical information and the remainder were infill holes. Drilling in 2014 consisted of a combination of infill, geotechnical, and metallurgical holes. In 2015, drilling consisted entirely of infill holes, drilling ceased on the property in 2015.the same year. No exploration workdrilling program was carried out on the project during 2020 or 2021. Nosince then and no exploratory drilling program is scheduled for 2022.2024.

Pukaqaqa

The Pukaqaqa project contemplates the development of an open pit copper and molybdenum mine, with gold credits, and is located in the Huancavelica region of Peru. The mineralization is hosted by an epithermal breccia system that is associated with exoskarn and endoskarn alterations. Given the geological setting, we believe that a porphyry copper system remains undiscovered below the currently explored mineralization, which will be explored in the following phases. The Pukaqaqa project has a total of 34 concessions covering approximately 11,131.3 hectares.

In 2015, the MINEM approved Pukaqaqa’s EIA, which allowed a treatment capacity of up to 30 ktpd. In 2017, a scoping study was developed by JRI, a Chilean engineering firm, enabling the start of a drilling campaign in 2018 to obtain samples for metallurgical testing.

The pre-feasibility study progressed until the end of FEL2-A phase (equivalent to the trade-offs phase). Metallurgical results indicated the need to further explore copper and molybdenum recoveries prior to progressing with the pre-feasibility study. During 2019 and 2020 a new laboratory campaign was initiated in Chile, which was temporarily suspended due to COVID-19 restrictions. The first part was concluded in December 2020, demonstrating better results than previous campaigns, including improved recoveries and grades. During 2021, metallurgical tests were concluded. New mine studies are ongoing and project evaluation is expected to be updated in 2022. The project remains on hold.

In 2021, we spent approximately US$0.8 million on this project, related to metallurgical tests. In 2022, we have budgeted US$0.3 million for the Pukaqaqa project, which allows for further metallurgical testing and reclamation of the drill sites.

 
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Shalipayco

The Shalipayco project, located in the Central Andes of Peru, is a joint venture between Nexa Peru (which holds a 75.0% interest) and Pan American Silver Perú S.A.C. (which holds a 25.0% interest). It is a potential underground polymetallic project containing zinc, lead and silver deposits. This project consists of mining concessions with evidence of MVT mineralization, which is a deposit type similar to our Morro Agudo mine. The Shalipayco mineralization is mainly located within the Chambará formation that is part of the Pucará Group, considered the most important Peruvian location for MVT mineralization. The Shalipayco project has a total of 52 concessions covering approximately 22,510 hectares and one mineral claim in process totaling 740.6 hectares.

In 2021, we spent approximately US$0.8 million on this project to maintain the office and warehouse facilities in Carhuamayo, as well as conducting some preliminary analysis in relation to the pre-feasibility study. All field activities in Shalipayco were on hold during 2020 due to the COVID-19 pandemic and, as a result of government ordered lockdowns, no exploration activities were carried out in 2021. The project is under review.

Hilarión

The Hilarión project is located in the Department of Ancash, approximately 230 km north of Lima, the capital of Peru, and approximately 80 km south of the city of Huaraz and is accessible by paved road from Lima. It consists of 7172 mineral concessions covering an area of approximately 15,408.3 hectares and one mineral claim in process totaling 209.715,841.2 hectares. Hilarión is a skarn mineral deposit made of vertical tabular ore bodies containing sulfide zinc, lead, silver and copper deposits. Hilarión and El Padrino and other occurrences in proximity to them (Mia, Eureka and others) constitute a large mineralized system, open in several directions for a potential increase in resources, extended mine life and increased production capacity in the future. The conceptual plan for the project includes the development of an underground mine that could either use its own processing plant or use one of the several existing plants in the area, such as Pachapaqui, Huanzala and Atalaya plants.

From 2005 to 2014, in addition to mapping, remote sensing, topographical and geophysical surveys, we completed four drilling campaigns totaling 244.0km on Hilarión and El Padrino deposits. During 2018-2019, two additional drilling campaigns totaling 17.1km were carried out. The recent 2018-2019 drilling predominantly focused on the Hilarión North zone. During 2019, we drilled 12 drill holes totaling 9.1 km at Hilarión. High grade and thick intercepts revealed continuity of the mineralized zones of the deposit to the north and south and demonstrated the potential for resource increase.

In 2020, we drilled 5 drill holes totaling 4.6km and4.6 km, completed the sampling for metallurgical test studies. We alsostudies, and filed a preliminary economic assessment (“PEA”) for the Hilarión project, prepared jointly by Nexa and Roscoe Postle Associates Inc (“RPA”), disclosing an updated mineral resource, plant production and economics estimate in accordance with NI 43-101 (as of December 31, 2019 with a drilling cut-off date of December 5, 2014).

project. In 2021, we executed 21.3 km of diamond drilling to test Hilarión Sur target, totaling 32 drill holes confirming the southeast continuity of the Hilarión deposit towards the edge of the Hilarión stock with multiple thick intersections, in addition to 310 meters0.3 km remaining from the 2020 drilling campaign, which werecampaign. In 2022, we completed earlier this year.mineral exploration activities including a geological review of recent project data, an aero magnetometry survey to structure the drilling program, found new mineralized zones and expanded the known mineralization at Hilarión West, and drilled 7.2km at the Hilarión West, confirming the presence of mineralization to the west of known bodies and their continuities.

In 2021,2023, we spent approximately US$8.84.2 million on the Hilarión project, including project maintenance, geology works and exploration activities such as geological mapping, rock chipping, diamond drilling and social permittings to continue the exploration work for the coming years.

In 2022, we have budgeted US$5.5 million for the Hilarion project and planned 5.5campaigns. We completed 4.1 km of diamond drilling, within three targets:and the focus of the exploratory activities was to identify the mineralization continuity of the deposit in the southeast direction, at the Chaupijanca target, in addition to searching for zones with higher copper content at the El Padrino area, San Martin (two kilometers east oftarget.

In 2024, we have budgeted US$1.6 million for the Hilarión deposit)project maintenance, and at the Yanashallash fault trend located 1,500 meters west of Hilarión.we have planned no drilling activities.

Florida Canyon Zinc

The Florida Canyon Zinc project is located in the Eastern Cordillera of Peru at the sub-Andean front in the upper Amazon River Basin, 680 km north-northeast of Lima and 245 km northeast of Chiclayo and is accessible by paved road from Lima. It is comprised of 1613 contiguous mining concessions, covering approximately 12,600.010,700.0 hectares, is owned by Minera Bongará S.A. and operated by Nexa Peru, a joint venture between Nexa Peru, Solitario Exploration and Royalty Corp. and Minera Solitario Peru S.A.C. (collectively, Solitario) in existence since 2006. As of December 31, 2021,2023, Nexa Peru owns a 61.0%61.00% interest in this joint venture, which may increase up to 70.0%70.00% upon Nexa Peru’s satisfaction of certain conditions.

Although a pre-feasibility study relating to the Florida Canyon Zinc was released in 2017, the project continues to be treated as an advanced mineral exploration project.

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During 2019, we started work to improve the access road, which we expect to reduce logistical costs. We also drilled in the Florida Canyon region, focusing on two sulfide concentration areas, which are related to feeders that generate the concentration of sulphides in the mantos, bodies and veins mineralization.

In 2020, we continued to work on the access road repair to reduce logistical costs. Another important activity carried out in 2020 was the update of the geological model based on the 2018-2019 drilling campaign and by improving ore-type definition (oxide-mixed-sulfide) by using qualitative and quantitative analytic data, that helped in ore classification for the 2020 mineral resource estimation.

In 2021, field work was focusfocused on mapping access road from 0 km up to 19.5 km; and mapping, sampling and topographic survey of Teodolfo, Matias, Berny, and Pizarro targets, in addition to a new mineral occurrence named Aron. Also, initialAron, as well as metallurgical testing using historic drill core material is ongoing. Further metallurgical test will be performed inmaterial.

In 2022, depending onwe advanced the resultsopening of the afore mentionedroad that connects the project structures to the main camp and carried out geometallurgical tests. to establish better mineralogical and metallurgical knowledge of the deposit, which showed high recovery of zinc and lead concentrates, as well as the presentation of the fifth environmental modification to the competent body.

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In 2021, we2023, drilling at the Florida Canyon began in the third quarter due to a delay in the drilling program caused by lack of transportation for drilling materials. In September, construction and maintenance of the motorized trail, which aims to reach La Florida Annex, commenced and is expected to be completed in 2024.

We spent approximately US$1.93.6 million on this project. In 2022,project in 2023 to drill 1.4 km and we have budgeted another US $3.3US$2.0 million for the Florida Canyon Zinc project in 2024, including US$2.0 million for access road maintenance and construction and US$0.3 millionof the final stretch that connects the road to obtain a new environmental permit forthe main exploration camp in the drilling plans beyond 2023. We expect to obtain the permit in 2022. The remaining budget is forarea, maintenance of the project structure, and social programsprograms. No drilling activities are planned for the local community.2024.

Caçapava do Sul

The Caçapava do Sul project is a joint venture between Mineração Santa Maria Ltda., a wholly owned subsidiary of Nexa Brazil, which holds a 56.00% interest, and IAMGOLD Corporation, which holds a 44.00% interest. Nexa Brazil is the operator of the joint venture. The Caçapava do Sul project is a polymetallic project that has the potential to be mined by open pit and underground methods.

In 2021, we spent approximately US$0.4 million on the Caçapava do Sul for maintenance of the project structures. The Caçapava do Sul project was suspended in 2021 as a result of our current capital allocation strategy.

Other Greenfield Exploration Projects

Project in Namibia

 

We have been developing exploratory work in Namibia since 2015, as part of a joint venture with the Japan, Oil, Gas and Metals National Corporation (“JOGMEC”), a Japanese state-owned company. The project was part of a farm-out process of the Namibian tenements inherited from the former strategy of Votorantim Metals to explore opportunities in Africa, where Nexa has a back-in right to invest and maintain participation depending on exploration results. The exploration area is located 360 km north of Windhoek. This early-stage exploratory program is targeting sediment-hosted copper mineralization, such as the Tsumeb and Kombat mines, both of which contain rocks from the Otavi Mountain land terrain.

Nexa currently holds 366,083.2560,078.1 hectares in 1626 exclusive prospective licenses (“EPL”). for the Otavi and Namibia North targets.

The 20212022 exploration expenditures totaled US$2.93.1 million (US$2.2 million for JOGMEC expenditures and US$0.70.8 million for Nexa expenditures) with a total of 12,717 meters9.1 km drilled. InThe focus of the drilling campaign in 2022 we have budgetedwas the expansion of mineralization in the Otavi target and the identification of new mineralized zones of the “Deblin” copper trend in the Namibia North target.

The drilling campaign in 2023 was focused on extending the known mineralization from the Deblin trend, intensifying drilling to further investigate polymetallic mineralization identified at the Ondjondjo target and targeting of high-grade copper sediment deposits along the fertile Tsumeb belt. We spent approximately US$3.12.2 million, fordivided between Nexa (US$0.3 million) and JOGMEC (US$1.8 million) on this project (US$2.3 millionin 2023 to drill 4.9 km.

To date, we are defining the budget for JOGMEC and US$ 0.8 million for Nexa) to execute 10,000 metersthe project as part of exploratory drilling.a joint venture with “JOGMEC” as the Japanese fiscal year ends in March 2024. Nexa is currently focusing on scoutmapping and defining regional opportunities and we plan to execute a geophysical survey at Tsumeb Block, conduct exploratory drilling to evaluatein Tsumeb East and define opportunities in the mineral potential of previously defined targets in Namibia.Namibian Kalahari Copperbelt throughout 2024.

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Permits & authorizations for greenfield projects

The following table summarizes the status of the main permits and authorizations for our greenfield projects.

Project

Status

Aripuanã

On December 20, 2018, SEMA/MT granted the installation license for the Aripuanã project, which allowed us to begin construction.

The mineral exploration operation license (“LOPM”) is valid until May 2022 which allows drilling activities in the project.

On November 27, 2020, the request for the Transmission Line 69kV Operation Permit was filed. The project is under development.

On October 7, 2021, the operating license was granted. The license was issued by the Environmental Secretariat of the state of Mato Grosso (“SEMA”).

MagistralThe EIA was renewed in 2019 and was valid for an additional two years, until September 2021. An amendment to the EIA was submitted to the Ministry of the Environment (SENACE) in the fourth quarter of 2021 for its assessment.
PukaqaqaIn 2020,October 2023, we responded to SENACE inquiries. The amendment to the EIA is in the final approval stage and a new environmental impact statement (“EIS”) was approved, with the purpose of developing exploration activitiesdecision is expected in Pukaqaqa Sur Exploration Project.
ShalipaycoThe EIA for exploration activities approved in 2017 was modified in early 2019 and extended to 2023.2024.
Hilarión

The most recent environmental study is the fifth modification to the HilarionHilarión Project’s EIS, which consisted of obtaining approval for new exploration platforms and reviewing the drilling program. It was approved in 2020 and is valid until 2024.2025.

The authorization for exploratory activities at the El Padrino deposit was extended until March 20232024 and a detailed EIS was approved in 2020, which is valid until 2025.

For the Azulmina target, one possible location for the plant and tailings facilities, there is an approved EIS and Technical Sustaining Instrument (STI) that allows the execution of exploration activities until 2023.

Florida Canyon ZincThe most recent environmental study is the STI of the Fourth Modification EIS offifth modification to the Florida Canyon project,Project’s EIS, which consisted of obtaining approval for new exploration platforms and reviewing the drilling program. It was approved in 20212023 and is valid until 2024.2028.
Caçapava do SulThe drilling environmental licensing process was cancelled in 2020 due to the stoppage of mineral exploration activities. An EIA was submitted in 2016 to the Fundação Estadual de Proteção Ambiental Henrique Luiz Roessler. A new term of reference was issued in 2020, with a two-year deadline for submitting new environmental studies. The project was suspended in 2021 as a result of our current capital allocation strategy.73

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Tailings disposal

Regulatory framework

We are subject to several environmental regulations related to the use of tailings dams and effluent dams.

In Brazil, tailings dams’ failures have triggered the issuance of new regulations. On January 25, 2019, there was a tragic failure of a tailings dam in the city of Brumadinho, in the state of Minas Gerais, Brazil. The Brumadinho dam was built using the upstream method and belongs to Vale S.A. A report by a panel of technical experts commissioned by Vale S.A. found that the tailings dam failure was the result of flow liquefaction within the tailings in the dam. Another upstream-method tailings dam in Brazil, the Fundão tailings dam owned by Samarco Mineração S.A., failed in November 2015. Each of these failures released muddy tailings downstream, flooded certain communities, caused fatalities and resulted in extensive environmental damage to the surrounding area.

In response to failures of tailings dams in Brazil, the state of Minas Gerais enacted regulations in February 2019 affecting the use of dams in the state, including tailings dams and effluent dams that mandate the decommissioning of all upstream tailings dams and prohibit construction of new tailings dams using the upstream method. Additionally, a rule approved by the ANM requires all inactive upstream dams to be decommissioned by 2021 and active upstream dams to be decommissioned by 2023. We have not been impacted by these regulations as all of our tailings dams in Brazil are downstream.

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In addition, in February 2019, the state of Minas Gerais enacted regulations that prohibit the construction of a new dam or the expansion of existing dams if communities are established within its self-rescue zone, an area encompassing the portion of the valley downstream of the dam where timely evacuation and intervention by the competent authorities in emergency situations is not possible. All of the tailings dams located in Minas Gerais have permission to operate, however, future licensing for new tailings storage facilities or new raises must consider any community in the hazardous zone. We are undertaking aDue to the difficulty in licensing new raisedams in the state of Minas Gerais, in February 2023 we began industrial-scale testing the technology developed for dry stacking disposal at the Três Marias unit, which consists of filtering the waste pulp for subsequent disposal through the dry stacking process, as waste disposal in this unit was going directly to its tailings deposit. The initiative achieved excellent results, filtering an average of 74% of the operation’s material throughout the year. In December 2023, filtration reached more than 90% and from 2024 onwards, we expect filtration to reach between 95% and 100%. We expect that the Company will be able to utilize dry disposal in the future to reduce the risks for communities in the hazardous zones. Due to the promising progress of the dry disposal tests and the difficulties in licensing new dams and dam Oeste 1 andexpansion projects, we canceled the licensing request that was in progress in Três Marias for the Central and different possibilities of disposal and consolidationWest 1 module of the disposed tailings are being studiedMurici Deposit to reduce that risk.begin the licensing process of the dry stacking disposal.

In 2020, the mining authorities in Brazil enacted two regulations that establish new procedures related to dams. The first resolution (Resolução ANM 32/2020), decreed in May 2020, determines procedures to develop dam break studies and deadlines to update the Emergency Action Plan (“EAP”) depending on the dam class. This regulation updated previous mining agency standards. We have updated the dam break studies of all mining dams according to these procedures. The second resolution (Resolução ANM 51/2020), decreed in December 2020, defines procedures to certify the EAP. In 2022 the ANM enacted Resolution No. 95/2022, amended by Resolution No. 130/2023, which consolidates all dam safety standards by unifying and regulating the innovations promoted by Law No. 14,006/2020.

At the end of 2020, the Brazilian Federal Authorities decreed that the new dam safety law (law(Law No. 14,006/2020) updates the previous dam safety lawLaw No. 12,334 enacted in 2010. Similar to the regulation enacted in February 2019, this new law defines that new upstream tailings dams and new raises are no longer permitted and, that the EAP is mandatory tofor all mining dams that storagestore tailings. This law also limited the construction of new tailings dams if communities are established within its self-rescue zone. In this case, the mining company must remove the residents or reinforce the dam structure according to the technical solution approved by the ANM. In 2022, the mining authorities in Brazil enacted a regulation that establishes new procedures related to dams (Resolution ANM 95/2022), which consolidated the safety standards for mining dams, revoking several previous regulations (Ordinance DNPM No. 70,389/2017 and Resolutions ANM No. 13/2019, 32/2020, 40/2020, 51/2020 and 56/2021) and also regulated items by the national legislation (Law No. 14,066/2020), which modified the National Dam Safety Policy.

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The changes included the alteration of the assumptions of risk category and emergency level classifications, the inclusion of new suspension and interdiction assumptions, and the creation of new obligations such as the Risk Management Process for Mining Dams (“RMPMD”), for high Associated Potential Damage (“APD”) dams. The RMPMD consists of the risk assessment of the structure in acceptable and not acceptable “As Low as Reasonably Practicable” terms and integrates the management and decision-making related to mining dams.

In 2021, we began implementing the requirements ofcovered by these regulations to all mining dams such asincluding certification of the EAP, training staff safety trainings, and dam break simulations according toin accordance with the new regulation.

In January 2021,2022, Nexa revised the requestEAP for environmental licensing for aall mining dams to adapt to the new expansionBrazilian regulations and considering the new EAP guidelines, detailed by specific terms of reference (Termos de Referência), which were published in 2021.We sent the EAP to all relevant public agencies and published the document on our website. In 2023, we also conducted the Compliance and Operational Evaluation (“COA”) of the Três Marias tailings dam was submittedEAP for mining, which consists of a legal requirement that aims to certify that the EAPs comply and adhere to the environmental agencylegislation and would be operational in practice in case of an emergency. Thus, the EAP was evaluated by an external company that issued the Compliance and Operability Report (“COR”) and Declaration of Conformity and Operability (“DCO”) of the state of Minas Gerais. The public hearing of this expansion was held in November 2021. This may impactEAP.

On December 30, 2023, the licensing schedule for this expansion, scheduled to be completed by February 2023, as well as Três Marias expected operating capacity.

In 2021, we submitted to the environmental agency of the stateState of Minas Gerais published State Decree No. 48,747/2023, regulating the request for environmental licensing forrecovery policies that companies are required to have in place in the event of an accident or deactivation of a new expansiondam, pursuant to a prior state law passed in 2019. Under State Decree No. 48,747/2023, any dams that meet the requirements established under the 2019 Dam Safety Policy law must have an environmental guarantee policy in place. Nexa estimates that it will require US$27.3 million to cover the applicable dams under this policy. The guarantee can be made by one of the Três Marias tailings dam, which already followsfollowing methods: (i) cash deposit; (ii) CDB; (iii) bank guarantee; or (iv) guarantee insurance. The Company has until March 29, 2024 to submit an environmental recovery proposal and must contract for 50% of the rules establishedpolicy by the new regulation described above. The needDecember 31, 2024, 25% by December 31, 2025 and 25% by December 31, 2026 and expects to remove all residents who are within the self-rescue zone may impact the licensing schedule forcomply with this expansion, estimated to be completed by February 2023, as well as Três Marias expected operating capacity.requirement.

In Peru, the upstream method has long been an abandoned practice due to seismic concerns in the region. As of 1995, compulsory guidelines were passed prohibiting the use of such method. Subsequently, in 2014 environmental regulators, and later technical regulators, in 2015, adopted the same guidelines prohibiting construction and operation under the upstream method, allowing only the use and construction under the centerline and downstream methods. A specialized governmental agency carries out annualperiodically inspections of tailings dam and mining infrastructure, ensuring technical and environmental regulations are complied with. In addition, mining operations must submit biannual stability studies, to which they are held liable. We follow these guidelines, and all operative tailings dams use the downstream and centerline lift methods.

El Porvenir’s tailings dam is currently supported by an authorization for operation up to an altitude of 40604,064 meters above sea level (‘(“masl”), which was granted by the Ministry of Energy and Mines on October 7, 2019. A newMay 25, 2023, the previous authorization was for operation is currently underway which will allow operations4,062 masl. Activities to expand the El Porvenir’s tailings dam to an altitude of 4062 masl.elevation up to 4,066 masl are underway and the approval process for the operation will begin in April 2024, and it is expected to last up to 3 months.

For more information, see “Risk factors—Operational risks—The failure of a tailings dam could negatively impact our business, reputation and results of operations, and the implementation of associated regulations and decommissioning processes may be expensive.”

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Nexa’s practices

We monitor tailings and waste dams in accordance with international best practice guidelines for management and project design based on criteria set by the International Commission on Large Dams (“ICOLD”) and the Canadian Dam Association (“CDA”) dam safety guidelines. In 2021,2023, all of our tailings dams in Brazil received Stability Condition Declarations (“DCEs”), certifying that these facilities are safe and stable. In Brazil, these certifications are carried out twice a year once for mining dams and once for smelting dams. In Peru, they occur once a year only for smelting dams.year. As of the date of this annual report, all tailings dams in Peru are undergoinghave undergone the certification process, and we expect to concludeconcluded a technical report for these dams during the first half of 2022.2023. In addition, all our dams and dry stacking structures are monitored under a system known as the Sistema de Gestão de Barragens ou Depósitos / Tailing Dam Management System (“SIGBAR/SIGDEP”), which consists of procedures, tools and key performance indicators, monthly reports and monitoring and analysis by an independent Geotechnical Engineer. The monitoring procedures include regular inspections, as well as internal and external audits.

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In addition to the above-mentioned policies and procedures, our sustainability and capital projectsSCP committee assists and advises our boardBoard in supporting safe and sustainable business practices in our conduct and activities, as well as in reviewing technical, economic and social matters with respect to our projects.

In 2020, management reviewed the Emergency Action Plan (“EAP”)EAP for all mining dams in accordance with the new Brazilian regulations released midway through 2020 and we trained our internal team in these new procedures. In 2021, newNew EAP guidelines, detailed by specific terms of reference, were published in April, May and June 2021. We startedIn 2022, all plans for the units in Brazil were reviewed and filed with their respective government’s environmental agencies, and as of the date of this annual report, approval is pending from the respective environmental agencies. In 2023, we began conducting engineering studies to review all Brazilian EAP’s and we estimate to presentconfirm the update planconstruction method of inactive industrial waste containment structures that have been closed for management’s approval in 2022.more than 20 years.

For more information about our sustainabilitySCP committee and ESG initiatives, see Information on the Company—Environmental, Social and Governance (“ESG”)(ESG) and corporate initiatives—Sustainability Committee and Reporting.”

We use four disposal options for tailings. Our preferred option is to convert part or all of the tailings material into a commercially viable product. We use this method at our Morro Agudo mine, where most of the tailings that we produce are ZinCal, a limestone rich in zinc that is used as fertilizer. This option doesfertilizer, which we sell, not requirerequiring the disposal of tailings materials.

When the conversion method is not available, we prefer to use the backfill method for our underground mines. This technique involves removing moisture from tailings, creating a mixture with cement and filling open spaces in the mines with this combination. We believe this method reduces safety risks related to tailings disposal given that it provides greater geotechnical stability and does not involve the building of a dam or dry stacking structure.

If neither the conversion nor the backfill method is available, we prefer to use the dry stacking method, which involves removing moisture from tailings and stacking them in layers to form an artificial mountain covered with soil and vegetation, causing it to integrate into the local landscape. We use the dry stacking and backfill methods at our Cerro Lindo mine in Peru since the startup of our mine. In 2019, we started operating a dry stacking facility, which substituted the tailings dam in Vazante. With this new structure, over 80%74.1% of our tailings disposal is done either through backfill or dry staking, reducing our exposure to dams. We are currently developing the backfill and dry stacking methods at our Aripuanã greenfield project,unit, which will start to operate this year.began the ramp-up in July 2022, and in February 2023 we started industrial-scale testing for dry stacking disposal at the Três Marias unit.

When neither of these three methods is possible, we use tailings dams. The dam acts as a solid barrier engineered to prevent the tailings material from escaping to the environment around the mine. We use this method in Peru at our El Porvenir and Atacocha mines and at our Cajamarquilla smelter, and in Brazil at our Vazante and Morro Agudo mines and Juiz de Fora and Três Marias smelters. We also use a combination of the backfill method and tailings dams at our El Porvenir and Atacocha mines in Peru. At the Aripuanã project,mine, we are buildinghave built a water dam to supply water to our plant. This dam is engineered with borrowed material and uses the technical control of compaction of the soil.

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Mining Operations

We currently raise our tailings dams using the following two methods: (i) the downstream method, where the building material is disposed downstream of the crest of the dam body; and (ii) the center-line method, where the building material is disposed partially downstream and partially upstream of the crest of the dam body, while maintaining the same centerline of the crest. Historically, we have also used the upstream method – where the building material is disposed upstream of the crest of the dam body – in certain instances.

In addition, we also use effluent dams, which are dams used to treat water that contains tailings particles or other solid particles. The effluent dams separate the tailings particles or other solid particles from the water by retaining the particles and releasing the clean water downstream. Finally, we use products dams for the provisional storage of ZinCal prior to its sale.

76
Mining Operations

We currently have 4724 active and 25 inactive disposal facilities (including tailings dams, dry stacking facilities, effluent dams and products dams), 22 of which are operational. Of our eight operational tailings dams, seven were raised using either the downstream method or the center-line method,24 located in Peru and one dam was at one point raised using the upstream method but was later raised using the downstream and the center-line methods. Of our 25 non-operational tailings dams, 16 are24 located in the process of being decommissioned,Brazil, and we also have plans to decommissionone water storage dam at the others. Three of our non-operational dams in Peru were originally raised using the upstream method.

Aripuanã unit. The following is an overview of the dams we have in place at our principal mining and smelting facilities:

Peru

·At Cerro Lindo, we have no tailings dams, and tailings are disposed of using a combination of the backfill method, two dry stacking structures and two effluent dams.
·At El Porvenir and Atacocha, tailings are disposed of using a combination of the backfill method and tailings dams; there are two tailings dams in active use and four non-operational tailings dams, which are in the process of being decommissioned.
·At Cajamarquilla, there are three tailings dams in active use and four non-operational tailings dams, which are in the process of being decommissioned.
·At the Chapi mine property, which is currently inactive, there are five non-operational tailings dams.
·At the Sinaycocha property, which is part of our Atacocha mine property, there are two non-operational tailings dams.

Brazil

·At Morro Agudo, most tailings are converted for sale, and the product is stored temporarily at two products dams until it is sold. A separate tailings dam is used to store tailings that are not convertible into product.
·At our Ambrósia mine, there is one effluent dam in active use. In 2020 the mine was closed, and it is in process of decommissioning.
·At Vazante, tailings are disposed of using a combination of tailings dams and dry stacking; there is one tailings dam and onetwo effluent damdams in active use.
·At Juiz de Fora, there is one tailings dam in active use, three effluent dams in active use and six non-operational tailingswaste dams, five of which areone is in the commissioning process of being decommissioned.and the other five have been decommissioned since 2002.
·At Três Marias, there are three tailingswaste dams in active use and three non-operational tailings dams, which are in the process of being decommissioned.
 
6177

Smelting Operations

Smelting operations

The table below provides an overview of our smelting facilities:

Smelting Unit

Location

Smelting
Process

Principal
Refined Zinc
Products

Plant
Capacity

Metallic Zinc
Production
in 2021

Zinc Oxide
Production in
2021

Other Products

Location

Smelting
Process

Principal
Refined Zinc
Products

Plant
Capacity

Metallic Zinc
Production
in 2023

Zinc Oxide
Production in
2023

Other Products

 (in tonnes of
refined zinc
per year)
(in tonnes of
zinc metal available for sale, includes alloys)
(in tonnes of
zinc oxide)
  (in tonnes of
refined zinc
per year)
(in tonnes of
zinc metal available for sale, includes alloys)
(in tonnes of
zinc oxide)
 
CajamarquillaPeruRLEMetallic zinc (SHG, CGG jumbos and alloys)344,436328,1290Sulfuric acid, silver concentrate, copper cement and cadmium sticksPeruRLEMetallic zinc (SHG, CGG jumbos and alloys)344,436323,0590Sulfuric acid, silver concentrate, copper cement and cadmium sticks
Três MariasBrazilRLEMetallic zinc (SHG, CGG jumbos, alloys and Zamac) and zinc oxide192,199198,367¹41,713Cadmium briquettesBrazilRLEMetallic zinc (SHG, CGG jumbos, alloys and Zamac) and zinc oxide192,199148,35433,966Cadmium and cobalt cement
Juiz de ForaBrazilWaelz Furnace and RLEMetallic zinc (SHG, alloys and Zamac)96,92381,119²0Sulfuric acid, sulfur dioxide, silver concentrate, copper sulfate and zinc ashBrazilWaelz Furnace and RLEMetallic zinc (SHG, alloys and Zamac)96,92382,147(1)0Sulfuric acid, sulfur dioxide, silver concentrate, copper sulfate and zinc ash
Total   633,558607,61541,713     633,588553,55933,966 

(1)Including 31,492 tonnes of zinc ashes and drosses, as well as metallic zinc used in the production of zinc oxide, zinc granules and zinc powder and 1951,768 tonnes of zinc cathodes transferred from Juiz de Fora.
(2)Including 2,649 tonnes of zinc ashes and drosses. It does not include zinc cathode to Três Marias.

Notes:

RLE stands for Roast-Leach-Electrowinning.

Alloys are zinc-based products with the addition of up to 1.0% of a specified metal, which are primarily used in the galvanizing market.

Special alloys are zinc-based products with addition of specified metals, which are primarily used in galvanizing market.

Zamac is a zinc-based product with the addition of specified metals, which are primarily used in the die casting market.

Smelter sales

We produce various kinds of refined zinc products. In 2021,2023, we sold a total of 577.9556.0 thousand tonnes of our metallic zinc line of products (including SHG, CGG jumbos, alloys, Galvalume and Zamac). In addition, we commercialized 40.933.9 thousand tonnes of zinc oxide at 80%80.0% standard zinc content in 2021,2023, totaling 618.8589.8 thousand tonnes of zinc metal products sold.

In March 2021, one of our calcine supplierssupplier in Peru shut down its facility, reducing our calcine availability and, consequently, impacting our production and sales. However,sales going forward. Since 2022, we were able to mitigateare mitigating part of this supply decrease by sourcing raw materials from other suppliers, in addition to sales of third-party products. Nonetheless, we anticipate that this will have an impact on our smelter’s production in 2022.suppliers.

Cajamarquilla

The Cajamarquilla smelter is located in the district of Lurigancho/Chosica in Lima, Peru, and is accessible by road.

The Cajamarquilla smelter is currently the largest zinc smelter in Latin America and the only zinc smelter in Latin America outside Mexico and Brazil, according to Wood Mackenzie. It uses the RLE process to produce metallic zinc. With an annual production capacity of 344.4 thousand tonnes of metallic zinc, the Cajamarquilla smelter produced 328.1323.1 thousand tonnes of zinc metal available for sale in 2021.2023. In recent years, Cajamarquilla developed operational efficiencies, including debottlenecking projects, which increased the production of calcine from concentrates obtained from Nexa Peru, and the use of calcine and waelz oxide processed by third parties. See “Risk factors—Operational risks—Inadequate supply of zinc secondary feed materials and zinc calcine could affect the results of our smelters.”

62

Smelting Operations

The Cajamarquilla smelter produces zinc primarily from zinc contained in concentrates and, to a lesser extent, recycled zinc secondary feeds (also referred to as pre-treated concentrate). In 2021,2023, the Cajamarquilla smelter consumed approximately 344.3341.0 thousand tonnes of zinc contained in concentrates. In 2021, 37.9%concentrates and secondary raw material, which consumed 27.2% of the zinc contained in concentrates used by the Cajamarquilla smelter was sourced from our mines, 68.5% of zinc contained in Peru and 62.1% was purchasedconcentrates from third parties.parties and 4.3% from secondary raw material.

78

Smelting Operations

In 2021,2023, the Cajamarquilla smelter sold approximately 333.4326.4 thousand tonnes of metallic zinc, of which 39.1%30.6 % of the volume was sold to Latin America (including Mexico), 16.4%19.6% to Europe, 10.9%14.7% to the United States, 3.1%20.1% to international traders 25.5%and 15.1% to Asia and 5.1% to Africa.Asia. The Cajamarquilla smelter also produces sulfuric acid, silver concentrate, copper cement, manganese dioxide, oxides (ashes) and cadmium sticks. These products are sold primarily to international traders and local customers.

The following table presents the historical concentrates processed and zinc recovery rate in Cajamarquilla for the periods indicated.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Input (in tonnes)   
Zinc Contained in Concentrate from Our Mines]130,614119,843135,10492,827104,150130,614
Zinc Contained in Concentrate from Third Parties

213,703

202,687

230,938

233,425

14,745

239,587

17,081

213,703

9,583

Secondary Raw Material

9,583

1,966

Total Inputs353,899324,495366,042340,996360,819353,899
Zinc Recovery (%)94.393.794.193.894.794.3

 

Brownfield project

Conversion to Jarosite process

In 2017, we announced our intention to convert our Cajamarquilla smelter to the Jarosite process, which would allow for the recovery of a greater percentage of zinc. The project was estimated to improve the zinc recovery rate by 3.0% at the Cajamarquilla smelter. We initiated the construction phase in 2018 and during 2019 civil works and procurement activities continued to progress. Inin December 2019, the implementation of the conversion process was suspended due to problems with contractors and suppliers. We intend to reassesswrote off our investment and the project throughout 2022.remained on hold following our capital allocation strategy. In 2023, our internal technical and engineering teams considered the engineering studies of the project and detailed engineering was updated. In 2024, we expect to continue working on the execution plan, enhancing the detailing around the piping tie-ins and conducting constructability exercises to optimize the project’s schedule and guarantee operational alignment with the maintenance intervention program. Further decisions on the advancement of this project will remain under review, taking into consideration our capital allocation strategy for the upcoming years.

Três Marias

The Três Marias smelter is located in the municipality of Três Marias in the state of Minas Gerais, Brazil, 250 km from the Morro Agudo mine and 253 km from the Vazante mine and is accessible by road.

The Três Marias smelter was built to treat the zinc silicate concentrates from the Vazante mine (willemite and calamine) and sulfide concentrates from the Morro Agudo mine,and Aripuanã mines, from Nexa Peru and from third-party concentrates. Currently, this smelter is integrated with the operations of the Vazante, and Morro Agudo and Aripuanã mines, and it uses the RLE process to produce metallic zinc and zinc oxide. The annual production capacity of our Três Marias smelter is 192.2 thousand tonnes of refined metal per year. Production in 20212023 totaled 198.4182.3 thousand tonnes of zinc metal and oxide available for sale.

The Três Marias smelter produces zinc primarily from zinc contained in concentrates and, to a lesser extent, recycled zinc secondary feeds. In 2021, this2023, the Três Marias smelter consumed approximately 191.2192.1 thousand tonnes of zinc contained in concentrates and 3.2 thousand tonnessecondary raw material, which consumed 87.3% of zinc contained in concentrates from our mines, 11.7% of zinc contained in concentrates from third parties and 1.0% from secondary raw material.

In 2021,2023, Três Marias sold approximately 163.7147.1 thousand tonnes of metallic zinc and 40.933.9 thousand tonnes of zinc oxide, of which 83.6%65.2% of the volume was sold to Latin America (including Mexico), 0.0%14.1% to international traders, 9.1%18.2% to Africa, 3.2%1.2% to Asia 3.2%and 1.4% to Europe and 0.9% to the United States.Europe. The Três Marias smelter also produces copper/cobalt cement, Oxides (ashes) and cadmium briquettes. These products are sold to local customers.

79

Smelting Operations

The Três Marias smelter contains a zinc oxide production plant intended for the chemical, pneumatic, ceramic, animal feed and fertilizer industries. In 2021,2023, the production of zinc oxide was approximately 41.734.0 thousand tonnes. In zinc content, approximately 69.8%73.3% of the raw material was electrolytic zinc that originated from the melting stage. In addition, we purchased 30.2%26.7% of raw material from third parties, in the form of dross and skims, to produce zinc oxide as well as the generation of by-products.

63

Smelting Operations

In 2021, the request for environmental licensing for a new expansion of the Três Marias tailings dam was submitted to the environmental agency of the state of Minas Gerais. In 2023, we advanced with the waste dry disposal system on an industrial scale, which consists of filtering the waste pulp for subsequent disposal through the dry stacking process, as waste disposal in this unit was going directly to its tailings deposit. The initiative achieved excellent results, filtering an average of 74% of the operation’s material throughout the year. In December 2023, filtration reached more than 90% and from 2024 onwards, we expect filtration to reach between 95% and 100%. Due to the progress of the dry stacking disposal tests and difficulties in licensing new dams and dam expansion projects, we canceled the licensing request that was in progress in Três Marias for the Central and West 1 module of the Murici Deposit to begin the licensing process of the dry stacking disposal. We expect to begin the licensing process in the first half of 2024 and subsequently will submit the license for government approval. For more information, see “Mining Operations—Tailings Disposals—Regulatory framework.” See also “Risk factors—Operational risks—The failure of a tailings dam could negatively impact our business, reputation and results of operations, and the implementation of associated regulations and decommissioning processes may be expensive.

The following table presents the historical concentrates processed and zinc recovery rate in Três Marias for the periods indicated.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Inputs (in tonnes) (1)    
Zinc Contained in Concentrate from Our Mines161,070176,893178,928167,726146,006161,070
Zinc Contained in Concentrate from Third Parties30,14826,40322,47022,43038,31930,148
Secondary Raw Material

3,231

1,374

2,642

1,976

3,320

3,231

Total Inputs194,449204,669204,040192,132187,645194,449
Zinc Recovery (%)94.794.894.390.191.694.7

(1) Impacted by higher secondary raw material consumption and concentrates with contaminants (mainly iron and arsenic).

Juiz de Fora

The Juiz de Fora smelter is located in the municipality of Juiz de Fora in the state of Minas Gerais, Brazil, and is accessible by road.

The Juiz de Fora smelter produces zinc from sulfide concentrates and secondary sources such as EAF dust, batteries, and brass oxide, and uses the RLE process to produce metallic zinc. The annual production capacity of our Juiz de Fora smelter is 96.9 thousand tonnes of metallic zinc per year. In 2021,2023, Juiz de Fora produced 81.182.1 thousand tonnes of zinc metal available for sale. In recent years, Juiz de Fora used calcine processed by third parties in its production process.

The Juiz de Fora smelter produces zinc primarily from zinc contained in concentrates and, to a lesser extent, recycled zinc secondary feeds. In 2021, this2023, the Juiz de Fora smelter consumed 68.687.4 thousand tonnes of zinc contained in concentrates and 16.4secondary raw material, which consumed 41.7% of zinc contained in concentrates from our mines, 41.8% of zinc contained in concentrates from third parties and 16.5% from secondary raw material.

In 2023, the Juiz de Fora smelter sold approximately 82.5 thousand tonnes of metallic zinc, from secondary raw materialof which 86.1% of the volume was sold to Latin America (including Mexico) and secondary sources.13.9% to international traders outside of Latin America. This Juiz de Fora smelter also produces sulfuric acid, sulfur dioxide, silver concentrate, copper sulfate and copper sulfate.zinc ash. These products are sold primarily to international traders and local customers.

In 2021, the Juiz de Fora smelter sold approximately 80.8 thousand tonnes of metallic zinc, of which 100.0% of the volume was sold to Latin America (including Mexico).

The smelter operated at 60% of its normal production capacity in May2023, 2022 and June 2020, in anticipation of a lower market demand due to the global economic conditions due to the COVID-19 pandemic. The Juiz de Fora smelter returned to normal production level during the second half of 2020. In 2021, although we had planned and unplanned maintenances, the Juiz de Fora Smelter operated at high-capacity utilization rates.

80

Smelting Operations

The following table presents the historical concentrates processed and zinc recovery rate in Juiz de Fora for the periods indicated.

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2019

2023

2022

2021

Inputs (in tonnes)     
Zinc Contained in Concentrate from Our Mines27,87322,29139,12536,46027,87427,873
Zinc Contained in Concentrate from Third Parties40,70447,50037,76336,51543,41940,704
Secondary Raw Material

16,356

14,925

16,367

14,419

17,554

16,356

Total Inputs84,93384,71693,25587,39488,84784,933
Zinc Recovery (%)93.692.893.493.693.193.6
 
6481

Other Operations

Other operations

Transportation and shipping

Concentrates in our mines

Our Cerro Lindo operation transports 100.0% of its concentrates by road. The concentrates are trucked in a dedicated fleet through the Panamericana Sur road to the port of Callao, that is approximately 255 km north, or to the Cajamarquilla smelter. This transportation is covered by long-term contracts entered with two trucking companies.

Our Atacocha and El Porvenir operations use both road and rail transportation. The concentrates are trucked through the Carretera Central Road to the port of Callao, that is approximately 315 km west, or to the Cajamarquilla smelter. We also use railway transportation to secure logistic availability and maintain high environmental standards. Our use of railway transportation is covered by a long-term contract.

The zinc concentrate produced in the Cerro Lindo, Atacocha and El Porvenir mines supply both our Peruvian and Brazilian smelters, as well as third-party customers, while the lead and copper concentrates produced by these mines are transported to third-party customers from the port of Callao. Our smelters use zinc concentrate supplied from our mines and from third-party suppliers to meet the blending needs of each smelter.

The Peruvian zinc concentrate supplied to the Brazilian smelters is loaded in bulk 17,000 tonne shipments and sent to the Port of Rio de Janeiro, where it is cleared through customs and then loaded into railcars to the Juiz de Fora smelter or into trucks and railcars to the Três Marias smelter. The ocean freight for this Peruvian zinc is covered by a long-term freight contract.

All the zinc concentrates produced at our Vazante and Morro Agudo mines are transported by road to the Três Marias smelter using two trucking companies. These mines also produce lead and lead/silver concentrates, which are loaded into containers at the mine and are transported using trucks and trains to the Sepetiba Tecon Terminal in Itaguaí, Rio de Janeiro, Brazil. The lead and lead/silver concentrates are then shipped to customers in Asiaexported in accordance with our annual contracts with container shipping lines.

All the zinc concentrates produced at our Aripuanã mine are transported by road to the Três Marias and Juiz de Fora smelters. The mine also produces lead and copper concentrates, which are either loaded into containers at the mine or transported by road to the Rondonópolis warehouse to be loaded into containers and are then transported using trucks and trains to the Terminal in Santos, São Paulo, Brazil. A small portion of zinc, and all lead and copper concentrates are then shipped to foreign customers.

Smelters

The metallic zinc produced in the Cajamarquilla smelter is transported by train or truck to the terminals. The material intended for the Peruvian domestic market is distributed by truck from these terminals, while exports to foreign markets are loaded into containers and transported by truck from these terminals to the port of Callao.

The metallic zinc produced in the Juiz de Fora and Três Marias smelters is transported by truck for either local customers or exports. In the case of exports, the material is transported to terminals near the ports of Rio de Janeiro or Itaguaí, both in the state of Rio de Janeiro, or the port of Santos, in the state of São Paulo. The material is then loaded into containers at the terminal and transported to the ports by truck, where it is shipped to customers abroad.

The metallic zinc and zinc oxide production process in our smelters also produces by-products. The most relevant by-products are sulfuric acid and silver concentrate. Sulfuric acid produced in the Cajamarquilla smelter is loaded into dedicated FCCA tank railcars and transported to be stored. The sulfuric acid is then loaded in bulk into chemical ship-tanks destined to our customers and discharged at the Chilean ports of Mejillones and Barquito. The silver concentrate produced in the Cajamarquilla and Juiz de Fora smelters is loaded into containers and are dispatched to the port of Callao in Peru or to the port of Itaguaí.

82

Other Operations

We ship all our refined zinc and silver concentrate exports in containers. Transportation of this material is covered by annual agreements with the liner shipping providers, which are responsible for 70.0%90.0% of these shipments.

Sales and marketing

We sell most of our products through supply contracts with terms between one and fourthree years. Only a small portion of our products is sold on the spot market. The agreements with our customers include customary international commercial terms, such as CIF, FOB and other delivery terms based on Incoterms 2010/2020. Our ability to deliver significant volumes across several regions worldwide makes us a significant supplier to a client base of end users and global traders. As a result, we can obtain competitive commercial terms for our products in the long-term.long term. In 2021,2023, our top 10 metallic zinc customers represented approximately 47.9%58.0% of the total sales volume for such products, with our top 10 zinc oxide customers representing 58.9%57.0% of the total sales volume for that product, and our top threefive concentrate customers represented approximately 90%87% of the total sales volume for such products, in each case excluding intercompany sales.

65

Other Operations

Concentrates

In 2021, 100.0%2023, 94.5% of our total production volume of zinc concentrates went to our smelting operations in Peru and Brazil. In 2021,2023, we did not sellsold Zinc concentrates produced from our Peruvian and Brazilian operations to third-party customers. Sales prices are established mainly by reference to prices quoted on the LME less a discount based on either the treatment charge or smelter charge. The LME price quotes are based on prevailing LME average prices for the period set forth in our sale agreements, and generally refer to either the month following the shipment or the period near the execution date of the relevant agreement.

We also purchase zinc contained in concentrate from third-party suppliers to meet our raw material requirements. In 2021, 50.5%2023, 47.9% of the total zinc raw material consumption in our smelters was produced by our mines and 49.5%52.1% was purchased from third parties or obtained from secondary raw materials.materials (excluding oxide).

Refined Metals

 

Our metallic zinc and zinc oxide are sold worldwide through our commercial offices located in:

·São Paulo, Brazil;
·Lima, Peru;
·Houston, United States; and
·Luxembourg, Grand Duchy of Luxembourg.

We hold a leadership position in our home market, Latin America (excluding Mexico), with an estimated market share of 87.8%78.3% in 2021,2023, according to our sales volume, import databases and demand forecasts sourced from specialized consultancy groups and customs websites. In other regions, we hold a strategic position, with estimated market share of 25.2%26.2% in Africa, 2.9%4.0% in North America, 2.7%3.4% in Europe and 1.0%0.6% in Asia, according to our sales volumes, import databases and demand forecasts sourced from specialized consultancy groups and customs websites. In recent years, we have increased our sales of metallic zinc and zinc oxide to end users in attractive markets, consolidating a commercial network in place to support volume growth.

In 2021, 85.3%2023, 71.5% of our total sales of refined metals were to customers in the continuous galvanizing, general galvanizing, die casting, transformers and alloy segments and 14.7%28.5% of our total sales were to international traders. Our products are sold to end users in the transport, construction, infrastructure, consumer goods and industrial machinery industries. Of our volume of metallic zinc and zinc oxide sales in 2021, 61.7%2023, 48.9% were to Latin America (including Mexico), 9.9%11.3% to Europe, 6.2%8.1% to the United States, 5.8%5.6% to Africa and 14.8%8.7% to Asia, with the remaining 1.7%17.4% to international traders. Sales prices are mainly established by reference to prices quoted on the LME plus a negotiable premium. Pricing is based on prevailing LME average prices for a period set forth in our sale agreements, which generally refer to the month or month prior to shipment.

83

Other Operations

By-products

We sell a wide variety of chemical and metallurgic by-products generated during the production processes in our smelters and mines to a broad customer base. Our sales include more than 2527 different by-products, most of which are sold based on the characteristics of each market or region.

66

Other Operations

Power and energy supply

Peru

With respect toWe contracted for 97.4% (1,835.2 GWh) of energy for our operations in our Peruvian operating units we obtained 98.0% (1,862 GWh) of the electricity for our operations from the SEIN and 2.0% (37.2consumed 100% (1,835.2 GWh) of this energy. The other 2.6% (49.7 GWh) of the energy for our Peruvian operating units was obtained from our own hydroelectric power plants.plants, the Cajamarquilla cogeneration power plant and the micro solar generation in Cajamarquilla. We own three hydroelectric power plants, two at Atacocha and one at El Porvenir, with a total installed gross rated capacity of 11,8249,726 kilowatts, or kW.

We also receivedhave contracts with Electroperú S.A., a well-known Peruvian state-owned company, which cover 100% (277.5 GWh), 100% (121.7 GWh) and 49.2% (29.3 GWh) of the energy requirements for our energy from third parties through electricity supply contracts. Our Cerro Lindo, El Porvenir and Atacocha units, have electricity supply contracts with Electroperú S.A., which cover 100% (273.6 GWh), 100% (128.6 GWh) and 37.2% (22.0 GWh) of their electricity requirements, respectively. In July 2019,2023, we signed a new long-termconsumed 100% of the energy agreement with Electroperú S.A, a well-known Peruvian state-owned company, which started supplying energy our operations in Peru in January 2020, totaling a supply of 1,842 GWh in 2021. Electroperú was the sole supplier for our operations in Peru following the expiration of an electricity spot supply contract between the Cajamarquilla unit and Engie Energía Perú S.A. (formerly Enersur S.A.) in July 2020.Inacquired through these contracts.

In June 2021, however, anothera spot contract was signed with Kallpa Generación S.A. for the supply of electricityenergy to the Cajamarquilla unit. The contract, which expired on December 31, 2021,In 2023, 2.9% (40.7 GWh) of the energy requirements for our operations in Cajamarquilla was automatically renewed for another six months, supplying a totalcontracted from Kallpa Generación and 100% of 19.4 GWh in 2021.this energy was consumed.

The following table sets forth the energy sources and electricityenergy consumption with respect to our Peruvian operating units in 2021.2023.

Operating Unit

Energy Source

Total Energy
Consumed in 2021 (GWh)

Percentage of Total Energy Usage in 2021

Energy Source

Total Energy
Consumed in 2023 (GWh)

Percentage of Total Energy Usage in 2023

Third Party    
Cerro LindoThird Party (Electroperú S.A.)273.614.4%Third Party (Electroperú S.A.)277.515.1%
El PorvenirThird Party (Electroperú S.A.)128.66.8%Third Party (Electroperú S.A.)121.76.6%
AtacochaThird Party (Electroperú S.A.)22.01.1%Third Party (Electroperú S.A.)29.31.6%
CajamarquillaThird Party (Kallpa Generación S.A.)25.81.4%Third Party (Kallpa Generación S.A.)40.72.2%
CajamarquillaThird Party (Electroperú S.A.)1,411.774.3%Third Party (Electroperú S.A.)1,366.074.5%
Total Energy Usage 1,861.798% 1,835.2100%
Own Power Plant    
El PorvenirOwn Power Plant (Candelaria)00%Own Power Plant (Candelaria)0.00.0%
AtacochaOwn Power Plant (Chaprin and Marcopampa)37.22%Own Power Plant (Chaprin and Marcopampa)

 

30.3

61.0%
Cogeneration CJMTwo steam turbines with HRSG from tostación

 

19.4

39.0%
Total Energy Usage 1,898.9100% 49.7100%

 

Hydroelectric plants

Candelaria

The El Porvenir unit has one hydroelectric plant, the Candelaria Hydroelectric Power Plant, which is located along the Lloclla River. The plant contains three separate hydroelectric turbines, two of which have been operational since 1957 and the third since 1998, and which together have an installed rated capacity of 4.8 MW.

Chaprin and Marcopampa

The Atacocha unit has two hydroelectric plants. The Chaprin Hydroelectric Power Plant is located along the Lagia Ravine near the Huallaga River. The plant has been operating since 19531957 and its installed rated capacity is 5.9 MW. The Marcopampa Hydroelectric Power Plant has been operating since 1937,1953, and was overhauled in 1984, increasing its installed rated capacity of 1.2 MW. Since the beginning of 2020, Marcopampa has been shut off indefinitely. During 2021,2023, Atacocha consumed 37.230.3 GWh from these plants, which represented approximately 62.8%50.8% of the energy usage of the mine.

 
6784

Other Operations

Brazil

With respect to our Brazilian operations, as of December 31, 2021,2023, energy supply comes from various contracts, and our subsidiary Pollarix S.A (“Pollarix”).

The five hydroelectric plants in which our subsidiary Pollarix has directly or indirectly the following interests: a 21.0%22.4% equity participation in Enercan (Campos Novos hydroelectric power plant), a 100.0% ownership of the hydroelectric power plant Picada located in Minas Gerais, a 12.6% equity participation in the Amador Aguiar I, a 12.6% equity participation in the Amador Aguiar II and a 23.9% equity participation in the Igarapava. These plants have hydroelectric power facilities in the states of Minas Gerais, Santa Catarina and São Paulo. AllThe hydroelectric power plants of Pollarix provide electricityenergy to the fourfive operating units (Vazante, Morro Agudo, Três Marias, and Juiz de Fora)Fora and Aripuanã).

The only activity of Pollarix is to own our energy assets and sell energy to our Brazilian operating subsidiaries at market prices. We own all the common shares of Pollarix, which represents 33.33%33.3% of its total share capital. The remaining shares are preferred shares with limited voting rights, which are owned by our shareholder VSA and/or its affiliates.Auren Energia S.A (“Auren”). Under the terms of the preferred shares, VSAAuren is entitled to dividends per share equal to 1.251.93 times the dividends per share payable on the common shares. See “Operating and financial review and prospects—Overview—Key factors affecting our business and results of operations—Operating costs and expenses—Energy costs.”

In November 2023, Nexa finalized a contract rearrangement with Pollarix, in which the energy delivery from the hydroelectric plants (Picada, Igarapava and Amador Aguiar) was centralized through Pollarix. Pollarix is responsible for transferring the energy to Nexa, guaranteeing the right to self-production. In 2023, Pollarix provided 124.8 GWh of energy, which represented 7.3% of Nexa’s total energy purchased.

We have a contract with Votorantim Energia,Auren, which provides energy from variousseveral energy generation sites withto all Nexa operations in Brazil. In 2023, Auren provided a total of supply of 6.89 MW6.9 MWavg of energy, in 2021 with a reference pricerepresenting 3.5% of R$226/MWh (price annually adjusted for inflation). During 2021, it provided electricity only to the Aripuanã development project.Nexa’s total energy purchased.

In January 2020, we began a new long-term15-year energy supply agreement with Furnas, a Brazilian energy company, controlled by Eletrobras, to help address the increased electricityenergy demand in our operations. Nexa Brazil currently consumes nearly all the energy supplied by Pollarix and Votorantim EnergiaAuren in its existing operations. Furnas provides electricityenergy to the four operating units (Vazante, Morro Agudo, Três Marias and Juiz de Fora), with 13.8 MW per year of energy, which represented 7.3% of our total energy purchased, with a reference price of R$154/MWh (price will be annually adjusted for inflation). The agreement is valid for 15 years.

The following table sets forth our energy sources and consumption with respect to our Brazilian operations in 2021.2023.

Operating Unit

Energy Source

Total Energy Consumed in 2021 (GWh)

Percentage of Total Energy Usage in 2021

Energy Source

Total Energy Consumed in 2023 (GWh)

Percentage of Total Energy Usage in 2023

Third Party and Own Power PlantsPollarix S.A. and Furnas S.A. Pollarix S.A, Furnas S.A., Auren and Market 
Morro Agudo 70.84.8%78.94.8%
Vazante 254.517.3%297.618.2%
Três Marias 753.851.2%751.046.0%
Juiz de Fora 

392.5

26.7%

410.425.2%
Aripuanã

93.9

5.8%

Total Energy Usage 1,471.6100% 1,631.8100%

 

85

Other Operations

Hydroelectric plants

Campos Novos

Campos Novos is a hydroelectric plant located along the Canoas River.River, in the state of Santa Catarina. The plant has an installed capacity of 880 MW and has been authorized by the Brazilian ElectricityEnergy Regulatory Agency (Agência Nacional de Energia Elétrica or ANEEL), to produce 379.7382.2 MWavg. In 2021, the plant’s physical guarantee for ballast purposes was 3,211 GWh, 21% of this total was acquired to our operating plants. During 2021,2023, our Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 673.7676.5 GWh from Campos Novos, which represented approximately 40.9%39.7% of our total energy purchased.

68

Other Operations

Picada

Picada is a hydroelectric plant located along the Peixe River.River in the state of Minas Gerais. The plant has an installed capacity of 50 MW and has been authorized by ANEEL to produce 30.829.6 MWavg. During 2021,2023, our Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 264.4211.5 GWh, which represented 16.1%12.4% of our total energy purchased.

Igarapava

Igarapava is a hydroelectric plant located along the Grande River.River in the state of Sao Paulo. The plant has an installed capacity of 210 MW and has been authorized by ANEEL to produce 134.2127.5 MWavg. During 2021,2023, our Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 276.1218.4 GWh from Igarapava, which represented approximately 16.8%12.8% of our total energy purchased.

Amador Aguiar I

Amador Aguiar is a hydroelectric plant located along the Araguari River.River in the state of Minas Gerais. The plant has an installed capacity of 240 MW and has been authorized by ANEEL to produce 154.4146.7 MWavg. During 2021,2023, our Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 155.6132.8 GWh from Amador Aguiar I, which represented 9.45%7.8% of our total energy purchased.

Amador Aguiar II

Amador Aguiar is a hydroelectric plant located along the Araguari River.River in the state of Minas Gerais. The plant has an installed capacity of 210 MW and has been authorized by ANEEL to produce 131.7125.2 MWavg. During 2021,2023, our Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 155.6113.4 GWh from Amador Aguiar II, which represented 9.45%6.7% of our total energy purchased.

 
6986

Mineral Reserves and Resources

MINERAL RESERVES AND RESOURCES

Disclosure of Mineral Reserves and Resources

The Securities and Exchange Commission (“SEC”Registrants engaged in mining operations must comply with Regulation S-K Subpart 1300 ("S-K 1300" or the "SEC Mining Modernization Rules") amendments to its disclosure rules modernizing, which came into force on January 1, 2021. S-K 1300 governs the mineral property disclosure requirements for mining registrants became effective on January 1, 2021. The amendments include the adoption of S-K 1300, which governs disclosure for mining registrants (the “SEC Mining Modernization Rules”). The SEC Mining Modernization Rules replaced the historical property disclosure requirements for mining registrants that were included in the SEC’s Industry Guide 7 and better align disclosure with international industry and regulatory practices, including the Canadian National Instrument 43-101—Standards of Disclosure for Mineral Projects (“NI 43-101”). We began voluntarily complying with the SEC Mining Modernization Rules in our 2020 annual report.registrants.

For the meanings of certain technical terms used in this prospectus, see “Additional Information—Glossary.”

As a reporting issuer in Canada, we are also subject to Canadian National Instrument 43-101—Standards of Disclosure for Mineral Projects (“NI 43-101,43-101”), which is an instrument administered by the provincial and territorial securities regulatory authorities that governs how issuers in Canada disclose scientific and technical information about their mineral projects to the public. NI 43-101 imposes certain requirements in respect of such disclosure, including the requirement to have prescribed information prepared by, or under the supervision of, a qualified personQualified Person and the filing of NI 43-101 technical reports in the prescribed circumstances. Any reference to a NI 43-101 report is for informational purposes only, and such reports are not incorporated herein by reference.

Descriptions in this report of our mineral deposits prepared in accordance with S-K 1300, as well as similar information provided by other issuers in accordance with S-K 1300, may not be comparable to similar information prepared in accordance with NI 43-101 that is presented elsewhere outside of this report.

The qualified personsQualified Persons that have reviewed and approved the scientific and technical information contained in this annual report are identified in the footnotes to the tables summarizing the Mineral Reserves and Resources estimates below, see “Information on the Company—Mining operations” below. For the meanings of certain technical terms used in this report, see “Additional information—Glossary.”

Presentation of information concerning Mineral Reserves

The estimates of proven and probable reserves at our mines and projects and the estimates of life of mine included in this annual report have been prepared by the qualified personsQualified Persons referred to herein, and in accordance with the technical definitions established by the SEC.SEC Under S-K 1300:

·Proven Mineral Reserves are the economically mineable part of a Measured mineral resource and can only result from conversion of a measured mineral resource.
·Probable Mineral Reserves are the economically mineable part of an indicated and, in some cases, a measured mineral resource.
·Indicated Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated based on adequate geological evidence and sampling. The level of geological certainty associated with an Indicated Mineral Resource is sufficient to allow a qualified personQualified Person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an Indicated Mineral Resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve.
·Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated based on limited geological evidence and sampling. The level of geological uncertainty associated with an Inferred Mineral Resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an Inferred Mineral Resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an Inferred Mineral Resource may not be considered when assessing the economic viability of a mining project and may not be converted to a mineral reserve.
 
7087

Mineral Reserves and ResourcesOther Operations

·Measured Mineral Resource is that part of a mineral resource for which quantity and grade or quality are estimated based on conclusive geological evidence and sampling. The level of geological certainty associated with a Measured Mineral Resource is sufficient to allow a qualified personQualified Person to apply modifying factors, as defined in S-K 1300, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a Measured Mineral Resource has a higher level of confidence than the level of confidence of either an Indicated Mineral Resource or an Inferred Mineral Resource, a Measured Mineral Resource may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

We periodically update our reserves and resources estimates when we have new geological data, economic assumptions or mining plans. During 2021,2023, we performed an analysis of our reserves and resources estimates for certain operations, which is reflected in new estimates as of December 31, 2021.2023. Reserves and resources estimates for each operation assume that we either have or expect to obtain all the necessary rights and permits to mine, extract and process mineral reserves or resources at each mine. Where we own less than 100% of the operation, reserves and resources estimates have been adjusted to reflect our ownership interest. Certain figures in the tables, discussions and notes have been rounded. For a description of risks relating to our estimates of Mineral Reserves and Resources, see “Risk factors—Risks related to our Mineral Reserves and Resources.”

 
7188

Mineral Reserves and ResourcesOther Operations

Mineral Reserves

The following table shows our estimates of Attributable Mineral Reserves for our material mining properties as of December 31, 2021,2023, prepared in accordance with Subpart 1300 of Regulation S-K. The Morro Agudo mine Atacocha underground mine and Atacocha open pit mine dodoes not have known Mineral Reserves under Subpart 1300 of Regulation S-K.

 GradeContained Metal
 Ownership Interest (%)ClassTotal Attributable(1)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Cerro Lindo Mine(3)83.48Proven20.291.610.6521.80.21-327.4132.114,21742.3-
Probable16.481.210.5922.90.20-198.797.012,12032.6-
Subtotal36.761.430.6222.30.20-526.1229.126,33774.9-
El Porvenir Mine(4)83.48Proven2.773.700.2468.61.08-102.56.76,11929.8-
Probable10.023.540.1969.81.03-354.619.422,466103.6-
Subtotal12.793.570.2069.51.04-457.126.228,585133.4-
Vazante(5)100Proven7.398.90-17.30.25-657.6-4,09718.8-
Probable8.528.66-10.60.19-737.6-2,89616.4-
Subtotal15.918.77-13.70.22-1,395.2-6,99235.3-
Aripuanã(6)100Proven8.973.800.2835.71.430.26340.725.410,279128.175.2
Probable12.823.470.1932.11.310.32445.024.613,216167.4132.8
Subtotal21.793.610.2333.51.360.30785.650.023,496295.5208.0
              
Total Proven39.423.620.4227.40.560.061,428.2164.234,712219.075.2
 Probable47.843.630.2933.00.670.091,735.9141.050,698320.0132.8
 Total87.253.630.3530.50.620.073,164.0305.385,410539.1208.0


    GradeContained Metal
 Ownership Interest (%)ClassTonnage (1)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Cerro Lindo (3)83.48Proven21.831.680.6121.20.20-367.1132.614,86344.1-
Probable12.521.150.4525.20.24-144.356.810,15429.9-
Subtotal34.361.490.5522.60.22-511.4189.425,01774.1-
Vazante (4)100Proven5.499.84-17.10.23-539.8-3,02312.5-
Probable5.859.40-10.70.19-549.7-2,00311.3-
Subtotal11.339.62-13.80.21-1,089.5-5,20623.8-
Vazante Aroeira Tailings (5)100Proven-----------
Probable2.114.12-7.60.25-87.0-5185.2-
Subtotal2.114.12-7.60.25-87.0-5185.2-
El Porvenir (6)83.48Proven3.274.090.2475.21.29-133.87.97,90842.0-
Probable8.964.110.2272.11.17-368.720.020,760104.6-
Subtotal12.234.110.2372.91.20-502.528.028,667146.6-
Atacocha (Underground) (7)75.96Proven1.303.860.3484.91.45-50.04.43,53518.7-
Probable3.014.540.4377.71.29-136.612.87,50938.8-
Subtotal4.304.330.4079.81.34-186.517.211,04457.5-

Atacocha

(Open pit) (8)

75.96Proven1.451.02-38.21.160.2514.8-1,17816.911.5
Probable1.880.97-32.41.140.2918.2-1,95821.417.4
Subtotal3.330.99-34.91.150.2733.1-3,73738.228.9
Aripuanã (9)100Proven6.433.830.2133.81.400.28246.213.86,99390.057.1
Probable24.644.480.1342.41.730.211,105.031.833,610427.3167.3
Subtotal31.074.350.1540.61.660.221,351.345.640,602517.2224.4
Total Proven39.773.400.4029.80.560.061,351.7159.138,100224.268.7
Probable58.964.090.2140.41.080.102,409.7122.176,511638.5184.7
Total98.733.810.2836.10.870.083,761.3281.3114,611862.7253.3

Notes:

* Numbers may not add due to rounding.

* The point of reference for Mineral Reserves in this table is mill feed materials.

* The El Porvenir, Atacocha Underground and Atacocha Open Pit mines are part of the Cerro Pasco Complex.

 
7289

Mineral Reserves and ResourcesOther Operations

The following table shows our estimates of Mineral Reserves (100% ownership basis) for our material mining properties as of December 31, 20212023 prepared in accordance with Subpart 1300 of Regulation S-K. The Morro Agudo mine Atacocha underground mine and Atacocha open pit mine dodoes not have known Mineral Reserves under Subpart 1300 of Regulation S-K.

 GradeContained Metal
 Ownership InterestClassTotal(2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
  
 (%) (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Cerro Lindo Mine(3)83.48Proven24.301.610.6521.80.21-392.2158.317,03050.6-
Probable19.741.210.5922.90.20-238.0116.214,51939.1-
Subtotal44.041.430.6222.30.20-630.3274.431,54989.7-
El Porvenir Mine(4)83.48Proven3.323.700.2468.61.08-122.88.17,32935.7-
Probable12.003.540.1969.81.03-424.823.326,912124.1-
Subtotal15.323.570.2069.51.04-547.531.334,242159.8-
Vazante(5)100Proven7.398.90-17.20.25-657.6-4,09718.8-
Probable8.528.66-10.60.19-737.6-2,89616.4-
Subtotal15.918.77-13.70.22-1,395.2-6,99235.3-
Aripuanã(6)100Proven8.973.800.2835.71.430.26340.725.410,279128.175.2
Probable12.823.470.1932.11.310.32445.024.613,216167.4132.8
Subtotal21.793.610.2333.51.360.30785.650.023,496295.5208.0
              
Total Proven43.983.440.4427.40.530.051,513.3191.738,736233.375.2
 Probable53.083.480.3133.70.650.081,845.4164.057,543347.0132.8
 Total97.063.460.3730.90.600.073,358.6355.796,279580.2208.0
              
                  


    GradeContained Metal 
 Ownership InterestClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold 
 
 (%) (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz) 
Cerro Lindo (3)83.48Proven26.151.680.6121.20.20-439.7158.817,80352.8- 
Probable15.001.150.4525.20.24-172.968.112,16335.9- 
Subtotal41.151.490.5522.60.22-612.6226.929,96688.7- 
Vazante (4)100Proven5.499.84-17.10.23-539.8-3,02312.5- 
Probable5.859.40-10.70.19-549.7-2,00311.3- 
Subtotal11.339.62-13.80.21-1,089.5-5,20623.8- 
Vazante Aroeira Tailings (5)100Proven----------- 
Probable2.114.12-7.60.25-87.0-5185.2- 
Subtotal2.114.12-7.60.25-87.0-5185.2- 
El Porvenir (6)83.48Proven3.924.090.2475.21.29-160.39.59,47250.3- 
Probable10.734.110.2272.11.17-441.624.024,867125.3- 
Subtotal14.654.110.2372.91.20-601.933.534.338175.7- 
Atacocha (Underground) (7)75.96Proven1.713.860.3484.91.45-65.85.74,65424.6- 
Probable3.964.540.4377.71.29-179.816.99,88651.1- 
Subtotal5.664.330.4079.81.34-245.622.614,54075.7- 

Atacocha

(Open pit) (8)

75.96Proven1.911.02-38.21.160.2519.5-2,34222.215.2 
Probable2.470.97-32.41.140.2924.0-2,57728.122.9 
Subtotal4.380.99-34.91.150.2743.5-4,91950.338.1 
Aripuanã (9)100Proven6.433.830.2133.81.400.28246.213.86,99390.057.1 
Probable24.644.480.1342.41.730.211,105.031.833,610427.3167.3 
Subtotal31.074.350.1540.61.660.221,351.345.640,602517.2224.4 
Total Proven45.603.230.4130.20.550.051,471.2188.544,286252.572.3 
Probable64.763.950.2241.11.060.092,560.2141.685,623684.2190.2 
Total110.363.650.3036.60.850.074,031.4330.1129,910936.7262.5 

Notes:

* Numbers may not add due to rounding.

90

Other Operations

* The point of reference for Mineral Reserves in this table is mill feed materials.

* The El Porvenir, Atacocha Underground and Atacocha Open Pit mines are part of the Cerro Pasco Complex.

(1)The qualified person for the Mineral Reserves estimate is SLR Consulting Ltd., an independent mining consulting firm. The total tonnage and content amounts presented in this table represent Nexa’s attributable ownership basis.

(2)The qualified person for the Mineral Reserves estimate is SLR Consulting Ltd., an independent mining consulting firm. The total amounts and content presented in this table have not been adjusted to reflect our ownership interest. The information presented in this table includes 100% of the Mineral Reserve estimates for the property. Please refer to our ownership percentage for the amounts attributable to our ownership interest in the property.

73

Mineral Reserves and Resources

(3)The Qualified Person for the Mineral Reserves estimate is Cristovao Teofilo dos Santos, B.Eng., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at an NSR break-even cut-off value of US$38.73/40.86/t processed. Some incremental material with values between US$29.13/32.99/t and US$38.84/40.86/t was included. Mineral Reserves estimates are estimated usingbased on average long-term metal prices of Zn: US2,722.20/of: zinc: US$2,799.04/t (US$1.23/1.27/lb), Pb:; copper: US$1,997.21/7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); Cu:and silver: US$7,288.26/t (US$3.31/lb); and Ag: US$19.68/21.17/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at LOMLife of Mine average head grades 88.1%are 88.36% for Zn, 68.9%85.23% for Cu, 66.53% for Pb, are 86.6% for Cu, and 68.8%68.78% for Ag. A minimum mining width of 5.0m5.0 m was used. Dilution and extraction factors are applied based on stope type and location. Bulk density varies depending on mineralization domain.

(4)The Qualified Person for the Mineral Reserves estimate is Vitor Marcos Teixeira de Aguilar, B.Eng., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at a NSR cut-off value of US$66.31/t processed. Mineral Reserves estimates are based on average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); and silver: US$21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head grades are 87.19% for Zn, 23.93% for Pb, and 42.00% for Ag. A minimum mining width of 4.0 m was applied.

(5)The Qualified Person for the Mineral Reserves estimate is Vitor Marcos Teixeira de Aguilar, B.Eng., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at a NSR cut-off value of US$25.44/t processed. Mineral Reserves estimates are based on average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); and silver: US$21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Vazante Aroeira Tailings average head grades are 67.86% for Zn, 40.74% for Pb, and 42.00% for Ag. A minimum mining unit of 10 m x 10m x 2 was applied.

(6)The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at NSR cut-off grade values ranging from US$57.63/63.77/t to US$62.19/67.04/t for SLS areas and US$65.77/t to US$69.04/t for C&F areas depending on the zone and mining method.zone. Mineral Reserves estimates are estimated usingbased on average long-term metal prices of Zn:of: zinc: US$2,722.20/2,799.04/t (US$ 1.23/1.27/lb); Pb:copper: US$1,997.21/7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); Cu:and silver: US$7,288.26/t (US$3.31/lb); and Ag: US$19.68/21.17/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average head gradesgrade are 89.59%89.21% for Zn,77.74%Zn, 14.60% for Cu, 80.01% for Pb, 14.29% for Cu, and 63%77.51% for Ag. Minimum mining width of 5.0m was applied. Average Bulk density5.0 m for C&F mining and 4.0 m for SLS mining were used for reserves shapes and development design and are reported inclusive of 3.12 t/m3.extraction losses and dilution.

(5)(7)The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at NSR cut-off grade values ranging from US$69.00/t for SLS areas and US$71.07/t for C&F areas depending on the zone. A number of incremental material (with values between US$45.09/t and US$69.00/t for SLS and values between US$47.16/t and US$71.07/t for C&F mining) were included in the estimate. Mineral Reserves estimates are based on average long-term metal prices of: zinc: US$2,799.04/t (US$1.27/lb); copper: US$7,669.61/t (US$3.48/lb); lead: US$2,000.29/t (US$0.91/lb); and silver: US$21.17/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head grades are 89.30% for Zn, 15.73% for Cu, 80.02% for Pb, and 77.51% for Ag. Minimum mining width of 5.0 m for C&F mining and 4.0 m for SLS mining were used for reserves shapes and development design and are reported inclusive of extraction losses and dilution.

(8)The Qualified Person for the Mineral Reserves estimate is SLR Consulting (Canada) Ltd., an independent mining consulting firm. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at a NSR cut-off gradevalues of 4% Zn.US$16.21/t. Mineral Reserves estimates are estimated usingbased on average long-term metal prices of Zn:of: zinc: US$2,722.20/2,799.04/t Zn,(US$1.27/lb); lead: US$1,997.21/2,000.29/t Pb(US$0.91/lb); silver: US$21.17/oz; and gold: US$19.68/oz Ag (using an average long term U.S. dollar to Brazilian real exchange rate of 4.98).1,630.93/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average head gradesheads grade are 84.7%70.44% for Zn, 22.1%83.97% for Pb, 75.76% for Ag and 42.0%65.46% for Ag. A minimum mining width of 4.0m was applied. Average Bulk density of 3.1 t/m3Au.

91
(6)

Other Operations

(9)The Qualified Person for the Mineral Reserves estimate is Vitor Ferraz Viana, B.Eng., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Reserves, which also are consistent with the CIM (2014) definitions. Mineral Reserves are estimated at a NSR break-even cut-off value of US$47.91/63.40/t processed. Someprocessed was estimated from forecasted operating costs and some incremental material with values between US$39.79/49.20/t and US$47.91/63.40/t was included. A minimum mining width of 4.0 m was used. The long-term prices derived are in line with the consensus forecasts from banks and independent institutions. Mineral Reserves estimates are estimated usingbased on average long-term metal prices of Zn: Zn: US2,722.20/of: zinc: US$2,799.04/t (US$1.23/1.27/lb), Pb:; lead: US$1997.21/2,000.29/t (US$0.91/lb); Cu:silver: US$7,288.26/t (US$3.31/lb); Au: US$1,454.12/21.17/oz; and Ag:gold: US$19.68/1,630.93/oz. Metallurgical recoveries are accounted for in the NSR calculations based on metallurgical test worktestworks and are variable as a function of head grade.grade and oretype. Recoveries at the LOMLife of Mine average head grades for stratabounda Mix of 80% Stratabound and 20% Stringer material are 89.4%90.06% for Zn, 83.3%60.00% for Cu, 84.92% for Pb, 59.3% for Cu, 76.0%68.00% for Ag, and 70.0% for Au. Recoveries at the LOM average head grades for stringer material are 87.8% for Cu, 50.0% for Ag, and 63.0%67.80% for Au. A minimum mining width of 4.0m4.0 m was applied.

 
7492

Mineral Reserves and ResourcesOther Operations

Mineral Resources

The following table shows our estimates of Attributable Mineral Resources for our material mining properties as of December 31, 20212023 prepared in accordance with Subpart 1300 of Regulation S-K.

Ownership Interest (%)ClassTotal Attributable(1)GradeContained Metal GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGoldOwnership Interest (%)ClassTonnage (1)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz) (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Cerro Lindo Mine(3)83.48Measured3.241.930.6121.60.23-62.519.82,2497.4-
Indicated2.971.040.4828.10.26-30.914.32,6857.8-
Subtotal6.211.500.5524.70.24-93.434.14,93415.2-
Inferred6.871.400.2939.20.46-96.219.98,65931.6-
El Porvenir Mine(4)83.48Measured0.542.660.2060.70.85-14.41.11,0594.6-
Indicated2.532.960.2048.20.76-74.95.13,91919.2-
Subtotal3.072.910.2050.40.78-89.36.14,97923.8-
Inferred8.703.850.2169.20.95-334.918.319,35382.6-
Vazante Mine(5)100.0Measured2.343.63-6.40.12-84.9-4662.8-
Indicated2.945.53-3.40.07-162.7-3112.1-
Subtotal5.284.69-4.70.09-247.6-7774.9-
Inferred15.447.7211.20.19-1,192.1-5,39530.0-
Aripuanã Project(6)100.0Measured0.441.790.3417.50.590.357.91.52482.65.0
Indicated2.802.180.3019.90.740.4861.08.41,79120.743.2
Subtotal3.242.130.3119.60.720.4668.99.92,03923.348.2
Inferred38.483.510.3335.51.290.551,350.6127.043,919496.4680.4
Cerro Lindo (3)83.48Measured3.671.930.6523.10.24-70.923.92,7288.8-
Indicated2.751.060.4724.40.22-29.212.92,1616.1-
Subtotal6.431.560.5723.70.23-100.136.84,88914.9-
Inferred7.751.540.2532.60.42-119.319.48,11932.6-
Vazante (4)100Measured0.488.40-12.40.25-40.3-1911.2-
Indicated1.409.64-4.00.08-135.0-1821.1-
Subtotal1.889.32-6.20.12-175.3-3732.3-
Inferred12.7710.27-12.90.21-1,311.0-5,28927.4-
Vazante Aroeira Tailings (4)100Measured-----
Indicated-----
Subtotal-----
Inferred0.664.21-7.90.25-27.8-1671.7-
El Porvenir (5)83.48Measured0.553.470.2757.70.95-19.11.51,0235.3-
Indicated2.693.250.2063.20.97-87.45.35,46026.0-
Subtotal3.243.290.2162.20.97-106.56.86,48331.3-
Inferred9.233.830.2482.91.32-353.622.124,602121.9-
Atacocha (Underground) (6)75.96Measured0.803.470.2755.00.98-27.62.11,4117.8-
Indicated1.913.300.3654.90.92-63.26.93,37917.6-
Subtotal2.713.350.3354.90.94-90.89.04,79025.4-
Inferred6.124.090.5677.31.21-250.434.315,21674.1-

Atacocha

(Open pit) (7)

75.96Measured1.371.28-31.40.870.1917.5-1,38111.98.4
Indicated2.951.05-29.00.900.2430.9-2,74726.522.7
Subtotal4.311.12-29.80.890.2248.4-4,12838.431.1
Inferred1.291.27-32.71.150.2216.4-1,35714.99.1
Aripuanã (8)100Measured0.352.600.3923.10.860.369.11.42603.04.1
Indicated5.193.950.1835.01.460.27205.09.35,84075.845.1
Subtotal5.543.860.1934.21.420.28214.110.76,10078.849.2
Inferred38.753.470.3345.71.390.431,344.6127.956,935538.6535.7
Total Measured6.562.590.3419.10.270.02169.722.44,02217.45.0 Measured7.222.560.4030.10.530.05184.528.96,99438.112.5
Indicated11.242.930.2524.10.440.12329.527.88,70649.843.2Indicated16.893.260.2036.40.910.12550.734.519,769153.267.8
Subtotal17.802.800.2822.20.380.08499.250.212,72867.248.2Total24.113.050.2634.50.790.10735.263.426,763191.380.3
Inferred69.494.280.2434.60.920.302,973.8165.277,326640.6680.4Inferred76.574.470.2745.41.060.223,423.2203.6111,686811.1544.8


Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

* The El Porvenir, Atacocha Underground and Atacocha Open Pit mines are part of the Cerro Pasco Complex.

 
7593

Mineral Reserves and ResourcesOther Operations

The following table shows our estimates of Mineral Resources (100% ownership basis) for our material mining properties as of December 31, 20212023 prepared in accordance with Subpart 1300 of Regulation S-K.

 

Ownership Interest (%)ClassTonnage(2)GradeContained Metal GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGoldOwnership Interest (%)ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz) (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Cerro Lindo Mine(3)83.48Measured3.881.930.6121.60.23-74.923.72,6948.9-
Indicated3.561.040.4828.10.26-37.017.13,2169.3-
Subtotal7.441.500.5524.70.24-111.940.85,91018.2-
Inferred8.231.400.2939.20.46-115.223.910,37237.9-
El Porvenir Mine(4)83.48Measured0.652.660.2060.70.85-17.31.31,2695.5-
Indicated3.032.960.2048.20.76-89.76.14,69523.0-
Subtotal3.682.910.2050.40.78-107.07.45,96428.5-
Inferred10.423.850.2169.20.95-401.221.923,18399.0-
Vazante Mine(5)100Measured2.343.63-6.40.12-84.9-4662.8-
Indicated2.945.53-3.40.07-162.7-3112.1-
Subtotal5.284.69-4.70.09-247.6-7774.9-
Inferred15.447.72-11.20.19-1,192.1-5,39530.0-
Aripuanã Project(6)100Measured0.441.790.3417.50.590.357.91.52482.65.0
Indicated2.802.180.3019.90.740.4861.08.41,79120.743.2
Subtotal3.242.130.3119.60.720.4668.99.92,03923.348.2
Inferred38.483.510.3335.51.290.551,350.6127.043,919496.4680.4
Cerro Lindo (3)83.48Measured4.401.930.6523.10.24-84.928.63,26810.6-
Indicated3.301.060.4724.40.22-35.015.52,5897.3-
Subtotal7.701.560.5723.70.23-119.944.15,85717.9-
Inferred9.281.540.2532.60.42-142.923.29,72639.0-
Vazante (4)100Measured0.488.40-12.40.25-40.3-1911.2-
Indicated1.409.64-4.00.08-135.0-1821.10-
Subtotal1.889.32-6.20.12-175.3-3732.3-
Inferred12.7710.27-12.90.21-1,311.0-5,28927.4-
Vazante Aroeira Tailings (4)100Measured-----
Indicated-----
Subtotal-----
Inferred0.664.21-7.90.25-27.8-1671.7-
El Porvenir (5)83.48Measured0.663.470.2757.70.95-22.91.81,2256.3-
Indicated3.223.250.2063.20.97-104.76.46,54031.2-
Subtotal3.883.290.2162.20.97-127.68.27,76537.5-
Inferred11.063.830.2482.91.32-423.626.529,471146.0-
Atacocha (Underground) (6)75.96Measured1.053.470.2755.00.98-36.42.81,85710.3-
Indicated2.523.300.3654.90.92-83.29.14,44823.2-
Subtotal3.573.350.3354.90.94-119.611.96,30533.5-
Inferred8.064.090.5677.31.21-329.745.120,03197.5-

Atacocha

(Open pit) (7)

75.96Measured1.801.28-31.40.870.1923.0-1,81815.711.0
Indicated3.881.05-29.00.900.2440.7-3,61634.929.9
Subtotal5.681.12-29.80.890.2263.7-5,43450.640.9
Inferred1.701.27-32.71.150.2221.6-1,78719.612.0
Aripuanã (8)100Measured0.352.600.3923.10.860.369.11.42603.04.1
Indicated5.193.950.1835.01.460.27205.09.35,84075.845.1
Subtotal5.543.860.1934.21.420.28214.110.76,10078.849.2
Inferred38.753.470.3345.71.390.431,344.6127.956,935538.6535.7
Total Measured7.312.530.3619.90.270.02185.026.54,67719.85.0 Measured8.742.480.4030.70.540.05216.634.68,61947.115.1
Indicated12.332.840.2625.30.450.11350.431.610,01355.143.2Indicated19.513.090.2137.00.890.12603.640.323,215173.575.0
Subtotal19.642.730.3023.30.380.08535.458.114,69074.948.2Total28.252.900.2735.00.780.10820.274.931,834220.690.1
Inferred72.574.220.2435.50.910.293,059.1172.882,869663.3680.4Inferred82.284.380.2746.61.060.213,601.2222.7123,406869.8547.7


Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are reported exclusive of those Mineral Resources that were converted to Mineral Reserves, and Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

* The El Porvenir, Atacocha Underground and Atacocha Open Pit mines are part of the Cerro Pasco Complex.

94

Other Operations

(1)The qualified person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee. The total tonnage and content amounts presented in this table represents Nexa’s attributable ownership basis.

 

76

Mineral Reserves and Resources

(2)The qualified person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee. The tonnage and content amounts presented in this table represents 100% of the Mineral Resources estimates for the property. Please refer to our ownership percentage for the amounts attributable to our ownership interest in the property.

(3)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at an NSR cut-off value of US$ 38.84/40.86/t. Mineral Resources estimates are estimated using anbased on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), Pb:; copper: US$2,296.79/8,820.05/t (US$3.48/lb); lead: US$2,300.33/t (US$1.04/lb); Cu:and silver: US$8,381.50/t (US$3.80/lb); and Ag: US$22.63/24.35/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at LOMLife of Mine average head grades 88.1%are 88.36% for Zn, 68.9%85.23% for Cu, 66.53% for Pb, are 86.6% for Cu, and 68.8%68.78% for Ag. A minimum mining width of 4.0m4 m was used to create resource shapes. Bulk density varies depending on mineralization domain.

(4)Subpart 1300 of Regulation S-K definitions were followedThe Qualified Person for the Mineral Resources which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at NSR cut-off grade values ranging from of US$57.45/t to US$60.39/t for SLS areas and US$ 59.24/t to US$62.18 for C&F areas depending on the zone. Mineral Resources are estimated using an average long-term metal prices of Zn: US$3,130.52/t (US$1.42/lb)estimate is José Antonio Lopes, B.Geo., Pb: US$2,296.79/t (US$1.04/lb); Cu: US$8,381.50/t (US$3.80/lb) and Ag: US$22.63/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable asFAusIMM, a function of head grade. Recoveries at the LOM average head grades are 89.59% for Zn, 77.74% for Pb, 14.29% for Cu, and 63% for Ag. A minimum mining width of 4.0m and 3.0m was used for C&F and SLS resource stopes shapes respectively. Bulk density varies depending on mineralization domain.

(5)Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at various NSR cut-off values appropriate to the mineralization style and mining method. For Supergene Mineralization (Calamine) the resources are estimated at a NSR cut-off value of US$20.33/27.91/t for soil and US$22.18/32.92/t for fresh rock and transition material. For Aroeira Tailings the resources are estimated ate a NSR cut-off value of US$20.62/29.06/t and for Hypogene Mineralization (Willeminte)(Willemite) a cut-off value of US$ 52.95/66.31/t for all resources shapes. Mineral Resources are estimated using anestimates are based on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), Pb:; lead: US$2,296.79/2,300.33/t (US$1.04/lb); and Ag:silver: US$22.63/oz (using an average long-term U.S. dollar to Brazilian real exchange rate of 4.98).24.35/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average hypogene mineralization (Willemite) head grades are 84.7%87.19% for Zn, 22.1%23.93% for Pb, and 42.0%42.00% for Ag. Recovery at Life of Mine average supergene mineralization head grade is 55.00% for Zn. Recoveries at Life of Mine average Aroeira Tailings head grades are 67.86% for Zn, 40.74% for Pb and 42.00% for Ag. A minimum thickness of 3.0 m for underground SLS, open pit shell for Calamine and above original topography for tailings was applied. Bulk density was assigned based on rock type.

95

Other Operations

(6)(5)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources reported using a cut-of valueare estimated at NSR cut-off grade values ranging from of US$47.91/t.63.77/t to US$67.04/t for SLS areas and US$65.77/t to US$69.04for C&F areas depending on the zone. Mineral Resources estimates are estimated using anbased on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), Pb:; copper: US$2,296.79/8,820.05/t (US$3.48/lb); lead: US$2,300.33/t (US$1.04/lb); Cu:and silver: US$8,381.50/t (US$3.80/lb); Au: US$1,672.24/oz; and Ag: US$22.63/24.35/oz. Metallurgical recoveries are accounted for in the NSR calculations based on metallurgical test workhistorical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average head grades for stratabound material are 89.4%89.21% for Zn, 83.3%14.60% for Cu, 80.01% for Pb, 59.3%and 77.51% for Cu, 76.0%Ag. A minimum mining width of 4.0 m was used for Ag,C&F and 70.0%a minimum mining width of 3.0 m was used for Au. Recoveries at the LOM average head grades for stringer material are 87.8% for Cu, 50.0% for Ag, and 63.0% for Au.SLS resource stopes shapes respectively. Bulk density varies depending on mineralization domain.

77

Mineral Reserves and Resources

The following table shows our estimates of Attributable Mineral Resources for our other operating mines which do not currently have estimated Mineral Reserves as of December 31, 2021 prepared in accordance with Regulation S-K 1300.

 Ownership (%)ClassTotal Attributable(1)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Atacocha (Underground Mine)(3)75.96Measured2.884.87-101.11.98-140.2-9,35857.0-
Indicated3.334.14-75.61.41-137.7-8,08446.9-
 Subtotal6.214.48-87.41.67-277.9-17,442103.9-
 Inferred6.194.43-81.81.25-274.2-16,28177.4-
Atacocha (Open pit Mine)(4)75.96Measured2.491.10-28.90.810.2127.4-2,31520.216.8
Indicated6.201.07-30.80.940.1866.3-6,13858.335.9
Subtotal8.691.08-30.30.900.1993.7-8,45378.552.6
Inferred1.520.93-32.00.920.2614.1-1,56314.012.7
Morro Agudo Mine(5)100.0Measured-----------
Indicated13.923.39--0.59-472.1--82.4-
Subtotal13.923.39--0.59-472.1--82.4-
Inferred4.403.26--0.47-143.6--20.8-
Total Measured5.373.12-67.61.440.10167.6-11,67377.216.8
 Indicated23.452.88-18.90.800.05676.1-14,222187.635.9
 Subtotal28.822.93-27.90.920.06843.7-25,895264.852.6
 Inferred12.113.57-45.80.930.03431.9-17,844112.212.7


Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability.

78

Mineral Reserves and Resources

The following table shows our estimates of Mineral Resources (100% ownership basis) for our other operating mines which do not currently have estimated Mineral Reserves as of December 31, 2021 prepared in accordance with Regulation S-K 1300.

 Ownership (%)ClassTonnage(2)GradeContained Metal
ZincCopperSilverLeadGoldZincCopperSilverLeadGold
(Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Atacocha (Underground Mine)(3)75.96Measured3.794.87-101.11.98-184.6-12,31975.0-
Indicated4.384.14-75.61.41-181.3-10,64361.8-
Subtotal8.174.48-87.41.67-365.9-22,962136.8-
Inferred8.154.43-81.81.25-361.0-21,434101.9-
Atacocha (Open pit Mine)(4)75.96Measured3.281.10-28.90.810.2136.1-3,04826.622.1
Indicated8.161.07-30.80.940.1887.3-8,08076.747.2
Subtotal11.441.08-30.30.900.19123.4-11,128103.369.3
Inferred2.000.93-32.00.920.2618.6-2,05818.416.7
Morro Agudo Mine(5)100.0Measured-----------
Indicated13.923.39--0.59-472.1--82.4-
Subtotal13.923.39--0.59-472.1--82.4-
Inferred4.403.26--0.47-143.6--20.8-
Total Measured7.073.12-67.61.440.10220.7-15,367101.622.1
 Indicated26.462.80-22.00.830.06740.7-18,723220.947.2
 Subtotal33.532.87-31.60.960.06961.4-34,090322.569.3
 Inferred14.553.60-50.20.970.04523.2-23,492141.116.7


Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability. 

79

Mineral Reserves and Resources

(1)(6)The qualified personQualified Person for the Mineral Resources estimate is José Antonio Lopes,Jerry Huaman Abalos, B.Geo., FAusIMM (CP) Geo,MAusIMM CP(Geo), a Nexa Resources employee. The total tonnage and content amounts presented in this table represents Nexa’s attributable ownership basis.

(2)The qualified person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM (CP) Geo, a Nexa Resources employee. The tonnage and content amounts presented in this table represents 100% of the Mineral Resources estimates for the property. Please refer to our ownership percentage for the amounts attributable to our ownership interest in the property.

(3)Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at a NSR cut-off value of US$18.17/t. Some marginal material with cut-off value of69.00/t for SLS, and US$15.66/71.07/t was included.for C&F. Mineral Resources estimates are estimated using anbased on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), Pb:; copper: US$2,296.79/8,820.05/t (US$3.48/lb); lead: US$2,300.33/t (US$1.04/lb); and Ag:silver: US$22.63/24.35/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average head grades are 85.44%89.30% for Zn, 84.92%15.73% for Cu, 80.02% for Pb, and 76%77.51% for Ag. A minimum mining width of 4.0m4.0 m was used.used for C&F and a minimum mining width of 3.0 m was used for SLS resource stopes shapes respectively. Density was assigned based on rock type.

 

(4)(7)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are reported within optimized pit shell. Mineral Resources are estimated at a NSR cut-off value of US$18.17/22.44/t. Some marginal material with cut-off value of US$15.66/t was included. Mineral Resources estimates are estimated using anbased on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb), Pb:; lead: US$2,296.79/2,300.33/t (US$1.04/lb); Cu:silver: US$8,381.50/t (US$3.80/lb); Au: US$1,672.24/24.35/oz; and Ag:gold: US$22.63/1,875.57/oz. Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOMLife of Mine average head grades are 76.05%70.44% for Zn, 80.0%83.97% for Pb, 76%75.76% for Ag, and 53%65.46% for Au. Mineral resources are reported within open pit shell. Density was assigned based on rock typetype.

 

(5)(8)The Qualified Person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources reported using a cut-of value of US$63.40/t. Mineral Resources estimates are based on average long-term metal prices of: zinc: US$3,218.90/t (US$1.46/lb); copper: US$8,820.05/t (US$3.48/lb); lead: US$2,300.33/t (US$1.04/lb); silver: US$24.35/oz; and gold: US$1,875.57/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at Life of Mine average head grades are 90.06% for Zn, 60.00% for Cu, 84.92% for Pb, 68.00% for Ag, and 67.80% for Au. A minimum thickness of 3.0 m was used for stopes shapes. Bulk density varies depending on mineralization domain.
96

Other Operations

The following table shows our estimates of Attributable Mineral Resources for our other operating mines and zinc projects which do not currently have estimated Mineral Reserves as of December 31, 2023 prepared in accordance with Regulation S-K 1300.

    GradeContained Metal
 Ownership (%)ClassTonnage (1)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Morro Agudo (3)100Measured-----------
Indicated12.943.51--0.59-454.3--75.9-
Subtotal12.943.51--0.59-454.3--75.9-
Inferred3.913.91--0.53-152.7--20.7-
Hilarión (4)83.48Measured12.143.39-30.90.69-411.5-12,05983.7-
Indicated28.413.62-27.00.54-1,028.4-24,660153.4-
Subtotal40.553.55-28.20.58-1,439.9-36,719237.2-
Inferred35.204.06-25.00.41-1,429.3-28,296144.3-
Florida Canyon Zinc (5)50.93Measured0.4111.32-15.41.40-46.7-2045.8-
Indicated0.8310.28-14.91.31-85.4-39810.9-
Subtotal1.2410.63-15.11.34-132.1-60216.7-
Inferred7.579.63-11.31.26-728.8-2,75095.3-
Total Measured12.553.65-30.40.71-458.2-12,26389.5-
 Indicated42.183.72-18.50.57-1,568.0-25,058240.2-
 Total54.733.70-21.20.60-2,026.2-37,321329.7-
 Inferred46.684.95-20.70.56-2,310.8-31,045260.4-

Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

97

Other Operations

The following table shows our estimates of Mineral Resources (100% ownership basis) for our other operating mines and zinc projects which do not currently have estimated Mineral Reserves as of December 31, 2023 prepared in accordance with Regulation S-K 1300.

    GradeContained Metal
 Ownership (%)ClassTonnage (2)ZincCopperSilverLeadGoldZincCopperSilverLeadGold
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Morro Agudo (3)100Measured-----------
Indicated12.943.51--0.59-454.3--75.9-
Subtotal12.943.51--0.59-454.3--75.9-
Inferred3.913.91--0.53-152.7--20.7-
Hilarión (4)83.48Measured14.543.39-30.90.69-492.9-14,445100.3-
Indicated34.033.62-27.00.54-1,231.9-29,540183.8-
Subtotal48.573.55-28.20.58-1,724.8-43,985284.1-
Inferred42.174.06-25.00.41-1,712.1-33,895172.9-
Florida Canyon Zinc (5)50.93Measured0.8111.32-15.41.40-91.7-40111.3-
Indicated1.6310.28-14.91.31-167.6-78121.4-
Subtotal2.4410.63-15.11.34-259.3-1,18232.7-
Inferred14.869.63-11.31.26-1,431.0-5,399187.2-
Total Measured15.353.81-30.10.73-584.6-14,846111.6-
 Indicated48.603.81-19.40.58-1,853.8-30,321281.1-
 Total63.953.81-22.00.61-2,438.4-45,167392.7-
 Inferred60.945.41-20.10.62-3,295.8-39,294380.8-

Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

(1)The tonnage and content amounts presented in this table represents Nexa’s attributable ownership basis.

(2)The tonnage and content amounts presented in this table represents 100% of the Mineral Resources estimates for the property. Please refer to our ownership percentage for the amounts attributable to our ownership interest in the property.

(3)The Qualified Person for the Mineral Resources estimate is José Antonio Lopes, B.Geo., FAusIMM, a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are reported within underground mining shapes and the NSR cut-off values are calculated based on the life of mine costs for each mine. Morro Agudo: US$ 39.20/51.84/t and Bonsucesso: US$ 47.10/55.83/t. Mineral Resources estimates are estimated using anbased on average long-term metal prices of Zn:of: zinc: US$3,130.52/3,218.90/t (US$1.42/1.46/lb) and Pb:lead: US$2,296.79/2,300.33/t (US$1.04/lb). Metallurgical recoveries are accounted for in the NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOM average head grades for Morro Agudo are 89.84%89.96% for Zn and 75.52%71.69% for Pb, and for Bonsucesso are 92.50% for Zn and 61.10% for Pb. A minimum thickness of 3.0m3.0 m was applied for Bonsucesso and 4.5m4.5 m for Morro Agudo underground. Density was assigned based on rock type.
98

Other Operations

(4)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at an NSR cut-off value of US$45.00/t. Mineral Resources estimates are based on average long-term metal prices of: zinc: US$3,245.91/t (US$1.47/lb); lead: US$2,332.46/t (US$1.06/lb); and silver: US$22.66/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOM average head grades for Hilarion are 90.00% for Zn, 86.00% for Pb, and 72.00% for Ag. A minimum thickness of 4.0 m was applied. Density was assigned based on rock type.

(5)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at an NSR cut-off value of US$41.40/t NSR for SLS, US$42.93/t for C&F and US$40.61/t for Room & Pillar mine areas. Mineral Resources estimates are based on average long-term metal prices of: zinc: US$2,816.35/t (US$1.27/lb); lead: US$ 2,196.50/t (US$1.00/lb); and silver: US$19.38/oz. Metallurgical recoveries are accounted for in NSR calculations based on historical processing data and are variable as a function of head grade. Recoveries at the LOM average head grades for Florida Canyon are 80.00% for Zn, 74.00% for Pb, and 52.00% for Ag. A minimum thickness of 3.0 m was applied for Bonsucesso and 4.5 m for Morro Agudo underground. Density was assigned based on rock type.

 

The following table shows our estimates of Attributable Mineral Resources for our copper project which does not currently have estimated Mineral Reserves as of December 31, 2023 prepared in accordance with Regulation S-K 1300.

    GradeContained Metal
 Ownership (%)ClassTonnage (1)ZincCopperSilverLeadMolybdenumZincCopperSilverLeadMolybdenum
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Magistral (3)83.48Measured82.39-0.522.8-0.050-428.47,416-41.2
Indicated75.70-0.432.8-0.040-325.56,814-30.3
Subtotal158.09-0.482.8-0.045-753.914,231-71.5
Inferred9.24-0.383.1-0.050-35.1921-4.6
Total Measured82.39-0.522.8-0.050-428.47,416-41.2
 Indicated75.70-0.432.8-0.040-325.56,814-30.3
 Total158.09-0.482.8-0.045-753.914,231-71.5
 Inferred9.24-0.383.1-0.050-35.1921-4.6

Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

The following table shows our estimates of Mineral Resources (100% ownership basis) for our copper project which does not currently have estimated Mineral Reserves as of December 31, 2023 prepared in accordance with Regulation S-K 1300.

99

Other Operations

    GradeContained Metal
 Ownership (%)ClassTonnage (2)ZincCopperSilverLeadMolybdenumZincCopperSilverLeadMolybdenum
   (Mt)(%)(%)(g/t)(%)(g/t)(kt)(kt)(koz)(kt)(koz)
Magistral (3)83.48Measured98.69-0.522.8-0.050-513.28,884-49.3
Indicated90.68-0.432.8-0.040-389.98,163-36.3
Subtotal189.37-0.482.8-0.045-903.117,047-85.6
Inferred11.06-0.383.1-0.050-42.01,103-5.5
Total Measured98.69-0.522.8-0.050-513.28,884-49.3
 Indicated90.68-0.432.8-0.040-389.98,163-36.3
 Total189.37-0.482.8-0.045-903.117,047-85.6
 Inferred11.06-0.383.1-0.050-42.01,103-5.5

Notes:

* Numbers may not add due to rounding.

* The estimation of Mineral Resources involves assumptions about future commodity prices and technical mining matters. Mineral Resources are not mineral reserves and do not have demonstrated economic viability.

* The point of reference for Mineral Resources in this table is mill feed materials.

(1)The tonnage and content amounts presented in this table represents Nexa’s attributable ownership basis.

(2)The tonnage and content amounts presented in this table represents 100% of the Mineral Resources estimates for the property. Please refer to our ownership percentage for the amounts attributable to our ownership interest in the property.
(3)The Qualified Person for the Mineral Resources estimate is Jerry Huaman Abalos, B.Geo., MAusIMM CP(Geo), a Nexa employee. Subpart 1300 of Regulation S-K definitions were followed for Mineral Resources, which also are consistent with the CIM (2014) definitions. Mineral Resources are estimated at a pit shell constraint and NSR cut-off value: US$5.99/t (Porf San Ernesto, Porf. Sara and Porf. H), US$5.51/t (Mixto), US$5.48/t (Skarn). Mineral Resources estimates are based on average long-term metal prices of: copper: US$8,272.00/t (US$3.75/lb); silver: US$21.34/oz; and molybdenum: US$21,829.00/t (US$ 9.90/lb). Metallurgical recoveries are accounted for in the NSR calculations based on metallurgical data and vary from 79.3% in skarn to 92.5% in San Ernesto porphyry for Cu, 51.3% in skarn and 79.2% in San Ernesto porphyry for Mo, and 70% for Ag. Density was assigned based on rock type.

Internal Controls Disclosure

Nexa has used well-established quality assurance/quality controls (“QA/QC”) protocols since 2007 for core samples from operating mines and its Brownfield/Greenfield projects. Nexa has used a corporate database (GDMS Fusion) from Datamine since 2017, which replaced the previous corporate database system used from 2007 to 2016. The current database system has several default laboratory packages, specific for different Business Units (ore deposit types/countries) with pre-defined preparation and assay methods, reporting units and over-limit methods. All assay dispatches from all mines and projects follows the same protocols for each medium type (core, rock, soil, stream sediment samples). All written protocols are in a corporate internal system that requires revisions and updates every three years.

100

Other Operations

Nexa Quality Control include three types of duplicates (pulp, coarse rejects and half core duplicates), blank controls and certified standards. Inter-laboratory checks are also carried out on an annual basis at certified laboratories. Fusion database has a collection of pre-defined QA/QC charts for each type of control where Nexa parameters for each control are built in. All blanks and certified standards are approved and registered in Fusion by the database administrator. Nexa protocols for construction and certification of new standards from operating mines and projects include a minimum of ten laboratories and minimum of fiveten samples per lab in the Round Robin. Laboratories need to be form different continents and only three laboratories from the same group are allowed.

Every mine and advanced project provides a detailed QA/QC report at least once a year, which is appended to the updated mineral resources technical reports prepared by our engineers.

80

Mineral Reserves and Resources

With respect to the verification of analytical procedures, Nexa carries out periodic reviews of the QA/QC programs to ensure that an adequate level of quality is maintained in the process of sampling, preparing and testing drill core samples and that the QA/QC programs are designed and implemented to prevent or detect contamination and allow analytical precision and accuracy to be quantified. Nexa’s internal qualify person performed this review and concluded that Nexa's QA/QC programs meet or exceed industry standards and the data are suitable for Mineral Resources and Mineral Reserves purposes.

Internally, regular data verification workflows are carried out to ensure the collection of reliable data. Coordinates, core logging, surveying, and sampling are monitored by exploration, mine geologists, and verified routinely for consistency.

The Mineral Resource and Mineral Reserve estimates are supported by a review of the recent operation results including operating costs, production, metallurgical performance and reconciliation. The LOM plan supporting the estimates includes consideration of changes to the permits required, capital costs, tailings capacity and other production constraints. The estimates are subject to normal industry risks including metal prices, metallurgical performance and geological modeling. For geological risk Nexa has modeling and estimation procedures following mining industry best practices including drilling, borehole survey, core logging, sampling, and density protocols.

 
81101

Capital Expenditures

Capital expenditures

Our capital expenditures from January 1, 20192021 through December 31, 20212023 totaled US$1,254.71,198.2 million and we have budgetedexpect to invest US$385.1311.0 million for 2022 for investments in projects that are currently underway, reflecting a 24.2% decreasecapital expenditures in 2024, maintaining the same levels compared to our 2021 investment2023 investments, mainly driven by Aripuanã.higher HS&E and other non-expansion investments. Our guidance includes US$307.0 million directed towards non-expansion investments and US$4.0 million towards expansion investments. The following table sets forth our capital expenditures for the periods indicated.

 

For the Year Ended December 31,

 

2021

2020

2019

 

For the Year Ended December 31,

 

2023

2022

2021

 
 (in millions of US$)
Capital Expenditures   
Expansion (1)271.2221.7188.5
Modernization8.88.118.5
Sustaining189.0107.5138.0
Health, Safety and Environment (“HSE”)31.616.257.4
Others3.61.37.7
Subtotal504.3354.8410.1
Reconciliation to Financial Statements (2)

3.6

(18.3)

0.2

Total507.9336.5410.3


 (in millions of US$)
Capital Expenditures 
Expansion (1)3.788.5271.2
Modernization3.810.38.8
Sustaining292.8239.7189.0
Health, Safety and Environment (“HS&E”)15.740.131.6
Others3.51.13.6
Subtotal319.5379.7504.3
Reconciliation to Financial Statements (2)

(10.5)

1.6

3.6

Total309.0381.2507.9

(1)For a description of the projects, see “Information on the Company—Mining operations.”
(2)The amounts under “Reconciliation to Financial Statements” are mainly related to advance payment of imported materials, capitalization of interest net of advanced payments and tax credits"

Our main capital expenditures during the years ended December 31, 2021, 20202023, 2022 and 20192021 include the following:

·In 2023, our capital expenditures were US$309.0 million, an 18.9% decrease compared to 2022, mainly due to the decrease in expansion investments with the conclusion of construction at Aripuanã, which was partially offset by an increase in sustaining capital expenditures, including US$79.4 million invested in the Aripuanã mine.
·In 2022, our capital expenditures were US$381.2 million, a 24.9% decrease compared to 2021, mainly due to a decrease in growth capital expenditures related to the conclusion of construction at Aripuanã, which was partially offset by an increase in sustaining Capex, including US$45.8 million invested in the Aripuanã mine.
·In 2021, our capital expenditures were US$507.9 million, a 50.9%51.0% increase compared to 2020, mainly due to expenditures related to the construction of the Aripuanã project (50.7% of total Capex) and higher non-expansion investments, including an increase in Sustainingsustaining and HSEHS&E expenses to historical levels, which were minimallower in 2020 due to the impact of the COVID-19 pandemic.
·In 2020, our capital expenditures were US$336.5 million, mainly due to effects of the COVID-19 pandemic in international prices and demand in 1H21, leading to our decision to reduce exploration projects and maintain only essential investments (non-expansion), except for Aripuanã. In 2020, 65.9% of our capital expenditures were related to expansion, primarily the construction of Aripuanã (US$187 million), as well as the Vazante mine deepening project (US$13 million), which aims to extend the life of mine by seven years.
·In 2019, our capital expenditures were US$410.3 million, mainly allocated to the following projects: the continuation of construction at the Aripuanã greenfield project; the Vazante mine deepening project; sustaining capital expenditures; and the construction of our dry-stacking tailings disposal facility in Vazante.

For 2022, we have budgeted US$385 million to invest in projects that are currently underway. Our main projects include US$75 million directed towards expansion projects, of which US$59 million is allocated to construction of the Aripuanã project and US$292 million towards mainly to sustaining and HSE investments.

We expect to meet these capital expenditure needs from our operating cash flow and our current cash position. We may need to incur indebtedness to finance a portion of these expenditures or also incur indebtedness if financing is available at attractive terms. Our actual capital expenditures may vary from the expected amounts we have described here, both in terms of the aggregate capital expenditures we incur and when we incur them.

 
82102

Environmental, Social and Governance (“ESG”)(ESG)

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)(ESG)

We are committed to fully integrating sustainability into our business through a comprehensive approach based on systematic planning and execution, prioritizing risk and impact management, and establishingmaintaining a positive social, economic and environmental legacy in the places where we operate. Our practices related to ESG are continuously evolving to adapt to new frameworksframework, and regulatory and disclosure requirements, including the SEC’s new environmental rules adopted on March 6, 2024, as well as to consider best practices as well as toand respond to stakeholder feedback.

Nexa integrates sustainability practices into its business, focused on generating a positive social, economic and environmental impact in the places where it operates. Within this context, the Company has a multidisciplinary and integrated task force that is currently complementingcontinually assessing and definingrefining its Environmental, Social and Governance (“ESG”) strategy and future actions including risks analyses with respect to climate change and global, regional and local weather conditions, as well as those related to the emission of greenhouse gases, among other matters. In October 2022, Nexa formally announced updated medium- and long-term goals regarding its ESG strategy. The Company’s objective isCompany disclosed updated targets related to continuously evolvekey ESG topics, such as climate change, water consumption, safety and adapt to new frameworks,diversity, and regulatorysocial commitments. In 2022, Nexa also announced its ESG purpose as “Mining that changes with the world.” Nexa’s ESG strategy takes a long-term approach, and disclosure requirements as well as to respond to its stakeholder feedback. As a result of these definitions, the Company could have in the future some change in its accounting estimates, assumptions and judgments regarding new definitions, practices or commitments that would be assumed by management in relation to its ESG strategy.

In 2023, the Company advanced on its ESG targets by progressing on projects and initiatives and also enhanced its ESG management process. In the second half of 2023, we kicked off the implementation of an ESG Data Management platform (“Deep ESG”), which will support ESG data gathering and control, enabling corporate and operations to improve the ESG strategy management process. We expect to conclude the implementation of Deep ESG by the end of 2024.

During 2023, we also conducted a materiality review process aiming to rediscuss key ESG topics that will support the Company’s strategy. More details on the materiality review process are discussed further in this section.

Our sustainability approach is set out in our codeCode of conductConduct and Compliance and Sustainability policies. We adhere to the United Nation’s Global Compact and the goals related to our material topics discussed below seek to contribute to fulfilling the UN’s Sustainable Development Goals (“SDGs”). Our current material topics and ESG initiatives, as discussed below, strive to meet the SDGs.

We view ESG as core to our efforts to generate shareholder and social-environmental value, including:

·Putting the health, safety and well-being of our people first;
·Being environmentally responsible and accountable;
·Respecting and fostering the human rights agenda; and
·Supporting and constantly dialoging with the communities where we operate.

 

Sustainability and Capital ProjectsBoard of Directors, SCP Committee, Compensation, Nominating and Governance (“CNG”) Committee, and Audit Committee reporting

Our boardBoard of directors oversees our ESG strategy, given its strategic importance to the Company and our operations. The boardBoard of directors is responsible for guidance, governance and oversight of ESG, and overseeing the Company’s twelveeight current material topics described below, that emerged from the Nexa materiality matrix.below. The boardBoard committees, and in particular the CNG committee, the sustainabilitySCP committee and the auditAudit committee, support the boardBoard in its monitoring and oversight of ESG matters. Specifically, our SCP committee oversees and contributes to our ESG strategy plan, ensuring that we are considering material and relevant topics to Nexa and its stakeholders, as well as proposing reasonable ESG targets and benchmarks.

 

In 2017, we established aOur CNG committee to assistassists our boardBoard of directors in fulfilling its governance and supervisory responsibilities and adviseadvises our boardBoard of directors with respect to evaluation and monitoring of compensation models and policies and other related matters. The committee’s responsibilities also include the supervision and approval of our social responsibility plans and policies. In 2019, we established a sustainability and capital projectspolicies, including, but not limited to, those described in our ESG Strategy (except community related aspects, which are overseen by the SCP committee).

103

Environmental, Social and Governance (ESG)

Our SCP committee (“sustainability committee”) to overseeoversees sustainability-related issues, which include the prioritization of safe and sustainable business practices with respect to environmental, health, safety and social matters, as well as the oversight of the management and governance of our tailings disposals. In 2020, the sustainabilityThe SCP committee assumed oversight ofalso oversees our capital projects, as well. Its role expanded to monitormonitoring technical, economic and social issues with respect to our projects, including exploration, development, licensing, construction and operation of mines and metallurgical plants and key assets for our strategy and growth.

During 2021, In 2022, our CNG and sustainability committees oversaw and contributed toSCP committee reaffirmed our ESG strategy, restated our framework, approved new long-term targets and reviewed management’s ESG plan. During 2023, the committee met eight times and discussed ESG topics in four of these meetings. The CNG committeenew ESG materiality review process was also presented to the committees.

In 2022, Nexa completed an internal ESG ownership project, which focused on introducing ESG into Nexa’s overall governance strategy and defining how the governance approach, while the sustainability committee oversaw and contributedCompany intends to the environmental and social aspects of ESG. Both committees ensured that we were considering material and relevant topics to Nexa and its stakeholders, as well as proposing reasonableaddress ESG targets and benchmarks. Our sustainability committee also oversaw a study that focused on market references, benchmarks and frameworks, including ratings agencies such as S&P, Sustainalytics and MSCI, to guide our progressinternally with respect to key ESG disclosuretopics. In 2023, we focused on building each operating unit its own ESG strategy to align with the goals and transparency. The CNG committee oversaw a study both contemplating externalinitiatives within Nexa’s ESG strategy. This process consisted of discussing and internal governance aspects, such as industry best practices, board membersvalidating targets for each unit, gathering the information on projects and executives’ interviews, benchmarks evaluation, ESG rating methodology surveyinitiatives that support the goals and simulations, extensive debates through leadership workshopstargets, discussing the goals’ advancement over time, including the amount to be invested in these projects and oriented meetings resulting in a new suggested ESG Governance framework for 2022 that could enable the Company to enhance its position in the industry and capture potential opportunities.

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other relevant details.

The auditAudit committee is also involved in ESG matters, in particular with respect to the analysis of the impact on financial reporting, as well as preparedness in order to meet financial reporting and disclosure requirements that may be implemented in the near future.

ESG Commitments

In October 2022, we announced our new long-term ESG commitments, aligned with the Paris Agreement and focused on reducing the impacts of climate change. We adopted a new ESG Governance framework that is intended to enable Nexa to enhance our position in the industry and capture potential opportunities. Nexa’s eight long-term sustainability commitments, which we aim to achieve by 2030, are focused on four areas: emission reduction and neutrality; safety; water usage and disposal; and plurality.

Emission Reduction and Neutrality: Nexa has been reducing GHG emissions for more than a decade, and currently has one of the lowest carbon footprints in the world in the zinc production industry (scopes 1 and 2), according to the International Zinc Association (“IZA”). In alignment with the Paris Agreement, Nexa’s goal is to reach net zero by 2050. Our commitments in this category are:

·Absolute reduction of scope 1 emissions by 20% (52 thousand tons of CO2 equivalent), keeping Nexa’s electrical energy matrix almost entirely composed of renewable sources1 by 2030;
·Reach net neutrality – the balance between carbon emissions and absorption – by 2040; and
·Reach net-zero greenhouse gas emissions (“GHG”) by 2050.

In order to reduce greenhouse gas emissions, Nexa is developing innovative projects in collaboration with different partners to improve its performance towards its decarbonization goals. For example, in 2023 we committed to reducing CO2 emissions by using natural gas to replace diesel fuel in vehicles that transport materials at mining sites in Peru. With this initiative, we expect to reduce approximately 23 tons of CO2 emitted by our vehicles annually. We also acquired 100 units of hydraGENTM equipment to be installed on diesel engines to increase the engines’ combustion efficiency, which is expected to reduce up to 3,200 tCO2eq annually. Furthermore, we obtained government authorization to use biofuel to replace fossil fuels, to be used in all 47 furnaces in the zinc oxide operation in Três Marias, which is expected to offset up to 24,700 tCO2eq annually. As of December 31, 2023, we have successfully utilized biofuel in 12 out of the 47 furnaces (offsetting 6,400 tCO2eq). As of now, we have the potential to replace 30% of the thermal capacity in our zinc recycling kiln, which would be expected to offset up to 25,600 tCO2eq. We also implemented the use of renewable energy at our Cajamarquilla smelter and have initiatives in place to expand the utilization of solar panels installed in deactivated tailings dams in Cajamarquilla.

1 98.8% electric energy from renewable sources in 2022.

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In 2023, our energy matrix was mainly renewable, with renewable energy accounting for 95.5% of the matrix, emphasizing the company’s commitment to maintaining its electric energy matrix mainly from renewable sources.

In February 2024, we announced that the Carbon Disclosure Project concluded its 2023 evaluation for the year-ended 2022 and upgraded Nexa’s rating in the Climate Change Questionnaire from C to B, reflecting the efforts, disclosure, and transparency of Nexa related to ESG governance, strategy, risk management, metrics, and targets.

As of date of this filling, we are waiting for assurance related to our emissions inventory, which is currently undergoing the assurance process. While we anticipate an increase in scope 1 emissions in 2023 compared to 2022, we remain confident that we are on track to meet our 2030 targets. We expect disclosing this outcome during the first half of 2024 in Nexa’s Sustainability Report for the year-ended 2023.

Safety: Nexa seeks to be a model when it comes to safety, focusing on building a safer environment with zero fatalities and a reduction of severe accidents through a robust cultural transformation program in health and safety, including awareness campaigns, counseling, and monitoring for both employees and third parties. Our commitments in this category are:

·Zero fatalities in all operating units (annually); and
·By 2030, consolidate all units in the first quartile of the mining industry with regard to the Total Recordable Injury Frequency Rate (“TRIFR”).

In 2023, Nexa registered zero fatalities and its 2023 TRIFR final outcome positioned the Company in the industry’s second quartile based on 2022 benchmarks set by the International Council on Mining and Metals. As of the date of this annual report, Nexa registered one fatality in 2024.

During 2023, we continued to implement our G-MIRM project, which is focused on enhancing the culture of safety in Nexa’s operating units by providing training and discussing new safety procedures. This program follows a well-known methodology developed by the University of Queensland.

Water usage and disposal: Nexa prioritizes the responsible management of water and seeks to reduce its consumption by 2030. Our commitment in this category is:

·10% reduction of consumption of water in mining operations (from 1.68 m³/ton of ROM2 to 1.51 m³/ton of ROM) and smelting operations (from 24.01 m³/ton of metal to 21.61 m³/ton of metal).

In 2023, the average consumption of water in mining operations represented 1.97 m³/ton of ROM and 22.10 m³/ton of metal in smelting operations. The difference in mining operations consumption compared to our commitment baseline is due to the increase in water consumption in our Peruvian assets and in the Aripuanã mine.

Plurality (diversity, equity, and inclusion): Nexa is committed to being an increasingly plural company which emphasizes diversity, equity, and inclusion, to promote an environment of opportunity, recognition, and acceptance for all. Our commitments in this category are:

·30% of women in the workforce by 2030;
·30% of women in leadership positions by 2030.

As of December 31, 2023, our workforce was made up of 17.3% women, with 24.6% serving in leadership positions. The mine operations workforce at the Aripuanã mine in Brazil was made up of 23.7% women.

In 2022, alongside the announcement of our ESG commitments, we intenddeveloped a dedicated website to publish aprovide our stakeholders and investors with greater transparency about our ESG initiatives: www.nexaresources.com/esg. Information contained on our website is not incorporated by reference into this report, and you should not consider it to be part of this report. Booklets and videos were also developed to expand the communication of ESG topics internally and externally throughout Nexa.

2 ROM (Run-of-mine): crude ore, extracted directly from the mine without undergoing any kind of processing.

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On May 9, 2023, we published our 2022 sustainability report that will outlinehighlights our ongoing commitment to ESGcorporate sustainability and discuss a range ofsocially responsible actions. The report discloses Nexa’s initiatives and achievements related to our business, employees and communities, and also discusses the strategy, risk and governance-related matters that we have implemented or are implementing to accelerate our ESG initiatives. We also intendThe annual report follows the guidelines of the International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI), in addition to developthe guidelines of the Sustainability Accounting Standards Board (SASB) and recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD). The information contained is submitted to external assurance.

In 2023, ESG targets were considered in senior leadership goals panels, as well as for employees who were eligible for variable compensation, representing 20% of the executive’s short-term incentives and 20% for other managerial or professional levels. Two components were adopted: (i) a dedicated websitecorporate goal based on initiatives connected with key topics on the ESG Strategy; and (ii) specific goals that were unfolded according to the responsibilities of the area and the projects related to the theme to give a sense of responsibility to all employees on the subject.

Other ESG highlights for Nexa in order to provide our stakeholders and investors with greater transparency about our ESG initiatives.2023 include:

·Nexa was recognized as a leader in Social Governance and awarded “Company of the Year - Mining Sector 2023” by Brasil Mineral (a Brazilian magazine specializing in mining). This recognition was partly in acknowledgement of our training program in Aripuanã. The program trained 1,987 people, of whom 53% were women. Furthermore, 40% of program participants were placed back into the job market. It is estimated that more than 15% of the local population has benefited from this initiative, underscoring our commitment to being a collaborative force in regional development.
·Our project Gente Cuidando das Águas (People Taking Care of Water), in Vazante, was the only Brazilian initiative presented among the 200 initiatives presented at the Regional Water Dialogue organized by the United Nations Economic Commission for Latin America and the Caribbean. The project aims to recover water sources in the Santa Catarina River basin by sealing off areas and activities related to environmental education in schools and surrounding communities. Since 2018, 154 springs have been protected.
·Nexa partnered with Amazon Web Services with the goal of training 100,000 individuals in cloud computing fundamentals in Brazil and Peru by 2025, creating opportunities for skills development and nurturing local talents.
·Nexa registered its carbon emissions on “LMEpassport”, a platform on the London Metal Exchange platform which promotes sustainability and transparency across the base metals sector. Nexa’s zinc production has one of the lowest carbon footprints recorded in the sector, with an emission intensity of 0.36 tons of CO2 equivalent (scopes 1 and 2) according to the GHG protocol methodology, an achievement that positions Nexa as a global leader in carbon reduction within the zinc industry.
·Nexa announced the successful closing of a US$320 million sustainability-linked revolving credit facility. This new revolving credit facility, which remains undrawn, has a term of five years, and amounts drawn are subject to an initial interest rate of 1.60% plus Term SOFR. The applicable margin is subject to compliance with carbon reduction key performance indicators, reflecting the Company's unwavering commitment to reducing its carbon footprint. Such efforts are consistent with Nexa’s ESG ambitions, targeting net-zero greenhouse gas emissions by 2050, in alignment with the Paris Agreement.
·Nexa obtained authorization from the Regional Superintendence for the Environment of the State of Minas Gerais to use biofuel to replace fossil fuels, used in all 47 furnaces in the zinc oxide operation in Três Marias. In 2023, we were able to replace the use of biofuel in 12 out of the 47 furnaces. This initiative supports our goal to reduce scope 1 CO2 emissions by 20% by 2030.
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·Nexa implemented the ON GRID solar system at our Cajamarquilla smelter, providing electric power from solar energy, resulting in a reduced footprint carbon emissions and promoting clean energy production.

Nexa Materiality Matrix

The Nexa materiality matrix defines the issues that are most relevant to our business and our stakeholders, guiding how we plan and execute our ESG initiatives. We use this matrix to help inform our sustainability strategies and to ensure that our sustainability disclosures include the issues of most interest to our business and stakeholders in line with the principles established by the International Integrated Reporting Council (“IIRC”) and Global Reporting Initiative (“GRI”). In 2020, we updated our matrix to evaluate the most relevant topics for the mining and metals sector by incorporating the Sustainability Accounting Standards Board (“SASB”) guidelines for the mining and metals sector and other sector benchmarks.

In 2023, we concluded a 6-month materiality review process, focused on determining the most relevant topics to support our ESG practices and guide our reporting and management strategies. This process was conducted by a consultancy company, and we also gathered contributions from different stakeholders. The matrix additionally includesprocess consisted of 3 stages: (i) context and definitions, (ii) prioritization and (iii) results validation. In the prioritization stage, we conducted 27 interviews with directors, Board members, investors, sector representatives, team leaders, and others. We also conducted field work in 5 operating units (in Brazil and Peru), accessing 30 focal groups and 20 interviews with community representatives. Finally, we surveyed a surveywide range of external stakeholders. We combinedstakeholders focusing on 11 different populations. Based on the results of this prioritization phase, we implemented a methodology to combine the results of these surveys with insights from our sustainabilitySCP committee and leadership teams to define the 128 most relevant material topics that are most relevant tofor us and to our stakeholders. By reviewing these

Nexa’s current material topics regularly, we seek to guide our reporting and management strategies, considering the short, medium and long-term context, impacts, risks and opportunities of each material topic.

In 2020, we revised our previous eight material topics relating tosupport corporate goals and ESG management guidelines towards the following themes: dam, waste and tailings management, climate change, (formerly called emissions), water resources management, social management, (formerly called local development), health, safety and wellness, diversitywell-being, plurality (formerly called people)diversity), decommissioning and human rights (which was excluded because the scope of this topic will be addressed by others material topics) – and added five new topics: dam management, innovation, ethics and compliance, operational excellencegovernance and reputation.

In 2021, we began to define the key performance indicators (“KPIs”) and goals for each material topic until 2030, providing further transparency with respect to our socio-environmental management goals, and how they align with our business strategy. The development Nexa’s ESG long-term commitments are an important part of some of these KPIs and goals is ongoing, along with our ESG strategy definition, and we intendtopics, enhancing the Company’s commitment to publish it in 2022.

Our twelve current material topics, including ongoing ESG initiatives, are further discussed below:a more sustainable operation.

Environmental

·WasteDam, waste and tailings management. We aim to reduce our residue footprint. Our activities generate a significant amount of waste. We seek to reduce the generation of mining and metallurgical waste, complying with applicable local legislation, and acting in accordance with our strategic commitment, attempting to co-create a positive legacy for society. Our Morro Agudo site is considered a pioneer in eliminating waste production with one of the main projects being agricultural lime powder, also known as Zincal200. The project is based on technology created to reprocess the tailings produced in the zinc beneficiation process, which used to be dumped in dams. In addition, our Cerro Lindo and Vazante mines already use the dry stacking method for tailings disposal (andand our Aripuanã project ismine has also designed to usebegun its operation using this method. In 2023, we started testing the same).dry stacking process in Três Marias and we filtered 74.0% of the material from the operation by the end of 2023. Peru’s mining operating units have a significant volume of tailings disposed in the backfill system. Approximately, 31%25.9% of the tailings generated by Nexa were disposed of in dams in 2021,2023, as compared to 34%31.8% in 2020, because2022. In August 2023, Nexa signed a partnership agreement with a local cement supplier to test and evaluate the feasibility of technological routes for Cajamarquilla’s dried neutral sludge to be used in the initiatives listed above.cement production chain, thereby reducing waste disposal.

As tailings disposals are one of the main risks associated with mining activity, we constantly review our dam management policy, which goes beyond the requirements of the legislation of the jurisdictions in which we operate. We apply guidelines from the ICOLD to control, monitor and ensure the safety of our 24 active and 25 inactive disposal facilities (24 in Brazil and 24 in Peru) and one water storage dam at the Aripuanã unit. We also have 7 Golden Rules for Managing Dams and Tailings Sites, which are internal guidelines that we use to ensure the management of geotechnical structures and the safety of all employees and third parties. All of our projects are required to comply with these guidelines and any non-compliance must be analyzed by the audit team.

 
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·Climate change. We are also committed to reducing greenhouse gas emissions to minimize our impact on climate change, contributing to a low-carbon economy. We consume large amounts of energy due to the nature of our activities and transportation processes, which is why we seek new technologies and progress in sustainable energy generation. Much of the electric energy consumed by our operations is from renewable and low emission sources, predominantly hydroelectricity. In 2020, we implemented a project for a biomass boiler at the Três Marias unit, in which fuel oil was substituted by eucalyptus wood chips and sugar cane bagasse, highlighting our commitment to energy efficiency. Another important initiative is underway at the Cajamarquilla unit in Peru, which includes the substitution of diesel oil with natural gas, made viable through the implementation of a gas pipeline in the region. At the Juiz de Fora unit, we have an ongoing project to replace natural gas by reusing solid waste as fuel to generate steam. We remain committed to diminish our waste volumes and transforming them into secondary products, reducing the usage of our tailing dams. In 2022, we consolidated the use of tools for calculating GHG emissions following the GHG Protocol in all operating units and corporate areas, as well as progressed on mapping out its strategy with respect to measuring scope 3 emissions. In 2023, we committed to reducing emissions by using natural gas to replace diesel fuel in vehicles that transport materials at mining sites in Peru. Although 25% of the fleet of 20 trucks is already operating using natural gas, our goal is for our fleet to achieve 100% natural gas usage thereby reducing approximately 23 tons of CO2 emitted by our vehicles annually. In 2023 we also obtained authorization from the Regional Superintendence for the Environment of the State of Minas Gerais to use biofuel to replace the fossil fuels used in all furnaces in the zinc oxide operation in Três Marias. In 2023, we were able to use biofuel in 12 of the 47 furnaces. In our Cajamarquilla smelter, we implemented the ON GRID solar system, providing electric power from solar energy, resulting in a reduced carbon footprint and promoting clean energy production. We plan to expand the utilization of this solar system in the available locations of deactivated tailings dams in Cajamarquilla.
·Water resources management. Our target is to reduce water consumption and increase recirculation. Mining activity involves technical procedures in which water assumes an important role, both for extraction and processing, making it even more important to reduce water use and increase reuse throughout the value chain. Advanced investments in efficient water recirculation programs contribute not only to lowering the intake of new water but also reducing the volume of effluents and the environmental impact of the discharge. In 2021,2023, we have allocated approximately 30%22.0% of our environmental spending resources (17%(as compared to 36.0% in 2020)2022) towards efforts to keep our effluents disposed through proper treatment and to comply with the new dam legislation published in the year. In our Cerro Lindo mine, we have 91%92.2% of water recirculation. We use a desalination plant, extracting salt by a reverse osmosis process and pumping it up to a plant, at an altitude of 2,200 meters. In an area with scarcity of water resources, this technology is important to avoid competing with the local population in demand for water. In addition, we encourage and guide the community in the region to store rainwater.
·Dam management. Tailings disposals are one In February 2023, our project, Gente Cuidando das Águas (People Caring for the Waters), in Vazante, was the only Brazilian initiative selected among the 200 initiatives presented at the Regional Water Dialogue organized by the Economic Commission for Latin America and the Caribbean, of the main risks associated with mining activity. We have safe tailings disposal practices, and we constantly review our dam management policy, which goes beyond the requirements of the legislation of the jurisdictions in which we operate. We apply guidelines from the ICOLDUnited Nations. The project aims to control and monitor our 47 dams and tailings deposits (23 in Brazil and 24 in Peru). We also have 7 Golden Rules for Managing Dams and Tailings Sites, which are internal guidelines that we use to ensure the management of geotechnical structures and the safety of all employees and third parties. All of our projects are required to comply with these guidelines and any non-compliance must be analyzed by the audit team.
·Decommissioning. Our activities impact the environment and the communitiesrecover water springs in the vicinitySanta Catarina River basin, through the fencing of our units. As a way of minimizing these impacts, we seekareas and activities related to designate alternative future uses, with the goal of co-creating a positive legacyenvironmental education in neighboring communities, free of environmental liabilities. Some of our achievements include: the definition of general guidelines for decommissioning (governanceschools and corporate committee for approval of new plans); assessment of future uses and preliminary liabilities valuation; integrated management of decommissioning cash flow; and review of our decommissioning plans and updated Asset Retirement Obligation (“ARO”) costs and liabilities. We also perform benchmark visits to assess best practices in decommissioning. For further details on our ARO and environmental obligations revisions, see Note 26 to our consolidated financial statements.surrounding communities. Since 2018, 154 springs have been protected.

We have developed decommissioning plans for all of our units that not only go beyond adopting best-practices and regulatory requirements from our operating markets (Peru and Brazil) but are also based on international standards from the EPA and Minerals Council of Australia (“MCA”), in addition to Environmental Resource Management consultants from Canada. These plans are developed at early stages of the projects, which are initially conceptual, and are revised and updated every five years or whenever there is a material change in the unit’s operations. In addition, we develop a technical execution plan to decommission two years prior to closure which is submitted to local authorities in Brazil, while in Peru the execution plan submission is defined when the EIA is approved.

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Social

·Social development. We aim to develop mutually beneficial relationships with the communities in which we operate. The object of Nexa’s social strategy is aimed at leavingto leave a long-lasting relevant legacy for local communities (including rural producers, suppliers and local entrepreneurs) by contributing to the improvement of social indicators and the quality of life of the people living in the municipalities near our operations. Nexa’sIn 2022, we re-prioritized our social management strategy with respect to investments, focus mostlyfocusing on four levers for community improvement: economic diversification; childhoodassertive and youth; public administrationvalue-added projects, which demands a structured partnership with communities to minimize reputational risks and social participation;business impacts. As a result, global strategic themes were simplified to foster ongoing business development of Nexa and socio-environmental development. Our achievements include the development and improvement of Nexa's social governance program. In addition, in 2021, we dedicated over 10,000 hours to volunteer work across our units, benefitting more than 17 thousand people. We aim to develop our greenfield projects aligned with social best practices, like Aripuanã’s Socio-economic Integrated Plan and Bonsucesso’s Social Entrance Plan, both are study projects that analyze the current scenarios related to social impacts and legal requirements in the territories where we operate, aiming to identify the communities’ profile,its host communities, as well as their interaction dynamicsmaintaining a social license to operate and possible impacts. Inco-creating a positive legacy. Four pillars were determined to guide the caseCompany’s plan on social development: (i) Income Generation: to enhance local economic development through the qualification of Aripuanã,local suppliers/entrepreneurs and rural producers; (ii) Water: to protect water springs and develop projects focused on revitalization, rainwater harvesting and/or water quality improvement; (iii) Education: to contribute to basic and technical education, aiming at improving the program's objective is to build a development planqualification of the local population for the municipality,job market, especially young people and adults; and (iv) Social License to Operate: to fulfill social and legal commitments to stakeholders, focused on mitigating impacts and obtaining social licenses to operate in Bonsucesso, is to identify external aspects that may influence the Project's operations. We have conducted a sanitation diagnosis (water and sewage) in all communities surrounding our operations. In Aripuanã, we have a qualification program in place for future mine and plant operating professionals. In 2021, we had 283 candidates enrolled, of which approximately 181 received professional qualifications on maintenance and automation and geology and surveying. The company hired 181 people who attended the qualification program, of which 60% are men and 40% are women.host communities.
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In addition, in 2023, we dedicated over 13,500 hours to volunteer action across our units, benefiting more than 11,500 people. Our focus in 2023 was to carry out volunteer work with greater social impact. In 2023, we partnered with Amazon Web Services with the goal of training 100,000 individuals in cloud computing fundamentals in Brazil and Peru by 2025, creating opportunities for skills development and fostering local talent. In Aripuanã, we have a qualification program for future mine and plant operating professionals In September 2023, Nexa was recognized as a leader in Social Governance and was awarded “Company of the Year-Mining Sector 2023” by Brasil Mineral in acknowledgment of our training program. The program trained 1,987 people, of whom 53% were women. 40% of the program participants were placed back into the job market and it is estimated that more than 15% of the local population has benefitted from this initiative.

·Health, safety and wellness.well-being. Our goal is to reduce our injury frequency rate and to reduce fatalities to zero. We continuously invest in strengthening a culture focused on safety and health for both our own as well as outsourced employees, through training, especially for risky activities, and in enhancing working conditions. In September 2023, we held our annual Safety Week to share insights and experiences to enhance our culture of safety and to strengthen our awareness of potential risks, promote healthy habits, and encourage safe behaviors. We launched a quality-of-lifewell-being program in 2016,2021, seeking to emphasize the dimensions of integral health. We also have health initiatives in place for the Aripuanã project, aimed at disease prevention and a much healthier operating environment (i.e., Dust Zero Project). WeA prominent initiative within the well-being program is Go Nexa which encourages and helps employees monitor physical activities, healthy eating practices and hydration, and rewards users for healthy habits. Nexa also trymaintains ongoing initiatives related to maintain the adequacy level of Nexa’s chemical management flow, which includes both the products used and produced.disease prevention by providing periodic vaccinations for all employees. For further discussion of our safety records, please refer to “Health and safety compliance” in the following section. In response to the COVID-19 pandemic, we also created a Crisis Committee in 2020 to carry out preventive and protective procedures in our operations and offices and is still in place. For more information about the Crisis Committee, please see “Operating and Financial Review and Prospects—Operating costs and expenses—COVID-19.”

Governance

·Diversity.Plurality. We target the increase of diversity in the workplace. Our personnel management model and our policies and tools have guided the development of people based on culture and performance, enthusiasma focus on guaranteeing employee satisfaction, and courage.the continuity and evolution of the business, in addition to generating an environment that fosters innovation and disruptive solutions. For further information please see “Corporate Governance, management and employees—Board of directors—Diversity” section. In 2021, we established a governance structure for the program to enhance diversity across Nexa. Affinity groups were created,which involves not only the affinity groups, but also an Executive Committee, formed by our board of directors, CEO, and the Diversity Committee,are formed by employees from key areas ofwho are responsible for promoting diversity throughout the company so that the theme is multiplied: legal, compliance, sustainability, operations,Company. These groups coordinate and institutional relations. All of them have the objective of coordinating the implementation of several actions aimed at promotingimplement initiatives to promote diversity in a transversal and uniform manner, generating greater impact in all units.

In 2021, we received the Women on Board certificate, which is an independent initiative that seeks to recognize and valuewe also signed the existenceletter of corporate environments withadhesion and the presence10 commitments of women on boards of directors or advisory boards in order to highlight the benefits of this diversity to the business worldLGBTI+ Business and to the society.

Also in 2021, 16% of Nexa’s workforce was comprised of women (950 employees). According to Women in Mining, this index is higher than the global average of 8%. In 2021, Nexa alsoRights Forum. Additionally, we launched a talent program focused on the admission and training of diverse professionals with disabilities and/or special needs, who have graduated or will graduate in 2022.and the program is ongoing to date.

In 2023, we focused our diversity initiatives on three main areas:

(i) the individual: we believe that an inclusive environment with emotional security encourages creativity, a sense of belonging, and innovation;

(ii) the company: we believe that plurality is a strategic pillar that expands the potential of our teams and multiplies the results of our business; and

 
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(iii) the society: we believe that our practices and results contribute to society becoming increasingly ethical, humane, and equitable. Our diversity programming is becoming increasingly more robust and mature and has resulted in significant changes through the actions of affinity groups across the Company.

During 2022, held our first Plurality Week, which focused on fostering a deeper understanding of questions around diversity, inclusion and strengthening a culture of ethics and respect both within and outside the Company. We prepared a “Good Practices Guide” with online training modules to help all employees better understand and achieve these goals.

In 2021,2023, Nexa also signed the letter of adhesion and the 10 commitments of the LGBTI+ Business and Rights Forum, an institution that brings together companiesPeru committed to RED (Red de Empresas y Discapacidad) to improve the employment and inclusion of professionals with disabilities, reaffirming our commitment to providing equal opportunities and defense of the LGBTQIA+ communitypromoting a diverse and human rights.inclusive organizational culture.

Governance

·EthicsGovernance and compliance.reputation. Acting responsibly and transparently is one of our core values. We are committed to high standards of ethics and integrity across the entire company, which are standards guaranteed through theprinciples stated in our Code of Conduct and reflected in our Compliance Program. Our boardBoard of directors is one of the main agents in promoting the program and ensuring compliance with our codeCode of conduct. Our code of conductConduct, which is a public document that is also shared with all stakeholders, including employees, suppliers, customers, communities, NGOs, government agencies, shareholders and other individuals and organizations with which we have a relationship. In 2021, we updated our Code of Conduct to include issuestopics such as plurality and ESG practices, as well as adaptations to new laws, such as the general law of data. The code of conduct outlines an effective process for managing and mitigating risks, setting goals for usIn 2022, Nexa continued to achieve excellence in all our practices. The Company is enhancingenhance its supplier assessment program to include reviews of ESG indicators and best practices and a new codeCode of conductConduct for suppliersSuppliers was also launched in 2021.2022. In 2023, we also launched the Code of Conduct for Customers. In 2023, as in previous years, we disseminated our Code of Conduct among all employees at a global level and started to disseminate the Code of Conduct for Suppliers with strategic vendors. In addition, in 2022, Nexa implemented the following initiatives, among others: (i) created committees against sexual harassment at the Brazilian units, based on those existing in our operations in Peru, and in 2023, this committee was implemented in Brazil’s corporate office, (ii) trained all units in Peru and Brazil on these topics, reinforcing Nexa’s commitment to zero tolerance for any harassment and discrimination, and (iii) appointed “Compliance Influencers”, employees at the units and corporate offices who will support Nexa’s culture and commitment to ethics and integrity.

In addition, in 2021,2022, we conducted a reassessment ofcontinued to assess the Company’s risks aimed at continuously improving our risk management and governance. We also updated the charters of each of our committees to include the responsibility of supporting the Board in monitoring enterprise risk management in matters related to the responsibilities of each committee. In 2022, we also conducted a review of the Related Party Transaction Policy and approved a new version. We also updated the Audit committee charter to incorporate new NYSE and SEC requirements, including obligations relating to related party transactions.

Regarding reputation we want to stand out from our competitors and be recognized as one of the leading players of the mining of the future, through sustainable production and by co-creating a legacy for society.

For further information on our Company's governance, see “Corporate governance, management and employees”.

Other

·Operational excellence. We seek continuous improvement in competitiveness to maximize the value of existing operations. We invest in projects that ensure we have operational stability, increased capacity utilization, constant cost improvement, productivity and rationalization of capital employed.
·Reputation. We want to stand out from our competitors and be recognized as one of the leading players of the mining of the future, through sustainable production and by co-creating a legacy for society.
·Innovation. Enabling the strategic axes of growth and operational excellence makes our operations safer, minimizes waste and optimizes production. For fiveseven years, we have managed a powerful tool for open innovation, the Mining Lab platform, which allows us to deliver projects in energy, circular economy, IT and automation, in Brazil and Peru.
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Nexa incorporates and develops innovative practices to extract the mineral resources necessary for its operations and works to continuously reduce the impact of its activities on the environment.

Health and safety compliance

Health and safety in the workplace are among our main values, and our policies and procedures seek to eliminate accidents. We are committed to protecting the health and wellbeing of our employees and contractors and have set standards to identify and assess health risks, manage their impact and monitor the health of our people. Nevertheless, mining is an activity that involves substantial risks. We established a Health and Safety Director Plan (“H&S Director Plan”) focused on the following objectives (i) eliminate fatalities; (ii) reduce the severity and number of accidents and illnesses; and (iii) raise the health, safety and well-being culture standards in our sites. The H&S Director Plan has facilitated the improvement of our health and safety culture and performance, and includes eightseven pillars of focus: (1) cultural transformation, (2) risk management, (3) emergency response systems, (4) health and safety management system, chemicalsystems, (5) infrastructure systems, (6) restructuring of corporate guidelines, and (7) occupational hygiene and wellbeing management.

A main focus of the H&S Director Plan is cultural transformation. In 2022, we started training all leaders in the G-MIRM (“Global Minerals Industry Risk Management”) program. This program started at the University of Queensland (Australia) and currently involves several universities around the world. In Brazil, the representative is the University of São Paulo (USP). Throughout 2022 and 2023, Nexa’s leadership team had the opportunity to participate in this training provided by USP, seeking significant and lasting changes in decision-making at all hierarchical levels, and creating and improving risk management in companies in a sustainable and effective way. The main benefits of the program are: (i) awareness and early recognition at all levels of significant hazards and risks to the enterprise; (ii) development of internal competencies for the scope of a risk assessment and applying tools for comparison with good practice approaches; (iii) providing practical tools to improve risk management and advance security procedures; (iv) improved understanding of a personal commitment to safety guidelines,and defining responsibilities for risk management leading to better decision-making processes; and (v) identification of new opportunities to strengthen internal security policies and external image, and infrastructure systems.procedures.

In 2021,2023, we continued to reinforce the initiatives which have been set in the creation of the Master Plan in 2020, related to our health and safety culture, which are set to be implemented over a five-year term. Many of the initiatives, such as Global SIPAT (an internal week of discussion forums and seminars related to health and safety across our organization), Safety Workshops at all Nexa units performed virtually due to the COVID-19 pandemic and the PROA Movement (a year-end campaign by our safety department to promote prevention of work accidents), contribute to our enhanced safety culture. As a result

In 2022, we reported three fatalities, two that occurred at the El Porvenir mine and one that occurred at the Cajamarquilla smelter. These incidents in El Porvenir are still under investigation by the Peruvian authorities and as of these actions andthe date of this filing their work-related status has not yet been established. In 2023, there were zero fatalities within our leadership’s engagement in risk perception and management,operations. On March 2, 2024, we did not experience any work fatalitiesregistered one fatality in our operations in Brazil and Peru in 2020 or 2021.

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Environmental, Social and Governance (“ESG”)

El Porvenir mine, which as of the date of this annual report is still under investigation.

We have also sought to improve our safety record as it relates to recordable injury frequency, lost worktime incident, and severity rates, in conformity with standards in the mining industry. In 2021,2023, our total recordable injury frequency rate was 1.922.15 compared to 2.391.98 in 20202022 and 2.151.92 in 2019.2021. This rate is defined as the number of injuries with and without lost time per one million man-hours worked. In 2021,2023, our lost worktime incident rate was 0.600.88 compared to 0.79 in 2020 and 0.75 in 2019.2022 and 0.60 in 2021. This rate is defined as the number of injuries with lost time per one million man-hours worked. Our severity rate for 20212023 was 2464 compared to 178163 in 20202022 and 14924 in 2019.2021. To calculate the severity rate, we consider the sum of lost, transported and debited days, divided by the total number of man-hours worked times one million. In addition to these efforts, we also operate programs aimed at improving working conditions, including medical services, for our mining operations and monitoring employees’ health.

 
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Regulatory Matters

Regulatory matters

We are subject to a wide range of governmental regulation in the jurisdictions in which we operate. The following discussion summarizes the kinds of regulation that have the most significant impact on our operations.

Brazilian regulatory framework

Mining rights and regulation of mining activities

Mining activities in Brazil are governed by the Brazilian Federal Constitution of 1988, the Brazilian Mining Code and other decrees, laws, ordinances and regulations, such as the Decree nº 9.406/2018 which renewed the regulation of the Mining Code. These regulations impose several obligations on mining companies relating to, among other things, the way mineral deposits are exploited, the health and safety of workers and local communities where mines are located, and environmental protection and remediation measures. They also set forth the Brazilian federal government’s jurisdiction over, and scope of activities within, the industry. The MME and ANM regulate mining activities in Brazil. As of July 2017, the ANM replaced the National Department of Mineral Production (“DNPM”), and is responsible for monitoring, analyzing and promoting the performance of the Brazilian mineral economy, granting rights related to the exploration and exploitation of mineral resources and other related activities in Brazil.

Under the Brazilian Federal Constitution, surface property rights are distinct from mineral rights, which belong exclusively to the Brazilian federal government, the sole entity responsible for governing mineral exploration and mining activity in Brazil.

Summary of Brazilian concessions

In Brazil, we hold 691214 exploration authorizations, (autorizações de pesquisa), 2017 mining concessions, (concessões de lavra), 10eight mining concession applications, (requerimento de lavra), 9three rights to apply for mining concession (direitos de requerer a lavra) and 7441 exploration authorization applications, (requerimentos de pesquisa), which we broadly and collectively refer herein to as mineral rights, that cover a total area of 2,066,834.3767,289.8 hectares, of which: (i) 1,898,019.8500,331.5 hectares, or 91.8%65.2%, are exploration licenses,authorizations, (ii) 11,990.910,725.4 hectares, or 0.6%1.4%, are mining concessions, (iii) 6,721.63,828.0 hectares, or 0.3%0.5%, are mining concession applications, (iv) 7,661.92,261.5 hectares, or 0.4%0.3%, are rights to apply for mining concession and (v) 142,440.1250,143.5 hectares, or 6.9%32.6%, remain as exploration authorization applications and are presently under initial geological reconnaissance.

The term of each of the mining concessions mentioned above is valid for the life of the mine, evaluated pursuant to the specific mining project. All our mineral rights in Brazil are in good standing. Maintaining our mineral rights in Brazil in good standing involves: (i) maintaining production on the mineral concessions and/or satisfying the ANM’s requirements if production has been suspended; (ii) developing exploration work and paying an annual property fee for the exploration authorizations; and (iii) complying with all the legal requirements, including not only as to mining, but also as to environmental and real estate requirements applicable to claiming a property with respect to exploration applications.

Failure to pay the applicable fees for any given year will result in us forfeiting our mineral rights. As of December 31, 2021,2023, we have paid all applicable royalties, taxes and fees on our mineral rights. Our mineral rights in Brazil that are not currently undergoing exploration or production will not expire unless we fail to timely pay the applicable royalties, taxes and fees, as well as the applicable penalties and meet the ANM’s and environmental authorities’ requirements, as applicable. See “Information on the Company—Regulatory matters—Brazilian regulatory framework—Royalties and other taxes on mining activities.”

The following table summarizes our mineral rights in Brazil.

  

Mineral Right

 

Project

Titles

Area (hectares)

MinesMorro Agudo / Ambrósia Trend63,941.9
 Vazante mine92,120.8
Greenfield ProjectsAripuanã2166,328.2
 Caçapava do Sul32,947.3
Prospective ProjectsVarious

765

1,991,496.1

Total 

804

2,066,834.3

  

Mineral Right

 

Project

Titles

Area (hectares)

MinesMorro Agudo31,446.1
 Vazante102,174.5
 Aripuanã13,639.9
Prospective ProjectsVarious269

760,029.3

Total 283767,289.8
 
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Regulatory Matters

Exploration authorization and mining concession regimes

Exploration authorizations grant the rights to conduct exploration activities for a period from one to threefour years, which may be renewable for an additional period (and potentially additional renewals on a case-by-case basis). Exploration authorizations are granted on a first come, first serve basis, and the ANM will only grant one exploration authorization for any given area. Mining concessions are currently valid until the mineral deposit reserves are exhausted. Mining concessions may be transferred to eligible third parties with the ANM’s prior approval, pursuant to applicable legislation.

Decommissioning

In Brazil, enterprises dedicated to the exploitation of mineral resources shall submit a recovery plan to receive a mining concession. Accordingly, the environmental recovery of the degraded areas caused by mineral exploitation activities shall have been planned since their conception. According to Minas Gerais law, entrepreneurs must also submit to the environmental agency an environmental plan for closing two years before the planned mine closing.

On October 1, 2020, the Brazilian federal government issued law No. 14,066 which, among other provisions, amended the Brazilian Mining Code in order to explicitly state that all mine closure plans must be approved by the ANM as well as the environmental licensing agency. In addition, on April 30, 2021, the ANM published new rules regarding the Mine Closure Plan – PFM. We have been complying with legal requirements regarding mine closure plans and continue to comply with all regulatory and environmental requirements.

The state of Minas Gerais has also passed legislation on decommissioning plans for industrial activities. The Três Marias unit was the first metal production operation to prepare a decommissioning plan at the licensing stage, including the calculation of a financial provision. In the case of the Aripuanã greenfield projects, presentation of a decommissioning plan is one of the requirements for obtaining an environmental license.

Royalties and other taxes on mining activities

Revenues from mining activities are subject to the Brazilian mining royalty, Compensação Financeira pela Exploração de Recursos Minerais (“CFEM”), which is paid to the ANM. CFEM is a monthly royalty based on gross revenue, excluding taxes on the sale of minerals. When the produced minerals are used in its internal industrial processes, CFEM is determined based on the costs incurred to produce them. CFEM is determined by a reference price of the respective mineral to be defined by the ANM. The applicable rate varies according to the mineral product (currently 2.0% for zinc, lead, copper and silver). In addition, we are required to make certain fee payments for exploration authorizations known as the Annual Fee per Hectare (Taxa AnualI por Hectare). There is also a monthly inspection fee related to the transfer and commercialization of certain minerals in some Brazilian states, such as Minas Gerais and Mato Grosso, where the concessions are located.

In 2019, the State of Minas Gerais ratified a tax benefit that suspended the VAT on the commercialization of several products, including metallic zinc for companies incorporated in the State. There are no formal requirements to obtain the benefit (such as demonstrating that the legal entity is the company actually industrializing the zinc), however the existence of the tax benefit has resulted in increased scrutiny by the tax authorities in the State. We are currently collaborating with all the requested information by the tax authorities in this process of reviewing the commercialization of our products throughout the zinc value chain. In case the buyer does not comply with the VAT deferred regulation, Nexa may be subject to (i) subsidiary liability (pursuant to art. 57, IN, RICMS/MG); or (ii) joint liability (pursuant to art. 124, I of National Tax Code and art. 56, XI, RICMS/MG). For additional information, see “Risk Factors—Changes in tax laws may increase our tax burden and, as a result, could adversely affect our business, financial position and results of operations.”

In December 2022, a new tax on mining operations (the “TRFM”) was approved in the State of Mato Grosso, where the Aripuanã project is located. The regulation came into force in April 2023. The Brazilian Supreme Court held that the tax was unconstitutional in December 2023. However, the state of Mato Grosso approved a new tax to replace the tax that the Court deemed unconstitutional. The new TFRM will be collected according to the nature of the extracted ore. Similar taxes on mining operations have been implemented in other Brazilian states, such as the state of Minas Gerais.

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Regulatory Matters

Environmental regulations

We are subject to several environmental regulations related to, among other matters, water resources, caves, waste management, contaminated areas, areas of permanent preservation, and conservation of protected areas.areas and environmental recovery policies. For more information on environmental recovery policies that Nexa is subject to, see “Information on the Company—Mining operations—Tailings disposal.” Specifically, we have taken the following actions regarding contaminated areas and areas of permanent preservation:

Contaminated areas. We have carried out environmental assessments on our operation units to verify the existence of contamination in groundwater and soil. The assessments prepared for the Brazilian units identified deviations in soil, groundwater and surface water quality standards. We are committed to improving the management of areas identified as contaminated. For most of the identified deviations, we developed a robust remediation plan in order to comply with all legal requirements. We recorded provisions in our consolidated financial statements in respect of any potential liabilities associated with these deviations from applicable standards. See “Operating and financial review and prospects—Overview—Key factors affecting our business and results of operations—Environmental expenses.” We continue to conduct similar assessments with respect to the Peruvian operating units.

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Regulatory Matters

Areas of permanent preservation. Permanent Preservation Areas (Áreas de Preservação Permanente, or APP) are areas that, because of their importance for preserving water resources, geological stability, biodiversity protection and erosion control, receive special legal protection. The existence of such protected areas within a property, whether in urban or rural locations, may cause restrictions to the performance of the intended activities. Interference or removal of APP vegetation is only allowed in cases of public utility (such as mining activities), social interest or low environmental impact, if there is a prior authorization from the applicable environmental authorities. Most of our properties in the state of Minas Gerais interfere in APPs in some way.way, however all are authorized by environmental agencies. For such properties, we have either already established an advanced ongoing regularization process or have started the process for other properties. The regularization process includes the implementation of rigid controls over the properties.

Environmental licenses

The Brazilian Federal Constitution grants federal, state and municipal governments the authority to issue environmental protection laws and to publish regulations based on those laws. While the Brazilian federal government has authority to issue environmental regulations setting general standards for environmental protection, state governments have the authority to issue stricter environmental regulations. Municipal governments may only issue regulations regarding matters of local interest or as a supplement to federal or state laws.

Under Brazilian law, the construction, installation, expansion and operation of any establishment or activity that uses environmental resources, or is deemed to be actually or potentially polluting, as well as those capable of causing any kind of environmental degradation, is subject to a prior licensing process.

Notably, in addition to the general guidelines set by the Brazilian federal government, each state is legally competent to promulgate specific regulations governing environmental licensing procedures under its jurisdiction. Depending on the level of environmental impact caused by the exploration/exploitation activities, the procedures for obtaining an environmental license may require assessment of the environmental impact and public hearings, which may considerably increase the complexity and duration of the licensing process and expose the exploration/exploitation activities to potential legal claims.

Environmental liability

Environmental liability may be determined by civil, administrative and criminal courts, with the application of administrative and criminal sanctions, in addition to the obligation to redress the damages caused. All our operating units, except for Cerro Lindo, have obtained certification under the ISO 14001 standard.

Regulation of other activities

In addition to mining and environmental regulation, we must abide by regulations related to, among other things, the use of explosives and fuel storage. We are also subject to more general legislation on labor, occupational health and safety, and support of communities near mines, among other matters.

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Regulatory Matters

Peruvian regulatory framework

Mining rights and regulation of mining activities

In Peru, surface land is owned by private landowners, while the government retains ownership of all subsurface land and mineral resources. The Natural Resources chapter of the Peruvian Constitution, enacted in 1993, states that mineral resources are the property of the Nation, and the Peruvian State is sovereign in their administration. The Peruvian government may establish by law the conditions for granting exploitation rights and titles to individuals and legal entities.

The General Mining Law (Texto Único Ordenado de la Ley General de Minería) is the primary law governing both metallic and non-metallic mining activities in Peru and is complemented by other regulations approved by the MINEM. Under the General Mining Law, mining activities such as exploration, exploitation, mining labor, beneficiation and mining transport (except storage, sampling, prospecting and trade) are carried out exclusively by means of concessions granted by the Peruvian State. The Dirección General de Minería (“DGM”) is the regulatory body of the MINEM responsible for proposing and evaluating regulations in the Peruvian mining sector as well as authorizing the commencement of mining activities in Peru.

91

Regulatory Matters

A mining concession allows its holder to carry out exploration and exploitation activities within the area established in the respective concession title, provided that prior to the beginning of any mining activity, such concession title is granted by the Instituto Geológico, Minero y Metalúrgico (“INGEMMET”) and other applicable administrative authorizations are obtained (e.g., mining, environmental, use of water, use of explosives, impact on indigenous communities, etc.). A concession provides its titleholder with the exclusive right to undertake mineral exploration and mining activity within a determined area but does not grant the titleholder the right to own the surface land where the concession is located. Therefore, for the holder of a mining concession to develop exploration and/or exploitation works, the latter must purchase the corresponding surface land from the owners, reach an agreement for its temporary use or obtain the imposition of a legal easement by the MINEM, which is rarely granted. There are special proceedings for purchasing or acquiring temporary rights over barren lands owned by the state.

Mining concessions are irrevocable, provided the holder of a mining concession complies with the obligations set forth in the General Mining Law and applicable regulations. Such concessions have an indefinite term, subject to payment of an annual validity fee per hectare granted and achievement of minimum annual production for each hectare, or payment of a production penalty when applicable. Failure to achieve annual production targets will result in a penalty. Failure to pay annual validity fees or production penalties for two consecutive years in any mining concession will result in the cancellation of such mining concession. Failure to satisfy minimum annual production thresholds for a specified period of time (currently thirty years beginning the year after the mining concessions were granted for mining concessions granted after October 10, 2008, and thirty years beginning on January 1, 2009 for mining concessions granted before October 10, 2008) could result in cancellation of the mining concessions.

Summary of Peruvian concessions

In Peru, we hold, through Nexa Peru and its subsidiaries, 870815 mining and exploration concessions, which cover a total area of 389,022345,921.3 hectares and 7060 mineral claims totaling 45,50144,352.2 hectares. Of our mines in Peru, the Atacocha mine property includes 147 mining concessions that cover an area of 2,872.5 hectares and one beneficiation concession, the El Porvenir mine property includes 25 mining concessions that cover an area of 4,846.84,846.7 hectares and one beneficiation concession, the Cerro Lindo mine has 68 mining concessions that cover an area of 43,750.243,827.8 hectares and one beneficiation concession and the inactive Chapi mine property includes 32 mining concessions that cover an area of 4,625.6 hectares and one beneficiation concession. In addition, we have 223225 mineral rights concessions for greenfield projects in Peru that cover a total area of 83,760.182,596.8 hectares. Our prospective projects include 375318 mining concessions that cover an area of 249,166.9207,152.0 hectares.

All our mining and processing concessions in Peru are in good standing. Maintaining our concessions in Peru in good standing involves, among other requirements, (i) paying the annual validity fee and production penalties (when applicable) for mining concessions with no production or with no effective exploration or (ii) paying the annual validity fee and complying with minimum production or investment requirements established in mining law.

115

Regulatory Matters

Failure to pay such validity fees or production penalties (when applicable) for two consecutive years results in the cancellation of the respective mining concessions or beneficiation concessions granted by the Peruvian government. Our mining and beneficiation concessions will not expire unless we do not timely comply in paying these fees or with the minimum production or investment as required by law in respect of such rights and depending on the applicable regime.

The following table summarizes our mining concessions in Peru.Peru:

 

Concessions

 

Concessions

Project

Titles

Area (hectares)

Project

Titles

Area (hectares)

MinesAtacocha mine1472,872.5Atacocha1472,872.5
El Porvenir mine254,846.8El Porvenir254,846.7
Cerro Lindo mine6843,750.2Cerro Lindo6843,827.8
Chapi mine (inactive)324,625.6Chapi (inactive)324,625.6
Greenfield ProjectsFlorida Canyon Zinc1612,600.0Florida Canyon Zinc1310,700.0
Chapi Greenfield145,856.3Hilarión7215,841.2
Hilarión7115,408.3Magistral3616,254.2
Magistral3616,254.2
Pukaqaqa3411,131.3
Shalipayco5222,510.0
Prospective ProjectsVarious

375

249,166.9

Various

422

246,953.4

Total 

870

389,022.0

 

815

345,921.3

 

92

Regulatory Matters

Exploration and authorization and mining concession regimes

Mining concessions are granted for an indefinite term, though dependent on the fulfillment of certain legal obligations. The commencement and re-commencement of exploration and/or exploitation mining activities are subject to the prior obtainment of an authorization for the commencement of activities before the DGM. Such authorizations could be subject to a prior consultation procedure with indigenous communities, carried out by MINEM, if mining activities were to impact said communities’ collective rights and territories as determined by the Ministry of Culture.

As of December 31, 2021,2023, we primarily owned metallic mining concessions with respect to zinc, copper, silver and lead. Substantially all of Nexa Peru’s concessions were granted prior to 2008. Our mining rights and concessions are in full force and effect under applicable Peruvian laws. We believe that we comply in all material respects with the terms and requirements applicable to our mining rights and concessions.

Decommissioning

Title holders of mining exploitation and beneficiation activities, and, in some cases, of exploration activities require the prior approval of a mine closure plan, which includes the environmental rehabilitation, restoration and remediation measures that shall be executed along with the mining operations and until its closure. Once the corresponding mine closure plan is approved, a guarantee (usually a bank performance bond) must be granted in favor of the MINEM to back up the environmental costs associated with the execution of the mine closure plan. Mining exploitation and beneficiation activities may only be initiated once the mine closure plan is approved, and the corresponding environmental guarantee is duly submitted before the competent authority. The referred guarantee is renewed yearly. If the titleholder of an ongoing mining operation fails to comply with this obligation, the MINEM is entitled to suspend the execution of such mining operation. For additional information, see “Risk Factors—Political, economic, social and regulatory risks—Our mineral rights may be terminated or not renewed by governmental authorities”.

Royalties and other taxes on mining activities

Holders of mining concessions are required to pay a mining royalty (regalía minera) to the Peruvian government for the exploitation of metallic and non-metallic resources. The amount of the royalty is payable on a quarterly basis and is equal to the greater of (i) an amount determined in accordance with a statutory scale of marginal tax rates from 1.0% to 12.0% based on a company operating income margin and applied to that company’s operating income and (ii) 1.0% of a company’s sales, in each case during the applicable quarter. We are also required to pay annual fees (derecho de vigencia) for our mining concessions and, in some cases, mining production penalties for not timely reaching the minimum production levels set by Peruvian mining law.

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Regulatory Matters

Holders of mining concessions are also required to pay a Special Mining Tax (Impuesto Especial a la Minería) to the Peruvian government. The Special Mining Tax is payable on a quarterly basis and is calculated based on the operating income derived exclusively from the sale of metallic resources, with marginal rates between 2.0% and 8.4%.

Holders of mining concessions that are subject to administrative legal stability (in force as of the effective date) under an Agreement of Guarantees and Measures for Investment Protection entered into with the MINEM and Mining shall enter into an agreement with the Peruvian government for the payment of a Special Charge on Mining (Gravamen Especial a la Minería, or “GEM”). The GEM is payable on a quarterly basis and is calculated based on the operating income derived exclusively from the sale of metallic resources, with marginal rates between 4.00% and 13.12%.

Tax stability agreements

On March 26 of 2002, Nexa Peru entered into an Agreement of Guarantees and Measures for Investment Protection with the MINEM with respect to our Cerro Lindo unit. Pursuant to section 9 of said Agreement, until December 31, 2021, certain guarantees and benefits were available with respect to operations of the Cerro Lindo unit including, among others, free commercialization of the products proceeding from such unit, free disposition of the currencies generated from the export of the products proceeding from such unit, the right to use the global depreciation rate applicable on the fixed assets relating to the Cerro Lindo unit up to 20.0% per year, the right to keep the accounting corresponding to the Cerro Lindo unit in U.S. dollars, and tax stability. The tax stability agreement expired on December 31, 2021. As of January 2022, Nexa Peru is required to pay taxes at statutory rates to the Peruvian government.

93

Regulatory Matters

As of the date of this report, there is an ongoing dispute between Nexa and Peruvian tax authorities in respect of the applicability of such agreement. For more information, see “Risk Factors—Changes in tax laws may increase our tax burden and, as a result, could adversely affect our business, financial position and results of operations” and “Additional Information—Legal Proceedings—Other legal proceedings.”

Municipal permits

Under the General Mining Law, all Peruvian mines located in rural areas such as Cerro Lindo, Atacocha, El Porvenir and Chapi are exempted from paying municipal taxes and obtaining municipal permits.

Environmental regulations

The development of economic activities in Peruvian territory, such as those related to the mining industry, are subject to a broad range of general environmental laws and regulations related to the generation, storage, handling, use, disposal and transportation of hazardous and controlled materials; the emission and discharge of hazardous materials into the ground, air or water; and the protection of migratory birds and endangered and threatened species and plants. These regulations also set environmental quality standards for noise, water, air and soil, which shall be considered for the preparation, assessment and approval of the corresponding environmental management instrument, granted by the National Service for Environmental Certification of Sustainable Investments (“SENACE”). for exploitation and beneficiation activities, or the MINEM for exploration activities.

The Ministry of Environment and other administrative entities, such as the Dirección General de Asuntos Ambientales Mineros (“DGAAM”), have the authority to enact regulations related to environmental matters. Additionally, the Environmental Supervision Agency (Organismo de Evaluación y Fiscalización Ambiental, or “OEFA”), is the competent authority in charge of supervising and imposing sanctions on mining companies upon non-compliance of applicable environmental legislation. In addition, there are other competent governmental agencies or authorities on specific environmental matters such as water, forestry resources, protected natural areas and aquatic environment that regulate, authorize and supervise environmental compliance and liability.

On November 23, 2023, Supreme Decree No. 028-2023-EM was enacted, amending the Regulations for Environmental Protection in Mining Exploration Activities in order to allow the simultaneous processing of various enabling permits related to water resources, such as water use authorizations or discharge permits, alongside the evaluation procedure for the respective environmental management instrument.

117

Regulatory Matters

Additionally, on November 25, 2023, Supreme Decree No. 031-2023-EM was enacted, approving the law that specifies the mandatory environmental protection measures in the transportation and final disposal of tailings and the corresponding environmental management instruments for mining operations.

In addition, as of the date of this filing, a revision process was initiated by the Peruvian Congress of a law to prohibit economic activities in the headwaters of basins, which are considered vulnerable areas that require protection and mitigation measures. However, the revision process lost momentum and has shown no sign of progress to date. If adopted, this law could have a material impact on our business and projects in case any new projects were to occur in headwaters of basins.

Environmental permit regularization processes

Supreme Decree 040-2014-EM provided special procedures allowing us to acquire environmental and operational permits for mining operations and to regularize the mining of certain areas within the Cerro Lindo and Atacocha mines. These regularization procedures, however, are independent from any sanctioning administrative procedure that the OEFA may initiate in connection with the construction and operation of mining components in the first place without the corresponding environmental permits.

Similarly, Supreme Decree 013-2019-EM allowed for further regularization procedures to be carried out as of January 6, 2020, which will also allow us to acquire environmental and operational permits for infrastructure and mining areas in the Cerro Lindo, Atacocha, El Porvenir and Chapi mines. The regularization proceduresprocedure for Cerro Lindo Atacocha andwas denied due to an unfavorable opinion by the National Water Authority, yet proper procedure was not followed for which we have taken judicial measures to appeal the denial. Atacocha’s procedure was carried out to completion while the El Porvenir mines areregularization procedure is currently underway. The Chapi mine procedure did not fall through and the areas subject to the procedure must follow the standard mine closure regulations.

Regulation of other activities

In addition to mining and environmental regulation, we must abide by regulations related to, among other activities, the use of explosives, fuel storage, controlled substances, telecommunications, archeological remains, and electricityenergy concessions. We are also subject to more general legislation on labor, occupational health and safety, and peasant and indigenous communities, among others. RelatingWith respect to labor regulations, the Peruvian government is currently reviewingenacted Supreme Decree 001-2022-TR in February 2022, establishing a new law that that proposesseries of measures to eliminate the outsourcing of a company’s “core business” activities, which are defined as the main operational activities withof a company, such as any activities that differentiate and identify it within the aimmarket, generate the most income for the company or add the most value for the company’s customers. In July 2023, the law was deemed to be unconstitutional because it was determined to be an unenforceable bureaucratic barrier by INDECOPI, and therefore is not expected to have any material impact on Nexa. In addition, a lawsuit was initiated by Nexa which is seeking to declare the unconstitutionality of contracting workers directly by the company. If passed, this law would affect the mining sector and other economic sectors in the country that have a significant percentage of outsourced workforce.aforementioned law. For additional information, see “Risk Factors—Operational risks—We may be liable for certain payments to individuals employed by third-partythird party contractors” and “Risk Factors—Operational risks—The nature of our business includes risks related to litigation and administrative proceedings that could materially adversely affect our business and financial performance in the event of unfavorable rulings.”

Regarding occupational health and safety regulations, on December 30, 2023, Supreme Decree No. 034-2023-EM was enacted, amending the Regulation of Occupational Safety and Health in Mining approved by Supreme Decree No. 024-2016-EM. Among the key modifications made are the inclusion of parameters for the development of geo-mechanical, hydrogeological, seismicity, and stability studies; the elaboration of a monthly report on geotechnical supervision of tailings deposits, pads, leaching heaps, and waste rock deposits; changes regarding which entity should receive the preliminary report on hazardous incidents or fatal accidents; as well as the addition of a chapter on tailings deposit management which includes parameters for the development of a geotechnical monitoring and control program, a risk analysis and assessment, a management plan, among others. A period of 180 calendar days has been granted for mining activity holders to adapt and comply with the new obligations incorporated by the amendment.

 
94118

Overview

II.Operating and financial review and prospects

Overview

Executive summary

The following is an overview for 2021,of 2023, compared to 2020.2022. For an overview of overview for 20202022 compared to 2019,2021, please refer to "Operating“Operating and financial review and prospects"prospects” in our Annual Report on Form 20-F for the year ended December 31, 2020,2022, filed with the SEC on March 22, 2021.

20, 2023, as amended by our Annual Report on Form 20-F/A, filed with the SEC on October 27, 2023. During 2021,2023, we safely operated our assets safely and delivered strong results anda solid operational performance.

In 2023, we had net revenues of US$2,573.2 million, a 15.2% decrease from 2022, mainly due to lower zinc and copper prices and lower smelting sales volume, which was partially offset by higher mining production volumes. We also had net loss of US$289.2 million, a US$365.6 million decrease as compared to 2022, as a result of the decrease in operating income, mainly due to the aforementioned reasons.

Despite continued challenges associated withrising inflation, high interest rates, aggressive monetary policy tightening, increasing commodity price volatility, and social and political instability, including the COVID-19 pandemicongoing conflict in Russia-Ukraine and its macroeconomic effects,the Israel-Hamas conflict, supported by a solid operational performance, we achieved the highestdelivered an Adjusted EBITDA of US$391.2 million in our history, US$704.2 million, up 74.8%2023, down 48.6% compared to 2020,2022, negatively impacted by the decline in base metal prices, especially the strong decline in zinc prices, and we generatedlower smelting sales volume. We use Adjusted EBITDA as an additional measure of operational performance of the Company’s business (used in addition to, and not as substitute for, net income) without the impact of (i) share in the results of associates, depreciation, amortization, net financial results and income taxes, (ii) non-cash events and non-cash gains or losses that do not specifically reflect our operational performance for the specific period, and (iii) the impact of pre-operating and ramp-up expenses incurred during the commissioning and ramp-up phases of greenfield projects (currently, Aripuanã). For a discussion of our Adjusted EBITDA, reconciliation with most comparable IFRS Accounting Standards figures and changes made in 2023, see “Operating and financial review and prospects—Results of operations—Non-IFRS Accounting Standards measures and reconciliation.”

We measure our liquidity by cash from operating activitiesflows. For a description of US$493.0 million. our cash flows, see “Operating and financial review and prospects—Liquidity and Capital Resources—Source of funds.”

Although we believe we are well-positioned, for continued growth, benefitting from our unique position in Latin America, in addition to the strong fundamentals of our business in the long-term, with flagship assets and a strong balance sheet, theseit is anticipated that challenges such as difficult macroeconomic conditions are likely to continue in 2022, particularly if there are new outbreaks of COVID-19 and/or the continued emergence of new variants,2024, which could lead to new restrictive measures imposed by governments, affecting macroeconomic conditions and, as a result,may affect our operations.

The Nexa Way program, initiatedIn January and June 2023, as well as in mid-2019 and which aimed to structurally improve our business model and transform our organizational culture, has assisted us in overcoming these challenges and ongoing macroeconomic effects, positively contributing to our results. As the program is now completed and the improved culture is duly embedded in our operations’ dailyFebruary 2024, protest activities we will henceforth cease to report further achievements on a segregated basis.

Following the end of government-mandated temporary suspension of our Peruvian mines and limited smelters production, we safely resumed our activities during the second half of 2020, and since then we have been operating at higher capacity utilization rates, despite some setbacks we faced during the year.

During a regular inspection at the Extremo Norte underground mine at Vazante, above-normal ground displacements were identified in the area around the mine’s main access and the escape route. The Extremo Norte mine requires dewatering of the aquifer for its operation, which leads to depressurization and may causeby local disturbances in the rock mass around the mine. As a preventive measure, activities in this area were suspended on March 19, 2021. No work accidents or environmental impacts were reported. With the support of external experts, an in-depth analysis of the geological and geotechnical conditions was carried out. Mine activities restarted in the third quarter of 2021 and the rehabilitation plan was concluded ahead of schedule, allowing us to resume mine production during the fourth quarter of 2021. During this temporary suspension, we were able to mitigate the decrease in production in Extremo Norte by increasing throughput at the Vazante mine and reaching ore sorter circuit at maximum capacity to offset the grade drop.

In March 2021, one of our third-party raw material suppliers closed its calcine facility in Peru. While we were able to partially offset this supply reduction in 2021 by sourcing raw materials from other suppliers and third-party materials, as of the date of this report we expect this will affect our smelters’ production in 2022.

In 2021,communities in Peru protest activities were intensifiedtemporarily suspended operations at Atacocha. In each of these instances, Nexa complied with all existing agreements, pursued an active dialogue with the communities and carried out by several communities throughout the year, which illegally blocked the road accessauthorities, and remained committed to the mines, mainly affecting our units in Cerro Pasco and Cerro Lindo.social development of all its host communities. During the protests, mining activities were limited to critical operations with a minimal workforce to ensure appropriate maintenance, safety, and security. Even though production was temporally suspended during these periods, we were able to operate at high levels of capacity utilization rates throughout the year, but zinc production in Atacocha decreased by 14.2% compared to 2022. There was no material impact of these temporary suspensions, and the Company achieved its full consolidated production guidance for all metals in 2023.

In March 2023, production at the Cerro Lindo mine was suspended due to heavy rainfall levels and overflowing rivers caused by cyclone Yaku, resulting in the partial flooding of some lower levels of the mine. In April 2023, Cerro Lindo resumed its operations, and road access was restored. During the temporary suspension, Nexa remained focused on the security and reparation of the mine and took measures to ensure the safety and well-being of its employees, contractors and host communities. Despite the temporary suspension of the mine, there was no material impact andon 2023 production, with Cerro Lindo achieving the Company has achieved its fullupper range of our 2023 production guidance production for 2021.

In January 2022, the underground operation of Vazante mine reduced its daily production by approximately 60% of its daily capacity due to heavy rainfall levels in the state of Minas Gerais. As a result, Vazante’s underground mine has received more water than it could pump to the surface, partially flooding the lower levels of the mine. The Extremo Norte underground mine has not been affected and continued to operate. As of the date of this report, dewatering process is still in progress and we expect operations to resume at full capacity in early April 2022.all metals.

 
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Overview

During 2021,Aripuanã’s ramp-up activities began in July 2022, and the mine remained in the ramp-up phase throughout 2023. In 3Q23, Aripuanã’s guidance production range was revised downwards for the year, as a result of design limitations in the capacity of the flotation pumping system, identified during the detection of bottlenecks, which required resizing and updating certain plant processing facilities and systems, as well as the clean-up and upgrading of water treatment facilities. In 4Q23, we made significant progressachieved an average of 61% capacity utilization level and we expect to reach nameplate capacity in mid-2024. The mine is fully operational, and underground activities in 2023 were focused on developing and preparing areas for a ramp-up in mining operations, commissioning the Aripuanã project, where mechanical completionpaste back-fill plant and transitioning out a mine development contractor. Our priority in 2023 was, and for the first half of 2024 is almost concluded. Overall, progress reached 99.3% atto continue improving metal recovery and concentrate quality and grades, aiming to achieve a stable operation. At the end of December 2021, whileFebruary 2024, the beneficiation plant commissioning is more than 40% complete. Nevertheless,average capacity utilization rate was around 61%, maintaining similar levels as in 4Q23, given the emergence of new variants of COVID-19 throughout the year, along with the health protocols adopted and heavy levels of rainfall experiencedusual rainy season period in the region, which impacted our productivity (lower-than-anticipated workforce), which added additional pressure on costsdry disposal capacity. However, during this period the operational focus was to maintain concentrate quality and timeline. The ramp-up is now scheduled forgrades, as well as the third quarter of 2022. The development of Aripuanã is aligned with our objectives to increase integration between our mining and smelting operations and to reduce third-party zinc concentrate supply needs.metallurgical recovery rates.

Regarding our exploration activities, in 20212023 we continued to focus our investments inon projects around the mines we operate. We believe that our exploration program and disciplined approach on project evaluation, will contribute to replace and increase mineral reserves and resources of our current assets, and define potential in Hilarión and Bonsucesso orebodies.the materiality of exploration stage projects. We will continue to seek new regional targets to identify prospective areas and define materiality for new projects.

In terms of our brownfield projects, the Vazante mine-deepening project continued to progress, and the investment amounted to US$3.4 million. In 2021, we reviewed our mine planning and due to capital allocation prioritization, phase 2 of EB-140 was rescheduled to 2023. Nevertheless, this will not impact mine production.

In the first quarter of 2021, exploration activities and engineering studies resumed at the Bonsucesso project. Bonsucessoobjective is expected to extend the life of mine, of Morro Agudo and use the existing mine facilitiestherefore, most of the complex, reinforcingmineral exploration budget in 2023 was allocated to drilling activities in these projects, with emphasis on Cerro Lindo, Vazante and Aripuanã. In terms of greenfield projects, we direct continuous efforts to define the integration of our mines and smelters in Brazil. Magistral engineering studies continue to progress, and we expect to advance further detailed engineering and optimization opportunities to mitigate the risk of project execution before consideration of project’s approval. In 2021, we continued exploration activities at the Hilarión project, such as drilling program and geological mapping, and the maintenanceexpansion of the access road toknown mineralization and identify new mineralized zones in regional prospective trends, with emphasis on Hilarión and Namibia, as well as focusing on expanding the Cañon Florida project. The pre-feasibility studies at Shalipayco, Pukaqaqa and Florida Canyon remain on hold.mineral inventory of Aripuanã.

Our 20212023 financial results were affected by factors including: (i) higherlower LME metal prices, especially zinc; (ii) higher operational costs mainly in Aripuanã during the ramp-up phase related to concentrate and volumes, (ii)stockpile costs; (iii) lower zinc metal and oxide sales volumes; (iv) lower by-products contribution; and (v) the increase in costs, following higher volumes, third-party services and maintenance activities, (iii) higher exploration and project evaluation expenses and (iv) the depreciationnegative impact of the Brazilian real against the U.S. dollar. In addition, our 2021 results were impacted by the recognition of a US$19 million as a remeasurement adjustment to revenue recognized in our silver stream arrangement, according to our silver streaming accounting policy, and by the recognition of a US$6.7 million non-cash net expense related as part of our ARO review, increasing our expected disbursements on decommissioning obligations in certain operations. These factors were partially offset by the recovery of undue GSF energy costs of US$19 million in 2021, For further information, please refer to Notes 22, 26 and 28 of our consolidated financial statements.FX variation.

In 2021,2023, we had a 7.8%an 8.2% increase in our mine production (zinc equivalent)zinc equivalent (mine production), from 498.0564.7 thousand tonnes in 20202022 to 537.0611.1 thousand tonnes in 2021,2023, mainly driven by the decreaseincrease in processed ore volumes in our Peruvian mines, which were affectedproduction for all metals, specifically zinc and lead production increasing by the government-mandated temporary shutdowns in response12.4% and 13.5%, respectively, mainly due to the COVID-19 pandemic.increase in production at Aripuanã. Our total zinc metal (metallic zinc and zinc oxide) sales increaseddecreased by 5.7%4.3% in our smelting operations, from 585.4616.2 thousand tonnes in 20202022 to 618.8589.8 thousand tonnes in 2021.2023.

In 2021,2023, our net revenues were 34.4% higher15.2% lower compared to 2020,2022, reaching US$2,622.12,573.2 million, primarily impacteddriven by lower LME zinc and copper prices and lower smelting sales volume, which was partially offset by higher prices and volumes. In 2021, we had a net incomezinc mining production. See “Overview—Results of US$156.1 million and Adjusted EBITDA of US$704.2 million, a 74.8% increase compared to 2020, the main factors that contributed to this strong improvement were the increase in prices and by-products contribution, whichoperations—Net revenues” for more than compensated for (i) higher exploration and project evaluation investments; (ii) the increase in operating costs due to higher volumes, increased maintenance activities and third-party services; (iii) the negative hedge variation of US$20 million; and (iv) the negative variation of US$21 million related to ARO remeasurement and pre-operating expenses of the Aripuanã project affecting other income and expenses. See “Results of Operations” for reconciliations of Adjusted EBITDA to net (loss) income.information.

Our capital expenditures totaled US$507.9309.0 million in 2021,2023, a 50.9% increase18.9% decrease compared to 2020,2022, mainly due to mainly due tothe decrease in expansion investments with the conclusion of construction at Aripuanã’s construction and higher non-expansion CAPEX postponed from 2020 due to COVID-19 pandemic.. In 2021, 50.7%2023, 94.7% of our capital expenditures relatedwas allocated to sustaining investments, including US$79.4 million invested in the construction of Aripuanã (US$257.6 million), as well as the Vazante mine deepening project (US$3.4 million), which aims to extend the life of mine by seven years.

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Overview

mine.

Outlook

In 2022,2024, we estimate that we will produce (i) between 287.0323.0 thousand tonnes and 318.0381.0 thousand tonnes of zinc contained in concentrate, (ii) between 28.030.0 thousand tonnes and 35.0 thousand tonnes of copper contained in concentrate, (iii) between 46.066.0 thousand tonnes and 55.082.0 thousand tonnes of lead contained in concentrate and (iv) between 8.611.0 million ounces to 10.013.0 million ounces of silver contained in concentrate.

In 2022,2024, zinc production at the mid-range of the guidance is estimated to decrease 5%increase 5.6% over 2021 (320kt)2023 (18.6kt) mainly driven by expected lower grades in Cerro Lindo (from 1.79% to 1.49%)the Aripuanã mine. For 2025 and the temporary capacity reduction of daily production in Vazante due to heavy rainfalls in the state of Minas Gerais. For 2023,2026, zinc production is estimated to increase 16%be similar over 2022 due to full ore throughput at the Aripuanã mine, with a further 1% in 2024 over 2023.2024. For the forecasted period, zinc head grade is expected to be in the range of 2.70%2.86% and 3.13%3.18%, copper head grade is expected to be in the range of 0.29%0.26% and 0.36%0.32% and lead head grade is expected to be in the range of 0.50%0.67% and 0.63%0.77%.

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Overview

In 2022,2024, we expect to sell between 528.0545.0 thousand tonnes and 551.0565.0 thousand tonnes of metallic zinc product volume and between 37.035.0 thousand tonnes and 39.040.0 thousand tonnes of zinc oxide product volume.

Metal sales volume at the midpoint of the guidance range (565.0of 580.0 to 590.0605.0 thousand tonnes)tonnes in 20222024 is estimated to decrease 7.0%be similar compared to 2021, following lower production in Peru2023, as these estimates do not assume the resale of material from third parties. For 2025 and Brazil. The estimated performance is explained by the fact that our third-party raw material Peruvian supplier, which shut down its facility in the beginning of 2021, will not resume its activities. Consequently, for the forecasted period, our consolidated smelter production is estimated to decrease by 30kt compared to historical levels. In addition, we estimate that the temporary decrease in Vazante mine’s production will have an annual impact on our Brazilian smelters production from 10 to 15kt in 2022.

For 2023,2026, metal sales volume is forecasted to increase 3.0%remain unchanged over 2022 (ranging from 580.0 to 605.0 thousand tonnes) and remain stable in 2024 (ranging from 580.0 to 605.0 thousand tonnes). For 2023-2024, we assume supply from our mines maintain historical levels.

These estimates are based on several assumptions, including but not limited to metal prices, operational performance, grades, maintenance, input costs, exchange rates, political and social situation in the countries where we operate, and that our assets continue to operate subject to additional measures and protocols to mitigate the spread of COVID-19.operate.

Regarding our cash cost net of by-productby-products credits estimates for 2022,2024, for our mining segment, we estimate cash cost after by-productby-products credits atto be between US$0.230.23-0.42 per pound of zinc sold in 2024. This cost does not include Aripuanã, which is in the ramp-up phase, which is expected to be concluded in mid-2024. The estimated decrease of 19.4% compared to 2023 is mainly driven by higher benchmark treatment charges, higher unit costs due to inflationary costs pressureby-products contribution and decreased production volumes.lower TCs. For our smelting segment, cash cost after by-product creditby-products credits in 2024, is estimated atto be between US$1.151.07-1.18 per pound of zinc sold, primarily duesold. The estimated cost increase compared to inflation and higher energy costs, which should be partially offset2023 is mainly driven by higher by-products credits (sulphuric acid prices), compared with US$1.13 per pound of zinc sold in 2021, due to an estimated increase in input costs and lower volumes.TCs.

Our estimated capital expenditures for 20222024 is US$385.1311.0 million, sustaining investments are expected to total US$261.0 million, with mining accounting for US$200.0 million, including US$39.0 million at Aripuanã, and includes the estimatedsmelting accounting for US$59.5 million investments in the Aripuanã project.61.0 million. In response to COVID-19, in 2021 we focused our efforts on preserving cash. Consequently, we temporarily reduced non-expansion investments, maintaining all the essential investments to operate safely. In 2022,2024, we also expect to incur approximately US$82.472.0 million in mineral exploration and project evaluation expenses, with US$43.258.0 million allocated to mineral exploration (including brownfields, greenfields, mineral rights, mine development, business development and administrative issues) and US$18.314.0 million allocated to project evaluation. In mineral exploration, we plan to continue our efforts to replace and increase mineral reserves and resources.resources in our operating assets and define and expand the mineralized zones in exploration phase projects, focusing on Cerro Lindo, Aripuanã, Vazante and El Porvenir (brownfields) and copper opportunities (exploration phase), respectively.

These estimates should be considered preliminary, subject to change and are based on several assumptions that management believes to be reasonable as of the date of this annual report, which are subject to change based on internal and external developments. As of the date of this annual report, we continue to monitor developments related to the COVID-19 pandemicsocio-political environment in the countries we operate and the resumptionimpacts of Vazante mine at full capacity.global conflicts, including the Ukraine-Russia conflict and the Israel-Hamas conflict, on the economy, supply and demand for commodities, global security concerns, and market volatility. We cannot predict how and to what extent the pandemic,global conflicts, any protest activities or other operational issues may impact our current plans and objectives for 2022,2024, including with respect to our consolidated production guidance and our current capital expenditure, mineral exploration, and project evaluation disbursements. See “Forward-looking statements.” For cash cost guidance, see “Presentation of financial and other information—Non-IFRS Accounting Standards measures.”

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Overview

Key factors affecting our business and results of operations

Reporting segments

We have two reportable segments: mining and smelting. A major part of our zinc mining production, representing approximately 100%94.5% of production in 2021,2023, is processed in our own smelters. Similarly, a major part of the zinc raw material consumption for our smelting operations, representing approximately 52.9%47.9% of concentrateszinc contained in 2021,raw material (excluding oxide) in 2023, comes from our own mines. As a result, the revenues of our mining segment include sales to the smelting segment, and the costs of our smelting segment include purchases from the mining segment. We calculate internal transfer prices from our mines to the smelters on an arm’s length basis to evaluate the performance of our mining and smelting segments individually. These revenues and costs are eliminated in our consolidated financial statements.

The profitability of our mining segment depends primarily on world prices of the metals we produce, and on our costs to produce concentrates. It is also affected by treatment charges, which are amounts representing the cost of further processing that are applied to reduce the price of concentrate. Other factors affecting pricing are discussed below.

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Overview

The profitability of our smelting segment does not depend directly on market prices for metals because they have a similar impact on our revenues and our costs. It is affected primarily by treatment charges (which reduce our costs to acquire concentrates), by the premium over the market price of metals that we can charge for our products, and by the operating costs of our smelters and their efficiency in recovering the metal content of the concentrates we purchase.

Segments are reported in accordance with IFRS Accounting Standards 8 “Operating Segments,” and the information is presented to the chief executive officer, who is the chief operating decision maker in accordance with IFRS Accounting Standards 8. Segment results are derived from the accounting records and are adjusted for reallocations between segments, impairment of non-current assetsdepreciation and otheramortization and miscellaneous adjustments, if any, for the period. For more information, see “Operating and transfer pricing adjustments.Financial Review and Prospects—Results of Operations—Non-IFRS Accounting Standards measures and reconciliation” in this report. See also Note 2 to our consolidated financial statements.

Metal prices

Our financial performance is significantly affected by the market prices of zinc, copper and lead, and, to a lesser extent, silver, gold and the other by-products of our smelting operations. Metal prices have historically been subject to wide fluctuations and are affected by numerous factors beyond our control, including the impact such factors have on industries representing first-uses and end-uses of our products. These factors, which affect each metal to varying degrees, include international economic and political conditions, political changes in the countries in which we operate (for example, political instability surrounding the recent presidential elections in Peru and its aftermath, including new government legislation that could affect our operations), levels of supply and demand, the availability and cost of substitutes, inventory levels maintained by producers and others and, to a lesser degree, inventory carrying costs and currency exchange rates. In addition, market prices have on occasion been subject to rapid short-term changes due to speculative activities.

The market prices for zinc, copper and lead are typically quoted as the daily cash seller and settlement price established by the LME. LME zinc prices are influenced by global supply and demand for concentrate and metallic zinc and zinc oxide.zinc. The supply of metallic zinc and zinc oxide depends on the amount of zinc concentrates and secondary feed materials produced and the availability of smelting capacity to convert them into refined metal. This also applies to copper and lead.

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Overview

The table below sets forth the average published market prices for the metals and periods indicated:

 For the Year Ended December 31,

For the Year Ended December 31,

Average Market 2021 2020

2023

2022

Prices of Base Metals (US$/tonne) (US¢/lb) (US$/tonne) (US¢/lb)(US$/tonne)(US¢/lb)(US$/tonne)(US¢/lb)
Zinc (LME)  3,007.38   136.41   2,267.00   102.83 2,646.57120.053,478.32157.77
Copper (LME)  9,317.49   422.63   6,180.63   280.35 8,477.77384.558,797.01399.03
Lead (LME)  2,206.23   100.07   1,825.58   82.81 2,138.1896.992,150.1797.53

 

  For the Year Ended December 31,
Average Market Prices of Precious Metals 2021 2020
   (in US$/oz)     
Silver (LBMA)  25.14   20.55 
Gold (Fix)  1,798.61   1,769.59 
 

For the Year Ended December 31,

 Average Market Prices of Precious Metals

2023

2022

  (in US$/oz)
 Silver (LBMA)23.3521.73
 Gold (Fix)1,940.541,800.09
    

 

The key drivers and recent trends of each of the metals that we produce are discussed below.

Zinc

Zinc is a major material for the construction, transport and transportinfrastructure industries, which represent approximately 50%, 21% and 21%16% of the zinc end-use, respectively, according to Wood Mackenzie.

The annual average price of zinc on the LME as of December 31, 2021,2023, was 21.7% higher23.9% lower when compared to the corresponding period in 2020.2022. In 2021,2023, the main factor contributing to the decrease in price of zinc as compared to 2022 was the lack of demand from traditional sectors such as construction in most of the consuming regions. In China, after the peak in zinc prices continuedin the 1Q23 with expectations of the country’s recovery after the end of lockdowns, disappointing data from the real estate sector caused the steep drop in prices going into 2Q23. In the US and Europe, the high level of inflation and tax rates discouraged the real estate sector. The sectors that had increases in demand were those connected to recover from downturnsthe energy transition, such as solar power generation and electric vehicles.

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Overview

From the supply side, 2022 was a year of smelter closures with the increase in 2020, mostly linkedpower prices, especially in Europe, but production levels were normalized by the first half of 2023, with some production that remained offline (Nordenham, for example) as demand was weak. On the other hand, as zinc prices came down during 2Q23, reaching a minimum price of US$2,224/t by May 25, many mines ceased production as the continuing high level of costs caused some assets to an improvement in economic growth and tightoperate with negative margins. At the end of 2023, approximately 5% of the world’s zinc concentrate and refined markets, which also impacted spot treatment charges levels throughout the year.production was offline.

Spot treatment charges for imported concentrates in China increaseddecreased from US$70275 per tonne in January 20212023 to US$8580 per tonne in December 2021,2023, as reported by Wood Mackenzie, while long-term contract treatment charges decreasedincreased from US$300230 per tonne in 20202022 to US$159274 per tonne in 2021.2023. The benchmark for long-term treatment charges was set in early April 2021, reflecting the surplus of concentrate at the time, after Europe’s smelters closures, although this scenario changed rapidly throughout the year, as smelter production declined due to a tighteningreduction in concentrate supply, as mines ceased production. Energy prices also presented a major concern throughout the concentrates market, which was expected to continue through the year. year, with smelters in China and Europe ceasing or reducing production.

According to Wood Mackenzie’s December 20212023 report, the different movements of spot treatment charges resulted from a concentrate market less tight than expected, as carbon emissions and energy consumption restrictions in China impacted smelter output, which led to a surplus of 155 thousand tonnes at the close of 2021.

In 2021, despite the increase in production year-over-year (1.1% higher than 2020),2023, the zinc metal market closed with a deficitsurplus of 320260 thousand tonnes resulting from a metal production of 13.813.7 million tonnes and consumption of 14.213.4 million tonnes (7.1% higher(1.6% lower than 2020), according2022). Mine supply presented a decrease of 2.3% in 2023, with a total of 12.5 million tonnes, leading to Wood Mackenzie’s December 2021 report.

a concentrate deficit of 107 thousand tonnes, which is expected to drive benchmark treatment charges down during the negotiation of contracts in 2024.

Refined zinc supply presented an increase in 2021,2023, mainly because of the return of Latin AmericanEurope’s smelters coming back online and Chinese operations that had their production impacted by the pandemic related health protocols in 2020. China also contributed to an increase in demand, which was 7.0 million tonnes, or 1%, higher compared to 2020. As of December 31, 2021, refined zinc stock levels decreased, reaching 199.6 thousand tonnes at the LME, compared with 202.2 thousand tonnes on December 31, 2020.China’s smelter production.

Copper

Copper is used for building construction, power generation and transmission, electronic product manufacturing and the production of industrial machinery and transportation vehicles. The annual average price of copper on the LME as of December 31, 20212023 was 50.8% higher3.6% lower than in the corresponding period in 2020. Copper prices reached a historical record price of US$10,724.5 per tonne on May 10, 2021 and maintained a high level over the remainder of the year.2022. This was mainly a net result of positive effects related to mine disruptions, a falling US dollar value and demand from sectors related to the favorable macroeconomic environment associated with strongenergy transition, while traditional demand, declining inventoriessuch as civil construction and real estate, failed to grow at a tight concentrate market. According to LME data, copper stocks finished the year at 89.0 thousand tonnes, compared to 108.0 thousand tonnes in the December 31, 2020. Totalfaster pace. On balance, total mine production, refined production, as well as global demand for refined copper increased in 20212023 compared to 2020,2022 according to Wood Mackenzie.

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Overview

Lead

Lead is used in batteries as energy storage and in other products such as ammunition, oxides in glass and ceramics, casting metals and sheet lead. The annual average price of lead on the LME as of December 31, 20212023 was 20.9% higher0.6% lower than in the corresponding period in 2020.2022. This increasedecrease reflects improvements on metal demand, combinedthe market moving into surplus during the last year despite only a modest recovery in mine, and therefore primary smelter, output, while secondary output is suffering with tight metal inventories due to pandemic effects in the supply chains (higher freight and storage costs).raw material supply.

Silver

Silver is considered a precious metal and generally seen as a store of value, so its price tends to be resilient in times of economic uncertainty. In addition, applications in electronics and solar cells have added to the already broad range of uses of silver in currency, jewelry, and silverware. The annual average LBMA silver price for the year ended December 31, 20212023 was 22.3%7.5% higher than in the corresponding period in 2020.2022. Silver prices hit the highest level of the year on February 1, 2021,April 14, 2023, US$ 29.5926.03 per ounce, which was 146% above0.6% below the lowesthighest point of the previous year reached on March 19, 2020 and maintained09, 2022, but failed to maintain a similarly highsimilar level over the remainder of 2021.2023, nearing US$21 per ounce in October and recovering by the end of December with US$22.73 per ounce. This performance was mainly due to commodities stronger demand combined with investors moving towards lower risk assets, such as silver, amid a volatile economic scenario.the volatility of the US dollar and geopolitical risks.

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Overview

Production volumes, ore grade and metal mix

Our production volumes, the ore grade from our mines and the mix of metals in our product portfolio affect our business performance. For more details, see “Information on the Company—Mining operations.” Our zinc production increased by 12.4%, while copper and lead contained in concentrates production increased by 2.2%, 5.2%0.5%, and 19.9%13.5%, respectively, in 2021.2023. Production of silver contained in concentrates increased by 29.9%3.3% in 20212023.

Commercial terms

We sell our concentrates and metallic zinc and zinc oxide products mostly through supply contracts with terms between one and fourthree years, and only a small portion is sold on the spot market. The agreements with our customers include customary international commercial terms, such as cost, insurance and freight, or CIF; free on board, or FOB; free carrier, or FCA; and cost and freight, or CFR; pursuant to Incoterms 2010/2020, as published by the International Chamber of Commerce. For concentrates, revenues are recorded at provisional prices and, typically, an adjustment is then made after delivery, based on the pricing terms provided for under the relevant contract.

Sales prices for our products are based on LME and/or LBMA quotations. Concentrates are typically sold at the LME price reference minus a discount (treatment charge for zinc and lead; treatment charge and refining charge for copper). Metallic zinc and zinc oxide are typically sold at the LME quotation averaged during a quotation period, such as the month after shipment, the month prior to shipment or another agreed period, plus a negotiable premium that varies based on quality, shape, origin, and delivery terms and also according to the market where metal will be sold. In 2021, 49.4%2023, 47.1% of the total zinc raw material consumption in our smelters was produced by our mines and 50.6%52.9% was purchased from third parties or was obtained from secondary raw materials (including oxide). We buy zinc concentrates from different suppliers in the market to meet our raw material requirements. We sell all our copper and lead concentrates production to metal producers and international traders, on international market terms.

Our sales of metallic zinc are highly diversified. Our customer base is composed mainly of end users. Our products reach the following end use industries: transport, construction, infrastructure, consumer goods and industrial machinery. In 2021, 85.3%2023, 71.5% of our total sales were to customers in the continuous galvanizing, general galvanizing, die casting, transformers and alloy segments, and 14.7%28.5% were to international traders. Our ten largest customers represented approximately 58.9%58.0% of our total sales volume in 2021.2023. In 2021,2023, we sold to more than 335330 customers across 4645 different countries.

Free zinc, treatment charges, premiums and smelter by-products

Smelters are processing businesses that achieve a margin on the concentrates and other feedstocks they process; in large part, the price for the underlying metal is effectively passed through from the miner supplying the concentrate, or the supplier of the secondary feed material, to the smelter’s customer. Our smelters use zinc concentrate as feedstock, which is supplied from our mines and from third-party suppliers. The smelter earns revenue from (i) the treatment charge reflected as a discount in the purchase price it pays, (ii) the refined metal it can produce and sell over and above the metal content it has paid for in concentrates purchased from the miner (free metal) and (iii) any premium it can earn on the refined products it sells to its customers. By-products can also contribute to a smelter’s revenue. By-products from our smelting operations include, among others, silver, gold, copper, cement, sulfuric acid, lead concentrate, lead-silver concentrate, silver concentrates, limestone and copper sulfate.

100

Overview

Free zinc and treatment charges

Free zinc is the difference between the amount of zinc that is paid for in the concentrates and the total zinc recovered for sale by the smelter. The value of the zinc that is paid for corresponds to 85.0% of zinc content, which has historically been the industry standard, multiplied by the LME price of zinc. The zinc content which is not paid for is considered “free zinc.” The margin of a zinc smelter improves as the amount of metal in zinc concentrates that it can recover increases.

The treatment charge (“TC”) is a discount per tonne of concentrates, which is determined by negotiation between the seller (a mine or a trading company) and the buyer (a smelter). Treatment charges can be benchmark TC (negotiated by the major miners and buyers), spot or negotiated.

124

Overview

We apply a Benchmark TC for our integrated mining and smelter operations in Peru. For our other purchases of zinc concentrate from third-party miners and trading companies, the treatment charge is based on the Benchmark TC, spot treatment charges or treatment charges negotiated annually with miners or trading companies.

In order to reduce volatility, for most of our third-party contracts, which are renewed throughout different periods during the year, we consider the 3-years average TC. The reference (average benchmark TC of 2021, 20202023, 2022 and 2019)2021) for 20212023 stood at US$232/221/t concentrate, up 2%down 3.7% from the previous reference (average benchmark TC of 2020, 20192022, 2021 and 2018)2020).

The market trend for treatment charges reflects the supply and demand for concentrates in the market. Treatment charges tend to fall when concentrate demand increases relative to supply, and they tend to rise when demand falls. In other words, when there is an excess of concentrate compared to the smelting processing capacity, treatment charges tend to rise and when there is a deficit of concentrate in the market, treatment charges tend to fall. For information regarding our actual treatment charges, see “Information on the Company—Smelting operations.”

The following table sets forth, for the periods indicated, the zinc realized Benchmark TC, expressed in dollars per dry metric tonne (“dmt”) of concentrate.

 

For the Year Ended December 31,

 

2021

2020

Treatment Charge (in US$/dmt)159300
 

For the Year Ended December 31,

 

2023

2022

Treatment Charge (in US$/dmt)274230

Source: Wood Mackenzie.

Premiums

Like other smelters, we sell metallic zinc and zinc oxide products at a premium over the base LME price. The premium reflects a combination of factors, including the service provided by the smelter in delivering zinc or lead of a certain size, shape or quality specified by its customers and transportation costs, as well as the conditions of supply and demand prevailing in the regional or local market where the metal is sold.

Premiums tend to vary from region to region, as transportation costs and the value attributable to customer specifications tend to be influenced by regional or local customs rather than being a function of global market dynamics.

The following table sets forth, for the periods indicated, information on premiums for the markets indicated, expressed in U.S. dollars per tonne.

 

For the Year Ended December 31,

 

2023

2022

Rotterdam (in US$/tonne)371457
Singapore (in US$/tonne)131144
United States (in US$/tonne)652750

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Overview

 

For the Year Ended December 31,

 

2021

2020

Rotterdam (in US$/tonne)14598
Singapore (in US$/tonne)114103
United States (in US$/tonne)227180


Source: Wood Mackenzie.

The following table sets forth, for the periods indicated, the gross premium over the base LME price for zinc oxide realized by our smelting operations in Brazil, expressed in dollars per tonne.

 

For the Year Ended December 31,

 

2021

2020

Brazilian operations (in US$/tonne)492482
 

For the Year Ended December 31,

 

2023

2022

Brazilian operations (in US$/tonne)714548

 

Smelter by-products

The quantity of by-products produced in our smelters depends on several factors, including the chemical composition of the concentrate and the recovery rates achieved. Concentrates from some mines contain higher levels of by-product metals than concentrates from other mines. In addition, the higher rate of by-product recovery increaseincreases the number and volume of by-products that can be produced and sold.

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Overview

Sulfuric acid is the principal by-product we sell. It is manufactured from the sulfur dioxide gas generated from roasting zinc concentrates. While the zinc smelters use sulfuric acid in their leach plants, almost all this requirement is generated in each zinc smelter’s electrolysis plant, and only small amounts of the sulfuric acid produced are used in its facilities, leaving the rest available for sale. We sell sulfuric acid under annual or multi-year contracts and spot sales.

Silver concentrate is another relevant by-product that we produce at our Cajamarquilla and Juiz de Fora smelters. Silver concentrate is one of the components of zinc concentrate and is obtained during the zinc metallurgical flotation process. Recovered silver is sold primarily to international traders and local customers.

Operating costs and expenses

Our ability to manage our operating costs and expenses is a significant driver of our business performance. We focus on controlling and limiting our costs and expenses so that we are better prepared to overcome less favorable pricing conditions.

Energy costs

Our total cost of energy is composed of the operating costs of our own hydroelectric power plants, long-term electricityenergy supply contracts, transmission and distribution charges and fees.

In Peru, the energy market is more stable in terms of generation (hydrology forecast) and prices. We obtain 2.0%2.6% of the electricityenergy for our operations from our own hydroelectric power plants and 98.0%97.4% from third parties withparty contracts with terms ranging from one to two years.the SEIN.

In Brazil, the electricityenergy for our operations comes from five hydroelectric plants in which our subsidiary Pollarix has directly or indirectly the following interests as of December 31, 2021:2023: a 21.0%22.4% participation in the consortium Enercan (Campos Novos hydroelectric power plant), 100.0%100% ownership of a hydroelectric power plant (Picada) located in Minas Gerais, a 12.6% participation in the consortium Amador Aguiar I, a 12.6% participation in the consortium Amador Aguiar II and a 23.9% participation in the consortium Igarapava. We account for the consortiums as joint operations, as discussed in Note 4(b) to our consolidated financial statements. On a consolidated basis, our costs for electricityenergy in Brazil reflect the operating costs of the hydroelectric facilities and are sensitive to a variety of factors, including hydrologic variables.

102

Overview

The only activity of Pollarix is to own our energy assets, and it sells energy to our Brazilian operating subsidiaries at market prices. We own all the common shares of Pollarix, which represents 33.33%33.3% of its total share capital and/or its affiliates. The remaining shares are preferred shares with limited voting rights, which are owned by our major shareholder VSA.Auren. Under the terms of the preferred shares, VSAAuren is entitled to dividends per share equal to 1.251.93 times the dividends per share payable on the common shares. See “Information on the Company—Other operations—Power and energy supply—Brazil.” As a result, a substantial part of the profits recognized by Pollarix from selling energy to our Brazilian operating subsidiaries will represent non-controlling interest in our income statement.

Environmental expenses

Our mines and smelters operate under licenses issued by governmental authorities that control, among other things, air emissions and water discharges and are subject to stringent laws and regulations relating to waste materials and various other environmental matters. Additionally, each operation, when it ultimately ceases operations permanently, will need to be rehabilitated.

We have made significant investments to reduce our environmental impact in the areas in which we operate and to ensure that we are able to comply with environmental standards. All our operational units have environmental improvement initiatives relating to reducing emissions and waste and improving the efficiency of use of natural resources and energy.

126

Overview

Where appropriate, we establish environmental provisions for restoration or remediation of existing contamination and disturbance, with all material issues being reviewed annually. Provisions associated with smelter and mining operations sites primarily relate to soil and groundwater contamination.

Since 2016, we have conducted an extensive study and update of our decommissioning plans, including potential environmental obligations. During this period, we also modified our internal policies for decommissioning and environmental issues, which require frequent updates of environmental studies to reflect the best international practices. As a result of these adjustments, we recorded additional environmental provisions of US$3.112.6 million and US$2.66.9 million in 20202022 and 2021,2023, respectively. Although not expected in the near future, changes in legislation and adjustments to our internal policies after the ongoing evaluations could require additional provisionsprovisions.

COVID-19

COVID-19 has had a material impact on the global economy. As a response to COVID-19 in 2020, we implemented and continue to implement additional safety procedures in all our operations to ensure the health and safety of our employees, contractors and communities. While vaccination rates have increased and effective treatments have been developed, the emergence of additional COVID-19 variants continues to present risks to our operations and general macroeconomic activity. Business continuity measures to mitigate and reduce any impacts of the global pandemic on our operations, supply chain and financial situation also remains in place.

In 2021, COVID-19 direct costs amounted to US$18 million. COVID-19 costs are included in the cost of sales and operating expenses. Subject to the duration and extent of COVID-19, we expect these costs to be recurring in our operations in 2022, which are reflected in our cash cost guidance.

Although our operations and projects have returned to normal, the ultimate impact of the COVID-19 global pandemic on our financial condition, results of operations and cash flows depends on the continuing duration and severity of the pandemic and the possibility of new outbreaks or the emergence of new variants for which existing vaccines or treatments may not be as effective, as well as on global and local efforts to contain its spread, on the abilities of countries to access and distribute effective vaccines and on the impact of response measures taken by us, governments and others. A new period of disruption or an extended global recession caused by the pandemic could materially and adversely impact our results of operations, access to sources of liquidity and overall financial condition. See “Risk Factors—Global or regional health considerations, including the outbreak of a pandemic or contagious disease, such as the ongoing COVID-19 pandemic, have had and could continue to have adverse effects on our business, financial condition and results of operations.”

103

Overview

Macroeconomic conditions of the countries and regions where we operate

Peru

The following table sets forth Peruvian inflation rates, interest rates and exchange rates for the dates and periods indicated.

 For the Year Ended December 31,

For the Year Ended December 31,

 2021 2020

2023

2022

Real GDP growth rate (1)(2)  13.3%  (11.0%)(0.6%)2.7%
Internal demand growth rate (2)  14.4%  (9.5%)(1.7%)2.3%
Private investment growth rate (2)  37.6%  (16.5%)(7.2%)(0.5%)
Reference interest rate  2.50%  0.25%6.8%7.50%
CPI rate (2)  4.0%  1.8%6.3%7.9%
Appreciation (devaluation) of sol against the U.S. dollar  (10.6%)  (9.2%)2.7%4.9%
Exchange rate of sol to US$1.00 (end of period) (3)  4.0015   3.6180 3.70423.8061


Sources: Central Reserve Bank of Perú, Peruvian Ministry of Economy and Finance.

(1) Preview: Bloomberg consensus rate.

(2) Accumulated during each period.

(3) Official offer exchange rates.

Brazil

The following table sets forth Brazilian inflation rates, interest rates and exchange rates for the dates and periods indicated.

  For the Year Ended December 31,
  2021 2020
Real GDP growth rate (1)(2)  4.6%  (4.4%)
Inflation rate (IGP-M) (2)  17.8%  23.1%
Inflation rate (IPCA) (2)  10.1%  4.4%
CDI rate (end of period)  9.2%  1.9%
SELIC rate (end of period)  9.3%  2.0%
TJLP  5.3%  4.6%
Appreciation (devaluation) of real against the U.S. dollar  (7.4%)  (28.9%)
Exchange rate of real to US$1.00 (end of period) (3)  5.5802   5.1967 


 

For the Year Ended December 31,

 

2023

2022

Real GDP growth rate (1)(2)2.9%2.9%
Inflation rate (IGP-M) (2)(3.2%)5.9%
Inflation rate (IPCA) (2)4.7%5.8%
CDI rate (end of period)11.7%13.7%
SELIC rate (end of period)11.8%13.8%
TJLP6.6%7.2%
Appreciation (devaluation) of real against the U.S. dollar7.2%6.5%
Exchange rate of real to US$1.00 (end of period) (3)4.84105.2174

Sources: IBGE, the Central Bank, Cetip, and FGV.

(1) Preview published by the Central Bank official report (Focus) as of December 31, 2021.2023.

(2) Accumulated during each period.

(3) Official offer exchange rates.

127

Overview

Effects of exchange rate fluctuations

Prices for our products are based on international indices, such as LME prices, and denominated in U.S. dollars. A portion of our production costs, however, is denominated in reais, so there is a mismatch of currencies between our revenue and costs. In 2021, 18.2%2023, 20.5% of our production costs and operational expenses were denominated in reais. A smaller portion of our costs is denominated in soles since most of our costs in Peru are in U.S. dollars. In 2021, 15.1%and 16.1% of our production costs and operational expenses were denominated in soles., a smaller portion compared to reais, since most of our costs in Peru are in U.S. dollars. As a result, our results of operations are affected by changes in exchange rates between reais and, to a lesser extent, soles, and the U.S. dollar.

In addition, our Brazilian subsidiary Nexa Brazil has substantial intercompany debt to Nexa Resources that is denominated in U.S. dollars. The functional currency of Nexa Brazil is the real, so Nexa Brazil recognizes exchange gains or losses when the value of the real rises or falls against the U.S. dollar. These gains and losses are

104

Overview

not eliminated in consolidation because the functional currency of Nexa Resources is the U.S. dollar, so they do not recognize offsetting gains or losses. As of December 31, 2021, the aggregate amount outstanding under these intercompany loans was US$96.6 million.

The following table sets forth for the periods indicated (i) the high and low exchange rates, (ii) the average of the exchange rates on the last day of each month for each year and daily for each month and (iii) the exchange rate at the end of each period, expressed in soles per U.S. dollar (sol/US$) and reais per U.S. dollar (real/US$) as reported by the Peruvian Central Bank and the Brazilian Central Bank, respectively.

 

Exchange Rates of S/ and R$ per US$1.00

 

Period-End

Average (1)

High

Low

 

S/

R$

S/

R$

S/

R$

S/

R$

Year ended December 31,        
20203.61935.19673.49845,15783.66855.93723.30004.0213
20214.00155.58023.88265.39524.13755.83943.59784.9203
Month        
January 20223.84505.35713.88625.53383.96805.70393.83405.3571
February 20223.78105.13913.79025.19633.88305.32813.72755.0140
March 2022 (through March 14)3.73275.06443.73645.06163.78805.13443.70465.0091


 

Exchange Rates of S/ and R$ per US$1.00

 

Period-End

Average (1)

High

Low

 

S/

R$

S/

R$

S/

R$

S/

R$

Year ended December 31,        
20223.80615.21743.83445.16524.00055.70393.63504.6172
20233.70424.84103.74384.99503.89535.44563.55704.7199
Month        
January 20243.80854.95323.74164.91413.81014.97123.69544.8540
February 20243.78014.98303.82554.96413.88355.00503.78014.9300
March 2024 (through March 22nd)3.70414.98943.70764.97763.77005.03493.67304.9361

Source: Central Reserve Bank of Peru, Brazilian Central Bank, official offer exchange rates.

(1) Annually, represents the average of the daily exchange rates during the periods presented.

Income taxes

Income taxes in Luxembourg, Peru and Brazil have a significant impact on our results. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant changes. Our future effective tax rates could be affected by changes in the mix of earnings in countries with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws or their interpretation.

Luxembourg

The combined applicable income tax rate (including an unemployment fund contribution) is 24.9 %24.94% from 2019 onwards.onwards for entities having their statutory seat in Luxembourg City.

Brazil

Our Brazilian subsidiaries are subject to corporate income tax on their Brazilian and non-Brazilian income. In addition to corporate income tax, a social contribution tax is imposed on their worldwide income, and the combined applicable rate is 34.0%.

Peru

Our Peruvian subsidiaries are subject to Peruvian income tax on their worldwide income and are eligible for a potential credit for foreign taxes paid on income derived from foreign sources. The general income tax rate is 29.5 % from 2017 onwards.

To promote investments in Peru, investors and Peruvian companies may enter into an agreement with the Peruvian government, a Legal Stability Agreement, to provide a stable legal and tax regime for a specified period. In March 2002, Nexa Peru entered a guarantee and investment protection contract, or the stability agreement. Pursuant to the stability agreement, Nexa Peru has applied a special income tax rate of 20.0% from 2007 through 2021. The 29.5% income tax rate will becomeis applicable to Nexa Peru from January 1, 2022 onwards. For more information, see “Risk Factors—Changes in tax laws may increase our tax burden and, as a result, could adversely affect our business, financial position and results of operations.”

128

Overview

Our Peruvian subsidiaries Nexa Resources El Porvenir S.A.C. and Nexa Resources Atacocha S.A.A., do not have stability agreements with the Peruvian government and are therefore subject to a special mining tax (Impuesto Especial a la Minería, or “IEM”), with marginal rates from 2.00% and 8.40% of operating income, depending on the operating margin. In addition, these companies are subject to a mining levy (regalia minera).

105

Overview

In 2022, Nexa Peru isbecame subject to an IEM and mining royalties’ tax oncefollowing the expiration of its tax stability agreement with the Peruvian government expires.on December 31, 2021, and to date remains subject to the IEM and mining royalties tax.

Dividends distributed to us by our Peruvian subsidiaries are subject to withholding tax, at a rate of 5.0 % for profits earned beginning in 2017 and onwards.

 
106129

Results of Operations

Results of operations

The following discussion and analysis of our financial position and results of operations is based on our consolidated financial statements. The following table sets forth our summarized results of operations for the periods indicated.

 

For the Year Ended

December 31,

Variation

% of Net Revenue

from Products Sold

 

2021

2020

2021/2020

2021

2020

      
 

For the Year Ended

December 31,

Variation

% of Net Revenue

from Products Sold

 

2023

2022

2023/2022

2023

2022

      
 
 (in millions of US$) (percentage) (percentage)(in millions of US$)(percentage)(percentage)
Consolidated income statement information:                     
Net revenues  2,622.1   1,950.9   34.4   100.0   100.0 2,573.23,034.0(15.2)100.0
Cost of sales  (1,966.0)  (1,563.9)  25.7   (75.0)  (80.2)

(2,276.7)

(2,395.2)

(4.9)

(88.5)

(78.9)

Gross profit  656.1   387.0   69.5   25.0   19.8 296.5638.8(53.6)11.521.1
Operating expenses:                    
Operating expenses: 
Selling, general and administrative  (156.8)  (151.6)  3.4   (6.0)  (7.8)(126.9)(145.5)(12.8)(4.9)(4.8)
Mineral exploration and project evaluation  (85.0)  (57.2)  48.7   (3.2)  (2.9)(99.7)(98.9)0.8(3.9)(3.3)
Impairment loss  —     (557.5)  (100.0)  0.0   (28.6)
Impairment loss of long-lived assets(114.6)(32.5)252.6(4.5)(1.1)
Other income and expenses, net  31.9   (19.2)  (266.7)  1.2   (1.0)

(110.6)

(2.7)

4,035.5

(4.3)

(0.1)

Operating income (loss)  446.2   (398.5)  (212.0)  17.0   (20.4)(155.3)359.2(143.2)(6.0)(11.8)
Share in the results of associates23.51.91,148.60.90.1
Results from equity investees23.51.91,148.60.90.1
Financial income  11.5   11.2   2.7   0.4   0.6 25.525.01.91.00.8
Financial expenses  (142.3)  (159.8)  (10.9)  (5.4)  (8.2)(204.2)(168.7)21.0(7.9)(5.6)
Foreign exchange (loss) gain, net  (6.1)  (129.6)  (95.3)  (0.2)  (6.6)
Other financial items, net

17.0

9.9

71.3

0.7

0.3

Net financial results  (136.9)  (278.2)  (50.8)  (5.2)  (14.3)(161.6)(133.7)20.9(6.3)(4.4)
Share in the results of associates  —     —     —     —     —   
Income (loss) before income tax  309.3   (676.7)  (145.7)  11.8   (34.7)
Current income tax  (122.1)  (63.2)  93.2   (4.7)  (3.2)
Deferred income tax  (31.1)  87.3   (135.6)  (1.2)  4.5 
Net income (loss) for the year  156.1   (652.6)  (123.9)  6.0   (33.4)
(Loss) income before income tax(293.5)227.4(229.1)(11.4)7.5
Income tax benefit (expense)4.3(151.0)(102.8)0.2(5.0)
Net (loss) income for the year

(289.2)

76.4

(478.6)

(11.2)

2.5

 

Net revenues

In 2023, net revenues decreased by 15.2%, or US$460.8 million, primarily due to the decrease in zinc and copper prices and lower smelting sales volume, which was partially offset by higher mining production volumes. In 2023, zinc average LME prices (which is the key benchmark for our prices) increased by 23.9%, from US$3,478.3 per tonne in 2022 to US$2,646.6 per tonne in 2023. In 2023, this decrease had a negative impact in our net revenues of approximately US$490.6 million, based on our sales volumes of 589.8kt in 2023 and the average LME price difference of US$831.7/t between 2023 and 2022. Additionally, we had a negative impact in our net revenues of approximately US$91.7 million, explained by lower smelting sales volume. Finally, copper prices, which decreased 3.6% from US$8,797.0 per tonne in 2022 to US$8,477.8 per tonne in 2023, had a negative impact of US$11.4 million. The following isabove decrease in our net revenues was partially offset by a discussionpositive impact of results of operations for 2021, comparedUS$18.1 million, due to 2020.higher mining production volumes related to higher copper and lead sales. For a discussion of the financial conditionunderlying reasons driving the change in commodity prices, see “Operating and Financial Review and Prospects—Overview—Key factors affecting our business and results of operations for 2020 compared to 2019, please refer to "Operating and financial review and prospects" in our Annual Report on Form 20-F for the year ended December 31, 2020.

Net revenues

In 2021, net revenues increased by 34.4%, or US$671.2 million. This increase was primarily due to higher prices and volumes.

In 2021, zinc, copper and lead average LME prices increased by 33%, 51% and 21%, respectively. The average LME price of zinc increased from US$2,267 per tonne in 2020 to US$3,007 per tonne in 2021.

107

Results of Operations

operations—Metal Prices.”

The following table shows a breakdown of our net revenues by destination of our sales.

 

For the Year Ended December 31,

 

2021

2020

 (in millions of US$)
Brazil753.3583.1
Peru774.7485.9
United States of America119.6116.7
Luxembourg97.576.1
Switzerland78.868.9
Singapore56.976.7
South Korea118.677.4
Chile54.049.0
Taiwan53.8            28.8
Japan58.346.7
Argentina93.156.2
Austria45.135.2
Colombia54.334.8
Turkey34.525.0
Malaysia            25.7            13.9
South Africa            25.1              0.0
Netherlands            17.7            11.7
Ecuador            15.7               9.1
Italy            14.8               9.9
Vietnam            14.6             10.8
Belgium            13.7              30.2
Indonesia            11.8               8.6
Guatemala            11.1              4.7
Germany            7.3           33.9
Others

72.3

57.6

Net revenues

2,622.1

1,950.9

 
108130

Results of Operations

 

For the Year Ended December 31,

 

2023

2022

 (in millions of US$)
Peru654.2859.8
Brazil559.8827.2
Singapore229.3166.4
Switzerland209.3124.7
United States169.0174.5
Argentina94.194.4
Chile83.5120.1
Luxembourg78.595.3
China65.9-
Austria47.948.7
South Africa41.455.9
South Korea40.032.4
Colombia36.164.0
Japan32.171.4
Taiwan26.965.0
Turkey26.655.0
Belgium19.817.9
Malaysia18.726.0
Netherlands16.013.6
Ecuador14.615.4
Italy9.59.6
Vietnam5.08.4
Other95.288.4
Net revenues

2,573.2

3,034.0

 

The following table sets forth the components of our production and sales volumes for the metals and periods indicated.

 

For the Year Ended December 31,

 

2021

2020

Treatment Ore (in tonnes)12,330,46910,853,740
Mining Production—Metal Contained in Concentrate  
Zinc contained in concentrates (in tonnes)319,950313,074
Copper contained in concentrates (in tonnes)29,60728,154
Lead contained in concentrates (in tonnes)45,56538,009
Silver contained in concentrates (in oz)8,808,2916,825,883
Gold contained in concentrates (in oz)25,50116,179
External Mining Sales (1)  
Zinc concentrates (in dry metric tonnes)9,9260
Copper concentrates (in dry metric tonnes)113,887109,147
Lead concentrates (in dry metric tonnes)83,46473,238
External Mining Sales—Metal Contained in Concentrate (2)  
Zinc contained in concentrates (in tonnes)5,0890
Copper contained in concentrates (in tonnes)29,67728,077
Lead contained in concentrates (in tonnes)43,23238,761
Smelting Production—Zinc Contained in Product Volumes  
Cajamarquilla (metal available for sale in tonnes)328,145305,389
Três Marias (metal available for sale in tonnes)156,654167,505
Juiz de Fora (3) (metal available for sale in tonnes)

81,119

79,410

Total zinc metal available for sale production (in tonnes)565,918552,304
Zinc Oxide Production—Zinc Contained in Product Volumes  
Três Marias (4) (Zinc oxide, contained zinc in tonnes)41,71335,258
Smelting Sales—Product Volumes  
Metallic zinc (in tonnes)577,899550,698
Zinc oxide (in tonnes)

40,938

34,675

Total smelting sales volumes (in tonnes)618,837585,373
Smelting Sales—Zinc Contained in Product Volumes (4)  
Metallic zinc (in tonnes)574,639549,047
Zinc oxide (in tonnes)

32,751

27,740

Total zinc contained in product volumes (in tonnes)607,390576,786

 

For the Year Ended December 31,

 

2023

2022

Treatment Ore (in tonnes)13,846,53012,343,018
Mining Production—Metal Contained in Concentrate  
Zinc contained in concentrates (in tonnes)333,154296,403
Copper contained in concentrates (in tonnes)33,38533,219
Lead contained in concentrates (in tonnes)65,19457,448
Silver contained in concentrates (in oz)10,300,6729,974,462
Gold contained in concentrates (in oz)27,62727,216
External Mining Sales—Metal Contained in Concentrate (1)  
Zinc contained in concentrates (in tonnes)18,321179
Copper contained in concentrates (in tonnes)33,37932,931
Lead contained in concentrates (in tonnes)65,59659,406
Smelting Production—Zinc Contained in Product Volumes  
Cajamarquilla (metal available for sale in tonnes)323,059332,824
Três Marias (metal available for sale in tonnes)148,354149,592
Juiz de Fora (2) (metal available for sale in tonnes)

82,147

84,160

Total zinc metal available for sale production (in tonnes)553,559566,577
Zinc Oxide Production—Zinc Contained in Product Volumes  
Três Marias (Zinc oxide, contained zinc in tonnes)33,96640,322
Smelting Sales—Product Volumes  
Metallic zinc (in tonnes)555,957575,886
Zinc oxide (in tonnes)

33,885

40,315

Total smelting sales volumes (in tonnes)589,843616,200


(1)Excluding intercompany sales.
(2)Based on typical zinc contents in metallic zinc products and zinc oxide. For more details, see “Information on the Company—Smelting operations—Zinc contained in smelting products sold.”
(3)(2)Including 2,6493,067 tonnes of zinc ashes and drosses in 20212023, and 2,7723,710 in 2020.2022.
(4)Including 28,334 tonnes of zinc ashes and drosses in 2021, as well as metallic zinc used in the production of zinc oxide in 2021 and 23,256 in 2020.
131

Results of Operations

Cost of sales

In 2021,2023, our cost of sales increaseddecreased by 25.7%4.9%, or US$402.1118.4 million, primarilyof which approximately US$54.9 million was related to the positive impact of the reversal of the net realizable value provision of Aripuanã’s inventory and the positive impact of approximately US$166.0 million due to (i) higher concentrate costs as a result of higher priceslower smelting sales volume and lower TCs; (ii) the increase inthird party zinc concentrate prices, which were partially offset by approximately US$102.5 million related to higher operational costs due to higher volumes and maintenance activities; and (iii) inflationary cost pressure. In addition, COVID-19 related expenses included in cost of sales amounted to US$15.5 million.(excluding raw material).

Selling, general and administrative expenses

In 2021,2023, our selling, general and administrative (“SG&A”) expenses increaseddecreased by 3.4%12.8%, or US$5.218.6 million, to US$156.8 million. Inflationary costs pressures were partially offset by foreign exchange gains126.9 million mainly as result of our organizational redesign that occurred in 2022 and increased control over fixed costs.lower third-party services in support areas.

Mineral exploration and project evaluation

In 2021,2023, our mineral exploration and project evaluation expenses increased by 48.7%5.6%, or US$27.84.9 million, primarily in brownfield investments (mainly El Porvenir, Cerro Lindo, Aripuanã and Vazante) and exploration stage projects due to higher costs and projects expenses postponed frombudget restrictions regarding the previous yeardecrease in order to revert the impactLME of the COVID-19 pandemic.base metals. In 2021,2023, our exploration drilling (including infill drilling in Aripuanã) totaled 110.385.2 km, compared to 67.9116.7 km in 2020.2022, excluding Aripuanã infill drilling we drilled a total of 64.1 km.

Impairment loss

In 2021,2023, Nexa performed its annual test and analyzed all impairment indicators and found no need to recognize an additionalrecorded a non-cash, pre-tax net impairment loss or reversal.on long-lived assets of US$114.6 million (after-tax US$90.3 million), comprised of the Morro Agudo unit of Nexa Recursos Minerais S.A, and Nexa Resources Perú S.A.A. and subsidiaries.

For further information about our impairment assessments, please refer to Note 31 to our consolidated financial statements.

Other income and expenses, net

In 2021,2023, our other income and expenses, net positivelynegatively impacted our results by US$31.9110.6 million, primarilymainly due to tax benefits (ICMS subsidy) in the amountrecognition of US$71.9 million, partially offset by increase in expenses related legal claimsto the provisions in the amountof VAT discussions totaling US$86.9 million, variation of US$13.222.0 million pre-operationalin Offtake gains of US$2.3 million in 2023 versus a gain of US$24.3 million in 2022, the recognition of US$15.7 million related to Pollarix’s energy mark-to-market (“MTM”) balance and a variation of US$45.8 million referring to expenses recorded for the pre-operation of project Aripuanã, which did not occur in the amount of US$8.8 million, and remeasurement of asset retirement and environmental obligation of US$6.7 million.2023.

The following table sets forth our other income and expenses, net for the periods indicated. For further information, please refer to Note 9 to our consolidated financial statements.

  For the Year Ended December 31,
  2021 2020
  (in millions of US$)
Other income and expenses, net        
ICMS tax incentives  71.9   —   
Remeasurement of asset retirement and environmental obligations  (6.7)  (0.9)
Derivative financial instruments  7.5   0.9 
Loss on sale of property, plant and equipment and intangible assets.  (4.9)  (2.3)
Pre-operating expenses related to Aripuanã  (8.8)  (1.9)
Contribution to communities  (7.1)  (2.8)
Provision of legal claims  (13.2)  (10.9)
Others  (6.9)  (1.4)
Total other income and expenses, net  31.9   (19.2)

 

For the Year Ended December 31,

 

2023

2022

 (in millions of US$)
Other income and expenses, net  
ICMS tax incentives32.356.7
Changes in fair value of offtake agreement2.324.3
Changes in fair value of derivative financial instruments(1.4)1.4
Loss on sale of property, plant and equipment(3.7)(0.7)
Changes in asset retirement and environmental obligations(3.2)(1.5)
Pre-operating expenses related to Aripuanã-(45.8)
Slow moving and obsolete inventory(4.4)(11.5)
Dams obligations(7.0)-
Provision for legal claims(13.9)(7.7)
Contribution to communities(13.1)(17.2)
Impairment of other assets-(9.3)
Tax voluntary disclosure – VAT discussions(86.9)-
Energy forward contracts – Changes in Fair Value(15.7)-
Others4.08.7
Total other income and expenses, net

(110.6)

(2.7)

 
109132

Results of Operations

Net financial results

We recognized a net financial expense of US$136.9161.7 million in 20212023 compared to a net financial expense of US$278.2133.7 million in 2020.2022. This decreaseincrease was mainly due to lower losses in foreign exchange variation, which arean increase of US$16.0 million related to the outstanding intercompany debt, whichfinancial expenses of VAT discussions, an increase of US$11.8 million in financial expenses from factoring operations and a decrease of US$5.3 million in financial income from investments and, cash and cash equivalents.

In 2023, our financial income increased by 1.9%, or US$0.5 million, to US$25.5 million. This increase was impactedmainly due to the increase of US$5.7 million related to a monetary update on assets, interests and use of public assets, partially offset by the continuous depreciationdecrease of US$5.3 million in interest on financial investments and, cash and cash equivalents.

In 2023, our financial expenses increased by 21.0%, or US$35.5 million, to US$204.2 million. This increase was mainly due to an increase of US$16.0 million mainly related to VAT discussions and an increase of US$11.8 million from factoring operations.

In 2023, our other financial items, net increased by 71.3%, or US$7.1 million, to US$17.0 million. This increase was mainly due to the BRL during 2021 and 2020 and fair value of debts during the year.

Netnet foreign exchange (losses) reflectsgains reflecting the accounting effect of the appreciation (depreciation) of the Brazilian real against the U.S. dollar on certain U.S. dollar-denominated loans made by Nexa Resources to Nexa Brazil (which uses the Brazilian real as its functional currency). During 2021,2023, the 4.6%3.3% average depreciationappreciation of the Brazilian real against the U.S. Dollar3 resulted in a foreign exchange loss.gain.

Excluding the effect of foreign exchange variation, and other financial items, the net financial expense in 2021 decreased 12.0%2023 increased by 23.8% to US$130.8179.8 million compared to US$148.6145.2 million in 2020, which was affected by2022, as a result of the premium paid on bonds repurchase.aforementioned reasons.

In 2021, our financial(Loss) income increased by 2.7%, or US$0.3 million, to US$11.5 million. The increase in 2021 was mainly due to higher interest on tax credits.

In 2021, our financial expenses decreased by 10.9%, or US$17.5 million, to US$142.3 million. The decrease was due to the premium of US$14.5 million paid on bonds repurchase in 2020 that didn’t occur in 2021.

Income (loss) before income tax

As a result of the factors described above, our incomeloss before income tax was US$309.3293.5 million in 2021,2023, as compared to lossincome before income tax of US$676.7227.4 million in 2020.2022.

Income tax benefit (expense)

In 2021,2023, we recorded a net income tax expensebenefit of US$153.24.3 million.

In 2021,2023, our current income tax expense increaseddecreased by 93.2%48.4%, or US$58.971.1 million, to US$122.175.7 million, mainly due to better operational resultsthe decrease in 2021income before income tax for the year as a result of lower metal prices and volumes.

3 On December 31, 2023, the Brazilian real / U.S. dollar exchange rate at the end of period was R$4.841/US$1.00 compared to 2020, which was positively affected by a deferred income tax benefit mainly due to impairment loss recognition during the year.R$5.217/US$1.00 on December 31, 2022.

133

Results of Operations

The difference between the nominal and effective tax rates in 20212023 and 20202022 are primarily a result of differences inpermanent items that affect the calculation of current income tax rates from subsidiaries outside Luxembourg,for the impairment recognized in our operations in 2020,period, such as tax payments related to the tax effectvoluntary disclosure agreement made with the State of the translationMinas Gerais, impairment of non-monetary assets of the tax base of Nexa’s Peruvian entitiesgoodwill in Peru, and the temporary special mining levy and mining taxes in Peru. Peru, partially offset by permanent tax exclusion of VAT tax incentives in Brazil.

In 2021,2023, we recorded a deferred tax expenseincome of US$31.180.0 million, mainly as a result of better operational resultsthe recognition of deferred tax asset over Brazil tax losses for the year and effects of exchange variation in Peru arising from the fluctuation of the historical exchange rate and the difference in taxcurrent exchange rate of subsidiaries outside Luxembourg, partially offset by the deferred income of ICMS tax incentives.property, plant and equipment and intangible assets.

Net (loss) income (loss) for the year

As a result of the foregoing, we had a net incomeloss of US$156.1289.2 million in 20212023 as compared to net lossincome of US$652.576.4 million in 2020.2022.

Results by segment

The following table sets forth our summarized results of operations by segment for the periods indicated.

 For the Year Ended
December 31,
VariationVariation
 202320222023/20222023/2022
Consolidated Income Statement Information:(in millions of US$)(percentage)
Net revenues:    
Mining1,090.31,248.0(157.8)(12.6)
Smelting1,946.72,467.0(520.3)(21.1)
Intersegments Sales(468.3)(683.6)215.3(31.5)
Adjustments (1)

4.5

2.6

2.0

76.3

Total2,573.23,034.0(460.8)(15.2)
Cost of sales:    
Mining(1,028.3)(905.2)(123.0)13.6
Smelting(1,726.6)(2,190.9)464.3(21.2)
Intersegments Sales468.3683.6(215.3)(31.5)
Adjustments (1)

9.8

17.4

(7.5)

(43.4)

Total(2,276.8)(2,395.2)118.4(4.9)
Gross profit:    
Mining62.0342.8(280.8)(81.9)
Smelting220.1276.1(56.0)(20.3)
Adjustments (1)

14.4

20.0

(5.6)

(27.9)

Total

296.5

638.8

(342.3)

(53.6)

110

Results of Operations

  For the Year Ended
December 31,
 Variation Variation
  2021 2020 2021/
2020
 2021/
2020
Consolidated Income Statement Information: (in millions of US$) (percentage)
Net revenues:                
Mining  1,165.6   748.5   417.1   55.7%
Smelting  2,028.8   1,550.3   478.5   30.9%
Intersegments Sales  (636.2)  (375.4)  (260.8)  69.5%
Adjustments (1)  63.9   27.5   36.4   132.0%
Total  2,622.1   1,950.9   671.2   34.4%
Cost of sales:                
Mining  (719.4)  (625.4)  (93.9)  15.0%
Smelting  (1,796.1)  (1,287.9)  (508.2)  39.5%
Intersegments Sales  636.2   375.4   260.8   69.5%
Adjustments (1)  (86.8)  (26.0)  (60.8)  233.5%
Total  (1,966.0)  (1,563.9)  (402.1)  25.7%
Gross profit:                
Mining  446.2   123.0   323.2   262.6%
Smelting  232.7   262.4   (29.7)  (11.3%)
Adjustments (1)  (22.9)  1.5   (24.4)  1,601.8%
Total  656.1   387.0   269.1   69.5%
                 

(1)See Note 2 to our consolidated financial statements.

Mining

Net revenues

In 2021,2023, our net revenues in the mining segment increaseddecreased by 55.7%12.6%, or US$417.1157.8 million. This increasedecrease was primarily due to lower LME base metal prices, partially offset by higher average LME prices for zinc copper,and lead and silver, and lower benchmark TCs.volumes.

OurIn 2023, our production of zinc contained in concentrates increased by 2.2%12.4% to 319.9333.2 thousand tonnes in 2021,2023, primarily due to anthe increase in production at Aripuanã and Vazante, as a result of 14% inhigher treated ore volume compared to last year, which compensated for lowervolumes and higher average zinc grades (down 30bps to 2.98%).

In 2021, our volumesgrades. Our production of copper contained in concentrates increased by 5.2%0.5% to 29.633.4 thousand tonnes of metal contained in concentrates, primarily due to anthe increase in production at Aripuanã, partially offset by the decrease in 2021 compared to 2020 as a result of COVID-19. Ourproduction at Cerro Lindo. Finally, our production volumes of lead contained in concentrates followed the same trend and increased by 19.9%13.5% to 45.665.2 thousand tonnes of metal contained in concentrates in 20212023 compared to 2020.2022, primarily due to the increase in production at Aripuanã and Morro Agudo, as a result of higher average lead grades and higher treated ore volumes.

134

Results of Operations

In 2021, there was no external sales2023, the only export volumes of zinc contained in concentrates.concentrates were concentrates from Aripuanã to third parties that were not within market specifications.

Cost of sales

In 2021,2023, our cost of sales in our mining segment increased by 15.0%13.6%, or US$93.9123.0 million, mainly due to the effect of Aripuanã ramp-up activities explained by the increasecosts associated with a full-year of production in operating costs driven by higher volumes, mine development, rehabilitation costs and maintenance activities, as well as the ongoing COVID-19 related costs.comparison to 2022, which was only a partial year of production.

111

Results of Operations

Smelting

Net revenues

In 2021,2023, our net revenues in the smelting segment increased 30.9%decreased by 21.1%, or US$478.5520.3 million, mainly due to higher LMElower zinc prices and the increase inlower metal sales volume.volumes, which was partially offset by higher metal premium.

Our total metal (zinc metal + zinc oxide) sales were 618.8589.8 thousand tonnes in 2021, up 5.7%2023, down 4.3%, or 33.526.4 thousand tonnes compared to 2020.2022, affected by lower production volumes of our smelters, in addition to a decrease in global demand, and lower domestic demand for zinc oxide. In 2021,2023, our sales volume of zinc metal of 577.9556.0 thousand tonnes increased 27.2decreased by 3.5%, or 19.9 thousand tonnes versus 2020, driven mainly by higher demand at our homemarkets (Latin America excluding Mexico).2022, following the same trend. In 2021,2023, our sales volumes of zinc oxide increaseddecreased by 18.1%15.9%, or 6.26.4 thousand tonnes, to 40.933.9 thousand tonnes.

Cost of sales

In 2021,2023, our cost of sales in our smelting segment increaseddecreased by 39.5%21.2%, or US$508.2464.3 million, primarily due to (i)lower sales volumes, the increasedecrease in metal prices and higher zinc TCs, positively impacting the zinc concentrate purchase price;price.

Non-IFRS Accounting Standards measures and reconciliation

Consolidated Adjusted EBITDA

In this report, we present Consolidated Adjusted EBITDA, which we define as net income (loss) for the year, adjusted by (i) share in the results of associates, depreciation and amortization, net financial results and income tax; (ii) lower treatment costs paid tonon-cash events and non-cash gains or losses that do not specifically reflect our smelters;operational performance for the specific period (including: (loss) gain on sale of investments; impairment and impairment reversals; (loss) gain on sale of long-lived assets; write-offs of long-lived assets; and remeasurement in estimates of asset retirement obligations); and (iii) higher operatingpre-operating and ramp-up expenses such as logistics, maintenanceincurred during the commissioning and personnel costs, as well as the ongoing COVID-19 related costs.

Non-IFRS measures and reconciliationramp-up phases of greenfield projects (currently, Aripuanã).

Our management uses non-IFRS measures such asConsolidated Adjusted EBITDA as an additional performance measure on a consolidated basis, in addition to, and not as a substitute for, net debt and adjusted working capital, among other measures, for internal planning and performance measurement purposes.income. We believe these measures providethis measure provides useful information about the financial performance of our operations thatas it facilitates period-to-periodconsistent comparisons on a consistent basis. Management uses Adjusted EBITDA internally to evaluate our underlying operating performance for the reportingbetween periods, presented and to assist with the planning and forecasting of future operating results. Managementresults reflecting the operational performance of our existing business without the impact of interest, taxes, amortization, depreciation, non-cash items that do not reflect our operational performance for the specific reporting period and the impact of pre-operating and ramp-up expenses during the commissioning and ramp-up phases of greenfield projects (currently, only Aripuanã has reached these stages). Pre-operating and ramp-up expenses incurred during the commissioning and ramp-up of phases of Aripuanã are not considered infrequent, unusual or non-recurring expenses, as they have recurred in prior years with respect to Aripuanã and may recur in the future with respect to Aripuanã or any other projects that may reach the commissioning or ramp-up phases. Our management believes this adjustment is helpful because it shows our performance without the impact of specific expenses relating to a greenfield project that has reached the commissioning or ramp-up phases, with no connection with the performance of our other existing operations.

135

Results of Operations

When applicable, Adjusted EBITDA is a useful measurealso excludes the impact of our performance because it reflects our cash generation potential from(i) events that are non-recurring, unusual or infrequent, and (ii) other specific events that, by their nature and scope, do not reflect our operational activities excluding impairment of non-current assets and other miscellaneous adjustments, if any,performance for the period.specific period in our management’s view. These measures shouldevents did not be considered individually or as a substitute for net income or operating income, as indicators of operating performance, or as alternatives to cash flow as measures of liquidity. Additionally,impact our Adjusted EBITDA in 2023 and 2022 but may impact future periods.

Our calculation of Adjusted EBITDA and other non-IFRS measures may be different from the calculation used by other companies, including our competitors in the mining industry, so our measures may not be comparable to those of other companies.

In this report, we present Adjusted EBITDA, which we define as net income (loss) for the year, adjusted by (i) share in the results of associates, (ii) depreciation and amortization, (iii) net financial results, (iv) income tax, (v) (loss) gain on sale of investments, and (vi) impairment and impairment reversals. In addition, management may adjust the effect of certain types of transactions that in management’s judgment are not indicative of our normal operating activities or do not necessarily occur on a regular basis.

A reconciliation of Adjusted EBITDA to our net income for the years indicated is presented below.

  For the Year Ended December 31,
  2021 2020
  (in millions of US$)
Reconciliation of Adjusted EBITDA:    
Net income (loss) for the year  156.1   (652.5)
(+) Depreciation and amortization  258.7   243.9 
(-/+) Net financial results  136.9   278.2 
(-/+) Income tax  153.2   (24.1)
(-/+) Impairment of non-current assets  —     557.5 
(-/+) Gain on sale of investments and other miscellaneous adjustments  (0.7)  —   
Adjusted EBITDA  704.2   402.9 
 

For the Year Ended December 31,

 

2023

2022

 (in millions of US$)
Reconciliation of Adjusted EBITDA:  
Net (loss) income for the year(289.2)76.4
Share in the results of associates(23.5)(1.9)
Depreciation and amortization298.4290.9
Net financial results161.6133.7
Income tax benefit (expense)(4.3)151.0
Other Adjustments (1)--
Change in fair value of offtake agreement (2)(2.3)(24.3)
Impairment loss of long-lived assets (3)114.632.5
Impairment of other assets (4)-9.3
Loss on sale of property, plant and equipment (5)3.70.7
Remeasurement in estimates of asset retirement obligations (6)(3.1)(6.2)
Remeasurement adjustment of streaming agreement (7)10.110.6
Ramp-up expenses of greenfield projects (Aripuanã) (8)15.587.5
Energy forward contracts – Changes in Fair Value (9)15.7-
Tax voluntary disclosure – VAT discussion (10)87.0-
Dams obligations (11)7.0-
Adjusted EBITDA

391.2

760.3

(1) Non-cash adjustment: Reversal of an impairment relating to immaterial PP&E assets.

(2) Non-cash adjustment: Derivative financial instrument related to an offtake sale contract.

(3) Non-cash adjustment: Cash generating unit and individual PP&E assets impairment loss.

(4) Non-cash adjustment: Value-added-taxes impairment loss.

(5) Non-cash adjustment: Results from sale and disposal of certain non-current assets.

(6) Non-cash adjustment: Asset retirement obligation remeasurement of discount rate and updated studies that are not subject to capitalization.

(7) Non-cash adjustment: Remeasurement of contractual obligation related to the forward sale contract of Cerro Lindo's Silver contained in the ore.

(8) Expenses related to pre-operating and ramp-up expenses incurred during the commissioning and ramp-up phases of greenfield projects which have not achieved their nameplate capacity. Once the Aripuanã operation is stabilized and operational at its nameplate capacity, such effects will no longer be excluded.

(9) Non-cash adjustment: The fair value adjustment of the energy surplus resulting from electric energy purchase contracts of the company’s subsidiary, Pollarix.

(10) Expenses related to the impact of accruals related to VAT discussions.

(11) Expenses related to the impact of the provisions related to dams obligations.

 

This definition of Adjusted EBITDA reflects a revision we made in December 2022, to exclude certain items, aiming to provide a better understanding of the operational performance of the Company’s business without the potential distortions from (i) pre-operating and ramp-up expenses incurred during the commissioning and ramp-up phases of greenfield projects (Aripuanã is currently the only greenfield project that has reached this phase) and (ii) certain non-cash events that do not specifically reflect our operational performance for the specific period (i.e., loss (gain) on sale property, plant and equipment; remeasurement in estimates of asset retirement obligations, and remeasurement adjustment of streaming agreement).

 
112136

Results of Operations

We define Adjusted EBITDA by Segment

Adjusted EBITDA by segment as net income (loss)is the main performance measure used by the chief operating decision maker to assess segment performance and to make decisions about resource allocation. Adjusted EBITDA information for the year, adjusted by (i) depreciationNexa’s segments is disclosed and amortization, (ii) net financial results, (iii) income tax, (iv) gain on sale of investments, and (v) impairment and impairment reversals. Seereconciled with IFRS Accounting Standards numbers in Note 2 to our consolidatedNexa’s financial statements. The use of Adjusted EBITDA as a segment performance measure is not considered a non-IFRS Accounting Standards financial measure.

A breakdown of the Adjusted EBITDA by segment is presented below.

 For the Year Ended December 31,

For the Year Ended December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Breakdown of Adjusted EBITDA by segment:     
Mining  440.6   140.5 149.1439.8
Smelting  267.6   269.2 247.0326.4
Other (1)  (4.0)  (6.7)

(4.9)

(5.9)

Adjusted EBITDA  704.2   402.9 391.2760.3

(1) Represents the residual component of Adjusted EBITDA either not pertaining to the mining or smelting segments, or, represents items that, because of their nature, are not being allocated to a specific segment.

 

Net Debt

We also present herein ourdefine net debt which we define as (i) loans and financing and lease liabilities less (ii) cash and cash equivalents, less (iii) financial investments, plus/less (iv) the fair value of derivative financial liabilities or assets, respectively. Our management believes that net debt is an important figure because it indicates our ability to repay outstanding debts that become due simultaneously using available cash and highly liquid assets.

A reconciliation of net debt to loans and financing as of December 31, 20212023 and 20202022 is presented below.

 As of December 31,

As of December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Calculation of Net Debt:     
Loans and financing  1,699.3   2,024.3 
Loans and financings1,725.61,669.3
Derivative financial instruments  6.5   (5.1)2.6
Lease liabilities  19.6   25.7 9.25.0
Cash and cash equivalents  (743.8)  (1,086.2)(457.3)(497.8)
Financial investments  (19.2)  (35.0)

(11.1)

(18.1)

Net Debt  962.5   923.7 1,269.11,161.0

 

Net Debt to Adjusted EBITDA

We define net debt to Adjusted EBITDA ratio as net debt divided by Adjusted EBITDA.

The calculation of our net debt to Adjusted EBITDA ratio for the periods indicated is presented below.

 As of and For the Year
Ended December 31,

As of and For the Year
Ended December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Calculation of Net Debt to Adjusted EBITDA Ratio:     
Net debt (period end)  962.5   923.7 1,269.11,161.0
Adjusted EBITDA  704.2   402.9 

391.2

760.3

Net Debt to Adjusted EBITDA Ratio  1.37   2.29 3.241.53

 

137

Results of Operations

Adjusted EBITDA Margin

We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenues. The calculation of our Adjusted EBITDA margin for the periods indicated is presented below.

 For the Year Ended
December 31,

For the Year Ended December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Calculation of Adjusted EBITDA Margin:   
Adjusted EBITDA  704.2   402.9 391.2760.3
Net revenue  2,622.1   1,950.9 
Net revenues

2,573.2

3,034.0

Adjusted EBITDA Margin  26.9%  20.7%15.2%25.1%

 

113

Results of OperationsAdjusted Working Capital

We calculate adjusted working capital as (i) trade accounts receivable, plus (ii) inventory, plus (iii) other assets, less (iv) trade payables, less (v) confirming payable, less (vi) salaries and payroll charges, less (vii) other liabilities. Our management believes that adjusted working capital is an important figure because it provides a relevant metric for the efficiency and liquidity of our operating activities.

The calculation of our adjusted working capital derived from our consolidated financial statements as of December 31, 20212023 and 20202022 is presented below.

 As of December 31,

As of December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Calculation of Adjusted Working Capital:     
Trade accounts receivable  231.2   229.0 
Trade accounts receivables141.9223.7
Inventory  372.5   256.5 339.7395.2
Other assets  179.7   184.3 216.5210.0
Trade payables  (411.8)  (370.1)(451.6)(413.9)
Confirming payable  (232.9)  (145.3)
Confirming payables(234.4)(216.4)
Other liabilities  (64.7)  (55.0)

(123.9)

(75.7)

Adjusted working capital  74.0   99.4 (111.8)123.0

 

Cash cost, net of by-productby-products credits and related measures

In this report, we also present measures of costs that are widely used by peer companies operating in the mining and smelting industries. These performance measures are not IFRS Accounting Standards measures, and they do not have a standard meaning and therefore may not be comparable to similar data presented by other mining and smelting companies. They should not be considered as a substitute for costs of sales, costs of selling and administrative expenses, or as an indicator of costs. Similar measures are also calculated by Wood Mackenzie for many market participants, but Wood Mackenzie’s methodology differs from the methodology we use below.

Our management uses cash cost, net of by-productby-products credits and related measures, among other measures, for internal planning and performance measurement purposes. We believe these measures provide useful information about the operational performance of our operations that facilitates period-to-period comparisons on a consistent basis.

In calculating cash cost, net of by-productby-products credits, we account for transactions between our mining operations and our smelting operations using the same methodology we use to evaluate the performance of our mining and smelting segments. See Note 2 to our consolidated financial statements. We prepare an internal calculation based on transfer pricing adjustments made on an arm’s length principal basis. All information disclosed for cash cost, net of by-productby-products credits is consistent with this methodology.

138

Results of Operations

Mining operations

Cash cost, net of by-productby-products credits: For our mining operations, cash cost, net of by-productby-products credits includes all direct costs associated with mining, concentrating, leaching, solvent extraction, on-site administration and general expenses, any off-site services essential to the operation, concentrate freight costs, marketing costs and property and severance taxes paid to state or federal agencies that are not profit-related. Treatment and refining charges on metal sales, which are typically recognized as a deduction component of sales revenues, are added to cash cost. Cash cost is calculated on a contained zinc sold basis, which indicates the percentage of zinc in metal sold, after the deduction of by-productby-products credits attributable to mining operations, such as copper, silver, gold, and lead, which are deducted from total cash cost.

114

Results of Operations

Sustaining cash cost, net of by-productby-products credits: Sustaining cash cost, net of by-productby-products credits is defined as the cash cost, net of by-productby-products credits plus non-expansion capital expenditure, including sustaining health, safety and environment, modernization and other non-expansion-related capital expenditures.

All in sustaining cost, net of byproductby-products credits: All in sustaining cost (“AISC”) is defined as sustaining cash cost, net of byproductby-products credits plus corporate general and administrative expenses, royalties and workers’ participation.

Our cash cost and AISC net of by-products credits are measured with respect to zinc sold.

For mining operations, we present below cash cost, net of by-productby-products credits, sustaining cash cost, net of by-productby-products credits and all-in sustaining cost and a reconciliation to our consolidated financial statements.

For the year ended December 31, 2023

 

Vazante

Morro Agudo

Cerro Lindo

El Porvenir

Atacocha

Consolidation of Operations

Corporate
and Others

Mining

 Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Concentrate)        
Tonnes145,66223,16778,38857,6738,486313,376 313,376
Cost of goods sold124.765.0354.8205.169.9819.5(3.2)816.3
On-site G&A0.50.50.71.51.04.2 4.2
By-product credits(16.2)(32.0)(310.1)(148.3)(64.1)(570.6)24.5(546.1)
Treatment and refining charges114.214.941.634.95.2210.8 210.8
Selling expenses0.3(0.1)2.00.60.23.0 3.0
Depreciation and amortization(24.1)(4.5)(86.2)(45.7)(17.3)(177.8)(0.1)(177.8)
Royalties(2.2)(1.4)(2.0)(2.5)(0.4)(8.4) (8.4)
Workers’ participation & bonus(1.9)(1.0)(5.2)(2.8)(0.9)(11.7) (11.7)
Others

0.5

0.1

(6.6)

(6.5)

(1.8)

(14.3)

 

(14.3)

Cash cost net of by-product credits (sold)195.741.6(10.9)36.4(8.1)254.721.3276.0
Cash cost net of by-product credits (sold) (US$/tonne)1,343.51,796.8(138.6)630.6(959.7)812.7 880.6
Non-expansion capital expenditure

29.1

3.0

43.3

68.6

16.2

160.2

59.7

219.9

Sustaining cash cost net of by-product credits (sold)224.844.632.4105.08.1414.881.0495.8
Sustaining cash cost net of by-product credits (sold) (per tonne)1,543.21,925.1413.11,820.8949.41,323.8 1,582.2
Workers’ participation & bonus1.91.05.22.80.911.7 11.7
Royalties2.21.42.02.50.48.4 8.4
Corporate G&A
 
 
 
 
 
 

45.3

45.3

AISC net of by-product credits (sold)       561.2
AISC net of by-product credits (sold) (per tonne)       1,790.7
 
115139

Results of Operations

 

For the year ended December 31, 20212022

  Vazante Morro Agudo Cerro Lindo El Porvenir Atacocha Consolidation of Operations 

Corporate
and
Others (1)

 Mining
  Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Concentrate)                                
Tonnes  140,500   17,278   103,848   51,382   7,747   320,756   0   320,756 
Cost of goods sold  89.5   46.7   377.1   148.4   50.7   712.5   6.8   719.4 
On-site G&A  6.9   3.6   0.0   0.0   0.0   10.5   0.0   10.5 
By-product credits  (13.0)  (17,6)  (358.2)  (105.0)  (49.9)  (543.6)  (0.0)  (543.7)
Treatment and refining charges  70.9   6.6   55.1   27.2   4.2   164.0   0.0   164.0 
Selling expenses  0.3   1.7   1.9   0.3   0.0   4.2   0.0   4.2 
Depreciation and amortization  (20.1)  (5.5)  (112.6)  (25.9)  (11.2)  (175.4)  0.5   (174.9)
Royalties  (1.6)  (1.0)  0.0   0.0   0.0   (2.6)  0.0   (2.6)
Workers’ participation & bonus  (1.6)  (0.9)  (18.4)  (3.8)  (0.2)  (25.0)  0.0   (25.0)
Others  (5.9)  (1.6)  0.5   3.8   3.1   (0.1)  0.0   (0.1)
Cash cost net of by-product credits (sold)  125.5   31.8   (54.5)  45.0   (3.3)  144.4   7.4   151.8 
Cash cost net of by-product credits (sold) (US$/tonne)  893.1   1,841.2   (525.0)  875.1   (428.6)  450.2   0.0   473.2 
Non-expansion capital expenditure  42.0   7.6   40.56   36.5   11.6   138.23   23.87   162.0 
Sustaining cash cost net of by-product credits  167.4   39.4   (14.0)  81.5   8.2   282.6   31.1   313.7 
Sustaining cash cost net of by-product credits (sold) (per tonne)  1,191.7   2,279.6   (134.5)  1,586.2   1,064.4   881.0   0.0   978.1 
Workers’ participation & bonus  1.6   0.9   18.4   3.8   0.2   25.0   —     25.0 
Royalties  1.6   1.0   0.0   2.3   0.7   5.5   —     5.5 
Corporate G&A  —     —     —     —     —     —     50.7   50.7 
AISC net of by-product credits (sold)  —     —     —     —     —     —     —     394.9 
AISC net of by-product credits (sold) (per tonne)  —     —     —     —     —     —     —     1,231.2 
                                 
116

Results of Operations

 

Vazante

Morro Agudo

Cerro Lindo

El Porvenir

Atacocha

Consolidation of Operations

Corporate
and Others

Mining

 Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Concentrate)        
Tonnes131,52718,70085,91052,0019,560297,699 297,699
Cost of goods sold116.063.8396.5167.975.4819.6(1.8)817.8
On-site G&A1.20.80.50.70.33.4 3.4
By-product credits(10.3)(22.6)(351.2)(123.3)(72.2)(579.7)11.7(568.0)
Treatment and refining charges91.39.639.927.65.1173.5 173.5
Selling expenses0.41.41.80.60.54.7 4.7
Depreciation and amortization(24.0)(9.1)(117.0)(27.2)(14.9)(192.1)(0.0)(192.2)
Royalties(2.1)(1.4)(5.6)(3.8)(0.9)(13.8) (13.8)
Workers’ participation & bonus(1.6)(0.9)(13.3)(5.2)(0.8)(21.8)  (21.8)
Others

(9.5)

(1.2)

0.2

0.6

(7.3)

(17.3)

 

(17.3)

Cash cost net of by-product credits (sold)161.440.4(48.2)37.8(15.0)176.59.9186.4
Cash cost net of by-product credits (sold) (US$/tonne)1,227.52,160.5(561.4)727.7(1,566.2)592.8 626.0
Non-expansion capital expenditure

41.9

6.8

42.5

36.7

4.5

132.4

69.4

201.8

Sustaining cash cost net of by-product credits (sold)203.447.2(5.8)74.5(10.5)308.979.3388.2
Sustaining cash cost net of by-product credits (sold) (per tonne)1,546.22,523.8(67.1)1,433.6(1,096.6)1,037.5 1,304.0
Workers’ participation & bonus1.60.913.35.20.821.8 21.8
Royalties2.11.45.63.80.913.8 13.8
Corporate G&A      

52.0

52.0

AISC net of by-product credits (sold)       475.8
 AISC net of by-product credits (sold) (per tonne)       1,598.1

 

For the year ended December 31, 2020

  Vazante Morro Agudo Cerro Lindo El Porvenir Atacocha Consolidation of Operations 

Corporate
and
Others (1)

 Mining
  Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Concentrate)                                
Tonnes  147,990   25,177   96,198   35,734   10,389   315,488   0   315,488 
Cost of goods sold  80.2   50.2   311.1   135.9   58.7   636.2   (10.8)  625.4 
On-site G&A  5.0   4.2   0   0   0   9.2   0   9.2 
By-product credits  (9.5)  (15.0)  (246.5)  (67.4)  (42.6)  (381.0)  15.9   (365.1)
Treatment and refining charges  122.1   15.6   56.0   25.4   7.0   226.2   0   226.2 
Selling expenses  0.7   1.9   3.0   0.4   0.3   6.3   0   6.3 
Depreciation and amortization  (15.8)  (10.0)  (94.6)  (27.8)  (10.5)  (158.7)  (1.3)  (160.0)
Royalties  (2.0)  (1.6)  0   (0.7)  (0.3)  (4.6)  0   (4.6)
Workers’ participation & bonus  (1.3)  (0.8)  (6.0)  (0.7)  (0.5)  (9.3)  0   (9.3)
Others  (4.7)  (1.2)  (23.9)  (17.2)  (11.9)  (58.9)  0   (58.9)
Cash cost net of by-product credits (sold)  174.7   43.5   (0.8)  47.8   0.2   265.4   3.8   269.2 
Cash cost net of by-product credits (sold) (US$/tonne)  1,180.6   1,726.9   (8.7)  1,338.0   17.8   841.1   0   853.2 
Non-expansion capital expenditure  24.6   7.4   27.7   12.9   15.3   87.9   (10.9)  77.1 
Sustaining cash cost net of by-product credits  199.4   50.9   26.8   60.8   15.5   353.3   (7.0)  346.2 
Sustaining cash cost net of by-product credits (sold) (per tonne)  1,347.1   2,020.2   279.0   1,700.3   1,487.9   1,119.8   0   1,097.5 
Workers’ participation & bonus  1.3   0.8   6.0   0.7   0.5   9.3   0   9.3 
Royalties  2.0   1.6   0   1.2   0.4   5.1   0   5.1 
Corporate G&A  —     —     —     —     —     —     52.4   52.4 
AISC net of by-product credits (sold)  —     —     —     —     —     —     —     413.1 
 AISC net of by-product credits (sold) (per tonne)  —     —     —     —     —     —     —     1,309.5 
117

Results of Operations

Smelting operations

 

Cash cost, net of by-productby-products credits: For our smelting operations, cash cost, net of by-productby-products credits includes all the costs of smelting, including costs associated with labor, net energy, maintenance, materials, consumables and other on-site costs, as well as raw material costs. Cash cost is calculated on a contained zinc sold basis after the deduction of by-productby-products credits attributable to smelting operations.

 

Sustaining cash cost, net of byproductby-products credits: Sustaining cash cost, net of byproductby-products credits is defined as the cash cost, after byproductby-products credits plus non -expansionnon-expansion capital expenditure, including sustaining health, safety and environment, modernization and other non-expansion-related capital expenditures.

All in sustaining cost, net of byproductby-products credits: All in sustaining cost is defined as sustaining cash cost, net of byproductby-products credits plus general and administrative expenses and workers’ participation.

Our cash cost and AISC net of by-products credits are measured with respect to contained zinc sold, not considering resale operations of zinc from third parties. For our smelting operations, we present below cash cost, net of byproductby-products credits, sustaining cash cost, net of byproductby-products credits and all in sustaining cost and a reconciliation to our consolidated financial statements.

140

Results of Operations

For the year ended December 31, 2023

 

Três
Marias

Juiz de
Fora

Cajamarquilla

Consolidation
of Operations

Corporate
and Others

Smelting

 Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Products)      
Tonnes174,79081,939325,927582,656 582,656
Cost of goods sold502.2268.8960.31,731.4(5.3)        1,726.1
Cost of services rendered(22.4)(9.5)(43.5)(75.4) (75.4)
On-site G&A1.40.75.57.5 7.5
Depreciation and amortization(21.2)(13.1)(43.1)(77.3) (77.3)
By-product credits(14.2)(26.9)(135.6)(176.7)5.3(171.4)
Workers’ participation & Bonus(1.5)(1.6)(10.8)(13.9) (13.9)
Others

0.8

0.1

10.9

11.8

 

11.8

Cash cost, net of by-product credits (sold)445.2218.5743.71,407.30.01,407.3
Cash cost, net of by-product credits (sold) (per tonne)2,546.92,666.32,281.72,415.4 2,415.4
Non-expansion capital expenditure

22.2

14.4

34.5

71.1

13.9

85.0

Sustaining cash cost, net of by-product credits (sold)467.4232.9778.11,478.413.91,492.3
Sustaining cash cost net of by-product credits (sold) (per tonne)2,673.92,842.62,387.52,537.4 2,561.3
Workers’ participation1.51.610.813.9 13.9
Corporate G&A
 
 
 
 

27.9

27.9

AISC net of by-product credits (sold)     1,534.1
AISC net of by-product credits (sold) (per tonne)     2,632.9

 

For the year ended December 31, 20212022

 Três
Marias
 Juiz de
Fora
 Cajamarquilla Consolidation
of Operations
 

Corporate
and
Others (1)

 Smelting

Três
Marias

Juiz de
Fora

Cajamarquilla

Consolidation
of Operations

Corporate
and Others

Smelting

 Operations (in millions of US$, unless otherwise indicated)Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Products)                         
Tonnes  188,216   80,008   324,973   593,197   0.0   593,197 180,02983,084334,076597,189 597,189
Cost of goods sold  519.6   224.9   1,003.8   1,748.3   (2.7)  1,745.6 621.4325.21,219.42,166.1(6.1)2,159.9
Cost of services rendered  (21.2)  (2.8)  (36.3)  (60.2)  0.0   (60.2)(19.5)(9.9)(57.0)(86.4) (86.4)
On-site G&A  5.4   4.4   20.1   29.9   0.0   29.9 2.01.16.19.2 9.2
Depreciation and amortization  (13.1)  (11.7)  (54.1)  (78.9)  0.0   (78.9)(18.4)(13.1)(47.2)(78.7) (78.7)
By-product credits  (11.9)  (23.0)  (91.1)  (126.0)  3.9   (122.1)(9.5)(36.8)(180.4)(226.7)6.1(220.5)
Workers’ participation & Bonus  (1.3)  (1.2)  (10.3)  (12.8)  0.0   (12.8)(1.6)(1.3)(13.7)(16.6) (16.6)
Others  (17.8)  (9.2)  0.0   (26.9)  0.0   (26.9)

(13.5)

(6.0)

14.7

(4.8)

 

(4.8)

Cash cost, net of by-product credits (sold)  459.8   181.5   832.1   1,473.4   1.2   1,474.6 561.0259.1941.91,761.90.01,761.9
Cash cost, net of by-product credits (sold) (per tonne)  2,442.7   2,269.1   2,560.4   2,483.8   —     2,485.8 3,116.03,118.12,819.52,950.4 2,950.4
Non-expansion capital expenditure  17.7   19.0   39.3   76.0   (1.2)  74.8 

42.1

22.4

45.3

109.9

(18.9)

90.9

Sustaining cash cost, net of by-product credits  477.4   200.6   871.4   1,549.4   (0.1)  1,549.4 
Sustaining cash cost, net of by-product credits (sold)603.1281.5987.21,871.8(18.9)1,852.9
Sustaining cash cost net of by-product credits (sold) (per tonne)  2,536.6   2,507.1   2,681.5   2,612.0   —     2,611.9 3,350.13,387.92,955.13,134.4 3,102.7
Workers’ participation  1.3   1.2   10.3   12.8   0.0   12.8 1.61.313.716.6 16.6
Corporate G&A  0.0   0.0   0.0   0.0   28.1   28.1 
 

31.0

AISC net of by-product credits (sold)  0.0   0.0   0.0   0.0   0.0   1,590.3  1,900.6
AISC net of by-product credits (sold) (per tonne)  —     —     —     —     —     2,680.9  3,183.0
 
118141

Results of Operations

For the year ended December 31, 2020

  Três
Marias
 Juiz de
Fora
 Cajamarquilla Consolidation
of Operations
 

Corporate
and
Others (1)

 Smelting
  Operations (in millions of US$, unless otherwise indicated)
Sales Volume (Zinc Contained in Products)                        
Tonnes  196,327   77,965   302,495   576,788   0   576,788 
Cost of goods sold  363.9   187.3   739.8   1,291.0   (3.2)  1,287.9 
Cost of services rendered  (10.1)  (2.8)  (34.9)  (47.8)  0   (47.8)
On-site G&A  4.8   4.0   18.5   27.4   0   27.4 
Depreciation and amortization  (14.5)  (11.7)  (56.4)  (82.7)  0   (82.7)
By-product credits  (14.6)  (18.0)  (83.9)  (116.5)  2.4   (114.1)
Workers’ participation & Bonus  (1.2)  (1.0)  (7.6)  (9.7)  0   (9.7)
Others  (12.1)  (8.5)  (8.0)  (28.6)  0   (28.6)
Cash cost, net of by-product credits (sold)  316.2   149.3   567.6   1,033.1   (0.8)  1,032.3 
Cash cost, net of by-product credits (sold) (per tonne)  1,610.4   1,915.4   1,876.4   1,791.1   0   1,789.8 
Non-expansion capital expenditure  18.1   9.8   15.6   43.5   (5.8)  37.7 
Sustaining cash cost, net of by-product credits  334.3   159.1   583.2   1,076.6   (6.6)  1,070.0 
Sustaining cash cost net of by-product credits (sold) (per tonne)  1,702.6   2,041.0   1,927.9   1,866.5   0   1,855.1 
Workers’ participation  1.2   1.0   7.6   9.7   0   9.7 
Corporate G&A  0   0   0   0   32.8   32.8 
AISC net of by-product credits (sold)  0   0   0   0   0   1,112.5 
AISC net of by-product credits (sold) (per tonne)  0   0   0   0   0   1,928.7 

119

Liquidity and Capital Resources

Liquidity and capital resources

Overview

In the ordinary course of business, our principal funding requirements are for working capital, capital expenditures relating to maintenance and expansion investments, servicing our indebtedness and distributions to our shareholders. We typically meet these requirements through operational cash flows, long-term borrowings from private banks, the Brazilian Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social, or “BNDES”), international export credit agencies, and the issuance of debt securities in the international capital markets.

In 2021, sinceOctober 2023, Nexa announced the pricesuccessful closing of metals remained at high levels, consequently increasinga US$320 million sustainability-linked revolving credit facility. The applicable margin is subject to compliance with carbon reduction key performance indicators, reflecting the Company’s commitment to reducing its carbon footprint. Such efforts are consistent with Nexa’s EBITDA, we implemented a liability management transactionESG ambitions, targeting net-zero greenhouse gas emissions by prepaying outstanding bank loans of approximately US$330 million. The prepaid amount consisted of several Brazilian NCEs (Export Credit Notes), an Export Pre-payment, an Export Credit Agency facility agreement, and a bilateral loan2050, in Peru. alignment with the Paris Agreement.

Our financing strategy is to fund our necessary capital expenditures and to preserve our liquidity while meeting our debt payment obligations. We believe that our cash and cash equivalents on hand, cash from operations and available borrowings will be adequate to meet our capital expenditure requirements and liquidity needs for our current responsibilities.obligations. We may require additional capital to meet our longer-term liquidity and future growth requirements. Although we believe that our sources of liquidity are adequate, weaker economic conditions in Brazil, Peru or globally could materially adversely affect our business and liquidity.

Sources of funds

Our principal sources of funds are cash flows from operations and borrowings. The availability of cash flows from operations is affected by our working capital requirements, share premium reimbursements, dividends and investment activities, as well as a need to service our indebtedness. In 2021, our2023, we generated net cash from operating activities generated cash flows of US$493.0246.8 million, a 7.4% decrease as compared to US$291.7266.6 million in 2020, an increase of 69.0% primarily2022, which was largely due to better operating results. In addition, throughout 2021 we disbursed US$136 million of the BNDES facility agreement to partially finance thecontinued investments towards sustaining our current operations, including Aripuanã Project.and our working capital needs.

Uses of funds

In the ordinary course of business, our principal funding requirements are related to capital expenditures, dividend payments and debt service. In 2021,2023, we also raisedused funds to invest towards sustaining our current operations, for our working capital needs and for taxes and interest to partially finance the Aripuanã project in Brazil, through the full drawdown of the BNDES loan agreement.service debt.

Capital expenditures

Our capital expenditures in 2021 before tax credits2023 amounted to US$507.9309.0 million. Of this amount, 53.4%1.2% was allocated to expansion projects, mainly driven by Aripuanã’s project (US$257.6 million) and Vazante’sthe Vazante mine deepening (US$3.4 million).project, in line with our annual guidance due to lower than expected HS&E and other non-expansion investments.

Non-expansion projects, which includeincludes sustaining and HSE,HS&E, among others, accounted for 45.9%98.8% of the total capital expenditures (or US$233.1305.3 million) in 2021. The main investments were related to sustaining capital expenditures.2023, including US$79.4 million of Aripuanã.

For 2022,2024, we have budgeted US$385311.0 million to invest in our operations and projects that are currently underway. Our main projects include US$75 million directed towards expansion projects—of which US$59 million is allocated mainly to the final implementation of the Aripuanã project, US$6.2 million to Magistral’s FEL3 studies, US$5.8 million for the acquisition of lands in Aripuanã and US$2.0 million to the Vazante mine deepening project—and US$310 million towards non-expansion projects, which includes sustaining and HSE.

Expenses related to exploration and project evaluation

In 2021,2023, exploration expenses were US$57.857.2 million, mainly driven by higher costsbrownfield investments with the objective of extending the life of the mines we are currently operating (mainly in Cerro Lindo, Aripuanã, Vazante and the resumptionEl Porvenir) and copper exploration phase projects to support our growth strategy. We continue with efforts to replenish and increase available mineral resources as part of our greenfield and brownfield exploration programs, and also mine development. Inlong-term strategy, advancing mineral exploration we continueactivities, focusing mainly on identifying new ore bodies through drilling campaigns and preserving our efforts to replaceinvestments in greenfield projects and increase mineral reserves and resources.business development analysis.

 
120142

Liquidity and Capital Resources

Project evaluation investment amounted to US$18.935.1 million in 2021,2023, including approximately US$1.527.4 million directed towards greenfieldbrownfield projects in FEL1 and FEL2 stages and US$4.71.4 million to brownfieldgreenfield projects in the same stages.

We expect to continue to advance with our exploration and drilling campaigns and develop our pipeline of projects. In 2022,2024, we estimate to spend US$8258.0 million on expenses relating primarily to drilling campaigns in brownfield projects (mainly in Cerro Lindo, Vazante and Aripuanã) to expand the mineral resources and mineral reserves inventory, and on the development of our copper portfolio in the exploration (US$64 million), which includes mineral rights and mine development, and project evaluation (US$18 million) activities.stage.

Distributions and repurchases

On March 26, 2021,24, 2023, we paid a cash dividendapproximately US$25.0 million (US$0.19 per common share) of approximately US$35 million (US$0.26 per share)share premium (or special dividend) to our shareholders. Additionally, our subsidiary Pollarix declared dividends in the amount of US$23.7 million to the non-controlling interests owned by Votorantim Geração de Energia S.A. (“VGE”) which is a related party.

On February 15, 2022, Nexa’s Board approved a distribution to Nexa’s shareholders of US$50 million, US$44 million (US$0.33 per share) as dividend and US$6 million (US$0.05 per share) asThis share premium towill be paidratified, in accordance with Luxembourg laws, by our shareholders at the annual shareholders’ meeting for the fiscal year ended December 31, 2023, which will occur on March 25, 2022June 13, 2024.

 

Debt

As of December 31, 2021,2023, our total outstanding consolidated indebtedness (current and non-current loans and financings, including accrued interest as of December 31, 2021)2023) is US$1,699.31,725.6 million, consisting of US$46.7143.2 million of short-term indebtedness, including the current portion of long-term indebtedness (or 2.7%8.3% of the total indebtedness), and US$1,652.61,582.4 million of long-term indebtedness (or 97.3%91.7% of the total indebtedness). Our outstanding consolidated indebtedness increased by 3.4% compared to December 31, 2022.

Our U.S. dollar denominated indebtedness as of December 31, 20212023 was US$1,427.01,446.2 million (or 84.0%83.8% of our total indebtedness), our Brazilian real-denominated denominated indebtedness was US$270.6279.3 million (or 15.9% of our total indebtedness) and our Peruvian sol-denominated indebtedness was US$1.8 million (or 0.1%16.2% of our total indebtedness).

As of December 31, 2021,2023, US$359.1513.0 million, or 21.1%29.7% of our total consolidated indebtedness, bears interest at floating rates, including US$270.4279.3 million of real-denominated indebtedness that bear interest at rates based on the CDI rate, SELIC rate or Taxa de Juros de Longo Prazo (“TJLP”) and Taxa de Longo Prazo (“TLP”) rates (the long-term interest rates set by the Brazilian National Monetary Council and the basic costs of financing of the BNDES), and US$88.7233.7 million of foreign currency-denominated indebtedness that bear interest at rates based on LIBOR.SOFR.

Only 8.3% (US$143.2 million) of the total debt matures in 2024, 5.9% (US$101.9 million) matures between 2025 and 2026, while 85.8% (US$1,480.5 million) of total debt matures in and after 2027.

We continue to discuss with financial entities which fallback rate will replace the interest rate for our relevant LIBOR-based debt. Given the extension of most U.S. Dollar LIBOR tenors until June 30, 2023, we do not expect any relevant impacts on our business,continuously assess short-term and mid-term commodities prices, Nexa’s capital structure, financial position and resultsthe quantum and maturity profile of operationsour debt. Actions in relation to our capital structure, including, but not limited to, improving the current year.profile of outstanding debt, focusing on extending maturity and assessing financing alternatives are constantly being evaluated.

The following table sets forth selected information with respect to our total outstanding consolidated indebtedness as of December 31, 2021.2023.

  

As of December 31, 2021

Indebtedness

Average Annual Interest Rate

Current
Portion (1)

Long-term
Portion

Total

  (in millions of US$)
Eurobonds  Fixed + 5.73%20.11,318. 31,338.3
BNDESTJLP + 2.82%18.7197.1215.8
SELIC + 3.10%
TLP – IPCA + 5.43%
Debentures107.5% CDI4.9-4.9
Export Credit NoteLIBOR + 1.54%1.5133.6135.1
111.55% CDI
Other 

1 .5

3.7

5.2

Total 46.71,652.61.699.3
  

As of December 31, 2023

Indebtedness

Average Annual Interest Rate

Current
Portion (1)

Long-term
Portion

Total

  (in millions of US$)
Eurobonds – USDPre-USD + 5.84%18.51,194.01,212.6
BNDES

TJLP + 2.82%

SELIC + 3.10%

TLP – IPCA + 5.46%

28.6180.3208.9
Export Credit Notes

SOFR + 1.85%

134.20% CDI

SOFR + 2.5%

95.7142.1237.9
OtherSOFR + 2.57%0.365.966.2
Total 143.21,582.41,725.6


(1) Includes principal and interest.

 
121143

Liquidity and Capital Resources

As of December 31, 2021,2023, US$215.8208.9 million remains outstanding under our loan agreements with BNDES US$134.6 million regarding to the Nexa Dardanelos’ facility agreement which are guaranteed by Nexa Brazil and Nexa Resources, and US$81.2 million regarding to Nexa Brazil’s facility agreement which are guaranteed only by Nexa Resources.

Some of our debt instruments also contain other covenants that restrict, among other things, our ability and the ability of certain of our subsidiaries to incur liens and merge or consolidate with any other person or sell or otherwise dispose of all or substantially all its assets. These instruments also contained covenants requiring that we comply with certain financial ratios, including:

·a debt service coverage ratio of 1.0:1.0;
·a net debt to EBITDA ratio of 4.0:1.0; and
·a total debt to total capitalization ratio of 0.7:1.0.

As of December 31, 20212023 we were in compliance with the above stated ratios.

Short-term indebtedness and revolving credit lines

Our consolidated short-term indebtedness, including the current portion of our long-term debt, was US$46.7143.2 million, including principal and interest, as of December 31, 2021.2023.

We maintainIn October 2023, we announced the closing of a US$300.0320 million sustainability-linked revolving credit facility, which replaces Nexa’s 2019 US$300 million revolving credit facility that was set to mature in October 2024. The new sustainability-linked credit facility supports Nexa’s liquidity profile and the applicable margin is subject to compliance with a syndicate of lenders that will mature on October 25, 2024. Thiscarbon reduction key performance indicators, reflecting the Company’s commitment to reducing its carbon footprint. Such efforts are consistent with Nexa’s ESG ambitions, targeting net-zero greenhouse gas emissions by 2050, in alignment with the Paris Agreement. The new facility is guaranteed by Nexa Brazil and Nexa CJM. IfCJM and will mature on October 20, 2028, and amounts drawn this facility will bearare subject to an initial interest at three-month LIBORrate of 1.60% plus 1.00%Term SOFR per annum. As of December 31, 2021,2023, no amounts were drawn under this facility.

In March 2024, we entered into a 4131 Note agreement in the total principal amount of R$150 million (approximately €30 million) at an annual gross interest rate of 5.6%, maturing in June 2024. Additionally, a Global Derivatives Contract was established to swap the currency fluctuation of the euro to hedge this loan operation at a cost of CDI + 0.90%.

Also in March 2024, we extended by five years, one of our remaining Export Credit Notes which was maturing on October 2024 with a cost of TERM SOFR + 2.4%, in the total initial facility amount of US$90.0 million.

We believe that we will continue to be able to obtain sufficient credit to finance our working capital needs based on current market conditions and our liquidity position. See “Risk factors—Financial risk— Our business requires substantial capital expenditures and is subject to financing risks.”

Long-term indebtedness

The following discussion briefly describes our principal financing agreements as of December 31, 2021.the date of this annual report. For additional information, see Note 24 to our consolidated financial statements.

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Liquidity and Capital Resources

Term Loan.Debentures. On March 12, 2020, in order22, 2024, Nexa Recursos Minerais S.A. (Nexa Brazil), a wholly-owned subsidiary of Nexa Resources, announced the public offering of 650,000 non-convertible ESG-linked debentures, each with a par value of R$1,000.00, totaling R$650 million (approximately US$130 million). The debentures mature on March 28, 2030, are unsecured, bullet, and bear interest at 100% of CDI interest rate plus 1.50% per annum. The settlement date is expected to reduceoccur between March 28, 2024 and April 3, 2024, and will be characterized as debentures linked to ESG targets, aligning with the same ESG framework of our costUS$320 million sustainability-linked revolving credit facility mentioned above. The offering is part of debt, enhance our short-term liquidityNexa’s balance sheet and manage our debt profile,liability management strategy.

4131 Note. In December 2023, we entered into a term loan with a global financial institution,4131 Note agreement in the total principal amount of R$477.0US$50 million (approximatelywith maturity date of five years and costs of 2.57% plus TERM SOFR. As of December 31, 2023, our outstanding principal amount under this 4131 Note was US$100.0 million) at a cost of 8.5%, with a five-year maturity. Simultaneously, we contracted a swap to exchange the interest rate to 2.45% as well as the currency of debt service prepayments from Brazilian real to US dollar. The term loan is guaranteed by Nexa Resources.50.2 million.

Export Credit Notes. In March and April 2020, we entered into five Export Credit Note agreements in the total principal amount of R$1,477 million (approximately US$300 million) with maturity dates between one and five years and costs between 134.2% of CDI and CDI +1.8% up to CDI + 4.2%. In 2020, we prepaid the principal and accrued interest of two Export Credit Notes. As of December 31, 2021,2023, our outstanding principal amount under the threetwo remaining Export Credit Notes was US$135145.8 million. In March 2024, we extended by five years, one of our remaining Export Credit Notes which was maturing on October 2024 with a cost of TERM SOFR + 2.4%, in the total initial facility amount of US$90.0 million.

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Liquidity and Capital Resources

Export Prepayment Facilities.Credit Notes. On March 18, 2022, we entered into an Export Credit Note agreement in the total principal amount of US$90 million with a maturity date of five years and costs of 2.5% plus TERM SOFR. As of December 31, 2021, we have one export prepayment facility in an2023, our outstanding principal amount ofunder these Export Credit Notes was US$96 million, which bears interest at a rate of six-month LIBOR plus 1.27%. The outstanding export prepayment facility is guaranteed by Nexa Brazil and Nexa CJM and is secured by liens on certain collection accounts associated with the facility.92.1 million.

Nexa Resources Bonds due 2028. On June 18, 2020, we issued an aggregate principal amount of US$500.0 million in bonds maturing in 2028 and bearing interest at 6.500% per year. The bonds are guaranteed by our subsidiaries Nexa Brazil, Nexa Peru and Nexa CJM. As of December 31, 2021,2023, the outstanding amount under these bonds was US$508.8510.7 million, which is related to a principal amount of US$500.0 million plus an accrual of US$14.7 million related to interest, net of borrowing costs of US$5.910.7 million.

Nexa Resources Bonds due 2027. On May 4, 2017, we issued an aggregate principal amount of US$700.0 million in bonds maturing in 2027 and bearing interest at 5.375% per year. These securitiesThe bonds are guaranteed by our subsidiaries Nexa Brazil, Nexa Peru and Nexa CJM. As of December 31, 2021,2023, the outstanding amount under these bonds was US$699.7701.8 million, which is related to a principal amount of US$700.0 million plus an accrual of US$6.0 million related to interest, net of borrowing costs of US$6.31.8 million.

Nexa Peru Bonds due 2023. On March 28, 2013, we issued an aggregate principal amount of US$350.0 million in bonds maturing in 2023 and bearing interest at 4.625% per year. In 2020, we purchased an aggregate principal amount of US$214.5 million, or 62.55% of the outstanding principal amount, pursuant to a tender offer. As of December 31, 2021, the outstanding amount under these bonds was US$129.9 million, which is related to a principal amount of US$128.5 plus an accrual of US$1.5 million related to interest, net of borrowing costs of US$0.1 million.

On February 24, 2022, Nexa Resources Perú S.A.A. announced the early redemption and cancellation of all outstanding 4.625% bonds maturing in 2023. The bonds will be redeemed on March 28, 2022 at a price equal or the greater of (i) 100% of the outstanding principal amount, and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the bonds to be redeemed discounted to the redemption date on a semiannual basis at the applicable Treasury Rate plus 45 basis points, in each case plus accrued and unpaid interest and additional amounts, if any, to but excluding the redemption date, in accordance with the provisions of the indenture governing the bonds.

BNDES and FINEP. BNDES has been an important source of debt financing for our capital expenditures in Brazil. We, through our Brazilian subsidiaries, have entered into several loan agreements with BNDES for the expansion and modernization of certain fixed assets, studies and engineering projects, environmental investments and the acquisition of machinery and equipment. As of December 31, 2021,2023, our aggregate outstanding principal amount under BNDES loan agreements was US$215.8208.9 million. For further details on our long-term financings with BNDES, please see the table below.

OnIn October 26, 2020, we disbursed the first tranche of the Credit Facility Agreement related to the Aripuanã Project signed with BNDES in the amount of approximately R$225225.0 million or US$39.9 million at a cost of TLP plus 3.39%, with maturity in 2040. Onmillion. In December 28, 2020, we disbursed the second tranche of this facility in the amount of approximately R$250250.0 million or US$47.7 million. In May 2021, we disbursed the third tranche of this facility in the amount of approximately R$160.0 million or US$30.6 million. In June 2021, we disbursed the fourth tranche of this facility in the amount of approximately R$101.3 million or US$20.1 million. This loan was contracted at a cost of TLP plus 3.39%, with maturity in 2040.

In December 2014, Nexa Brazil entered into a loan agreement with the Brazilian Financing Agency for Studies and Projects (Financiadora de Estudos e Projetos or “FINEP”), to finance the research and development of various projects. As of December 31, 2021,2023, our outstanding principal amount under this loan agreement was R$18.5 million (or US$3.3 million).16.0 million.

The following table sets forth selected information with respect to Nexa Brazil’s principal long term financings with BNDES and our outstanding amount under these financings as of December 31, 2021.2023.

 
123145

Liquidity and Capital Resources

Indebtedness

Borrower

Guarantor

Interest Rate

Principal Payment Dates

Maturity
Date

Principal
Amount
Outstanding
As of
December 31, 20212023

      (in millions
of US$)
R$1,000.0 million BNDES Revolving Credit AgreementNexa BrazilNexa ResourcesTLP plus 2.09% per annum120 monthly installments commencing on January 15, 2019December 15, 202812.317.0
Total     12.317.0
R$1,200.0 million BNDES Revolving Credit Agreement (1)Nexa BrazilNexa ResourcesSELIC plus 3.10% per annum60 monthly installments commencing on October 15, 2021September 15, 202629.724.4
Nexa BrazilNexa ResourcesTJLP plus 2.82% per annum60 monthly installments commencing on September 15, 2017September 15, 202615.810.5
Nexa BrazilNexa ResourcesTLP plus 2.22% per annum120 monthly installments commencing on January 15, 2019December 15, 202823.512.3
Total     69.047.2
Credit Facility AgreementNexa DardanelosNexa Brazil and Nexa ResourcesTLP plus 3.39% per annum210 monthly installments commencing on March 15, 2023August 15, 2040134.6144.7
Total     

134.6144.7

Total BNDES Long-Term Indebtedness     

215.8208.9


(1) Consists of three tranches.

Cash flows

The table below sets forth our cash flows from operating activities, investing activities and financing activities for the years ended December 31, 20212023 and 2020.2022.

 For the Year Ended December 31,

For the Year Ended December 31,

 2021 2020

2023

2022

 (in millions of US$)(in millions of US$)
Consolidated Statement of Cash Flows Information     
Net cash flows provided by (used in):         
Operating activities  493.0   291.7 246.8266.6
Investing activities  (469.3)  (369.2)(270.4)(378.9)
Financing activities  (344.1)  451.6 (25.3)(149.2)
Effects of exchange rates on cash and cash equivalents  (21.9)  (16.1)
Other high liquid short term investments  —     29.5 
Increase (decrease) in cash and cash equivalents  (342.3)  387.5 
Foreign exchange effects on cash and cash equivalents8.215.5
Decrease in cash and cash equivalents(40.6)(246.0)
Cash and cash equivalents at the beginning of the year  1,086.2   698.6 497.8743.8
Cash and cash equivalents at the end of the year  743.8   1,086.2 457.3497.8

 

124

Liquidity and Capital Resources

In 2021,2023, our net cash flow provided by operating activities was US$493.0246.8 million, primarily due to positive working capital variations, as a result of initiatives deployed throughout the improvement of Company's year results, partially offset by higher interest paid on loans and financings.relating to inventory, as well as trade account receivables payment terms.

146

Liquidity and Capital Resources

In 2021,2023, our net cash flow used in investing activities was US$469.3270.4 million to maintain the sustainability of our business and invest in our growth, mainly duerelated to capital expenditures, which totaled US$485 million,sustaining investments in our operations including Aripuanã, partially offset by a positive variation in financial investments..

In 2021,2023, our net cash flow used in financing activities was US$344.125.3 million mainly impacted bydue to the payment of share premiums to shareholders, contractual dividends paid to non-controlling interests (Pollarix) and payments and prepayment of loans and financings, the acquisition of the common shares of Tinkapartially offset by new loans and dividends paid in the amount of US$52 million.financings.

AtAs a result, at December 31, 2021,2023, our cash and cash equivalents were US$743.8457.3 million, US$342.340.6 million lower compared to our cash and cash equivalents at December 31, 2020.2022.

 
125147

Critical Accounting EstimatesLiquidity and Capital Resources

Critical accounting estimates

The following discussion and analysis of our financial position and results of operations is based on our consolidated financial statements. The preparation of ourthe Company’s consolidated financial statements requires us to makethe use of estimates, assumptions, and judgments that affect the reported amountamounts of revenues, expenses, assets and liabilities, revenuesthe accompanying disclosures, and expenses and relatedthe disclosure of contingent assets and liabilities at the date of ourthe consolidated financial statements. InBy definition, critical estimates, assumptions, and judgments will seldom equal the preparationactual results and are continually evaluated to reflect changing expectations about future events. Management also needs to exercise judgment in applying the Company’s accounting policies.

This note provides an overview of our consolidated financial statements, we believethe areas that certaininvolve a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong due to their uncertainty. Detailed information about each of these estimates, assumptions and judgments is included in other factors were reasonable and relevant. These estimates and assumptions are periodically reviewed, and adjustments are made to our consolidatednotes together with information about the basis of calculation for each affected item in the financial statements, when appropriate. Each of the corresponding notes to our consolidated financial statements provides a detailed discussion of our significant accounting policies, as well as critical accounting estimates.

Critical accounting policies reflect significant estimates or judgments about matters that are both inherently uncertain and material to our financial position or results of operations.statements. Below is a description of our critical accounting policies that require significant estimates and judgments.

Impairment of goodwill

We annually test whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 31 to our consolidated financial statements. We assess the recovery of the carrying amount of goodwill of each cash generating unit or group of cash generating units based on value in use or fair value less costs to sell, using a discounted cash flow model.

We also assess at each reporting date, whether there is an indication that goodwill may be impaired. If any indication exists, such as volume and price reductions or unusual events that can affect the business, we estimate the recoverable amount of the cash generating unit or group of cash generating units.

The process of estimating the value in use and the fair value less costs to sell involves assumptions, judgment and projections of future cash flows. Our assumptions and estimates of future cash flow used for impairment testing of goodwill are subject to risk and uncertainties, particularly for markets—such as metals— subject to higher volatilities, which are outside our control. The calculations used for the impairment testing are based on discounted cash flow models as of September 30, 2021,December 31, 2023 (due to impairment indicators identified during the fourth quarter), market assumptions, such as LME prices, market interest rates and other available data regarding global demand. The discount factor applied to the discounted cash flow model is our pre-tax (for value in use calculation method) or post-tax (for fair value less cost of disposal calculation method) weighted average cost of capital for the applicable region, adjusted for country-specific risk factors. These calculations use cash flow projections before taxes on income, based on financial and operational budgets for a five-year period. After the five-year period, the projections are extended to the end of the mine life for our mines and indefinitely for our smelters. We do not use growth rates in cash flow projections of the terminal value for our smelters.

Impairment analysis

When performing its annual impairment assessments and after analyzing all impairment indicators we haven’tthe Company identified impairment indicators mainly related to the: (i) Três Marias System (“STM”) cash-generating unit (“CGU”) (previously formed by the combined operations of the Três Marias smelter and the Vazante and Morro Agudo mines) split in two for: (a) STM CGU (comprised of the Três Marias smelter and the Vazante mine) and (b) Morro Agudo CGU (comprised of the Morro Agudo mine and Bonsucesso greenfield), based on management's conclusion that the implicit value of Morro Agudo’s zinc concentrate processed in the Três Marias smelter could no needlonger continue to recognize anybe recognized, based on an understanding of the current and specific macroeconomic and price scenarios, as well as on possible future operational scenarios; (ii) Aripuanã and Juiz de Fora CGUs – reduction in Aripuanã's life of mine, a lower exchange rate of the Brazilian real against the U.S. dollar and an increase of operational costs for their operations; and (iii) Mining Peru Group of CGUs (comprised of Cerro Pasco and Cerro Lindo CGUs) – increase in operational costs.

The impairment assessment as of December 31, 2023 resulted in a non-cash, pre-tax net impairment loss of US$114.6 million (after-tax US$90.3 million), comprised of (i) an impairment loss of US$59.0 million in the Morro Agudo cash-generating unit (“CGU”); (ii) an impairment loss of US$42.7 million in goodwill in the Mining Peru Group of CGUs; and (iii) individual assets impairment in 2021.the amount of US$13.0 million, mainly within assets and projects under construction. For further information, please refer to Note 31 to our consolidated financial statements.

148

Liquidity and Capital Resources

Fair value of derivatives and other financial instruments

We determine the fair value of financial instruments not traded in an active market by using valuation techniques. We use judgment to select among a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

The main financial instruments and the assumptions we make for their valuation are described below.

·We consider the nature, terms and maturity of cash and cash equivalents, financial investments, trade accounts receivable and other current assets. The carrying amount of these items are similar to their respective fair value.
·Financial liabilities are subject to typical market interest rates. The market value is based on the present value of expected future cash disbursement, at interest rates currently available for debt with similar maturities and terms. We also consider Nexa’s credit risk when assessing the fair value of financial liabilities.
126

Liquidity and Capital Resources

·The fair value of derivative financial instruments that we use for hedging transactions is evaluated by calculating their present value through yield curves at the closing dates. The curves and prices used in the calculation for each group of instruments are developed based on data from the Brazilian Securities, Commodities and Futures Exchange, Central Bank of Brazil, LME and Bloomberg, interpolated between the available maturities.
·Swap contracts: The present value of both the assets and liabilities is calculated through the discount of forecasted cash flows by the interest rate of the currency in which the swap is denominated. The difference between the present value of the assets and the liabilities generates its fair value.
·Forward contracts: The present value is estimated by discounting the notional amount multiplied by the difference between the future price in the reference date and contracted price. The future price is calculated using the convenience yield of the underlying asset. It is common to use Asian non-deliverable forwards for hedging non-ferrous metals positions. Asian contracts are derivatives in which the underlying asset price is the average price of certain assets over a range of days.
·Option contracts: The present value is estimated based on pricing methodologies such as the Black Scholes model, with assumptions that include the underlying asset price, strike price, volatility, time to maturity and interest rate. The underlying asset price is the average price of the foreign exchange rate in the fixing month.

Asset retirement obligations

Provision for asset retirement obligations include costs to restoration and closure of the mining assets and is recognized due to the development or mineral production, based on the net present value of estimated closure costs. Management uses its judgment and previous experience to determine the potential scope of rehabilitation work required and the related costs associated with that work, which are recognized as a Property plant and equipment for asset retirementenvironmental obligations relating to operating mining assets or as Other income and expenses, net for non-operating structures. Environmental obligations include costs related to rehabilitation of areas damaged by the Company in its extractive actions (for example - soil contamination, water contamination, among others) or penalties. Therefore, it becomes an event that creates obligations when these environmental damages are detected by the Company, when a new law requires that the existing damage be rectified or when the Company publicly accepts any responsibility for the rectification, creating a constructive obligation. The costs to remedy an eventual unexpected contamination, which give rise to a probable loss and can be reliably estimated, are recognized in Other income and expenses, net in income statement.

In addition, investments in infrastructure, machinery and equipment regarding operational improvements to avoid future environmental damage, are not provisioned, because it is expected that these assets will bring future economic benefits to the operating units, thus it is capitalized as Property, plant and equipment.

The cash flows are discounted to present value using a credit risk adjusted rate that reflects current market assessments of the time value of money and the specific risks for the asset to be restored. The interest rate charges relating to the liability are recognized as an accretion expense in net financial results. Differences in the settlement amount of the liability are recognized in the income statement.

In 2021,2023, as part of its annual asset retirement and environmental obligations review, the Company increased its expected disbursements on decommissioning obligations in certain operations, in accordance with updates in their asset retirement or environmental obligations studies and update in the discount rates. As a result, Nexa recognized a non-cash net expense of US$63.2 million in “Other income and expenses” in 4Q21, totaling US$7 million in 2021,2023, and increased its “Operational assets, property, plant and equipment” by US$612.0 million.

In addition, a provision of US$7.0 million was recognized in 2023, based on results of conceptual engineering studies conducted on inactive industrial waste containment structures that do not contain mining tailings, water or liquid waste and that have been closed for more than 20 years. The Company has reserved amounts related to estimated costs of anticipated additional obligations in relation to these closed dams, which may include obligations to de-characterize closed and inactive dams. For further information, please refer to Note 2627 to our consolidated financial statements included herein.

 
127149

Liquidity and Capital Resources

Tax, civil, labor and environmental provision

We are party to ongoing labor, civil, tax and environmental lawsuits, which are pending at different court levels. We establish provisions for potentially unfavorable outcomes of litigation in progress and update them based on management evaluation, with support from the positions of external legal counsel. For additional information, see Note 2728 to our consolidated financial statements.

Income tax and other taxes

We are subject to income tax in all countries in which we operate. Significant judgment is required in determining the income tax provision. The ultimate tax determination is uncertain for many transactions and calculations. We also recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax assets and liabilities in the period in which such determination is made. For additional information, see Note 11 to our consolidated financial statements.

Determination of Mineral Reserves and Mineral Resources as basis to determine life of mine

Mineral reserves are deposits estimated to be economically feasible for extraction under economic conditions as of the applicable measurement date. The amortization method and rates applied to the rights to use natural resources reflect the pattern in which the benefits are expected to be used by us and based on the estimated life of mine. Any changes to the life of mine, including as a result of changes in estimates of mineral deposits and mining plans, may affect prospective amortization rates and carrying values of these assets. The process of estimation of mineral deposits is based on a technical evaluation, which includes accepted geological, geophysics, engineering, environmental, legal and economic estimates. These estimates, when evaluated in the aggregate, can have a relevant impact on the economic viability of the mineral deposits. We use various assumptions with respect to conditions, such as metal prices, inflation rates, exchange rates, technology improvements and production costs, among others. Estimates of mineral reserves and resources are reviewed periodically, and any changes are adjusted to reflect life of mine and, consequently, adjustments to amortization periods. Costs for the acquisition of rights to explore and costs to develop mineral properties incurred as of the start of the feasibility study phase known as front end loading (“FEL 3”),FEL3, are capitalized. Since April 1, 2018, these costs are amortized using the units of production method over the estimated useful liveslife of the mines. The impacts of the change in the accounting estimation were not considered to be material, and the change was accounted for prospectively. Once the mine is operational, these costs are amortized and considered a production cost.

Recently issued accounting standards and interpretations not yet adopted

For a discussion of new standards, interpretations and amendments to IFRS Accounting Standards, see Note 5 to our consolidated financial statements.

 
128150

Risk Management

Risk management

Risk management is considered one of the key points in our business strategy and contributes to value creation and increasing the level of confidence in Nexa by its main stakeholders, including shareholders, employees, customers, suppliers and the local communities.

As a result, we have adopted an Enterprise Risk Management (“ERM”) Policy, that describes Nexa’s Risk Management Model, and its activities are an integral part of the processes in our operational units, corporate departments and projects, and provides support for decision-making by our executive officers and boardBoard of directors.

The risk assessment cycle is performed annually focusing on our strategy, operational aspects and key projects. We seek to identify material risks, which are then assessed with consideration of the potential health, safety, environmental, social, reputational, legal and financial impacts. By embedding risk management into our work processes and critical business systems, we work to ensure we make decisions based on our risk appetite, defined in 2022, on relevant inputs and valid data. The material risks identified during the risk management process are monitored and reported to the executive team, auditAudit committee and boardBoard of directors. We use a governance, risk and compliance management platform, BWise, to manage and assess our risks, to monitor our action plans and to create related reports.

We consider market risk to be the potential loss arising from adverse changes in market rates and prices. We are exposed to several market risks arising from our normal business activities. These market risks, which are beyond our control, principally involve the possibility that changes in commodity prices, interest rates or exchange rates will adversely affect the value of our inventory, financial assets and liabilities or future cash flows and earnings. For information on our risk management policies, see Note 12 to our consolidated financial statements.

Financial risk

Our financial risk management policy seeks to preserve our liquidity and protect our cash flow and its operating components (revenues and costs), as well as financial components (financial assets and liabilities) against adverse credit and market events such as fluctuations in currency and interest rates.

A significant portion of the products we sell are commodities, with prices based on international indices and denominated in U.S. dollars. A portion of our costs, however, are denominated in reais and soles, and therefore leads to a mismatch of currencies between our revenues and costs. Additionally, our indebtedness is based on different indices and currencies, which may impact our cash flows.

Our current financial risk management policy includes:

·Foreign Exchange Exposure Management. Foreign exchange exposure is our exposure to fluctuations in the currencies that make up our commercial, operational and financial relations (the real and sol), and that may impact our U.S. dollar cash flow. All actions in the financial risk management process are intended to hedge our cash flow in U.S. dollars, to maintain our ability to pay our financial obligations and to comply with liquidity and indebtedness levels defined by our management team. Our foreign exchange hedge mechanisms are based on the foreign exchange exposure that is projected at least for 12 months after a reference date.
·Interest Rate Exposure Management. Exposure to the interest rate is our exposure to fluctuations in each of the indices of interest rates (mainly CDI, LIBORLIBOR/SOFR and TJLP) from loans and financing transactions and financial investment that may impact our cash flow. Interest rate fluctuations would also result in gains or losses in the market value of our fixed rate debt portfolio due to differences in market interest rates and the rates at the execution of the debt agreements.
·Commodity Exposure Management. Exposure to commodity prices is our exposure to income and operating costs fluctuations due to changes in the reference prices for commodities (e.g., zinc, copper, silver) based on demand, production capacity, producers’ inventory levels and commercial strategies and the availability of substitutes in the global market. We calculate our exposure at least for 12 months after a reference date, considering any derivative financial instrument that has a certain commodity as the underlying asset.
 
129151

Risk Management

·Counterparties’ and Issuers’ Risk Management. This policy establishes exposure limits for financial and non-financial institutions that are counterparties of financial transactions and/or issuers of debt securities. The purpose of our counterparties’ and issuers’ risk management is to mitigate the occurrence of negative impacts on our cash flows from the non-fulfillment of financial obligations by these issuers and counterparties. In the case of financial investments (cash allocation), we measure exposure to credit risk of issuers by the sum of gross balances of financial investments. In the case of derivative transactions, the credit risk exposure of a certain counterparty and transaction is measured by the pre-settlement risk using statistical models. Exposure limits are determined based on ratings assigned by rating agencies and the equity of the relevant financial institution.
·Liquidity and Financial Indebtedness Management. This policy establishes guidelines for managing our liquidity and financial indebtedness. The main instrument for measuring and monitoring liquidity is a cash flow projection, considering a minimum projection period of 12 months from the reference date. Liquidity and debt management considers as an objective the comparable metrics provided by global credit rating agencies for investment grade entities. With respect to indebtedness, metrics considered compatible with the relevant objective are considered.

All proposals must comply with the guidelines and rules set forth in our Financial Risk Management Policy and subsequently submitted for review by our financeFinance committee and then for our boardBoard of directors’ approval, under the governance structure set forth in our Financial Risk Management Policy.

Foreign exchange risk

We are subject to foreign exchange risks resulting from the fluctuation of the real and the sol against the U.S. dollar, our functional currency. All actions in the financial risk management process related to our foreign exchange exposure are intended to hedge our cash flow in U.S. dollars, to maintain our ability to pay our financial obligations and to comply with liquidity and indebtedness levels defined by our management. We are also exposed to financial risk associated with changes in foreign currency exchange rates as certain costs incurred are in currencies other than our functional currency.

Assuming an exchange rate appreciation (devaluation)or devaluation of 10.0% of the U.S. dollar against the real as of December 31, 2021,2023, we estimate that our Adjusted EBITDA for the year would have increased (decreased)or decreased by US$40.548.4 million for 2021.2023. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, changes in exchange rates may also affect the volume of sales as other market participants become more or less competitive. This sensitivity analysis does not factor in a potential change in sales levels or actions that management could take to manage the potential impact. Accordingly, the actual effect of exchange rate fluctuations will vary from period to period. However, assuming all other factors are held constant, we would expect future fluctuations like those analyzed above to have a similar potential impact on our results for future periods. See “Forward-looking statements.”

Interest rate risk

A portion of our outstanding debt bears interest at variable rates and, accordingly, is sensitive to changes in interest rates. Based upon our indebtedness as of December 31, 2021,2023, an increase/(decrease) in LIBORSOFR of 25.0%25% would impact our net income (loss) before income tax for the year and cash flows by US$(0.05)/0.053.1/(3.1) million. We calculate our exposure to fluctuations in interest rates at least for 12 months after a reference date, considering any derivative financial instrument that has certain index as the underlying asset. Based on these exposures, we prepare financial protection proposals, which are submitted for our financeFinance committee’s approval. The hedges of interest rates, in general, seek to exchange fixed interest rate to floating interest rate or vice versa.

Metal price sensitivity

We are subject to financial risks arising from the volatility of prices of zinc, copper, lead and silver, and to a lesser extent gold. Assuming that expected metal production and sales are achieved, that tax rates are unchanged, and giving no effect to potential hedging programs, metal price sensitivity factors would indicate the following change in our 20212023 Adjusted EBITDA (as previously defined) attributable to us resulting from metal price changes.

 
130152

Risk Management

Zinc

Copper

Silver

Zinc

Copper

Silver

Change in metal price (in percentage)10.0%10.0
Change in Adjusted EBITDA (in millions of US$)117.529.320.794.526.422.8

 

Derivative instruments

To hedge against financial risk, we enter derivative transactions under our Financial Risk Management Policy. Those transactions are carried out in the over-the-counter market under master agreements such as International Swaps and Derivative Association and Brazilian Contrato Geral de Derivativos (“CGD”) Agreements.

None of the derivative transactions we are party to as of December 31, 20212023 have corporate guarantees or require margin calls or any kind of collateral. None of the derivatives we were party to as of December 31, 20212023 was entered into for speculative or arbitrage purposes.

We have the following recurring hedge programs in place:

·Fixed price commercial transactions (customer hedge): Hedging transactions that convert sales at fixed prices to floating prices in commercial transactions with customers interested in purchasing products at fixed prices. The purpose of this strategy is to maintain the revenue flow of the business unit with prices linked to the LME prices. These operations usually relate to purchases of zinc for future settlement on the over-the-counter market.
·Hedges for mismatches of “quotation periods” (book hedge): Hedges that set prices for the different “quotation periods” between the purchases of certain inputs (metal concentrate) and the sale of products arising from the processing of these inputs, or different “quotation periods” between the purchase and the sale of the same product. These operations usually relate to purchases and sales of zinc and silver for future trading on the over-the-counter market.
·Hedges for “operating margin” (strategic hedge): Derivatives contracted to reduce the volatility of the cash flow from its zinc, copper and silver operations. With a view to ensuring a fixed operating margin in reais for a portion of the Brazilian production of metals, the mitigation of risks is carried out through the sale of zinc forward contracts with the sale of U.S. dollar forward contracts.

To execute our hedge programs, as well as any sporadic hedging demands, we and our subsidiaries mainly enter into average rate (Asian) forwards, collars and swaps and standard interest rate swaps. These are the types of derivatives applicable for the hedge of our exposures, according to our Financial Risk Management Policy.

We initially recognize derivative instruments at fair value on the date a derivative contract is entered into and subsequently re-measure at their fair value. The method of recognizing the resulting gain or loss depends on whether we designate the derivative as a hedging instrument, in the case of adoption of hedge accounting, and if so, the nature of the item being hedged. We adopt the hedge accounting procedure and designate certain derivatives as either:

·hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge); or
·hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

We document the relationship between hedging instruments and hedged items at the inception of the hedging transaction, as well as the risk management objective and strategy for the undertaking of the various hedge transactions. We also document our assessment, both at the inception of the hedge and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows or fair values of hedged items.

Cybersecurity

Risk Management and Strategy

We maintain a comprehensive process for assessing, identifying, recording, addressing and managing material risks associated with cybersecurity that may impact our business, including risks related to disruption of business operations, financial reporting systems or our financial statements, as well as fraud, regulatory, reputational and business continuity risks.

 
131153

Risk Management

Nexa prioritizes the identification and management of cyber risks, focusing on adopting controls, technologies and processes that support cybersecurity, developing IT systems and infrastructure, emphasizing the confidentiality and privacy of data and information and complying with legal and regulatory requirements. Nexa’s cybersecurity risk management process includes the following:

·Adapting our cybersecurity risk management practices to ISO 27005 and the best practices outlined in the National Institute of Standards and Technology (“NIST”) Framework. We adopted NIST’s framework based on five pillars: Identification, Protection, Detection, Response and Recovery, and in collaboration with external partners, we assess our adherence to the NIST framework through an analysis of our cybersecurity processes and technologies;
·Utilizing material components within our cybersecurity framework, such as firewalls, endpoint detect and response mechanisms, phishing tests and annual penetration and intrusion tests to identify threats and vulnerabilities that could be exploited by cybersecurity attacks and reviewing relevant tactics, techniques, and procedures to prepare for a cyber-attack;
·Involving a dedicated team of professionals who monitor and act on cybersecurity events and risks including the Information Technology and Automation Technology areas. This team is responsible for creating, implementing, overseeing, and managing controls provided for in specific cybersecurity policies and procedures, in addition to presenting priorities and strategies for information and cyber security. This team is overseen by a Chief Information Security Officer (“CISO”) who reports to the Cybersecurity committee (“COSEG”);
·Providing requisite training and ensuring employees comply with cybersecurity programs and policies;
·Utilizing a comprehensive Cybersecurity Materiality Matrix to identify material cybersecurity incidents;
·Maintaining a comprehensive incident response plan in the event of a cyber-attack that consists of defined policies, processes, and protocols for identifying a cybersecurity attack, analyzing the materiality of a cyber incident, responding to and recovering the technological environment, communicating the incidents to internal parties, and if necessary or required under various regulatory regimes, external parties, and completing a closing analysis to identify possible improvements of processes and controls.

Governance

Board of directors and Audit committee

Nexa’s Board of directors has delegated direct oversight over cybersecurity matters to the Audit committee. The Audit committee is working with management to implement processes to: monitor cybersecurity matters; receive regular updates on cybersecurity tests, the incident response plan and the Company’s cybersecurity policies and procedures from the COSEG; ensure that management is conducting regular risk assessments; receive periodic reports related to designated cybersecurity incidents from management; establish with management an agreed upon approach for communication during a cybersecurity incident; monitor material cybersecurity developments through update calls with management and provide guidance on key decisions; review and debrief with management on post-incident remediation; monitor the content and timing of required cybersecurity disclosures, as well as the Company’s methodology and consistency in its materiality assessment used to disclose material cybersecurity incidents; ensure that the Company is in compliance with the regulations and rules related to cybersecurity, including but not limited to SEC rules; and encourage the Company to provide regular education and training to the Board, the Board committees and management on cybersecurity, consulting with outside experts when appropriate.

154

Risk Management

Management

The cybersecurity risk management processes described above are managed by the Management committee through COSEG. COSEG is the executive committee responsible for overseeing the Company’s cybersecurity strategies and policies, including but not limited to, assessing and managing Nexa’s material risks from cybersecurity threats. COSEG is composed of seven senior managers and executives of the Company, including the CIO and CISO. On a regular basis, the results of operational cybersecurity indicators are presented to COSEG by the CISO. Our cybersecurity management is established based on cybersecurity policies and processes, a dedicated cybersecurity budget, technological solutions, human resources, suppliers, and a departmental structure for cybersecurity. COSEG regularly reviews, tests, and updates cybersecurity processes and holds discussions on materiality determinations, ransomware attacks and cybersecurity breaches. Additionally, the Management committee monitors technological, industry, and public policy developments concerning cybersecurity risks, keeping abreast of evolving cybersecurity best practices. The Management committee considers whether engagement with external experts or law enforcement is necessary and conducts investigations to gain a comprehensive understanding of cyber breaches.

As of the date of this filing, Nexa has not identified any incidents that would be deemed material within the context of the SEC's requirements.

155

Major Shareholders

III.Share ownership and trading

Major shareholders

As of March 17, 2022,27, 2024, Nexa Resources has 132,438,611 common shares outstanding, with par value of US$1.00 per share. The table below sets forth the list of our shareholders and their participation in our capital stock.

Votorantim S.A. is Nexa Resources’ controlling shareholder. VSA does not have any different voting rights, but as long as it holds a majority of our voting stock, it can influence or control matters requiring approval by our shareholders, including the appointment of directors. VSA acquired all its shares in Nexa Resources on February 26, 2014.

Shareholder

Number

Share Capital (%)

VSA85,655,12864.68%
Public

46,783,483

35.32%

Total

132,438,611

100.00%

VSA

As of March 17, 2022,27, 2024, Hejoassu Administração S.A., or Hejoassu, is the sole shareholder of VSA’s capital stock, which consists of 18,278,788,894 common shares. Hejoassu is indirectly wholly owned by Ermírio Pereira de Moraes, Maria Helena Moraes Scripilliti, José Ermírio de Moraes Neto, José Roberto Ermírio de Moraes, Neide Helena de Moraes and the descendantsa number of Antonioindividuals, some of whom are related to our Board member Luís Ermírioro de Moraes, through controlled companies.

 
132156

Related Party Transactions

Related party transactions

We enter into transactions with related parties, including VSA and companies that are owned or controlled, directly or indirectly, by VSA, in our ordinary course of business. These transactions are conducted on an arms’arm’s length basis and in accordance with applicable laws and our corporate governance policies. See “Risk factors—Risks relating to our corporate structure—VSA has substantial control over us, which could limit our shareholders’ ability to influence the outcome of important corporate decisions.” In accordance with article 441-7 of the Luxembourg law of August 10, 1915 concerning commercial companies, as amended (“1915 Law”), any member of our boardBoard of directors having a direct or indirect financial interest conflicting with that of Nexa Resources in a transaction put before the boardBoard for consideration must advise the boardBoard thereof and cause a record of such member’s statement to be included in the minutes of the meeting. The director may not take part in these deliberations and at the next following general meeting of shareholders of Nexa Resources, before any other resolution is put to vote, a special report shall be made on any such conflicted transactions. This shall not apply where the decision of the boardBoard relates to ordinary business entered into under normal market conditions. A similar rule is stated in the article 441-12 of the Law 1915 and applies to the members of the managementManagement committee.

Nexa has controls in place in order to identify related parties on a quarterly basis and approve related party transactions in advance. Such controls include an analysis by the related party group, an internal committee, and in certain circumstances, the auditAudit committee, which is required for the execution of related party transactions.

The table below sets forth the balances of our principal related party transactions as of the dates and periods indicated. The entities disclosed are entities part of the Votorantim Group. The transactions relate to shared project costs such as environmental protection; administrative services provided by the Center of Excellence (Centro de Excelência); sales of limestones and cement purchases, mainly for the Aripuanã project; purchases of energy to be used in Nexa Brazil operation units and construction services for the Aripuanã project, among others.

Related Party Transaction Balances

As of December 31, 20212023

Related Party Assets(in millions of US$)

Related Party Transaction Balances

Related Party Assets

Current assets 
Trade Accounts ReceivableReceivables0.2
Companhia Brasileira de Alumínio0.60.2
Votener - VotorantimAuren Comercializadora de Energia LtdaEnergía Ltda.0.3-
Votorantim Cimentos S.A.0.00.7
Other-
Total

1.1

0.9
Trade payables 
Votorantim S.A.1.12.0
Andrade Gutierrez Engenharia S.A.Group1.910.9
Companhia Brasileira de Alumínio0.3-
Votorantim Cimentos S.A.0.1
Votener - VotorantimAuren Comercializadora de Energia LtdaEnergía Ltda.0.9-
Campos Novos Energia S.A.14.8
Votorantim International CSC S.A.C0.3-
Other

0.2

0.1
Total

4.8

28.0
Dividends payable 
Other.Other

11.4

2.8
Total

11.4

2.8
Related parties liabilities 
Votorantim International CSC S.A.C0.9
Votorantim S.A2.5
Other

0.4

0.5
Total

0.4

3.9
157

Related Party Transactions

We summarize below some of our principal related party transactions.

133

Related Party Transactions

 

For the Year Ended
December 31,

Related Party Transactions

20212023

Sales(in millions of US$)

Related Party Transactions

Sales

    Votorantim S.A.0.0
Companhia Brasileira de Alumínio9.00.2
Votener - VotorantimAuren Comercializadora de EnergiaEnergía Ltda.6.00.7
Votorantim Cimentos S.A.

0.0

Other

0.1

Total

15.1

0.9
Purchases 
Votorantim S.A.3.77.5
Andrade Gutierrez Engenharia S.A.Group41.573.8
Companhia Brasileira de Alumínio3.70.2
Votener - VotorantimAuren Comercializadora de EnergiaEnergía Ltda.16.28.0
Campos Novos Energia S.A.61.5
Votorantim Cimentos S.A.0.71.1
Votorantim International CSC S.A.C4.35.1
Other

1.1

0.4
Total71.2157.6

 

Andrade Gutierrez Engenharia S.AGroup

As part of the execution of the Aripuanã project, in June 2019 we entered into a mining development services agreement with Andrade Gutierrez Engenharia S.A., in which one of our director’s close family members may have significant influence at its holding level. Additionally, in June 2020, Nexa entered into an additional agreement with Consórcio Construtor Nova Aripuanã, a consortium of the Andrade Gutierrez group of companies, in connection with construction and operational services for the Aripuanã project. As of December 2021,2023, the updated amount of this contract is US$55.173.8 million.

Shared arrangements

We have entered into a number of shared services contracts with other entities in the Votorantim Group in an effort to achieve operational efficiencies. These include joint contracts for insurance coverage and information technology. Entities in the Votorantim Group with whom we maintain such contracts have access to a substantial level of information about us. In addition, VSA negotiates our insurance coverage at the level of the Votorantim group and we thus depend on choices made by VSA for selecting the service providers to be used for all insurances contracted by us, including coverage related to property, transport, liability, credit and engineering risk insurances. We retain the right of approval of contract renewal terms negotiated by VSA.

In addition, all executive officers participate in the Fundação Senador José Ermírio de Moraes (“FUNSEJEM”) pension fund, a private, closed and not-for-profit pension fund responsible for the management of the pension plans for the employees of companies linked to the Votorantim Group.

See “Risk Factors—Risks relating to our corporate structure—VSA has substantial control over us, which could limit our shareholders’ ability to influence the outcome of important corporate decisions.”

 
134158

Distributions

Distributions

Distributions to our shareholders are subject to the requirements of Luxembourg law and the approval of our boardBoard of directors or our shareholders, as applicable, and will depend on a number of factors, including, but not limited to, our cash balance, cash flow, earnings, capital investment plans, expected future cash flows from operations, our strategic plans and cash dividend distributions from our subsidiaries, as well as legal requirements and other factors we may deem relevant at the time. As of December 31, 2021,2023, there are no contractual restrictions on our ability to make distributions to our shareholders. Subject to these considerations, we estimate to distribute each year amounts equal to at least 2.0% of our average market capitalization.

Each common share entitles the holder to participate equally in distributions, unless the right to distributions has been suspended in accordance with our articles of association or applicable law.

Distributions in our common shares may be made in the form of either dividends or reimbursements of share premium. Under Luxembourg law, dividends are determined by a simple majority vote at a general shareholders’ meeting based on the recommendation of our boardBoard of directors. Furthermore, pursuant to our articles of association, the boardBoard of directors has the power to declare interim dividends and/or proceed with reimbursements of share premium in accordance with the 1915 Law.

We and our subsidiaries are subject to certain legal requirements that may affect our ability to pay dividends or other distributions. Distributions to shareholders (including in the form of dividends or reimbursement of share premium) may only be made from amounts available for distribution in accordance with Luxembourg law, determined based on our standalone statutory accounts prepared under Luxembourg GAAP. Under Luxembourg law, the amount of a distribution paid to shareholders (including in the form of dividends or reimbursement of share premium) may not exceed the amount of the profits at the end of the last financial year plus any profits carried forward and any amounts drawn from reserves that are available for that purpose, less any losses carried forward and sums to be placed in reserve in accordance with Luxembourg law or our articles of association. Furthermore, no distributions (including in the form of dividends or reimbursement of share premium) may be made if at the end of the last financial year the net assets as set out in the standalone statutory accounts prepared under Luxembourg GAAP are, or following such a distribution would become, less than the amount of the subscribed share capital plus the non-distributable reserves. Distributions in the form of dividends may only be made from net profits and profits carried forward, whereas distributions in the form of share premium reimbursements may only be made from available share premium.

Luxembourg law also requires at least 5.0% of our net profits per year to be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10.0% of our issued share capital. If the legal reserve subsequently falls below the 10.0% threshold, at least 5.0% of net profits again must be allocated toward the reserve. The legal reserve is not available for distribution. As of December 31, 2021,2023, the legal reserve is US$13,332,051.30.

The table below describes the distributions paid to our shareholders. Distributions for 2019, 2020 and 2021 were made in the form of a cash dividend. Distributions for 2022 were made in the form of cash dividend and share premium. Distributions for 2023 were made in the form of share premium.

 For the Year Ended December 31,
 

2021

2020

2019

 (in millions of US$)
Distributions paid to shareholders35.050.069.8
 For the Year Ended December 31,
 

2023

2022

2021

 (in millions of US$)
Distributions to shareholders25.050.035.0

 

On March 26, 2021,24, 2023, we paid approximately US$3525.0 million (US$0.260.19 per common share) of dividendsshare premium (or special dividend) to our shareholders. This dividendshare premium will be ratified, in accordance with Luxembourg laws, by our shareholders at the annual shareholders’ meeting for the fiscal year ended December 31, 2021,2023, which will occur inon June 2022.

On February 15, 2022, our board of directors approved a distribution to Nexa’s shareholders of US$50 million, US$44 million as dividend and US$6 million as share premium, or approximately US$0.331275 per common share and US$0.046258 per common share, respectively, to be paid on March 25, 2022. This dividend will be ratified, in accordance with Luxembourg laws, by our shareholders at the annual shareholders’ meeting for the fiscal year ended December 31, 2022, which will occur in June 2023.

135

Distributions

13, 2024.

Nexa Resources is a holding company and has no material assets other than its ownership of shares in its subsidiaries. When Nexa Resources pays a dividend or other distribution on its common shares in the future, it generally causes its operating subsidiaries to make distributions to it in an amount sufficient to cover any such dividends or distributions. The ability of subsidiaries of Nexa Resources to make distributions to Nexa Resources is subject to their capacity to generate sufficient earnings and cash flow and may also be affected by statutory accounting and tax rules in Brazil and Peru, as well as any conditions under the corporate law applicable to each subsidiary.

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Distributions

A Luxembourg withholding tax of 15.0 %15.0% is generally due on dividends and similar distributions made by Nexa Resources to its shareholders. However, distributions on Nexa Resources’ common shares that are sourced from a reduction of share capital or share premium areshould not be subject to Luxembourg withholding tax if Nexa Resources does not have distributable reserves or profits in its standalone statutory accounts prepared under Luxembourg GAAP.GAAP and provided that such distributions are made for genuine economic reasons. See “Additional information—Taxation—Luxembourg tax considerations—Shareholders.”

There is no law, governmental decree or regulation in Luxembourg that would affect the remittance of dividends or other distributions by Nexa Resources to nonresidentnon-resident holders of its common shares, other than withholding tax requirements. In certain limited circumstances, the implementation and administration of international financial sanctions may affect the remittance of dividends or other distributions. There are no specified procedures for nonresident holders to claim dividends or other distributions.

Computershare Trust Company, N.A. is the paying agent for shareholders who hold common shares listed on the NYSE. Dividends and other distributions on our common shares will be declared and paid in U.S. dollars.

 
136160

Trading Markets

Trading markets

Our publicly traded share capital consists of common shares with a par value of US$1.00 per share. Our common shares are publicly traded in the United States on the NYSE, under the ticker symbol NEXA. On March 17, 2022,27, 2024, there were 132,438,611 common shares issued and outstanding.

 

 
137161

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Purchases of equity securities by the issuer and affiliated purchasers

Nexa did not repurchase any shares during 2021.2023. As of December 31, 2021,2023, there were no authorized share buyback programs.

 

 
138162

Corporate Governance

IV.Corporate governance, management and employees

Corporate governance

Our corporate governance model is aimed at facilitating the flow of information between our executives and other key decision-makers on our management team, specifically, our boardBoard of directors, advisoryBoard committees and managementManagement committee. Our corporate governance model also provides a framework for the duties of our management team, including oversight of Nexa’s performance and decision-making. Our main corporate governance activities include support for boardBoard of directors, boardBoard advisory committees and executive board meetings;Board meetings (management committee); contribution to the process of preparing the annual report on governance practices; and elaboration of governance documents and updating of best practices.

Our corporate governance model is designed to ensure that the proper corporate governance principles are consistently applied within our organization. We have adopted certain corporate governance policies and practices that include internal rules for the boardBoard of directors and key committees that have independent representation and leadership, including an audit committee and a compensation, nominating and governance committee. The charter for the compensation, nominating and governanceCNG committee includes responsibility for reviewing and assessing the size, composition and operation of the boardBoard of directors to ensure effective and independent decision making, advising on potential conflicts of interest situations and developing corporate governance guidelines and principles.principles, in line with ESG standards. The disclosure set out below describes in further detail our approach to corporate governance.

Code of conduct

We work with all of our employees, as well as third parties who we work with, to ensure they behave in a manner consistent with our values, codeCode of conductConduct and the key principles of our compliance program, particularly as these relate to the environment, human rights and labor related issues, health and safety, and anti-bribery and corruption. In 2021, we updatedThe Code of Conduct reflects our commitment to the principles of anti-corruption, anti-money laundering, anti-terrorist financing, integrity, ethics, human rights, social and environmental responsibilities and antitrust policies based on laws in effect in the countries where we operate. As a result of this, the code of conduct was revised, disseminated and implemented throughout Nexa. This revised version of the Code of Conduct reflects our commitment to the principles of integrity, ethics, human rights, and social and environmental responsibilities. Our directors and executives have certified that they have read and that they will comply with our codeCode of conduct.Conduct. Furthermore, our boardBoard of directors periodically monitors compliance related topics. We also launched our codeCode of conductConduct for suppliersSuppliers in 20212022. A conductConduct committee is in charge of promoting the implementation of the code and supervising the application of disciplinary measures. The last update on our Code of Conduct occurred in 2021, since then we continued with its dissemination to current and new employees at a global level and in 2024, we expect to review our Code of Conduct and consequently issue a new version. In 2022, we also launched our Code of Conduct for Suppliers started to disseminate it to any suppliers considered to be strategic vendors. In 2023, we launched the Code of Conduct for Customers and started disseminating it as well.

Several anti-corruption,Anti-corruption, anti-money laundering and antitrust initiativesprograms have been implemented, including, among other things, ethics and compliance training and an ethics hotline which enables employees and third parties to report misconduct. Information reported through our ethics hotline is investigated and following the investigation, disciplinary action may be taken, if necessary. We have not granted any implicit or explicit waivers from any provision of our codeCode of conductConduct since its adoption.

Our codeCode of conduct, codeConduct, Code of conductConduct for suppliersSuppliers and compliance-related policies are publicly available on our website at https://www.nexaresources.com. We will disclose future amendments to, or waivers of, our codeCode of conductConduct on the same page of our corporate website. Information contained on our website is not incorporated by reference into this report, and you should not consider it to be part of this report.

Foreign private issuer and controlled company exemptions

Because we are a foreign private issuer, the NYSE rules applicable to us are considerably different from those applied to U.S. companies. Accordingly, we intendhave been, and expect to takecontinue, taking advantage of certain exemptions from NYSE governance requirements provided in the NYSE rules for foreign private issuers. Subject to the items listed below, as a foreign private issuer we are permitted to follow home country practice in lieu of the NYSE’s corporate governance standards. Luxembourg law does not require that a majority of our boardBoard consist of independent directors or the implementation of a compensation committee or nominating and corporate governance committee. As a foreign private issuer, we must comply with four principal NYSE corporate governance rules: (i) we must satisfy the requirements of Exchange Act Rule 10A-3 relating to audit committees; (ii) our chief executive officer must promptly notify the NYSE in writing after any executive officer becomes aware of any non-compliance with the applicable NYSE corporate governance rules; (iii) we must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules; and (iv) we must provide a brief description of any significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards.

 
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Corporate Governance

In addition, for purposes of the NYSE rules, as VSA beneficially owns a majority of our outstanding common shares, we are a “controlled company.” “Controlled companies” under those rules are companies of which more than 50.0% of the voting power is held by an individual, a group or another company. Accordingly, we are eligible to take advantage of certain exemptions from NYSE governance requirements provided in the NYSE rules. Specifically, as a controlled company under NYSE rules, we are not required to have a majority of independent directors or a compensation, nominating and corporate governance committee composed entirely of independent directors.

As described further above, we recognize that good corporate governance plays an important role in our overall success and in enhancing shareholder value and, accordingly, we have adopted certain corporate governance policies and practices that reflect these considerations, as well as our consideration of the recommended Canadian Corporate Governance Guidelines.considerations. The following table briefly describes the significant differences between our practices and the practices of U.S. domestic issuers under NYSE corporate governance rules.

Section

NYSE corporate governance rule for
U.S. domestic issuers

Our approach

303A.01A listed company must have a majority of independent directors. “Controlled companies” and “foreign private issuers” are not required to comply with this requirement.

We are a controlled company because more than a majority of our voting power for the appointment of directors is controlled by VSA. We are a foreign private issuer because we are incorporated in Luxembourg. As a controlled company and foreign private issuer, we are not required to comply with the majority of independent director requirements.

FourFive of our nineten directors are independent. Our boardBoard of directors has adopted internal rules equivalent to a charter. See “Corporate Governance, management and employees—Board of directors” for a description of our boardBoard and processes our boardBoard has implemented to promote the exercise of independent judgment.

303A.03The non-management directors of a listed company must meet at regularly scheduled executive sessions without management.We have no management directors.
 
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Corporate Governance

 

303A.04

A listed company must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties.

“Controlled companies” and “foreign private issuers” are not required to comply with this requirement.

As a controlled company and foreign private issuer, we are not required to comply with the nominating/corporate governance committee requirements. However, we do have a compensation, nominating and governance committee composed of two independent directors and two non-independent directors, which has adopted a committee charter.

As set forforth in the committee’s charter, this committee is responsible for, among other matters:

·         identifying individuals qualified to be nominated as members of the boardBoard of directors;

·         suggesting names to fill any vacancies on the boardBoard of directors;

·         developing corporate governance guidelines and principles; and

·         evaluating the performance and effectiveness of the boardBoard of directors, the CEO and each of committees.

See “Corporate Governance, management and employees—Board of directors—Committees of our boardBoard of directors.”

 

303A.05

A listed company must have a compensation committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties.

“Controlled companies” and “foreign private issuers” are not required to comply with this requirement.

As a controlled company and foreign private issuer, we are not required to comply with the compensation committee requirements. However, we do have a compensation, nominating and governance committee composed of two independent directors and two non-independent directors, which has adopted a committee charter.

As set forth in the committee’s charter, this committee is responsible for, among other matters:

·         reviewing and proposing new compensation models and changes to current compensation models; and

·         determining compensation of executive officers, directors and committee members.

See “Corporate governance, management and employees—Board of directors—Committees of our boardBoard of directors.”

 

 
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Corporate Governance

 

303A.06

303A.07

A listed company must have an audit committee with a minimum of three independent directors who satisfy the independence requirements of Rule 10A-3 under the Exchange Act, with a written charter that covers certain minimum specified duties.

We have an audit committee composed of three members, all of whom qualify as independent under Rule 10A-3 and applicable NYSE standards. Each member of the auditAudit committee also satisfies the financial literacy requirement under applicable standards. The auditAudit committee has adopted a committee charter, which was duly approved by our boardBoard of directors.

As set forth in the committee’s charter, the committee shall assist the boardBoard of directors in fulfilling its oversight responsibilities with respect to:

·         quality and integrity of our financial reporting and related financial disclosures;

·         the effectiveness of our internal control over financial reporting and disclosure controls and procedures;

·         our compliance with legal and statutory requirements as they relate to financial statements and related financial disclosures;

·         our risk management controls and monitoring processes, according to the ERM policy; and

·         the qualifications, performance and independence of our independent auditors and performance of the internal audit function.

See “Corporate governance, management and employees—Board of directors—Committees of our boardBoard of directors.”

 

303A.08Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules.Our articles of association require shareholder approval of overall remuneration, including any equity-compensation plans of members of the boardBoard of directors and members of boardBoard committees.
303A.09A listed company must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects.We have corporate governance policies in place as described in “Corporate governance, management and employees” in this annual report.
 
142166

Corporate Governance

 

303A.10A listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.We have adopted a formal codeCode of conduct,Conduct, which applies to our directors, officers, employees and third parties who interact with the Company. Our codeCode of conductConduct has a scope that is similar, but not identical, to that required for a U.S. domestic company under the NYSE rules.
303A.12

(a) Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the Company of NYSE corporate governance listing standards.

(b) Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A.

(c) Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation as and when required by the interim Written Affirmation form specified by the NYSE.

As a foreign private issuer, we are subject to and comply with (b) and (c) of these requirements, but are not subject to (a).

 
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Board of Directorsdirectors

Board of directors

Our boardBoard of directors is responsible for the general guidance of our business and affairs, including providing general guidance, governance and strategic oversight to our executives and other members of our management team. It is also responsible for ensuring that we meet our objectives, as well as for monitoring our performance and ensuring business continuity. The boardBoard of directors is vested with broad powers to act on behalf of Nexa and to perform or authorize all acts of administrative or ancillary nature necessary or useful to accomplish our corporate purpose. All powers not expressly reserved by law to the shareholders fall within the competence of our boardBoard of directors.

Appointment and term of members of our boardBoard of directors

In accordance with our articles of association and the 1915 Law, the members of our boardBoard of directors are elected by a resolution of a general meeting of shareholders adopted with a simple majority of the votes validly cast, regardless of the portion of capital represented at such general meeting. Votes are cast for or against each nominee proposed for election to the boardBoard and cast votes shall not include votes attaching to shares for which the shareholder has not participated in the vote, has abstained or has returned a blank or invalid vote.

Our directors are appointed for two-year terms and may be reelected. Members of our boardBoard of directors may be removed at any time, with or without cause, by a resolution adopted at a general meeting of our shareholders. Under Luxembourg law, in the case of a vacancy of the office of a director appointed by the general meeting of shareholders, the remaining directors may, by a simple majority vote of the directors present or represented, fill the vacancy. In these circumstances, the following general meeting of shareholders shall make the final appointment of the director.

Composition of the boardBoard of directors

Our boardBoard of directors is comprised of a minimum of five and a maximum of eleven members and currently has nineten members, of which fourfive are independent directors and five are non-independent, as set out below.

The term of each and all of our directors expires at the 20222024 annual general meeting of shareholders. The following table sets forth our current directors as of the date of this filing, their respective boardBoard positions and their respective date of election to the board.Board.

Name

Age

Principal Residence

Position

Elected Since

Jaime Ardila (2)(3)6668Aventura, USAChair of the BoardJune 18, 2019
Daniella Elena Dimitrov (1)(2)*5254Toronto, CanadaDirectorDecember 14, 2017**
Diego Hernandez (2)7375Vitacura, ChileDirectorAugust 25, 2016
Eduardo Borges de Andrade Filho (3)*5557São Paulo, BrazilDirectorAugust 25, 2016
Edward Ruiz (1)(4)*7173New Jersey, USADirectorDecember 14, 2017**
Gianfranco Castagnola (4)6163Lima, PeruDirectorJune 4, 2020
Hilmar Rode (2)*57Woluwe-Saint-Pierre, BelgiumDirectorJune 22, 2023
Jane Sadowsky (1)(3)*6062New York, USADirectorDecember 14, 2017**
João Henrique Batista de Souza Schmidt (4)4345São Paulo, BrazilDirectorOctober 18, 2016
Luís Ermírio de Moraes (3)6163São Paulo, BrazilDirectorAugust 25, 2016


(1) Member of the auditAudit committee.

(2) Member of the sustainability and capital projectsSCP committee.

(3) Member of the compensation, nominating and governanceCNG committee.

(4) Member of the financeFinance committee.

* Independent pursuant to Rule 10A-3 under the Exchange Act (Rule 10A-3) and applicable NYSE standards, as well as National Instrument 52-110 Audit Committees.

** The Audit Committees’ members were elected in December 2017 and the effective date of the mandate starting period January 2018. 

The business address of each member of our boardBoard of directors is our corporate office, which is 37A, Avenue J.F. Kennedy, L-1855, Luxembourg, Grand Duchy of Luxembourg.

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Board of directors

We present below a brief biographical description of each member of our boardBoard of directors:

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Board of Directors

Jaime Ardila. Mr. Ardila has been a member of our boardBoard of directors since June 2019 and has been ChairmanChair of the boardBoard since July 30, 2020. Mr. Ardila founded The Hawksbill Group in 2016, which provides business advisory services, including strategy, operations, public relations, communications and investment advice. Prior to that, he held several positions at General Motors Company in the U.S., Europe and South America in a career spanning 30 years. He also worked at the Planning Department and the Ministry of Industry and Trade for the government of Colombia from 1981 to 1984 and the investment bank Rothschild from 1996 to 1998. At General Motors, Mr. Ardila served CFO of General Motors Chile; President and Managing Director of General Motors Ecuador; President of General Motors Colombia; President of General Motors Argentina; CFO for Latin America, Africa and the Middle East; President for Brazil and Mercosur; and President of General Motors South America from 2010-2016. He is currently a member of the Boardboard of Directorsdirectors of Accenture and Chairman of Goldman Sachs, BDC. Mr. Ardila earned his master’s degree in Economics at the London School of Economics in 1981 and his bachelor’s degree in Economics at the University of Bogota in 1977.

Daniella Elena Dimitrov. Ms. Dimitrov has been a member of our boardBoard of directors since January 2018. Ms. Dimitrov has over 2025 years of leadership experience in building, leading and operating businesses in mining and financial services, including as CEO, COO and CFO. She was aMs. Dimitrov’s previous roles include President and CEO, Interim CEO, CFO of multi mine gold/copper producers, partner at Sprott Capital Partners, a division of Sprott Capital Partners LP, a merchant bank with a focus on natural resources. Ms. Dimitrov is also a director of International Petroleum Corp. and Chemtrade Logistics Income Fund and served as director of Excellon Resources Inc. until April 2020. She is also CFO and Executive Vice President Strategy and Corporate Development of Iamgold Corporation and in January 2022 was appointed as interim CEO. Ms. Dimitrov’s previous roles include President and CEO and CFO of a multi-mine gold/copper producer;resources, Executive Vice Chair of an iron ore developer through its acquisition following a hostile take-over bid;takeover bid, COO of a Canadian national wealth management and capital markets firm;firm, and various corporate development roles in mining and financial services. Ms. Dimitrov has also been a director of various companies in the mining, companiesoil, gas and chemicals industries and has served as a member and chair of various board committees, including audit, technical, health and safety, compensation and governance. Ms. Dimitrov is currently also a director of Chemtrade Logistics Income Fund. Ms. Dimitrov has received the NACD Directorship Certification.Certification and the ESG Global Competent Boards Designation and is a candidate for the Cyber Risk Oversight Certificate from the CERT Division of the Software Engineering Institute at Carnegie Mellon University. She has a Global EMBA from Kellogg School of Management and Schulich School of Business and a law degree from University of Windsor.degree. She was chosen as one of the top 100 Global Inspirational Women in Mining in 2016.

Diego Hernandez. Mr. Hernández has been a member of our boardBoard of directors since 2016. He was a member of the board of directors of Nexa Brazil until 2018. Mr. Hernández has over 4550 years of experience in the mining industry. He is currently theCorporate Director of BAL Group in Mexico. He served as President of the Sociedad Nacional de Minería in Chile and Advisor(2016 to the Chairman of BAL Group. He also integrates the Executive Committee of the Confederación de la Producción y del Comercio de Chile. He served as2022) and CEO of Antofagasta Minerals from August 2012, and in September 2014 was appointed CEO of Antofagasta plc a position he held untilfrom September 2014 to April 2016. He was CEO of CODELCO in 2010/2012 and President of Base Metals in BHP Billiton and Chairman of Minera Escondida during 2004/2010, based in Santiago.2010. He served as Executive Director, Non-Ferrous Metals in Vale in 2001/2004, CEO of Compañía Minera Doña Inés ofde Collahuasi in 1996/2001 and has held other senior positions in Anglo American and Rio Tinto. Mr. Hernandez received a civil mining engineer degree from the University of Chile and from the École Nationale Supérieure des Mines de Paris. In 2010, he received anthe Ankh award granted by the Copper Club of New York, and in 2013 the Chilean Institute of Engineers awarded him the “Gold Medal” for his distinguished career and important contribution to the development of engineering in Chile.

Eduardo Borges de Andrade Filho. Mr. Andrade has been a member of our boardBoard of directors since 2016. He was a member of the board of directors of Nexa Brazil until 2018 and has been member of the board of directors of CBA since 2017. Mr. Andrade has over 20 years of experience working with large industrial conglomerates and international consulting firms on relevant issues related to strategy, corporate development, corporate finance, governance and organization. He is founder and managing director of Otinga Investimentos, a private equity firm focusing on mid-size companies in Brazil. Between 2011 and 2014, he was corporate planning officer at VSA and served as board member of four other companies of the Votorantim Group. From 2010 to 2011, he was vice president for corporate development at Usiminas, a steel company, where he was responsible for mining and capital goods businesses, as well as strategy, business development and M&A. Prior to that, between 1997 to 2010, he was a Partner at McKinsey & Company, a consulting firm, where he took various leadership roles such as the Basic Materials Practice and the Knowledge Committee in Latin America. He started his professional career as an entrepreneur and engineer in his home state of Minas Gerais. Mr. Andrade received a bachelor’s degree in civil engineering from Fundação Mineira de Educação e Cultura in 1991 and holds aan MBA from the University of Chicago in 1995.

 
145169

Board of Directorsdirectors

Edward Ruiz. Mr. Ruiz has been a member of our boardBoard of directors since January 2018. Mr. Ruiz brings over 51 years of experience in public and private accounting. Mr. Ruiz currently serves on the audit committee of several publicly traded companies in Brazil, including Iochpe-Maxion SA and Arezzo & Co. He is a Certified Public Accountant since 1972 and has been responsible for audits of companies in the mining and energy sectors in Brazil and the United States. Mr. Ruiz retired from Deloitte in 2012, where he was employed since 1997 and most recently served as an audit partner and member of Deloitte’s IFRS Accounting Standards specialist group. As head of the Capital Markets group for Deloitte, Mr. Ruiz advised companies on financial and regulatory reporting matters related to initial public offerings and secondary offerings in the Brazilian, United States and European capital markets. Prior to Deloitte, he held executive positions in internal audit at JP Morgan and PepsiCo in the United States. He started his career in public accounting with Arthur Young in 1971. Mr. Ruiz obtained his bachelor’s degree from Pace University, New York City in 1971.

Gianfranco Castagnola. Mr. Castagnola has been a member of our boardBoard of directors since June 2020. Mr. Castagnola is partner and CEO of Apoyo Consultoría, a leading firm specialized in economic, business and financial advisory services in Peru. He also serves as chairman of the board of directors of its subsidiary, AC Capitales SAFI, one of the largest Peruvian investment fund managers. He has been a member of the board of directors of the Peruvian Central Bank from 1996 to 2001 and was president of the Universidad del Pacífico board of trustees. He is chairman of the board of directors of Scotiabank Peru S.A., and member of the board of directors of Saga Falabella, the Austral Group and IKSA. Mr. Castagnola’s previous roles include serving as member of the board of directors of Nexa Peru, Nexa Resources Atacocha S.A.A., Lima Airport Partners, Quimica Suiza, Cementos Pacasmayo, Camposol Holding and Redesur. Mr. Castagnola earned his master’s degree in public policy from Harvard University and his bachelor’s degree in Economics from the Universidad del Pacífico.

Hilmar Rode. Mr. Rode has been a member of our Board of directors since June 2023. Mr. Rode has over 30 years of experience in the global mining, materials, chemicals, and industrial gases industries. He began his career in process development and research engineering before joining Anglo American, where he worked for 12 years in leadership positions in its industrial diamonds, base metals and paper divisions in South Africa, United Kingdom and Austria. He joined Glencore in 2007 as CEO of its zinc division in Bolivia, returning in 2019 to the copper division to work on operational strategy, technical services, projects and capital management. Between 2015 and 2019, Mr. Rode was president of BHP’s Minera Escondida Ltda. in Chile and then Chief Executive Officer of zinc producer Nyrstar. Since September 2020, Mr. Rode joined Sibelco as group CEO. Mr. Rode holds a bachelor’s degree in Chemical Engineering from the University of Stellenbosch, South Africa, a Master’s in Environmental Engineering and a Doctorate in Chemical Engineering from State University, Buffalo, New York, and a Certificate in the Advanced Management Program from Harvard Business School.

Jane Sadowsky. Ms. Sadowsky has been a member of our boardBoard of directors since January 2018. Ms. Sadowsky has a broad and diverse range of finance and deal-related expertise and also has sector expertise in power and utilities and the related fields of commodities, renewables, power technology, infrastructure, and energy. She has a depth of knowledge and experience in mergers and acquisitions, public and private debt and equity, corporate restructurings and cross border transactions. Ms. Sadowsky retired from Evercore Partners, after more than 22 years as an investment banker. Prior to Evercore Partners, she worked in Citigroup’s Investment Bank and began her investment-banking career at Donaldson, Lufkin & Jenrette. Currently, Ms. Sadowsky serves on the board, the audit and the audit committeecompensation committees of Allied Gold, Inc. (former Yamana Gold, a publicly traded gold mining company based in Toronto, Canada,Gold), and chairs Yamana’sAllied Gold’s nomination and governance committee. She also serves as a senior advisor with responsibility for diversity and inclusion at Moelis &. Company, a U.S. publicly traded company. Ms. Sadowsky also serves on the board and Remuneration Committee of Scientific Games, a PE-backed company based in the US and the NY Chapter of NACD. Ms. Sadowsky earned her MBA from the Wharton School in 1989 and her bachelor’s degree in Political Science and International Relations from the University of Pennsylvania in 1983. Ms. Sadowsky has received the NACD Directorship Certification. She is a National Association of Corporate Directors Governance fellow and a frequent speaker at board governance conferences throughout the United States.

João Henrique Batista de Souza Schmidt. Mr. Schmidt has been a member of our boardBoard of directors since 2016. He has held the position of executive officer for Corporate Development at VSA, and in 2020 he assumed the position of CEO. He is the Chairmana board member of the Board of Directors of Votorantim Geração de Energia S.A.,Auren, a position he has held since 2017 and he2017. He served as Chairman of the Boardboard of Directorsdirectors of CESP – Companhia Energética de São Paulo in part of 2019. He also served as member of the Boardboard of Directorsdirectors of Citrosuco S.A. from 2014 to 2019 and Nexa Brazil from 2016 to 2018. Mr. Schmidt was previously a member of the board of directors of Fibria Celulose S.A. from 2014 to 2019. Prior to joining VSA, Mr. Schmidt had 15 years of experience in the financial sector. Mr. Schmidt was a Managing Director of Goldman Sachs do Brasil Banco Múltiplo S.A., where he worked from April 2010 to August 2014, and prior to that worked at Citigroup and Goldman Sachs in different capacities. Mr. Schmidt received a bachelor’s degree in Business Administration from Fundação Getulio Vargas in 2001.

170

Board of directors

Luís Ermírio de Moraes. Mr. Moraes has been a member of our boardBoard of directors since 2016, and was the ChairmanChair of the boardBoard until July 30, 2020. He was a member and the Chairman of the board of directors of Nexa Brazil until 2018. Mr. Moraes has over 35 years of experience working in mining and metallurgical operations. He is currently Vice President and a member of the board of directors of VSA, which is the Portfolio Manager Board of the Votorantim Group. Mr. Moraes is Chairman of the board of directors of CBA, the largest integrated aluminum producer in Brazil. He is a board member of Hejoassu, which is the ownership board of Votorantim. Mr. Moraes previous roles include director of VSA since 2000. Mr. Moraes also worked as an engineer in various processes in the areas of alumina refinery, smelter and aluminum smelting, pyrometallurgical and hydrometallurgical mineral processing of nickel laterites, developing novel projects for the separation and refining of cobalt. In the early 2000s, Mr. Moraes was the shareholder responsible for the creation and development of a new Votorantim business area with investments in IT and biotechnology. Mr. Moraes received a bachelor’s degree in mineral and chemistry engineering from the Colorado School of Mines, in the state of Colorado, United States, in 1982.

146

Board of Directors

Internal rules of the boardBoard of directors

Our boardBoard of directors adopted boardBoard internal rules, which includes the following, among other things:

·approve the general guidance of our business, its mission, strategic goals and guidelines;
·ensure that the executive officers comply with such mission, strategic goals and guidelines;
·approve the budget and a strategic plan which takes into account, among other things, the opportunities and risks of the business;
·approve the annual commercial agreements strategy;
·recommend the shareholders to approve mergers, spin-offs, incorporations, acquisitions, divestitures and joint venture operations related to Nexa and its subsidiaries according to our articles of association;
·promote and ensure compliance with our corporate purpose;
·ensure Nexa’s long-term and sustainable continuity with respect to the sustainable, long-term continuityCompany’s ESG and economic goals, including, but not limited to, supporting the Board committees to oversee and revise the implementation of Nexa, including with regardthe Company’s ESG strategy pursuant to economic, social and environmental aspects;applicable laws, when applicable;
·develop our approach to corporate governance, including the creation and review, from time to time, of corporate governance principles and guidelines that are specifically applicable to us;
·evaluate the performance of our CEO and executive officers;
·exemplify and, together with the managementManagement committee, createimplement a culture of integrity throughout the organization;
·approve and monitor compliance, directly and/or through its committees, with the following policies: (a) code of conduct; (b) disclosure policy; (c) insider trading policy; (d) dividend policy; (e) compliance policy; (f) antitrust/competition policy; (g) anti-corruption policy; (h) money laundering and terrorist financing prevention policy; (i) financial risk management policy (and complementary policies proposed by the managementManagement committee, such as the hedge, derivatives, leverage, liquidity and foreign exchange exposure policy); (j) ERM policy; (k) Clawback policy; and (k)(l) authorization policy;
171

Board of directors

·approve boardBoard members and executive officers’ compensation, the amount of which shall not exceed the amount determined by the general meeting;
·ensure appropriate succession planning for our boardBoard of directors, CEO and executive officers;
·deliberate and approve the terms and conditions of any compensation arrangements or proposed material amendments to any terms and conditions of existing compensation arrangements entered between Nexa and any of our executive officers; and
·all further tasks as required by applicable laws.
147

Board of Directors

The boardBoard internal rules are available on our website.

The boardBoard has at its disposal a set of provisions and practices that promotes independence in the decision-making process of the board.Board. In accordance with the board’sBoard’s internal rules, the independent members of the boardBoard may hold separate meetings and each director has a duty to declare, prior to any boardBoard meeting, the existence of a particular reason or conflict of interest with Nexa with respect to a subject matter being discussed or considered by the board.Board. Accordingly, such boardBoard member would be refrained from discussing and voting on a matter that could present a conflict of interest. Additionally, our boardBoard members are prohibited from holding executive positions with Nexa and/or serving on more than four boards of directors of companies that do not belong to the same conglomerate. As discussed above, our auditAudit committee is comprised entirely of independent directors and we also have independent representation on all other committees.

Description of the position of Chair

Our boardBoard of directors has developed a written position description for the chair of the boardBoard of directors. The chairmanchair of the boardBoard has the following responsibilities, subject to any other matters that may be set forth in our articles of association or provided for under applicable law:

·ensure the efficiency and proper performance of the boardBoard of directors;
·preside over the boardBoard meetings;
·prepare, organize, elaborate and distribute the agenda and minutes of the meetings aided by the boardBoard secretary, including all information necessary to discuss the matters on the agenda;
·coordinate the activities of other boardBoard members;
·ensure that all boardBoard members receive comprehensive information about the items on the boardBoard agenda in a timely manner;
·propose the annual corporate calendar to the boardBoard in coordination with Nexa’s CEO, which shall necessarily set forth the dates of corporate events;
·organize the onboarding and education sessions for incoming members of the boardBoard in coordination with Nexa’s CEO; and
·periodically arrange for continuing education opportunities for all boardBoard members, so that individuals may maintain or enhance their skills and abilities as members and ensure that their knowledge and understanding of Nexa’s business remains current.

The chairmanchair of our boardBoard of directors is not an independent director of Nexa Resources. The boardBoard of directors has carefully considered governance issues relating to chairmanchair independence and believes that the chairmanchair carries out separate responsibilities diligently and that, with the compensating practices in place, the boardBoard of directors operates effectively and in Nexa’s best interest.

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Meetings of the boardBoard of directors and attendance

The boardBoard of directors ordinarily meets in person or by other means of communication as may be required. The frequency of and agenda items for boardBoard meetings will vary depending on the state of affairs, requirements for approvals and opportunities available to Nexa and the risks and issues which Nexa faces. The agenda for meetings places priority and focuses on key issues for Nexa, which are identified by the chairmanchair of our board.Board. Routine business is dealt with after substantive discussions on the key issues.

Under the boardBoard of directors’ internal rules and our articles of association, the boardBoard can validly consider any matters and make decisions provided at least a majority of the members are in attendance in person or by representation. The boardBoard of directors’ internal rules further provides that each member is entitled to one vote either in person or where duly represented as required by the board’sBoard’s internal rules. In fiscal year 2021,2023, our boardBoard of directors held 12eight meetings, in which the rate of attendance in person or by representation was 100% of the directors. In addition, we had (i) six auditnine Audit committee meetings, (ii) seven financefive Finance committee meetings, (iii) nine compensation, nominating and governancesix CNG committee meetings, and (iv) fifteen sustainability and capital projectseight SCP committee meetings.

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Director

Board Meetings

Meetings Attended

Overall % Attendance

Board Meetings

Meetings Attended

Overall % Attendance

Jaime Ardila121008100
Daniella Elena Dimitrov12100
Daniella Dimitrov8100
Diego Hernandez121008100
Eduardo Borges de Andrade Filho121008100
Edward Ruiz121008100
Gianfranco Castagnola121008100
Ian Wilton Pearce (until July 29, 2021)6100
Hilmar Rode4100
Jane Sadowsky121008100
João Henrique Batista de Souza Schmidt121008100
Luís Ermírio de Moraes121008100

 

As set forth in the boardBoard of directors’ internal rules, the independent directors may hold meetings in which members of the management team and the non-independent directors are not present. In 2021,2023, our directors held in camera sessions without members of the management team prior and/or at the conclusion of each boardBoard meeting.

Committees of our boardBoard of directors

Our boardBoard of directors has an auditAudit committee, a financeFinance committee, a compensation, nominating and governanceCNG committee and a sustainability and capital projectsSCP committee. Our boardBoard of directors may have other committees as it may determine from time to time. Each of the standing committees of our boardBoard of directors has the composition and responsibilities assigned to them by the meeting of the boardBoard of directors that created such committee and as set forth in their respective committee charters. These charters set out, among other things, the roles and responsibilities of the chair of each committee. As set forth in the respective charters of the committees, each of the committees may meet with or without the management, as the case may be, at the discretion of the committee. The charter for each of the committees of our boardBoard of directors is available on our website.

Audit committee

Our auditAudit committee is a standing committee established by our boardBoard of directors on March 28, 2017 to assist the boardBoard of directors in fulfilling certain of its oversight responsibilities. The auditAudit committee may be composed of three to five members, each appointed by our boardBoard of directors for a term of one year. Daniella Elena Dimitrov, Edward Ruiz and Jane Sadowsky currently serve as its members. These individuals are independent under Rule 10A-3 and applicable NYSE standards, as well as Canadian securities regulators’ National Instrument 52-110 Audit Committees. In addition, each of them satisfies the financial literacy requirement under applicable rules. Our boardBoard of directors has determined that Mr. Edward Ruiz qualifies as an “audit committee financial expert.”

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Our auditAudit committee’s primary responsibilities are to assist the boardBoard of directors’ oversight of: (i) quality and integrity of our financial reporting and related financial disclosure; (ii) the effectiveness of our internal control over financial reporting and disclosure controls and procedures; (iii) our compliance with legal and statutory requirements as they relate to financial statements and related financial disclosures; (iv) the monitoring of risk management controls and processes, according to the ERM policy, and the oversight of financial reporting and related compliance, internal control over financial reporting and fraud risks; (v) the compliance and ethics program; (vi) review of and approval of certainall related party transactions; and (vii) the qualifications, performance and independence of our independent auditors and performance of the internal audit function. It is alsofunction; (viii) the audit committee attributionadherence to supportinternal controls related to our ESG disclosures, targets and public commitments, pursuant to applicable laws; and (ix) the Board in its monitoring of the enterpriseCompany’s cybersecurity risk management in matters related to the responsibility of this Committee.program, including policies, procedures and controls.

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Nexa has established policies and procedures that require any engagement of our independent auditor for audit or non-audit services to be submitted to and pre-approved by the auditAudit committee. In addition, our auditAudit committee may delegate the authority to pre-approve non-audit services to one or more of its members. All non-audit services that are pre-approved pursuant to such delegated authority must be presented to the full auditAudit committee at its first scheduled meeting following such pre-approval. Our auditAudit committee shall pre-approve all audit and non-audit services to be provided to us by our independent auditor and also has the authority to recommend pre-approval policies and procedures to our boardBoard of directors and for the engagement of our independent auditor’s services.

Finance committee

Our financeFinance committee is a standing committee established by our boardBoard of directors on March 28, 2017 to assist the boardBoard of directors in fulfilling certain of its oversight responsibilities. The financeFinance committee may be composed of three to five members, each appointed by our boardBoard of directors for a term of one year. Gianfranco Castagnola, Edward Ruiz and João Henrique Batista de Souza Schmidt currently serve as its members. It is also the financeFinance committee attribution to support the Board in its monitoring of the enterprise risk management in matters related to the responsibility of this committee.

Our financeFinance committee’s primary responsibilities are to assist the boardBoard of directors in fulfilling its oversight responsibilities with respect to monitoring Nexa’s balance sheet and by providing recommendations on our capital management strategy and capital structure, including indebtedness, investments and returns, , support the boardBoard in its monitoring of the enterprise risk management in matters related to the responsibilities of the committee, among others.

Compensation, nominating and governanceCNG committee

Our compensation, nominating and governanceCNG committee is a standing committee established by our boardBoard of directors on March 28, 2017, to assist the boardBoard of directors in fulfilling certain of its oversight responsibilities. The compensation, nominating and governanceCNG committee may be composed of two to five members, each appointed by our boardBoard of directors for a term of one year. Luís Ermírio de Moraes, Eduardo Borges de Andrade Filho, Jaime Ardila and Jane Sadowsky currently serve as its members. Two of the four members of the compensation, nominating and governance committee are independent directors. An external advisor with broad experience in the area was retained in 2021 to assist our compensation, nominating and governance committee in carrying out its mandate.

Our compensation, nominating and governanceCNG committee is responsible for: (1) new compensation models and changes to compensation models currently used by us, in order to guide and influence our actions; (2) the compensation of the executive officers, of the members of the boardBoard of directors and of the members of the committees of the boardBoard of directors; (3) the proposal of candidates to the chair of chief executive officer, when applicable, or any serious restrictions on the candidates proposed by the chief executive officer to the other chairs of the executive officers; (4) development of corporate governance guidelines and principles; (5) the governance structure related to the Company’s ESG strategy as it applies to the Company and its value chain; (6) identification of individuals qualified to be nominated as members of the boardBoard of directors and suggesting nominees to fill any vacancies on the boardBoard of directors; (6)(7) the structure and composition of boardBoard committees; (7)(8) evaluation of the performance and effectiveness of the boardBoard of directors, the chief executive officer and each of the board’sBoard’s standing committees; (8)(9) the supervision and approval of our social responsibility plans and policies; (9)policies (other than community-related aspects which are overseen by the SCP committee), including, but not limited to, our ESG strategy; (10) support the boardBoard in its monitoring of the enterprise risk management in matters related to the responsibilities of the committee; and (10)(11) any related matters required by applicable lawslaws; and stock exchange rules.(12) administering the policy for the recovery of erroneously awarded compensation. For more information regarding our corporate governance policies, see “Information on the Company—Environmental, Social and Governance (“ESG”)(ESG)—Nexa Materiality Matrix—Governance.

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Sustainability and capital projectsSCP committee

Our sustainability and capital projectsSCP committee is a standing committee established by our boardBoard of directors on April 29, 2019 to assist the boardBoard of directors in fulfilling certain of its oversight responsibilities. The sustainability and capital projectsSCP committee may be composed of at least three and no more than five members, each appointed by our boardBoard of directors for a term of one year. Diego Hernandez, Daniella Elena Dimitrov, Hilmar Rode and Jaime Ardila currently serve as its members.

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Our sustainability and capital projectsSCP committee’s primary responsibilities are to assist the boardBoard of directors by supporting safe and sustainable business practices in the conduct of our activities in respect of environmental, health, safety and social matters, including relationships with local communities, tailings management.management, water, waste, biodiversity, and GHG emissions (climate change), as well as with respect to the estimation and disclosure of mineral resources and reserves at all operations and projects (collectively “Sustainability Matters”). The committee also assists inthe Board with the oversight of the estimate and disclosure of mineral reserves and resources related to our operations and projects and monitor our compliance with applicable laws and policies, provide oversight on the developmentESG strategy, including its revision and implementation, of management systems relating to sustainability mattersin connection with the Sustainability Matters and capital projects matters, including the review of the suitability and effectiveness of our risk management processes with respect to sustainability matters and capital projects matters, including but not limited to, tailings facility management and emergency response plans.all related applicable laws.

The sustainability and capital projectsSCP committee is also responsible for assisting the boardBoard with the review of technical, economic and social matters with respect to our projects, including exploration, development, permitting, construction and operation of our mining and smelting assets, which are core to our strategy and growth. For more information regarding our sustainability policies, see “Information on the Company—Environmental, Social and Governance (“ESG”)(ESG)—Nexa Materiality Matrix—Environmental” and “Information on the Company—Environmental, Social and Governance (“ESG”)(ESG)—Nexa Materiality Matrix—Social.”

Orientation and continuing education

We implemented an orientation program for new directors under which each new director meets with the chair of our boardBoard of directors and our executives. New directors are provided with comprehensive orientation and education as to our business, operations and corporate governance (including the role and responsibilities of the boardBoard of directors and each committee).

The chair of our boardBoard of directors is responsible for overseeing directors’ continuing education and ensure that it is designed to maintain or enhance the skills and abilities of our directors and to ensure that their knowledge and understanding of our business remains current. The chair of each committee is responsible for coordinating orientation and continuing director development programs relating to the committee’s mandate.

Our ongoing director education programs entails site visits, presentations from outside experts and consultants, discussions on ongoing governance trends and guidelines for public companies, briefings from staff and management, and reports on issues relating to our projects and operations, sustainability and social matters, competitive factors, reserves, legal issues, economic, accounting and financial disclosure, mineral and hydrocarbon education and other initiatives intended to keep the boardBoard abreast of new developments and challenges that we may face. As part of the education session, certain directors obtained international certifications related to the competencies necessary for their activities, such as National Association of Corporate Directors (“NACD”) Directorship Certification.

Evaluation of directors

Our compensation, nominating and governanceCNG committee established a framework for the implementation and administration of processes to assess the effectiveness of the boardBoard and each of its members. This includes peer reviews of each director’s performance and self-assessments, as well as full boardBoard and committee review of the boardBoard and the respective committees, by way of questionnaires, interviews and sessions with the chairman.chair. In addition to hiring external advisors to develop and undertake this assessment, the compensation, nominating and governanceCNG committee is also responsible for overseeing the process and evaluating the results, with the objective of improving the performance of each director and the boardBoard of directors as a whole.

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Considerations in evaluating director nominees

Our boardBoard of directors is responsible for nominating members for election to the boardBoard and for filling vacancies on the boardBoard that may occur between annual meetings of shareholders. The process for nominating a new director initiates with our compensation, nominating and governanceCNG committee which evaluates Nexa’s current circumstances and establishes a profile for a director candidate. Such profile is then shared with a specialized external executive search firm, who assists the compensation, nominating and governanceCNG committee in selecting candidates for interviews. Prior to the interview, the specialized external firm is responsible for a background check with former employers and colleagues of the respective candidates.

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Following the interview(s), our compensation, nominating and governanceCNG committee recommends the nomination of the director candidate to our boardBoard of directors based upon an assessment of the independence, skills, qualifications and experience of such candidate. Specifically, the boardBoard seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity.

Diversity

We value diversity of abilities, experience, perspective, education, gender, background, race and national origin. We believe that having a diverse boardBoard of directors can offer a breadth and depth of perspectives that enhance our performance. Recommendations concerning director nominees are based on merit and past performance as well as expected contribution to the board’sBoard’s performance and, accordingly, diversity is taken into consideration. We believe that having a diverse and inclusive organization overall is beneficial to our success, and we are committed to diversity and inclusion at all levels of our organization to ensure that we attract, retain and promote the brightest and most talented individuals. We have recruited and selected executives that represent a diversity of business understanding, personal attributes, abilities and experience.

The compensation, nominating and governanceCNG committee and our boardBoard of directors have the responsibility to review and assess the composition of the boardBoard and each of its committees, and to identify, evaluate and recommend potential new directors. With respect to our executive officers, the compensation, nominating and governanceCNG committee reviews candidates recommended by the chief executive officer and makes the final recommendation to the boardBoard of directors. In new director and executive officer appointments and ongoing evaluations of the effectives of our boardBoard and management team, each of the board’sBoard’s committees and each director, the boardBoard will take into consideration diversity as one of the factors in order to maintain an appropriate mix and balance of diversity, attributes, skills, experience and background on our boardBoard of directors and each of its committees and the management team. Ultimately, appointments to our boardBoard of directors and management team are based on merit against objective criteria and with due regard to the benefits of diversity in boardBoard and management team composition and the desire to maximize the effectiveness of corporate decision making, having regard to our best interests and strategies and objectives, including the interests of our shareholders and other stakeholders. During our selection process for boardBoard appointments, we seek to ensure that women candidates are always considered on the shortlist for nominations. Currently, two (or 22%20%) of our nineten members of the boardBoard are women, and on a general basis, 16.2%17.5% of our overall employees are women.

Further, we developed a diversity program in 2019 as part of the Nexa Way program. This program is composed of affinity groups, which are formed by employees on a volunteer basis and divided into five themes: (i) women, (ii) race and ethnicity, (iii) LGBTQIA+, (iv) people with disabilities and (v) multigenerational. The affinity groups are assisted by a technical committee composed of executive officers and employees in key areas such as human resources, compliance, legal and institutional relations.

The program promotes knowledge, improvements and improvementsawareness of diversity in the workplace for our employees. In 2021,2023, we held the Plurality Week, a meetingweek dedicated to discussions on the 5 affinity groups, including lectures with an LGBT forumexternal guests. We also continued participating in the Companies and Rights Forum LGBTI+ and continued our partnership with Women in Mining (“WIM”) in Brazil and Peru, updated specific accommodations forPeru. In 2023, we signed a letter of commitment to expand and strength the representation of women in Peru, providedthe mining industry, fostering a dynamic business environment that not only attracts and retains woman employes, but also harnesses their unique strengths and recognizes their significant contributions. Nexa’s Empodera (Empower) group remained active in community events, promoting discussions about motherhood, harassment, female empowerment and women in the local communities in which our projects are located. We also continued working with our affinity group for people with disabilities and carried out an antiracist guide,accessibility survey in all units and provided supportoffices to evaluate how our structures are serving the disabled. We also launched a podcast to discuss the inclusion of people with disabilities and care forpublicized the digital tools we have implemented into our workplaces. In Brazil, 4.2% of our employees aged 60 and over during the pandemic, among other measures. This year we also added 16 new employees identifiedidentify as people with disabilities, (PWDs). In Brazil, 5.2% of our employees are identified as PWDs, and by 2030 our diversity target is to have a workforce composed by 35%30% of women employees and 6%30% of employeeswomen in Brazil and 3% of employees in Peru as PWDs, and 50% of diversity leadership represented companywide.positions. These targets are frequently monitored globalboth globally and locally, and action plans are currently being implemented to achieve the proposed goal.targets.

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For more information on our practices related to diversity, see “Information on the Company—Environmental, Social and Governance (“ESG”)(ESG)—Nexa Materiality Matrix—Social” and “Information on the Company—Environmental, Social and Governance (“ESG”)(ESG)—Nexa Materiality Matrix—Governance.”

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Compensation-setting process

Our compensation, nominating and governanceCNG committee is responsible for assisting our boardBoard of directors in fulfilling its governance and supervisory responsibilities and advising our boardBoard of directors with respect to evaluation and monitoring of compensation models and policies performed every two years, which takes into account peer companies and the challenges and opportunities we face. The committee’s responsibilities also include administering and determining our compensation objectives and programs, reviewing and making recommendations to our boardBoard of directors concerning the level and type of the compensation payable, evaluating performance, implementing evaluation and improvement processes, and ensuring that policies and processes are consistent with our philosophy and the objectives of our compensation program.

Share ownership

Luís Ermírio de Moraes, a member of our boardBoard of directors, directly and indirectly owns 2,379,259,approximately 2,379,242, or 1.80%1.79%, of our common shares. As of December 31, 2021,2023, none of our executive officers own, beneficially or of record, any of our common shares.

 
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Executive officers and management committee

Executive officers

We have global executives and management teams for our main subsidiaries. Each subsidiary team has a management structure that adheres to our corporate governance rules.

On September 16, 2021 we announced that Ignacio Rosado was selected to replace current President and Chief Executive Officer (“CEO”) Tito Botelho Martins Júnior. Mr. Rosado joined Nexa on November 1, 2021, and started an orderly transition process with Mr. Martins, who remained as CEO until December 31, 2021. Our executives currently are as follows:

Name

Age

Principal Residence

Position

Ignacio Rosado5254São Paulo, BrazilPresident and Chief Executive Officer
Rodrigo MenckJosé Carlos del Valle4754Lima, PeruSenior Vice President of Finance and Group Chief Financial Officer; Chief Executive Officer of Nexa Peru
Mauro Davi Boletta63São Paulo, BrazilSenior Vice President Financeof Smelting Operations and Group Chief Financial OfficerCommercial
Mauro Davi BolettaLeonardo Nunes Coelho6146Lima, PeruSenior Vice President of Mining Operations
Marcio Luis Silva Godoy58São Paulo, BrazilSenior Vice President Smeltingof Technical Services and Projects
Leonardo Nunes Coelho44Lima, PeruSenior Vice President Mining
Marcio Luis Silva GodoyJones Aparecido Belther56São Paulo, BrazilSenior Vice President Projectof Mineral Exploration & Business Development & Execution
Jones Aparecido BeltherGustavo Cicilini54São Paulo, BrazilSenior Vice President Mineral Exploration & Technology
Felipe Baldassari Guardiano5948São Paulo, BrazilVice President Sustainability, Strategic Planning &of Human Resources and Corporate Affairs
Gustavo CiciliniRenata Penna Moreira Gunzburger4640São Paulo, BrazilVice President Human Resources
Ricardo Moraes Galvão Porto48Lima, PeruSenior Vice President Commercialof Legal & Supply ChainGovernance

 

The business address of our executives is Avenida Engenheiro Luís Carlos Berrini, n° 105, 6th6th floor, São Paulo, State of São Paulo, Brazil.

A brief biographical description of each of our executives is presented below:

Ignacio Rosado. Mr. Rosado has been our Chief Executive Officer since January 2022. He has more than 16 years of experience in the metals and mining industry, and extensive board experience in different countries. Mr. Rosado led the initial public offering of Hochschild Mining Plc, and its acquisition strategy on Canadian Mining Assets. He also led the reorganization and transformation of Volcan Compañia Minera S.A.A. (“Volcan”) which included the construction of two new polymetallic mines and the issuance of bonds for more than US$1 billion. Prior to joining Nexa Resources, Mr. Rosado was the CEO of Volcan since 2014 and its Deputy CEO since 2010. Prior to Volcan, he served as Director and Chief Financial Officer at Hochschild Mining Plc. since 2005 and as a Senior Project Manager at McKinsey & Company since 2000. During his career, he also served on the Boardboard of Directorsdirectors of Lake Shore Gold Corp., Zincore Metals, Cordoba Minerals, and Kaizen Discovery. Mr. Rosado graduated with a degree in Economics in 1992 from Universidad del Pacifico and an MBA from the Ross School of Business, University of Michigan in 2000.

Rodrigo Menck.José Carlos del Valle. Mr. Menckdel Valle has been our Senior Vice President of Finance and Group Chief Financial Officer since March 2019. Mr. MenckOctober 3, 2022, and he also serves as Chief Executive Officer of Nexa Peru since November 2022. He has extensive knowledge of the metals and mining industry and more than 2025 years of experience in treasury, structured finance and capital markets. Heplanning. Mr. del Valle joined Nexa Resources in 2016after spending nine years as HeadCFO at Compañía Minera Antamina, where he led a successful company-wide transformation program and a US$1 billion syndicated loan financing initiative, among other key efforts. Before Antamina, he was the CFO of TreasuryVolcan Compañía Minera and he held various leadership positions at well-known companies, including McKinsey & Investor Relations. He was also directly involved in Nexa Resources’ initial public offering in 2017Company, Standard Chartered Bank, and Wells Fargo Bank, among others. Mr. del Valle holds a Business Administration degree from California State University, as well as Nexa Resources’ first debt issuance in May 2017. Prior to joining Nexa Resources, Mr. Menck held positions at BankBoston Corp., Itau Unibanco Holding S.A., WestLB A.G., Citibank and BNP Paribas S.A. He also worked at Braskem S.A. as a Structured Finance Manager and Finance and Shared Services Director and at Construtora Norberto Odebrecht S.A., as Head of Risk, Investments & Structured Finance (Latin America). Mr. Menck holds a degree in Business Administration and an MBA from The Wharton School. He also graduated from the University of São Paulo, Brazil.Advanced Management Program at Harvard Business School.

Mauro Davi Boletta. Mr. Boletta has been our Senior Vice President of Smelting Operations and Commercial since 2016. Mr. Boletta has over 30 years of experience with operations. He joined Votorantim Metais S.A. in 1986, having served in several production areas. Between 2010 and 2011, he was responsible for the design review of an aluminum smelter in Trinidad and Tobago. Mr. Boletta graduated with a degree in electrical engineering from the Federal University of Itajubá, UNIFEI in 1985 and holds an MBA from FGV.

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Leonardo Nunes Coelho. Mr. Coelho has been our Senior Vice President of Mining Operations since 2017. Mr. Coelho has over 20 years of experience managing mining operations with focus at gold and zinc. Prior to joining us, Mr. Coelho worked for Anglo Gold Ashanti Ltd. for 15 years, where he initiated his career as a Trainee. In Anglo Gold Ashanti Ltd., Mr. Coelho has led mining operations and the expansion of mining projects and served as General Manager of the Cuiabá and Lamego complexes as his last position at this company. Mr. Coelho graduated with a degree in Mine Engineering in 2001 from the Federal University of the State of Minas Gerais (“UFMG”) and has obtained graduate degrees from the Kellogg Graduate School of Management in 2015 in the United States, the Dom Cabral Foundation in 2009 in Brazil and the University of Cape Town in 2005 in South Africa as well as a qualification at INSEAD in digital transformation in 2018 and MIT in 2019.

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Marcio Luis Silva Godoy. Mr. Godoy has been our Senior Vice President Project Development & Executionof Technical Services and Projects since June 2020 and has also been responsible for engineering and IT. Mr. Godoy has over 27 years of experience in the mining industry. He has worked in different roles related to mineral exploration, mineral technology, project development and implementation and mining operations in several countries including Brazil, Mozambique, Chile, Zambia, Australia and Suriname. Mr. Godoy previously worked in well-known companies including Vale, Phelps Dodge, Golden Star Resources and Novo Astro Mining. He was also the chairman of the Agency for the technological development of the Brazilian Mining Industry (“ADIMB”). Mr. Godoy is a graduated Geologist and has a Masters in Geology from the São Paulo State University (“UNESP”).

Jones Aparecido Belther. Mr. Belther has been our Senior Vice President of Mineral Exploration & TechnologyBusiness Development since 2014. He has over 28 years of experience in the area. He held the same position at Votorantim Metais S.A. between 2004 and 2014. Prior to joining us, he was country manager at Vale in Peru between 2002 and 2004. He has worked in Brazil and abroad in companies such as Rio Tinto Brasil, Golden Star Resources, in Suriname, Phelps Dodge in Brazil and Chile, Vale in Brazil and Peru, and other companies. Mr. Belther graduated with a degree in Geology in 1991 from the São Paulo State University, UNESP, in Brazil, where he also obtained a Master’s degree in 2000 in Mineral Exploration.

Felipe Baldassari Guardiano. Mr. Guardiano has been our Vice President Sustainability & Strategic Planning since 2014 and has also been our Vice President for Corporate Affairs since 2019. Prior to that, he served as Director of Performance Management at Votorantim Metais S.A. between 2012 and 2014. He is responsible for developing and implementing company policies for sustainability and coordinating the elaboration and implementation of our strategic plan. In addition, he is responsible for establishing targets for performance improvement at all operations and corporate divisions through the development and implementation of the Votorantim Performance Management System. In 2012, before joining Votorantim Metais S.A., he worked at Vale for seven years as Director of Performance Management and, later, as a Director of Pellet Plants. Prior to Vale, he worked as a consultant, serving as an engagement manager associate at McKinsey & Co. for approximately five years. Prior to 1999, he lived in the United States for 12 years, where he worked as a Geostatistician and Reserve Specialist for Mineral Resources Development Inc. (“MRDI”). While at MRDI, he provided advisory expertise on mines in the United States, Canada, Africa, Brazil, Australia, Chile and other countries. Mr. Guardiano graduated in Mining Engineering from the Ouro Preto School of Mines (Minas Gerais, Brazil), and holds a Master’s degree in Mining Engineering from the Montana College of Mineral Sciences and Technology (Butte, Montana, United States), as well as executive education program certificates from the Massachusetts Institute of Technology (Boston, Massachusetts, United States), and the IMD (Lausanne, Switzerland).

Gustavo Cicilini. Mr. Cicilini became Vice President Human Resources and Corporate Affairs in 2019. Mr. Cicilini joined Nexa Resources in 2018 as senior Human Resources manager for attraction, development and culture and has been responsible for leading a culture transformation program. He has over 20 years of professional experience in various business sectors, including telecommunication, food and beverage, mobility solutions, industrial technology, consumer goods, energy and building technology. He has previously worked in companies including Algar Telecom, AmBev and Robert Bosch and been located throughout Latin America, including in Peru, Colombia, Ecuador, Venezuela, Panama and Costa Rica. Mr. Cicilini previously worked as Regional Corporate Human Resources Project Manager and has been responsible for change management and innovation, business intelligence and cross-selling functions. He holds a degree in Psychology and an MBA in Business Administration.

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Ricardo Moraes Galvão Porto.Renata Penna Moreira Gunzburger. Mr. PortoMs. Penna has been our Senior Vice President Commercialof Legal & Governance since April 2023. Ms. Penna joined Nexa as Chief Legal Counsel and Supply Chain since July 2018. His previous position wasHead of Governance in 2017. With more than 20 years of experience, Ms. Penna has focused on M&A, project finance and capital market transactions and she served as Vice President Commercialcounsel and Supply Chain at Nexa, a position he held since 2014. Mr. Porto has also been Chief Executive Officer at Nexa Peru since Novemberproject manager on Nexa’s initial public offering in October 2017. Mr. Porto held a management position at Votorantim Metais S.A. between 2013 and 2014. Mr. Porto began its career as commercial manager at Esso do Brasil, an Exxon Mobil affiliate. Prior to joiningNexa, she led LATAM, M&A and Finance divisions within the Legal Department of Votorantim Metais S.A.,Cimentos for six years, as well as worked for law firms such as Linklaters, Lobo & de Rizzo and Barbosa Mussnich & Aragão Advogados. Ms. Penna has a Bachelor from 2004 until 2012, Mr. Porto worked in several senior management positions as supply chain executive at Vale S.A., reaching the positionPontifícia Universidade Católica de São Paulo and a Master of officer Procurement Director. After, served as Executive Officer at the Bravante Group, an oil & gas company. Mr. Porto graduated with a degree in chemical engineeringLaw Degree (LL.M.) from the Federal University of Rio de Janeiro (“UFRJ”) and holdsChicago Law School, an Executive MBA from Fundação Dom Cabral. He has also obtained executive education program certificatesInstituto de Ensino e Pesquisa and completed an Executive Education Program on Women on Board from the Massachusetts Institute of Technology, and Kellogg Graduate School of Management in the United States and the IMD in Switzerland.Harvard Business School.

Evaluation of executive officers

On an annual basis, the performance of our executive officers is evaluated by the chief executive officer, the compensation, nominating and governanceCNG committee and ultimately, the boardBoard of directors. We strive to create a strong ethical and high-performance culture, as well work to ensure an appropriate succession plan that ensures the continuity of our business. In addition to future business needs, we consider the core skills, experience and diversity necessary to carry out our strategy.

Each year, our chief executive officer presents to the boardBoard of directors a report on potential successors to his position, which considers the ability of succession candidates to succeed the chief executive officer in an emergency, on an interim or permanent basis, as well as critical experiences and other attributes required in order for each candidate to enhance his or her readiness for succession. Our boardBoard of directors discusses potential successors with the chief executive officers, as well as potential successors to each member of the management team.

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Executive Officers and Management Committee

Position descriptions

Our boardBoard of directors has developed position descriptions for each of the chief executive officer and chief financial officer, which are discussed below.

Chief executive officer

Our boardBoard of directors believes that our chief executive officer must have experience in, among other things: leading businesses of a similar complexity and scale; carrying out growth and value creation mandates; participating in mergers and acquisitions; articulating and executing long-term corporate strategies; and facilitating development within high achieving organizations. In addition, our boardBoard of directors expects our chief executive officer to have knowledge of the mining and metals industry, international experience and an extensive global network. According to our boardBoard of directors, our chief executive officer should possess the following attributes, among others: a hands-on approach to the business; an alignment with our values; resiliency and credibility; a good reputation within the market; and the ability to communicate with and influence stakeholders.

Chief financial officer

Our boardBoard of directors believes that our chief financial officer must have experience in, among other things: leading accounting, controllership, financial planning and analysis, investor relations, treasury matters, mergers and acquisitions and risk management activities; formulating a company’s plan and direction for the future; developing financial, operational and tax-related strategies; managing transactions; overseeing internal controls in compliance with applicable laws and regulations; and implementing all financial-related activities within a company. In addition, our boardBoard of directors expects our chief financial officer to have public company experience, strong analytical and business valuation skills and knowledge of national securities exchanges, such as the NYSE, international experience and an extensive global network. According to our boardBoard of directors, our chief financial officer should possess the following attributes, among others: a hands-on approach to the business; an alignment with our values; resiliency and credibility; a good reputation in the market; and the ability to communicate with and influence stakeholders.

156

Executive Officers and Management Committee

Management committee

In accordance with our articles of association, the boardBoard of directors may delegate its powers to conduct our management and affairs, as well as its representation of us with respect to such matters, to a managementManagement committee. The managementManagement committee consists of at least three, and a maximum of seven, members. The members are not required to be shareholders or directors of Nexa. The boardBoard of directors may not delegate its powers related to general guidance of our business or acts reserved to the boardBoard of directors pursuant to the 1915 Law.

The following table sets forth the current members of our managementManagement committee, and their respective positions. The term of the members of our managementManagement committee expires on the day of the first boardBoard meeting held after the 20222024 general shareholders’ meeting.

Name

Age

Principal Residence

Position

Ignacio Rosado5254São Paulo, BrazilPresident and Chief Executive Officer
Rodrigo MenckJosé Carlos del Valle4754São Paulo, BrazilLima, PeruSenior Vice President of Finance and Group Chief Financial Officer
Mauro Davi Boletta6163São Paulo, BrazilSenior Vice President of Smelting Operations and Commercial
Leonardo Nunes Coelho4446Lima, PeruSenior Vice President of Mining Operations
Marcio Luis Silva Godoy5658São Paulo, BrazilSenior Vice President Project Development & ExecutionTechnical Services and Projects
Jones Aparecido Belther5456São Paulo, BrazilSenior Vice President Mineral Exploration & Technology
Ricardo Moraes Galvão Porto48Lima, PeruSenior Vice President Commercial & Supply ChainBusiness Development

 

Conduct Committee

Our conductConduct committee reports to the Chief Executive Officer and was created on January 1, 2014. Its internal rules were revised and updated on December 2, 2019.

180

Executive Officers and Management Committee

The conductConduct committee may be composed of at least seven members, such members being necessarily the Chief Executive Officer, the Senior Vice President of Finance and Group Chief Financial Officer, the Vice President of Human Resources, the Vice President of Legal & Governance, the Head of Internal Audit, Compliance and Compliance, the Group General Counsel,Internal Controls, the Compliance Manager and two representatives of the Ethics Line program, a confidential reporting system managed by a qualified and independent external entity available to internal and external parties designed to allow anonymous reporting of violations of our codeCode of conduct,Conduct, policies and internal procedures or applicable laws.

Our conductConduct committee’s primary responsibilities are to assist the managementManagement committee in enforcing the codeCode of conduct,Conduct, reviewing any claims raised through the Ethics Line program, and identifying claims that should be rated as critical. The conductConduct committee also assists our auditAudit committee by ensuring that any claim filed through the Ethics Line program and rated as critical is properly elevated to the auditAudit committee for further review.

Family relationships among executives

Our executives do not have any family relationships among themselves or with any other of our employees.

 
157181

Executive and Director Compensation

Executive and director compensation

The following discussion describes the significant elements of the compensation of our executive officers and directors for the year ending December 31, 2021.2023.

In 20212023 our executive compensation program includes cash compensation in the form of base salary, short-term incentives and long-term incentives. We provide base salary to compensate executives for their day-to-day responsibilities, which is aligned to a market reference based on industry analysis. We evaluate our total compensation practices on an annual basis to ensure that our compensation remains competitive in light of market and industry trends.

Our compensation, nominating and governanceCNG committee is responsible for assisting our boardBoard of directors in fulfilling its governance and supervisory responsibilities and advising our boardBoard of directors with respect to evaluation and monitoring of compensation models and policies and other related matters. The committee’s responsibilities also include administering and determining our compensation objectives and programs, reviewing and making recommendations to our boardBoard of directors concerning the level and type of the compensation payable, evaluating performance, implementing evaluation and improvement processes, and ensuring that policies and processes are consistent with our philosophy and the objectives of our compensation program.

Compensation framework

Our compensation is comprised of three principal components: (i) base salary, (ii) short-term incentive and (iii) long-term incentive.

Principal elements of compensation

Base salary

Base salaries for executive officers are established based on the scope of their responsibilities and competencies and taking into consideration the median market reference. Adjustments to base salaries are expected to be determined annually and may be increased based on performance, as well as to maintain market competitiveness. Additionally, base salaries may be adjusted as warranted throughout the year to reflect promotions or other changes in the scope or breadth of roles or responsibilities.

Short-term incentive program / bonuses

The annual bonus or short-term incentive program aims to align short-term priorities with our strategic planning by rewarding achievement of our goals and targeted annual results, resulting in an alignment with our interests. Each named executive officer has a panel of individual goals, with scales of minimum performance, target and surpass results. Measurement in these panels is based on financial and non-financial indicators. These indicators represent the specific goals and challenges attributable to the position in alignment with our performance and strategic planning.

Financial indicators are based on internal metrics and represent up40% to 50% of the employee panel for corporate positions and up to 40% for operations positions. In 2021,2023, the metrics used were Adjusted EBITDAFree Cash Flow (“FCF”) and free cash flow.Management Gains (“MGs”). The target of FCF is structured around the combined total of all our revenue versus costs and considers metal prices, and floating exchange rates. For MGs, the target is to capture opportunities for working capital gains, fixed costs, production costs, and synergies, among other metrics, measured in millions of dollars, and it considers fixed metal prices and exchange rates.

Strategic goals represent up to 50%20% of the individual panel and are comprised of qualitative and quantitative factors. In 2021,2023, the metrics used in this assessment included performance targets related to cost, production volume, safetyrisk management indicators, heat maps and reservesESG projects, maps of critical environmental issues, including decarbonization and resources, Aripuanã project targets, ESGsustainability initiatives, and performance, measured by Nexa Way program.work environment. We also recognize individual performance throughoutthrough targets thar supportsthat support different strategies in line with Nexa’s broader plan. theThe financial indicators applicable to our CEO represented 50% of the individual panel, and the metrics used were EBITDAFCF and free cash flow. Strategic goals represented 50% of the individual panel reflecting Aripuanã project’s performance indicators, Nexa Way and ESG.MGs.

182

Executive and Director Compensation

In 2021,2023, up to 20% of the compensation of our executive committeeofficers was related to the achievement of ESG goals and we intend to set additional ESG goals have been set for our executive officers in 2022.2024.

158

Executive and Director Compensation

Long-term incentive program

Our long-term incentive (“LTI”) program is designed to provide strong incentives for making decisions with a view to creating value for shareholders by linking cash compensation to our long-term performance, and by guiding executive actions towards the achievement of our strategic goals and growth plans.

The LTI program aligns interests among our executives and shareholders to ensure continued value creation. This incentive system is also intended to engage management in developing and delivering a consistent strategic plan, as well to attract and retain executive officers.

TheIn 2023, the LTI program iswas based on a five-year vesting period and comprised of three parts: (i) restricted grant, (ii) absolute performance grant and (iii) relative performance grant. All grants arewere defined amounts approved by the boardBoard of directors to be paid out at the end of the five-year vesting period. The restricted grant amount appreciates according to the total shareholder return (“TSR”) over the vesting period. The payment of the absolute performance grant iswas based on a targeted Company TSR combined with a performance curve, both approved by our boardBoard of directors at each granting period. The performance curve determines the amount to be paid in case of a performance equal or lower than expected in the targeted TSR. If the targeted TSR is achieved, the payment is fully due. If the performance of the TSR was greater than expected, the supplementary grant to be paid will be adjusted by up to 100%. The payment of relative performance grant depended on Nexa’s TSR performance when compared to a selected peer group approved by the Board of directors.

In April 2023, Nexa began a revision process of our LTI program. The new LTI program came into effect in February 2024. The new LTI program is based on a five-year vesting period and comprised of two parts: (i) restricted grant and (ii) absolute performance grant. Both grants are defined amounts approved by the Board of directors to be paid out at the end of the third, fourth and fifth year, considering one third of the total payment to be made on each of the three payments. The restricted grant amount appreciates according to the TSR over each payment period. The payment of the absolute performance grant is based on a targeted Company TSR combined with a performance curve, over each payment period, both approved by our Board of directors at each granting period. The performance curve determines the amount to be paid in case of a performance equal or lower than expected in the targeted TSR. If the targeted TSR is achieved, the payment is fully due. If the performance of the TSR is greater than expected, the supplementary grant to be paid will be adjusted by up to 100%. The paymentAt the end of relative performance grant dependsthe five-year vesting period, the amount paid on Nexa’sthe previous two payments will be adjusted with the fifth year TSR performance when compared to a selected peer group approved by the board of directors.result.

The methodology is referenced to the market value of Nexa Resources’ shares at the end of the vesting period, calculated based on the weighted average price of the common shares during the months of October, November and December in the year immediately prior to the year in which the respective settlement date for the award occurs, together with dividends paid during the respective grant cycle.

Change of control

Upon the occurrence of a change of control event, all of the phantom shares will continue under the same terms, conditions and due dates, with the following exceptions:

·If Nexa terminates an executive’s employment without cause or if the executive resigns for good reason within 24 months of the change of control event, any unvested phantom shares will immediately fully vest as of the date of such termination or resignation for good reason. The exercise price will be calculated based on the weighted average price of the common shares during the three months immediately preceding the month of termination. In case termination occurs on the same date of the change of control event, the exercise price will be the share price (in US$/share) used as reference for the transaction that resulted in the change of control event.
·If the executive resigns within twelve months of the change of control event, he or she will be entitled to a portion of the granted shares, proportionate to the length of time served (1/60 for each 30-day period served), which will become immediately vested as of the date of resignation. The exercise price will be calculated based on the weighted average price of the common shares during the three months immediately preceding the month of resignation. The Board may approve special cases and adjust the aforementioned rules provided that the basic rights of the new shareholders as well as the executives are preserved.
183

Executive and Director Compensation

Short sellingInsider trading policies

According to our insider trading policy, directors, officers and officersemployees of Nexa and its subsidiaries must refrain from active or speculativeimproper trading, involvingand the appearance of improper trading, in Nexa’s securities. This applies to all transactions in any securities based on short-term fluctuations in the price of Nexa’s securities or other market conditions. This includes,Nexa, including, but is not limited to, short sales, trading inany of Nexa’s shares, securities convertible or exchangeable into shares or other securities of Nexa, securities that Nexa may issue from time to time, such as preferred stock, warrants, and convertible debentures, as well as debt instruments, puts, calls, or options or similarand any other rights or obligations to buy or sell Nexa’s securities orsecurities. It also applies to derivative securities relating to Nexa’s securities, including securities exchangeable into Nexa’s securities, whether or not issued by Nexa, such as exchange-traded options and the purchase of the Nexa’s securities with the intention of quickly reselling them. In addition, directors, officers and officersemployees may not purchase financial instruments, such as prepaid variable forward contracts, equity swaps or collars, designed to hedge or offset a decrease in the market value of Nexa’s securities. Our policy applies to not only all securities owned by Nexa directors, officers, and employees, but also all securities owned by others where Nexa directors, officers, or employees have a direct or indirect control over investment decisions.

159

Executive and Director Compensation

2021Our insider trading policy is made available to directors, officers and employees directly or by posting the policy on Nexa’s website and such individuals are informed whenever significant changes are made to the policy. Violations to the policy will result in disciplinary action, including possible termination. Additionally, our policy applies to individuals even after termination of employment or service with Nexa.

2023 executive compensation

During fiscal year 2021,2023, our executive officers received cash compensation in an aggregate amount of approximately US$6.6 million,5,329,512, which includes compensation paid to any officers whose terms ended on the first business day of 20212023. The following table summarizes compensation we paid to our executive officers during the fiscal year 2021,2023, including base salary, short-term incentive programs or bonuses, long-term incentive programs and pension value.

Non-equity Incentive Plan Compensation

Name and Title

Base Salary

(US$)

Short-term

incentive programs / bonuses

(US$)

Long-term incentive programs

(US$)

Pension Value

(US$)

Total Compensation

(US$)

 

Tito Botelho Martins Júnior

President and Chief Executive Officer (1)

653,405367,357407,37528,2271,456,365 

Ignacio Rosado

President and Chief Executive Officer (2)

106,658---106,658 

Rodrigo Menck

Senior Vice President Finance & Group Chief Financial Officer

169,73375,469-9,111254,314 

Mauro Davi Boletta

Senior Vice President Smelting

163,084147,28860,1808,800379,353 

Leonardo Nunes Coelho

Senior Vice President Mining

363,859288,740-9,839662,439 
Marcio Luiz Silva Godoy302,965215,189-16,567534,722 
Senior Vice President Project Development & Execution 

Jones Aparecido Belther

Senior Vice President Mineral Exploration and Technology

164,533124,64864,8108,840362,831 

Gustavo Cicilini (2)

Vice President Human Resources

133,70580,150-7,287221,142 

Ricardo Moraes Galvão Porto

Senior Vice President Commercial & Supply Chain

324,270285,85363,4428,577682,143 

Felipe Baldassari Guardiano

Vice President Sustainability, Strategic Planning & Corporate Affairs

167,984177,40668,5139,219423,123 


Non-equity Incentive Plan Compensation

Name and Title

Base Salary

(US$)

Short-term

incentive programs / bonuses

(US$)

Long-term incentive programs

(US$)

Pension Value

(US$)

Total Compensation

(US$)

Ignacio Rosado

President and Chief Executive Officer

570,359835,193-33,1471,438,700

José Carlos del Valle (1)

Senior Vice President of Finance and Group Chief Financial Officer

387,389558,576--945,965

Mauro Davi Boletta

Senior Vice President of Smelting Operations and Commercial

201,673172,83821,22912,094407,835

Leonardo Nunes Coelho

Senior Vice President of Mining Operations

369,558420,64032,80910,622833,629

Marcio Luiz Silva Godoy

Senior Vice President of Technical Services and Projects

331,207327,932-17,885677,024

Jones Aparecido Belther

Senior Vice President of Mineral Exploration & Business Development

211,374189,73619,29911,698432,107

Gustavo Cicilini

Vice President of Human Resources and Corporate Affairs

184,419143,602-9,704337,725

Renata Penna Moreira Gunzburger (2)

Vice President of Legal & Governance

152,84693,3743,6676,640256,527

(1)José Carlos del Valle joined the Company on October 1, 2022; therefore, he was ineligible for long-term incentives paid in 2023 with respect to 2022 performance.
(2)Renata Penna Moreira Gunzburger was promoted from Head of Legal & Governance to Vice President of Legal & Governance in April 2023.
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Executive and Director Compensation

(1) Tito Martins remained in his position as CEO until December 31, 2021, as part of the transition process with Mr. Rosado.

(2) Ignacio Rosado joined Nexa as an officer on November 1, 2021 and as CEO on January 1, 2022.

20212023 director compensation

During fiscal year 2021,2023, our directors received total compensation in an aggregate amount of US$2,183,583.332,238,333 for their services as members of our boardBoard of directors. The chair of our boardBoard of directors received US$270,000280,000 in annual fees, while each boardBoard member received an average of US$55,617.3655,958 per quarter. In addition, each director is entitled to reimbursement for reasonable travel and other expenses incurred in connection with attending boardBoard meetings and meetings for any committee on which he or she serves.

We have no service contracts with members of our boardBoard of directors providing for benefits upon termination of employment.

160

Executive and Director Compensation

Annual compensation levels for the directors are as set out below:

Name

Base

Total Compensation

Jaime Ardila (1)280,000280,000
Daniella Dimitrov (2)230,000230,000
Diego Hernandez (3)230,000230,000
Eduardo Borges de Andrade Filho (3)230,000230,000
Edward Ruiz (2)240,000240,000
Gianfranco Castagnola (3)230,000230,000
Hilmar Rode128,333128,333
Jane Sadowsky (2)230,000230,000
João Henrique Batista de Souza Schmidt220,000220,000
Luís Ermírio de Moraes220,000220,000

Name

Total Compensation

Jaime Ardila (1)270,000
Daniella Elena Dimitrov (2)228,000
Diego Hernandez (3)222,500
Eduardo Borges de Andrade Filho (3)222,500
Edward Ruiz (2)236,750
Gianfranco Castagnola (3)222,500
Ian Wilton Pearce (until July 29, 2021)123,333
Jane Sadowsky (2)228,000
João Henrique Batista de Souza Schmidt215,000
Luís Ermírio de Moraes215,000


1.The chairmanchair of the boardBoard is entitled to additional compensation of US$60,000.00 per year.
2.(2)The auditAudit committee members are entitled to additional compensation of US$10,000.00 per year. The chair of the auditAudit committee is entitled to additional compensation of US$20,000.00 per year.
3.(3)Chairs of the other committees receive compensation of US$10,000.00. There are no additional payments per meeting for members who attendare members of two committees concurrently.

Compensation consultants

We retained Korn Ferry in 20212023 to provide competitive market analysis to assist in determining the appropriate level of compensation for executives, providing comprehensive competitive market clearing information on incentives, policies and benefits for each executive position. Korn Ferry has over 40 years of experience and deep knowledge in the Brazilian market. We paid Korn Ferry US$6,054.3552,104 in consulting services fees in 2021.2023.

185

We also retained Mercer’s consulting services for a study of compensation competitiveness in the countries where Nexa operates. Mercer was founded in 1975 and has global experience in career and investment advice. We paid Mercer US$33,586 in consulting services fees in 2021.

We used survey reports compiled by the Bedford Consulting Group to assist in considerations related to board compensation. The Bedford Consulting Group’s mining industry reports offer in-depth analysis to support mining companies in benchmarking executive and director compensation practices relative to peer group competitors.

Executive and Director Compensation

Retirement benefit plans

All executive officers participate in the FUNSEJEM pension fund, a private, closed and not-for-profit pension fund responsible for the management of the pension plans for the employees of the companies that are linked with the Votorantim group.

The pension plan is a defined contribution plan. Participation is voluntary and thus supplemental to the Brazilian government’s mandatory social security system. The plan is offered to employees through a specific fund that is maintained separately from the funds of each of the sponsoring organizations.

The plan’s assets correspond to 100% of the value of the liabilities. Annually, an actuarial assessment is made in compliance with the current legislation. However, there is no risk of deficit, since it is a defined contribution plan, whose formation of the reserve results from the capitalization of the respective contributions to the plan.

An employee may choose to contribute between 0.5% and 6.0% of his or her base wage. Nexa also matches the contribution made by the participant depending on suchtheir salary range. This contribution is monthly and varies between 1.5% and 6.0%, depending on the chosen percentage of the participant’s salary.

contribution.

 
161186

Employees

Employees

As of December 31, 2021,2023, we had 5,8405,771 employees and 7,6628,784 independent contractors. The following tables show the number of employees and contractors as of December 31, 2021, 20202023, 2022 and 2019.2021.

Number of Employees

Number of Employees

Number of Employees

As of December 31,

As of December 31,

2021

2020

2019

2023

2022

2021

Brazil3,6313,1933,3103,6583,5093,631
Peru2,1852,1312,4272,0952,0962,185
United States and Luxembourg

24

25

23

18

20

24

Total5,8405,3495,7605,7715,6255,840

 

Number of Independent Contractors*

Number of Independent Contractors*

Number of Independent Contractors*

As of December 31,

As of December 31,

2021

2020

2019

2023

2022

2021

Brazil1,7731,4981,0467,0112,7881,773
Peru

5,889

5,638

5,984

1,773

5,808

5,889

Total7,6627,1367,0308,7848,5967,662

 

*Refers to fixed-term contracts only.

 

Most of our employees are represented by labor unions. We negotiate collective bargaining agreements, relating to salaries, working conditions and welfare, with the various unions that represent our employees. Although we believe our present labor relations are good, there can be no assurance that a work slowdown, stoppage or strike will not occur prior to or upon the expiration of the current collective bargaining agreements, and we are unable to estimate the effect of any such work slowdown, stoppage or strike on our production levels, in spite of an established contingency plan.

We regularly invest in programs that ensure employee development and meet our specific business needs while continuously enhancing the qualifications of our staff so as to maintain and reinforce our competitiveness and our know-how as we continue to grow. The training programs include Technical/Operative Trainings, Mentoring Program, Leadership Development Program, Young Professional Training and an Individual Development Plan that, among other things, indicates the training that a given employee requires in order to continue to grow within Nexa Resources. In addition, we have a Trainee Program and thean Academy of Excellence, a program created by Votorantim for leaders within Votorantim.

 

 
162187

Legal Proceedings

V.Additional information

Legal proceedings

As of December 31, 2021,2023, we were party to various legal and administrative proceedings relating to labor, civil, environmental and tax matters in which the disputed amount for probable and possible claims was an aggregate of approximately US$346.5727.8 million. It is our policy to make provisions for legal contingencies when, based upon our judgment and the advice of our legal counsel, the risk of loss is probable. As of December 31, 2021,2023, we had established a net provision in the amount of US$36.870.6 million to cover contingencies for proceedings for which the risk of loss was deemed probable.

The following tables summarize judicial and administrative proceedings to which we are a party, the amounts in dispute in these proceedings in which a loss is considered probable or possible and the aggregate amount of the net provision established for losses that may arise from these proceedings.

 

As of December 31, 2021

 

Total
Proceedings (1)

Total Net
Provisions (2)

 (in millions of US$)
Civil and environmental (3)126.013.6
Tax162.84.5
Labor

57.6

18.7

Total

346.5

36.8


 

As of December 31, 2023

 

Total
Proceedings (1)

Total Net
Provisions (2)

 (in millions of US$)
Civil and environmental (3)162.224.6
Tax495.023.8
Labor

70.6

22.3

Total

727.8

70.6

1.(1)Does not include claims with expectation of loss classified as remote.
(2)2.NetOnly includes claims with expectation of loss classified as probable, net of judicial deposits.
3.(3)Includes environmental legal and administrative proceedings.

Civil and environmental liabilities and contingencies

As of December 31, 2021,2023, we were party to civil judicial proceedings and environmental judicialadministrative proceedings, with a probable or possible chance of loss in the aggregate amount of US$126.0162.2 million, for which we have recorded a net provision in the amount of US$13.624.6 million for proceedings with probable losses. The civil and environmental judicial claims filed against us primarily relate to pollution and collection lawsuits, repossession actions and indemnity actions related to contract disputes.

Tax liabilities and contingencies

As of December 31, 2021,2023, we were party to tax-relatedtax related judicial proceedings, with a probable or possible chance of loss in the aggregate amount of US$162.8495.0 million, for which we have recorded a net provision in the amount of US$4.523.8 million for proceedings with probable losses.

The tax-related judicial and administrative claims filed against us primarily relate to (i) value added tax on Sales and Services (“ICMS”VAT”), (ii) corporate income tax and social contribution on net profit (“IRPJ/CSLL”CIT”), (iii) Brazilian mining royalty (“CFEM”), (iv) Contribution to the Social Integration ProgramContributions (“PIS”) and (v) Social Contribution on Billing (“COFINS”“COFINS”).

Labor liabilities and contingencies

As of December 31, 2021,2023, we were party to labor judicial proceedings related to employment benefits, with a probable or possible chance of loss of a total amount of US$57.670.6 million, for which we have recorded a net provision in the amount of US$18.722.3 million for proceedings with probable losses. The judicial and administrative claims related to labor benefits that were filed against us are mainly related to (i) overtime payments, (ii) compensation for illness-related damages and (iii) payment of social benefits.

 
163188

Legal Proceedings

Other legal proceedings

VAT investigation

Throughout 2023, Nexa continued to cooperate with the investigation being carried out by the Fiscal Office of the State of Minas Gerais and the Public Ministry of Minas Gerais (the “MG Authorities”) of the practices of certain of Nexa’s former customers with respect to commercial transactions and related value added tax (“VAT”), as well as Nexa’s relationship with such former customers, that could result in liabilities for all parties involved in the commercial relationship.

In the third quarter of 2023, Nexa and the MG Authorities reached a resolution (the “Tax Resolution”) whereby Nexa, without admitting primary responsibility for the resolved claims, agreed to make certain tax payments to the State of Minas Gerais on behalf of certain customers that allegedly failed to properly make their tax payments (“tax portion”), and subsequently on October 20, 2023 entered into a related additional agreement (the “Related Agreement”, and together with the Tax Resolution, the “Agreements”) to make a contribution to the State of Minas Gerais to support its ESG-related efforts (“ESG portion”), recognizing a total amount of US$75.8 million in "Other liabilities”, comprised of US$65.5 million as “Other Income and Expenses, net” and US$10.3 million as “Financial Expenses” related to the interest charged in connection with the VAT-related practices of its former customers. In funding this agreement, the Company applied an offset of US$25.0 million of VAT accumulated credits, paid a portion of US$1.5 million in cash up front, offset an amount of US$6.4 million which was classified as a judicial deposit, and will pay the remainder in up to 46 monthly installments, to be adjusted by the Brazilian federal funds rate (“SELIC”) interest rate.

On February 8, 2024, a second and final Tax Resolution was filed with the MG Authorities whereby Nexa, without admitting primary responsibility for the resolved claims, agreed to make tax payments on behalf of certain customers, including interest and penalties, to the State of Minas Gerais, recognizing a total amount of US$27.1 million in "Other liabilities”, comprised of US$21.4 million as “Other Income and Expenses, net” and US$5.7 million as “Financial Expenses” related to the interest charged in connection with the VAT-related practices of this former customers. In funding this agreement, the Company will apply an offset of US$10.8 million of VAT accumulated credits, will pay US$0.8 million in cash up front, and will pay the remainder in up to 59 monthly installments, to be adjusted by the SELIC interest rate.

This resolution concludes the MG Authorities’ investigation with respect to the Company, and the Company does not expect any further developments or provisions with respect to these matters, although reserves its legal right to recover from certain customers the amounts that it has paid, or will pay, on their behalf in connection with the tax portion of the Agreements. These amounts will only be recognized upon recovery. For further details on this investigation, see Note 9(iv) to our consolidated financial statements.

Cerro Lindo stability agreement

We are engaged in ongoing tax-related discussions with the Peruvian tax authorities SUNAT related to the stability agreement of Cerro Lindo’s operations. The Peruvian tax authority issued unfavorable tax decisions against the Company for the years-ended December 31, 2014, 2015, 2016 and 2017, arguing that the stability income tax rate (20%) granted by the stability agreement applies only to the income generated from 5,000 tons per day of its production (i.e., income exclusively related to the investments informed in the Cerro Lindo Feasibility Study), and not from Cerro Lindo’s entire production capacity expanded over time. The total amount estimated for the contingency materialized from 2014 to 2017 is US$293.1 million.

As of the date of this annual report, SUNAT is now auditing the years-ended December 31, 2018 and 2019. Discussions with SUNAT are expected to evolve in 2024, including potential audits of the years ended December 31, 2020 and 2021, which is the last fiscal year covered by the stability agreement, depending on the ongoing legal proceedings, which may impact Nexa’s results, cash flow and liquidity. For further details on these legal proceedings, see Note 11(d) to our consolidated financial statements.

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Articles of Association

Articles of association

Company objectives and purposes

We were incorporated in Luxembourg as a public limited liability company (société anonyme) on February 26, 2014. Our articles of association provide that our corporate purpose is to, among others, (i) carry out any trade, business or commercial activities whatsoever, including but not limited to the purchase, exchange and sale of goods and/or services to third parties; (ii) take participations and interests, in any form whatsoever, in any commercial, industrial, financial or other, Luxembourg or foreign companies or enterprises; (iii) acquire through participations, contributions, underwriting, purchases or options, negotiation or in any other way any securities, rights, patents and licenses and other property, rights and interest in property as we shall deem fit; (iv) generally to hold, manage, develop, sell or dispose of the same, in whole or in part, for such consideration as Nexa Resources may deem fit, and in particular for shares or securities of any company purchasing the same; (v) enter into, assist or participate in financial, commercial and other transactions; (vi) grant to any holding company, subsidiary or sister company, or any other company that belongs to the same group as Nexa Resources, any assistance, loans, advances or guarantees (in the latter case, even in favor of a third-party lender of any affiliates); (vii) borrow and raise money in any manner and to secure the repayment of any money borrowed; and (viii) generally to do all such other things as may appear to Nexa Resources to be incidental or conducive to the attainment of the above objects or any of them. We can perform all commercial, technical and financial operations, connected directly or indirectly in all areas as described above, in order to facilitate the accomplishment of its purpose, provided always that Nexa Resources will not enter into any transaction that would constitute a regulated activity of the financial sector without due authorization under Luxembourg law.

Our common shares are governed by Luxembourg law and our articles of association. Our articles of association were amended in June and August 2021. The following is a summary of the material terms of our common shares based on our articles of association and Luxembourg law. These rights may differ from those typically provided to shareholders of U.S. companies under the corporation laws of some states of the United States. We encourage you to read the complete form of our articles of association, filed as Exhibit 2.4 of this annual report on Form 20-F.

Common shares

On April 11, 2016, our shareholders approved the reduction of our share capital through the cancellation of 350,000,000 common shares, decreasing our share capital from US$1,280,505,254 to US$930,505,254.

On April 19, 2016, our shareholders approved the issuance of 110,910,811 new common shares fully paid via cash contributions by certain shareholders, increasing our capital from US$930,505,254 to US$1,041,416,065.

On June 28, 2017, our shareholders approved the reduction of our share capital through the cancellation of 200,000,000 common shares, decreasing our share capital from US$1,041,416,065 to US$841,416,065.

On September 18, 2017, our shareholders approved the reduction of our share capital through the cancellation of 300,000,000 common shares, decreasing our share capital from US$841,416,065 to US$541,416,065.

On October 6, 2017, our shareholders approved the reduction of our share capital through the cancellation of 428,595,552 common shares, decreasing our share capital from US$541,416,065 to US$112,820,513.

On October 31, 2017, our shareholders approved the issuance of 20,500,000 new common shares fully paid via cash contributions by certain shareholders, increasing our share capital from US$112,820,513 to US$133,320,513.

On September 13, 2018, our shareholders approved a general authorization to the boardBoard of directors to establish share buyback programs for a period of three years. On September 20, 2018, our boardBoard of directors approved a share buyback program under which we, directly or indirectly through our subsidiaries, may repurchase, from time to time, up to US$30.0 million of our outstanding common shares listed on the NYSE over a 12-month period beginning on November 6, 2018 and ending on November 6, 2019. As of March 25, 2019, we have repurchased 466,231 common shares, at an average price of US$10.63 per share, for an aggregate purchase price of US$4.96 million. All of the repurchased common shares were cancelled on June 4, 2020.

 
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Articles of Association

On June 4, 2020, our shareholders approved the reduction of our share capital through the cancellation of 881,902 treasury shares, decreasing our share capital from US$133,320,513 to US$132,438,611.

As of December 31, 2021,2023, our issued share capital was US$132,438,611 represented by 132,438,611 common shares fully paid, with par value of US$1.00 per share. In addition to our issued share capital, we have an authorized share capital of US$231,924,819, represented by 231,924,819 common shares.

Distributions

Pursuant to our articles of association, the general meeting of shareholders may approve dividends and the boardBoard of directors may declare interim dividends, in each case to the extent permitted by Luxembourg law. Pursuant to our articles of association, the boardBoard of directors may also declare distributions to our shareholders in the form of reimbursement of share premium or interim dividends to the extent permitted by Luxembourg law. Each common share entitles the holder to participate equally in any distributions, if and when declared by the general meeting of shareholders or, in the case of interim dividends or reimbursements of share premium, the boardBoard of directors, out of funds legally available for such purposes.

Declared and unpaid distributions held by us for the account of the shareholders shall not bear interest. Under Luxembourg law, claims for unpaid distributions will lapse in our favor five years after the date such distribution has been declared.

For additional information regarding our policy on distributions, including procedures provided by Luxembourg law, see “Share ownership and trading—Distributions.”

Voting rights

There are no restrictions on the rights of Luxembourg or non-Luxembourg residents to vote our shares. All of our shareholders, including our public shareholders, hold common shares with identical voting rights, preferences and privileges. Each common share entitles the shareholder to attend a general meeting of shareholders in person or by proxy, to address the general meeting of shareholders and to vote. Each common share entitles the holder to one vote at the general meeting of shareholders.

The boardBoard of directors may also decide to allow shareholders to vote by correspondence by means of a proxy form providing for a positive or negative vote or an abstention on each agenda item. The conditions for voting by correspondence are set out in the articles of association and in the convening notice.

The boardBoard of directors may decide to arrange for shareholders to be able to participate in the general meeting by conference call, video conference or similar means of communication, whereby (i) the shareholders attending the meeting can be identified, (ii) all persons participating in the meeting can hear and speak to each other, (iii) the transmission of the meeting is performed on an ongoing basis and (iv) the shareholders can properly deliberate without the need for them to appoint a proxyholder who would be physically present at the meeting.

General meeting of shareholders

In accordance with Luxembourg law and our articles of association, any regularly constituted general meeting of our shareholders has the power to order, carry out or ratify acts relating to our operations to the extent that such decisions are the domain of the shareholders and not the boardBoard of directors.

Our annual general meeting of shareholders shall be held at our registered office, or at such other place in Luxembourg as may be specified in the notice of the meeting, within six months after the end of the relevant financial year. Except as otherwise specified in our articles of association, resolutions at a general meeting of shareholders are adopted by a simple majority of shares present or represented and voting at such meeting.

A shareholder entitled to vote may act at any general meeting of shareholders by appointing another person (who need not be a shareholder) as his proxy, which proxy shall be in writing and comply with such requirements as determined by our boardBoard with respect to the attendance to the general meeting, and proxy forms in order to enable shareholders to exercise their right to vote. All proxies must be received by us (or our agents) no later than the day determined by our boardBoard of directors.

 
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Articles of Association

Issuance of shares and preferential subscription rights

Our shares may be issued pursuant to a resolution of the general meeting of shareholders. The general meeting of shareholders may also delegate the authority to issue shares to the boardBoard of directors for a renewable period of five years. The boardBoard of directors has been authorized to issue up to 231,924,819 common shares. Such authorization will expire five years after the date publication in the Luxembourg legal gazette (Recueil Electronique des Sociétés et Associations) of the minutes of the of the general meeting of shareholders held on June 4, 2020 (unless amended or extended by the general meeting of shareholders).

Each holder of shares has preferential subscription rights to subscribe for any issue of shares pro rata to the aggregate amount of such holder’s existing holding of the shares. Each shareholder shall, however, have no preferential subscription right on shares issued for a contribution in kind.

Preferential subscription rights may be restricted or excluded by a resolution of the general meeting of shareholders, or by the boardBoard of directors if the shareholders so delegate. The general meeting of shareholders has delegated to the boardBoard of directors the power to cancel or limit the preferential subscription rights of the shareholders when issuing new shares, so long as the issuance of new shares is carried out through a public offering.

If we decide to issue new shares in the future and do not exclude the preferential subscription rights of existing shareholders, we will publish the decision by placing an announcement in the Luxembourg official journal Recueil Electronique des Sociétés et Associations and in a newspaper published in Luxembourg. The announcement will specify the period in which the preferential subscription rights may be exercised. Such period may not be shorter than 14 days from the publication of the offer. The announcement will also specify details regarding the procedure for exercise of the preferential subscription rights. Under Luxembourg law preferential subscription rights are transferable and tradable property rights.

Repurchase of shares

Nexa Resources is prohibited by the 1915 Law from subscribing for its own shares. Nexa Resources may, however, repurchase its own shares or have another person repurchase shares on its behalf, subject to certain conditions, including:

·prior authorization of the general meeting of shareholders setting out the terms and conditions of the proposed repurchase, including the maximum number of shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed five years) and the minimum and maximum consideration per share;
·the repurchase may not reduce the net assets of Nexa Resources on a non-consolidated basis to a level below the aggregate of the issued share capital and the reserves that Nexa Resources must maintain pursuant to the 1915 Law or our articles of association;
·only fully paid-up shares may be repurchased; and
·the acquisition offer is made on the same terms and conditions to all the shareholders who are in the same position; however, listed companies may repurchase their own shares on the stock exchange without making an acquisition offer to the shareholders.

On September 13, 2018, our shareholders authorized us to purchase, acquire, receive or hold and sell shares of Nexa Resources in accordance with the 1915 Law and any other applicable laws and regulations. The authorization was effective immediately after the general meeting and valid for a period of three years. For more information, see “Share ownership and trading—Purchases of equity securities by the issuer and affiliated purchasers.”

 
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Form and transfer of shares

Our shares are issued in registered form only and are freely transferable. Luxembourg law does not impose any limitations on the rights of Luxembourg or non-Luxembourg residents to hold or vote our shares.

Under Luxembourg law, the ownership of registered shares is generally evidenced by the inscription of the name of the shareholder, the number of shares held by him or her in the shareholders’ register, which is maintained at our registered office. Each transfer of shares is made by a written declaration of transfer recorded in our shareholders’ register, dated and signed by the transferor and the transferee or by their duly appointed agent. We may accept and enter into its shareholders’ register any transfer based on an agreement between the transferor and the transferee provided a true and complete copy of the agreement is provided to us.

Our articles of association provide that, in case our shares are recorded in the register of shareholders on behalf of one or more persons in the name of a securities settlement system or the operator of such a system, or in the name of a professional depositary of securities or any other depositary or of a sub-depositary designated by one or more depositaries, Nexa—subject to a confirmation in proper form received from the depositary—will permit those persons to exercise the rights attaching to those shares, including admission to and voting at general meetings of shareholders. The boardBoard of directors may determine the requirements with which such confirmations must comply. Shares held in such manner generally have the same rights and obligations as any other shares recorded in our shareholder register(s).

 

 
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Taxation

Taxation

Luxembourg tax considerations

Scope of Discussion

This summary is based on the laws of Luxembourg, including the Income Tax Law of December 4, 1967, as amended, the Municipal Business Tax Act of December 1, 1936, as amended and the Net Wealth Tax Act of October 16, 1934, as amended, to which we jointly refer as the “Luxembourg tax law”, existing and proposed regulations promulgated thereunder, and published judicial decisions and administrative pronouncements, each as in effect on the date of this report or with a known future effective date. This discussion does not generally address any aspects of Luxembourg taxation other than income tax, corporate income tax, municipal business tax, withholding tax and net wealth tax. This discussion, while not being a complete analysis or listing of all of the possible tax consequences of holding and disposing of shares, addresses the material tax issues. Also, there can be no assurance that the Luxembourg tax authorities will not challenge any of the Luxembourg tax consequences described below; in particular, changes in law and/or administrative practice, as well as changes in relevant facts and circumstances, may alter the tax considerations described below.

For purposes of this discussion, a “Luxembourg shareholder” is any beneficial owner of shares that for Luxembourg income tax purposes is:

§an individual resident of Luxembourg under article 2 of the Luxembourg Income Tax Law (“LITL”), as amended; or
§a corporation or other entity taxable as a corporation that is organized under the laws of Luxembourg or effectively managed from Luxembourg under article 159 of the Income Tax Law, as amended.

This discussion does not constitute tax advice and is intended only as a general guide. Shareholders should also consult their own tax advisors as to the Luxembourg tax consequences of the ownership and disposition of our common shares. The summary applies only to shareholders who will own our common shares as capital assets and does not apply to other categories of shareholders, such as dealers in securities, trustees, insurance companies, collective investment schemes and shareholders who have, or who are deemed to have, acquired their shares in the capital of Nexa Resources by virtue of an office or employment.

Shareholders

Luxembourg income tax on dividends and similar distributions

A non-Luxembourg shareholder will not be subject to Luxembourg income taxes on dividend income and similar distributions in respect of our common shares, other than a potential Luxembourg withholding tax as described below, unless the shares are attributable to a permanent establishment or a fixed place of business maintained in Luxembourg by such non-Luxembourg shareholder.

An individual Luxembourg shareholder will be subject to Luxembourg income tax on dividend income and similar distributions in respect of its shares in Nexa Resources at the applicable progressive rates. Such payments may benefit from a 50.0% exemption set forth in Article 115 15a of the LITL, subject to the conditions set out therein (or 50.0% exemption).therein. If the 50.0% exemption applies, the applicable income tax will be levied on 50% of the gross amount of the dividends at the applicable progressive rates. Taxable dividends are also subject to dependence insurance contribution levied at a rate of 1.4% on the net income where certain Luxembourg shareholders are affiliated to the Luxembourg social security administration.

A corporate Luxembourg shareholder was subject to Luxembourg corporate income tax (“CIT”) and municipal business tax (“MBT”) at the aggregate rate of 24.94% in 2020 (i.e. Luxembourg CIT is 18.19% including the surcharge for the unemployment and MBT is 6.75% forentities having itstheir statutory seat in Luxembourg City).City. The taxable basis of a corporate Luxembourg shareholder will, in principle, correspond to its accounting results, unless a specific treatment is provided for by the LITL. A corporate Luxembourg shareholder may benefit from the Luxembourg participation exemption (the “participation exemption”) with respect to dividends received if the following two conditions are met: (a) the shareholder holds or commits itself to hold at least 10.0% of the share capital of Nexa Resources or a participation with an acquisition price of at least €1.2 million for an uninterrupted period of at least twelve months and (b) the shareholder is a Luxembourg fully taxable corporation. If these cumulative conditions are met, dividends received by the corporate Luxembourg shareholder wouldshould be fully exempt from CIT and MBT at the level of the corporate Luxembourg shareholder.

 
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If the conditions with respect to the Luxembourg participation exemption are not met, the corporate Luxembourg shareholders can still benefit from the aforementioned 50.0% exemption, subject to the conditions set out therein.

Luxembourg withholding tax—Share capital reductions or share premium reimbursements

Share capital reductions or share premium reimbursements made by Nexa Resources to the Luxembourg and non-Luxembourg shareholders are in principle subject to a 15% Luxembourg withholding tax, unless they have been motivated by genuine economic reasons. Although genuine economic reasons are not defined by law, Luxembourg tax authorities may examine the given reasons.reasons and determine that Nexa Resources does not have distributable reserves or profits in its chart of accounts according to Luxembourg regulations. We do not intend to make capital reductions in the near future. Nexa Resources discloses distributable reserves, retained earnings and profits in its chart of accounts according to Decree dated June 10, 2009. As of December 31, 2021,2023, we have the ability to pay dividends and share premiums. The share premium, if any, may be distributed to the shareholders in accordance with Luxembourg Commercial Companies Act by a resolution of the boardBoard of directors. See “Share ownership and trading—Distributions”.

Luxembourg withholding tax—Distributions to shareholders

A Luxembourg withholding tax of 15.0% is due on dividends and similar distributions made by Nexa Resources to its Luxembourg and non-Luxembourg shareholders unless a Luxembourg domestic dividend withholding tax exemption or a double tax treaty reduction is applicable, as described below. The tax will be withheld by Nexa Resources and remitted to the Luxembourg tax authorities within 8 days as of the date the income is made available to the Luxembourg and non-Luxembourg shareholders.

Exemption from Luxembourg withholding tax—Distributions to shareholders

Dividends paid by Nexa Resources will be exempt from Luxembourg withholding tax provided that the following cumulative conditions are met (or domestic exemption):

·at the date of the distribution, the shareholder holds at least 10% of the share capital of Nexa Resources or a participation with an acquisition price of at least €1.2 million for an uninterrupted period of at least twelve months; and
·the dividend is paid to a (i) fully taxable company resident in Luxembourg, (ii) a company resident in a EU Member State fulfilling the conditions of Article 2 of the Parent Subsidiary Directive and listed in the appendix to this directive, (iii) a company resident in a country with which Luxembourg has concluded a double tax treaty and which is fully subject to income tax comparable to the Luxembourg corporate income tax as well as a Luxembourg permanent establishment of such a company, (iv) a company resident of Switzerland and subject to tax without being exempt, (v) a company or a cooperative company resident in a Member State of the European Economic Area, other than a Member State of the EU, and that is fully subject to tax equivalent to the Luxembourg corporate income tax, or (vi) a Luxembourg permanent establishment of a company under (ii) or (v).

Shareholders that are companies’ resident in countries that have entered a double tax treaty with Luxembourg may qualify for the domestic exemption described above.

For a shareholder to benefit from such exemption upon a distribution date, Nexa Resources must file a properly competed form 900 with the Luxembourg tax authorities within 8 days following the earlier of (a) the payment date set in the distribution decision or (b) the day following the distribution decision date in case no payment date is fixed, and (b) the effective date of payment of the dividend.fixed. Luxembourg tax authorities may request all relevant documentation showing fulfillment of the above-mentioned conditions (e.g., including a tax residency certificate). Nexa makes no representation that this exemption procedure will be practicable with respect to shares held through a clearing system such as DTC (in the United States).

 
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Alternatively, a shareholder may file a refund request (form 901bis, stamped and validated by the tax authorities of the State of residency of the shareholder) with the Luxembourg tax authorities before December 31 of the year following the taxable event (i.e., the distribution). Nexa makes no representation that this refund procedure will be practicable for a shareholder residing in the United States or any other specific jurisdiction.

A shareholder that does not meet the twelve-month holding period described in the first bullet above can request a refund when the twelve-month period has elapsed. The refund request (form 901bis, stamped and validated by the tax authorities of the State of residency of the shareholder) has to be filed with the Luxembourg tax authorities before December 31 of the year following the taxable event.

Forms 900 and 901bis are generally made available on the website of the Luxembourg tax authorities (Administration des contributions directes).

The application of the dividend withholding tax exemption to taxable companies’ residents in other EU member states or to their EU permanent establishments is not granted if the income allocated is part of a tax avoidance scheme.

Reduction of Luxembourg withholding tax—Distributions to shareholders

As mentioned above, pursuant to the provisions of certain bilateral treaties for the avoidance of double taxation concluded between Luxembourg and other countries, and if certain conditions are met, the aforementioned Luxembourg dividend withholding tax may be reduced. Many such treaties, including the double tax treaty with the United States, provide for a tax rate lower than 15 percent only for a shareholder that holds a substantial (generally, 10 percent or 25 percent) portion of a Luxembourg company’s shares. Shareholders that hold such shares should consult their tax advisors to determine how to benefit from the reduction in withholding tax rates.

A shareholder that is a company resident in a country that has entered a double tax treaty with Luxembourg may qualify for the domestic exemption even if the treaty would not reduce the withholding tax rate applicable to dividends paid to that shareholder.

Luxembourg NWT

A non-Luxembourg shareholder will not be subject to Luxembourg net wealth tax (“NWT”) unless the shares are attributable to a permanent establishment or a fixed place of business maintained in Luxembourg by such non Luxembourgnon-Luxembourg shareholder.

Luxembourg individual shareholders are not subject to Luxembourg NWT. A Luxembourg corporate shareholder willshould be subject to Luxembourg NWT in respect of the shares held in the capital of Nexa Resources unless it holds more than 10% or €1.2 million of our common shares.

Luxembourg capital gains tax upon disposal of shares

Capital gains derived by a non-Luxembourg shareholder on the sale of our common shares will not be subject to taxation in Luxembourg, unless one of the following conditions applies:

·the shareholder does not benefit from a double tax treaty and (i) holds shares in Nexa Resources representing more than 10% of the share capital of Nexa Resources and such shares were held for less than six months prior to their sale or (ii) has been a resident taxpayer in Luxembourg for at least fifteen years and had acquired nonresident status less than five years prior to the disposal; or
·Our common shares are attributable to a permanent establishment or a fixed place of business maintained in Luxembourg by such non-Luxembourg shareholder. In such case, the non-Luxembourg shareholder is required to recognize capital gains or losses on the sale of such shares, which will be subject to CIT and MBT, unless the participation exemption applies.
 
170196

Taxation

Capital gains realized upon the sale of our common shares by a Luxembourg resident individual will be subject to Luxembourg income tax at the level of the Luxembourg resident individual only in case of (i) speculation gains or (ii) gains realized on a substantial participation.

Speculation gains

Capital gains realized upon the sale of our common shares within a shareholding period not exceeding six months will be subject to personal income taxation (unless such capital gain does not exceed €500) in the hands of a Luxembourg resident individual.

Substantial participation

In case where the Luxembourg resident individual has held the shares for at least six months and had a substantial participation, the capital gains realized will be subject to income tax at a rate equal to half the normal progressive rate applicable. A participation is considered as a substantial participation when a Luxembourg resident individual, jointly with his/her spouse and children under the age of 18, holds or has held, directly or indirectly, at any time during the five years prior to the date of the sale, 10.0% or more of the share capital of Nexa Resources.

Capital gains realized by the Luxembourg corporate shareholder (société de capitaux) should be exempt from capital gains tax in Luxembourg if at the date of the disposal, the Luxembourg shareholder has held or undertakes to hold, for an uninterrupted period of at least 12 months, a direct participation which represents at least 10.0% of the share capital of Nexa Resources, or which acquisition price was at least €6.0 million. If these conditions are not met, the Luxembourg corporate shareholder would be fully taxed on the capital gains realized upon the sale of the common share. The exempt amount of the capital gains realized will be, however, reduced by the amount of any expenses related to the participation, including decreases in the acquisition cost that could have previously reduced such shareholder’s Luxembourg taxable income.

ATAD rules

The European Council has adopted two Anti-Tax Avoidance Directives: Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (“ATAD I”) and Directive 2017/952/EU of 29 May 2017 amending ATAD I as regards hybrid mismatches with third countries (“ATAD II”) that address many of the issues mentioned above. The measures included in ATAD I were implemented into Luxembourg law on December 21, 2018 and almost all of them have been applicable since January 1, 2019. The measures included in ATAD II were implemented into Luxembourg law on December 19, 2019 and almost all of them have been applicable since January 1, 2020.2020, subject to certain exceptions. ATAD I and ATAD II may have a material impact on how returns to shareholders are taxed.

Pillar Two

Pillar Two is focused on implementing a global minimum tax designed to ensure that large multinationals pay a minimum effective tax rate of 15% in every jurisdiction they operate in. Pillar Two is expected to apply to multinational groups with turnover in excess of €750 million. The Pillar Two proposals involve a framework of complex rules which, broadly, would impose top-up taxes on certain entities within a multinational group where the overall tax paid on the group’s profit in any jurisdiction falls below the minimum 15% effective tax rate. The proposed rules for determining whether a top-up tax is required in respect of the group’s profits in a jurisdiction and the allocation of any such top-up tax between the members of the group are detailed and are designed to prevent multinational groups from being able to structure around the rules. It should be noted that a group’s effective tax rate in a jurisdiction may fall below the minimum 15% rate, and therefore a top-up tax may be required, even if that jurisdiction’s statutory headline tax rate is over 15%. On December 15, 2022, the EU Member States adopted a Council Directive (2022/2523) on ensuring a global minimum level of taxation for multinational enterprise (“MNE”) groups and large-scale domestic groups in the EU (“Minimum Tax Directive”). EU Member States had the obligation to implement the Minimum Tax Directive into their national laws before December 31, 2023. The Minimum Tax Directive was implemented into Luxembourg national law on December 22, 2023, and applies to fiscal years starting on or after December 31, 2023.

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Taxation

Peruvian tax considerations

The following is a general summary of material Peruvian tax matters, as in effect on the date of this report, and describes our understanding of the principal tax consequences of an investment in our common shares by a person or entity who is not considered a resident of Peru for tax purposes. This summary is not intended to be a comprehensive description of all the tax considerations that may be relevant to a decision to make an investment in the offered shares.

This summary is based on provisions of the Peruvian income tax law and its regulations in force as of the date hereof. No rulings from the Peruvian tax authorities or judicial rulings address the tax treatment of instruments similar to the shares of Nexa Resources. Accordingly, no assurance can be given that the Peruvian tax authorities will agree with the conclusions described below. If the Peruvian tax authorities were to take a position different from the conclusions described below, the Peruvian income tax consequences of investing in Nexa Resources may differ from those summarized below.

Sale, exchange or disposition of the shares or a beneficial interest therein

Investors who decide to invest in the shares of Nexa Resources hold the shares in book-entry form, in the name of a nominee holding such shares for the investors’ benefit. Any future trading of such shares will be effected through a conveyance of the beneficial interest held by the investors thereupon through the designated clearing mechanism. Because the conveyance of such beneficial interest does not imply the actual transfer of shares, any capital gains resulting from the conveyance of the beneficial interest in such shares, obtained by a person or entity who is not considered a resident of Peru for Peruvian tax purposes, should not be subject to taxation in Peru.

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Taxation

Contrary to the conclusion stated above, if the sale of our common shares were to qualify as an “indirect transfer of Peruvian shares” (and the transfer of the beneficial interest in the shares were to be considered as an actual transfer of such shares), different rules would apply.

According to Peruvian income tax law, an “indirect transfer of Peruvian shares” is deemed to occur when there is a transfer of shares issued by a non-resident company which, in turn, owns—directly or through one or more companies—shares issued by a Peruvian company, and the following two conditions are concurrently met:

(i) during any of the 12 months preceding the transfer, the fair market value (“FMV”) of the shares issued by the Peruvian company held directly or indirectly by the nonresident company which shares are being sold, is equivalent to 50% or more of the FMV of all the shares issued by said non-resident company; and

(ii) during any 12-month period, the shares transferred by a party, including those transferred by its related parties, represent at least 10% of the shares issued by such non-resident company.

Due to recent modifications to Peruvian income tax law, as of January 1, 2019, even if the abovementioned conditions are not met, an indirect transfer of Peruvian shares will also be deemed to exist if the “total value” of shares of the Peruvian company indirectly transferred within any 12-month period is equivalent to or higher than 40,000 Peruvian tax units (S/176 million or US$50.0 million approximately). Said “total value” is determined by multiplying: i) the “percentage” that the FMV of the shares issued by the Peruvian company held (directly or indirectly) by the non-resident company which shares are being transferred, represents with regard to the FMV of all the shares issued by said non-resident company; and ii) the price agreed for the shares issued by the non-resident company directly transferred. To determine the “total value” threshold, transfers made by those parties which qualify as related to the transferor should also be considered. Nonetheless, the “taxable base” shall be determined, in any case, per party, considering the transfers made by the latter within the abovementioned 12-month period, but excluding those transfers previously taxed.

In case the sale of the shares were to qualify as an “indirect transfer of Peruvian shares” (and the transfer of the beneficial interest on the shares were to be considered as an actual transfer of such shares), any capital gain resulting therefrom will be subject to a 30% tax rate in Peru.

In case the corporate investor that makes the indirect transfer of Peruvian shares has a branch or a permanent establishment with assigned assets in Peru, said corporation will be jointly and severally liable for any income tax that resulted from the transfer of Peruvian shares; it will also be obligated to present to the Peruvian tax authority all the information related to the Peruvian shares of the non-resident investor that are being sold, particularly the information referred to the FMV; participation percentages; capital increase or reduction; issuance and placement of shares or participations; reorganization processes; patrimonial values and balance sheets; etc. Investors should consult their own tax advisors about the consequences of the acquisition, ownership, and disposition of their investment in the offered shares or any beneficial interest therein, including the possibility that the tax consequences of investing in the offered shares may differ from the description above.

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Taxation

United States federal income tax considerations

The following is a summary of certain U.S. federal income tax considerations that are likely to be relevant to the purchase, ownership and disposition of our common shares by a U.S. Holder (as defined below).

This summary is based on provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and U.S. Treasury regulations (Regulations)(“Regulations”), rulings and judicial interpretations thereof, in force as of the date hereof, and the U.S.-Luxembourg Treaty dated December 20, 2000 (as amended by any subsequent protocols) (the “Treaty”). Those authorities may be changed at any time, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below.

172

Taxation

This summary is not a comprehensive discussion of all of the tax considerations that may be relevant to a particular investor’s decision to purchase, hold, or dispose of our common shares. In particular, this summary is directed only to U.S. Holders that hold common shares as capital assets and does not address tax consequences to U.S. Holders who may be subject to special tax rules, such as banks, brokers or dealers in securities or currencies, traders in securities electing to mark to market, financial institutions, life insurance companies, tax exempt entities, entities that are treated as partnerships for U.S. federal income tax purposes (or partners therein), holders that own or are treated as owning 10% or more of our common shares by vote or value, persons holding common shares as part of a hedging or conversion transaction or a straddle, nonresident alien individuals present in the United States for more than 182 days in a taxable year, or persons whose functional currency is not the U.S. dollar. Moreover, this summary does not address state, local or foreign taxes, U.S. federal estate and gift taxes, or the Medicare contribution tax applicable to net investment income of certain non-corporate U.S. Holders, or the alternative minimum tax consequences of acquiring, holding or disposing of common shares.

For purposes of this summary, a “U.S. Holder” is a beneficial owner of common shares that is a citizen or resident of the United States, a U.S. domestic corporation or that otherwise is subject to U.S. federal income taxation on a net income basis in respect of such common shares.

U.S. Holders should consult their tax advisors about the consequences of the acquisition, ownership, and disposition of the common shares, including the relevance to their particular situation of the considerations discussed below and any consequences arising under foreign, state, local or other tax laws.

Taxation of dividends

Subject to the discussion below under “Passive Foreign Investment Company Status”Status,” the gross amount of any distribution of cash or property with respect to our common shares that is paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will generally be includible in a U.S. Holder’s taxable income as ordinary dividend income on the day on which the U.S. Holder receives the dividend and will not be eligible for the dividends received deduction allowed to corporations under the Code.

We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes.

Subject to certain exceptions for short-term positions, dividends received by an individual with respect to the common shares will be subject to taxation at a preferential rate if the dividends are “qualified dividends.” Dividends paid on the common shares will be treated as qualified dividends if:

·the common shares are readily tradable on an established securities market in the United States; and
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Taxation

·we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”).

The common shares are listed on the NYSE and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on our consolidated financial statements and relevant marketcertain estimates of our gross income and shareholder data,gross assets, and relying on the Commodity Exception (as defined below under “Passive Foreign Investment Company Status”), we do not believe that we were not classified as a PFIC with respect tofor our prior2023 or 2022 taxable year. In addition, based on our consolidated financial statementsyears, and our current expectations regarding the value and nature of our assets, the sources and nature of our income and relevant market and shareholder data, we do not anticipate becoming a PFIC for our current taxable year or in the foreseeable future. Accordingly, we expect that dividends paid on the common shares will be treated as qualified dividends. U.S. Holders should consult their tax advisors regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.

Dividend distributions with respect to our common shares generally will be treated as “passive category” income from sources outside the United States for purposes of determining a U.S. Holder’s U.S. foreign tax credit limitation. Subject to thegenerally applicable limitations and conditions, provided in the Code and the applicable Regulations, a U.S. Holder may be able to claim a foreignLuxembourg dividend withholding tax credit against its U.S. federal income tax liability in respect of any Luxembourg income taxes withheldpaid at the appropriate rate applicable to the U.S. Holder frommay be eligible for a dividend paid tocredit against such U.S. Holder’s U.S. federal income tax liability. These generally applicable limitations and conditions include new requirements recently adopted by the U.S. Internal Revenue Service (“IRS”) in Regulations promulgated in December 2021, and any Luxembourg tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. Holder. Alternatively,In the case of a U.S. Holder that either (i) is eligible for, and properly elects, the benefits of the Treaty, or (ii) consistently elects to apply a modified version of these rules under recently issued temporary guidance and complies with specific requirements set forth in such guidance, the Luxembourg tax on dividends will be treated as meeting the new requirements and therefore as a creditable tax. In the case of all other U.S. Holders, the application of these requirements to the Luxembourg tax on dividends is uncertain, and we have not determined whether these requirements have been met. If the Luxembourg dividend tax is not a creditable tax for a U.S. Holder or the U.S. Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may be able to deduct the Luxembourg tax in computing such LuxembourgU.S. Holder’s taxable income taxes from itsfor U.S. federal taxable income providedtax purposes. Dividend distributions will constitute income from sources without the United States and, for U.S. Holders that the U.S. Holder electselect to deduct rather than credit all foreign income taxes for the relevant taxable year. The rules with respect toclaim foreign tax credits, are complexgenerally will constitute “passive category income” for foreign tax credit purposes.

The availability and involve the applicationcalculation of rules thatforeign tax credits and deductions for foreign taxes depend on a U.S. Holder’s particular circumstances and involve the application of complex rules to those circumstances. Accordingly,The temporary guidance discussed above also indicates that the Treasury and IRS are considering proposing amendments to the December 2021 Regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Holders are urged toshould consult their own tax advisors regarding the availabilityapplication of the foreign tax credit underthese rules to their particular circumstances.

173

Taxation

situations.

U.S. Holders that receive distributions of additional common shares or rights to subscribe for common shares as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax in respect of the distributions.

Taxation of dispositions of common shares

Subject to the discussion below under “—Passive Foreign Investment Company Status,” a U.S. Holder generally will recognize gain or loss on the sale, exchange or other disposition of common shares in an amount equal to the difference, if any, between the amount realized upon the sale, exchange or other disposition and the U.S. Holder’s adjusted tax basis in the common shares. A U.S. Holder’s adjusted tax basis in its common shares generally will equal the purchase price for the common shares. Any gain or loss will be capital gain or loss and generally will be long-term capital gain or loss if the common shares have been held for more than one year. Long-term capital gain realized by a U.S. Holder that is an individual generally is subject to taxation at a preferential rate. The deductibility of capital losses is subject to limitations. Gain, if any, realized by a U.S. Holder on the sale or other disposition of the common shares generally will be treated as U.S. source income for U.S. foreign tax credit purposes.

Passive foreign investment company status

Special U.S. tax rules apply to companies that are considered to be PFICs. We will be classified as a PFIC in a particular taxable year if either:

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Taxation

·75 percent or more of our gross income for the taxable year is passive income; or
·the average percentage of the value of our assets that produce or are held for the production of passive income is at least 50 percent.

Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income, net foreign currency gains, and gains from commodities transactions other than gains that are active business gains from the sale of commodities or arise from “commodity hedging transactions”,transactions,” within the meaning of the applicable rules (“Commodity Exception”).

Based on our consolidated financial statements and certain estimates of our gross income and gross assets, and relying on the Commodity Exception, we do not believe that we currently arewere a PFIC for our 2023 or 2022 taxable years, and we do not anticipate becoming a PFIC for our current taxable year or in the foreseeable future. However, since PFIC status will be determined by us on an annual basis and since such status depends upon the composition of our income and assets, and the nature of our activities (including our ability to qualify for the Commodity Exception or any similar exceptions), from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. In the event that, contrary to our expectation, we are classified as a PFIC in any year, and a U.S. Holder does not make a mark-to-market election, as described in the following paragraph, the U.S. Holder will be subject to a special tax at ordinary income tax rates on “excess distributions,” including certain distributions by us and gain that the U.S. Holder recognizes on the sale of the common shares. The amount of income tax on any excess distributions will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions were earned ratably over the period that the U.S. Holder holds the common shares. Classification as a PFIC may also have other adverse tax consequences.

A U.S. Holder can avoid the unfavorable rules described in the preceding paragraph by electing to mark the common shares to market. If a U.S. Holder makes this mark-to-market election, the U.S. Holder will be required in any year in which we are a PFIC to include as ordinary income the excess of the fair market value of the U.S. Holder’s common shares at year-end over the U.S. Holder’s basis in those shares. If a U.S. Holder’s basis in the common shares exceeds the shares’ fair market value at the end of the U.S. Holder’s taxable year, the U.S. Holder will be entitled to deduct the excess as an ordinary loss, but only to the extent of its net mark-to-market gains from previous years. The U.S. Holder’s basis in the shares will be adjusted to reflect the gain or loss. In addition, any gain that the U.S. Holder recognizes upon the sale of the common shares will be taxed as ordinary income in the year of sale.

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Taxation

A U.S. Holder that owns an equity interest in a PFIC must annually file IRS Form 8621 and may be required to file other IRS forms. A failure to file one or more of these forms as required may toll the running of the statute of limitations in respect of each of the U.S. Holder’s taxable years for which such form is required to be filed. As a result, the taxable years with respect to which the U.S. Holder fails to file the form may remain open to assessment by the U.S. Internal Revenue Service (“IRS”)IRS indefinitely, until the form is filed.

U.S. Holders should consult their tax advisors regarding the U.S. federal income tax considerations discussed above and the desirability of making a mark-to-market election if we were to be classified as a PFIC.

Foreign financial asset reporting

CertainIndividual U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatementHigher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of income attributable to “specifiedhold direct or indirect interests in specified foreign financial assets” in excess of US$5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed.assets based on objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors are encouraged to consult with their tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.

201

Taxation

Backup withholding and information reporting

Dividends paid on, and proceeds from the sale or other disposition of, the common shares to a U.S. Holder generally may be subject to the information reporting requirements of the Code and may be subject to backup withholding unless the U.S. Holder provides an accurate taxpayer identification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS in a timely manner.

A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.

 

 
175202

Exchange Controls and Other Limitations Affecting Security Holders

Exchange controls and other limitations affecting security holders

We are not aware of any governmental laws, decrees, regulations or other legislation in Luxembourg that restrict the export or import of capital, including the availability of cash and cash equivalents for use by our affiliated companies, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.

securities, except for regulations restricting the remittance of dividends and other payments in compliance with United Nations and EU sanctions. 

 
176203

Evaluation of Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.2023. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of December 31, 2021.2023. Based on our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2021. 

2023.

 
177204

Internal Control Over Financial Reporting

Internal control over financial reporting

Management report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for assessing its effectiveness.

Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and our chief financial officer, and effected by our boardBoard of directors, management and other employees, and is designed to provide reasonable assurance regarding the reliability of financial reporting and of the preparation of our consolidated financial statements, in accordance with IFRS accounting standards and interpretations, as issued by the IASB.International Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (“IFRS Accounting Standards”).

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,In addition, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with our policies or procedures may deteriorate.

Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021,2023, based upon the criteria established in Internal Controls—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of Treadway Commission (“COSO”). Based on this assessment and criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2021.2023.

Audit of the effectiveness of internal control over financial reporting

Our independent registered public accounting firm, PricewaterhouseCoopers Auditores Independentes Ltda., has audited the effectiveness of our internal control over financial reporting, as stated in itstheir report as of December 31, 2021, which is included herein.2023.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the fiscal year of 2021,2023, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
178205

Principal Accountant Fees and Services

Principal accountant fees and services

The following table summarizes the fees billed to us by our independent auditors PricewaterhouseCoopers Auditores Independentes Ltda. for professional services in 20212023 and 2020:2022:

For the Year Ended December 31,

For the Year Ended December 31,

2021

2020

2023

2022

(US$ thousand)(US$ thousand)
Audit fees1,936.31,762.41,839.72,132.1
Audit-related fees112,4543.9128.4107.0
Tax fees--
Other fees

-

17.5

-

Total fees

2,048.7

2,323.9

1,968.1

2,239.1

 

 

“Audit fees” are the aggregate fees billed by PricewaterhouseCoopers Auditores Independentes Ltda. for the audit of our annual financial statements, the audit of the statutory financial statements of our subsidiaries, and reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements. They also include fees for services that only the independent auditor reasonably can provide, including the provision of comfort letters and consents in connection with statutory and regulatory filings and the review of documents filed with the SEC and other capital markets or local financial reporting regulatory bodies. “Audit-related fees” are fees charged by PricewaterhouseCoopers Auditores Independentes Ltda. for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit fees”. “Tax fees” are the aggregate fees billed by PricewaterhouseCoopers Auditores Independentes Ltda. for services rendered for tax compliance, tax advice and tax planning. “Other fees” are the aggregate fees billed by PricewaterhouseCoopers Auditores Independentes Ltda. for services related with assurance and review procedures not related with regulatory or financial reporting of our consolidated financial statements.

Nexa has established policies and procedures that require any engagement of our independent auditor for audit or non-audit services to be submitted to and pre-approved by the auditAudit committee. In addition, our auditAudit committee may delegate the authority to pre-approve non-audit services to one or more of its members. All non-audit services that are pre-approved pursuant to such delegated authority must be presented to the full auditAudit committee at its first scheduled meeting following such pre-approval. Our auditAudit committee also has the authority to recommend pre-approval policies and procedures to our boardBoard of directors and for the engagement of our independent auditor’s services.

 

 
179206

Information Filed with Securities Regulators

Information filed with securities regulators

We are subject to various information and disclosure requirements in those countries in which our securities are traded, and we file financial statements and other periodic reports with the SEC and Canadian securities regulatory authorities.

·United States. We are subject to the information requirements of the Securities Exchange Act of 1934, as amended, and accordingly file reports and other information with the SEC. Our SEC filings are available to the public from the SEC at http://www.sec.gov. You may also inspect Nexa Resources’ reports and other information at the offices of the New York Stock Exchange, 11 Wall Street, New York, New York 10005, on which our common shares are listed. For further information on obtaining copies of Nexa Resources’ public filings at the NYSE, you should call (212) 656-5060.
·Canada. We must comply with certain Canadian periodic and ongoing disclosure rules under applicable Canadian provincial and territorial securities laws. However, with respect to the rules under applicable Canadian provincial and territorial securities laws, we are able to rely on certain exemptions from many of the requirements under such laws through our compliance with U.S. disclosures given our status in the U.SU.S. as a foreign private issuer. Our Canadian filings are available to the public from the website maintained by the Canadian Securities Administrators at www.sedar.com.www.sedarplus.ca.

 
180207

Glossary

Glossary

Brownfields project: An exploration or development project near or within an existing operation, which can share infrastructure and management.

Concentration: The process by which crushed and ground ore is separated into metal concentrates and reject material through processes such as flotation.

Concentrate plant: A plant where metal concentration occurs.

Cut-off grade: is the grade (i.e., the concentration of metal or mineral in rock) that determines the destination of the material during mining.

Development: The process of constructing a mining facility and the infrastructure to support the facility is known as mine development.

Diamond drilling: A method of drilling that uses a diamond bit, which rotates at the end of a drill rod or pipe. The opening at the end of the diamond bit allows a solid column of rock to move up into the drill pipe and be recovered at the surface. This column of rock is named drill core and is used for geological, geotechnical logging and for sampling for chemical analysis to define the metal content of the rock or mineralized material. Standard core sizes/diameters are 63.5 mm (defined as HQ), 46.7 mm (defined as NQ) and 36.5 mm (defined as BQ). Most drill rods are 10 feet long. After the first 10 feet are drilled, a new section of pipe is screwed into the top end, so the combination of pipes can be driven another 10 feet into the ground.

Exploration: Activities associated with ascertaining the existence, location, extent or quality of a mineral deposit.

Exploration stage property: is a property that has no mineral reserves disclosed.

Greenfields project: An exploration or development projectsproject that is located outside the area of influence of existing mine operations and/or infrastructure and will be independently developed and managed.

Indicated Mineral Resource: is that part of a mineral resourceMineral Resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.

Inferred Mineral Resource: is that part of a mineral resourceMineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability.

km: kilometer.

ktpd: thousand tonnes per day.

LBMA: The London Bullion Market Association.

LME: London Metal Exchange.

LOM: life of mine.

Measured Mineral Resource: is that part of a mineral resourceMineral Resource for which quantity and grade or quality, are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit.

Metal concentrate: The crushed and ground material obtained after concentration, including zinc, lead and copper concentrates. This is the product from our mining operations. Most of the zinc concentrate we produce is used in our smelting operations and the remaining portion, along with our lead and copper concentrates, is sold to our customers.

208

Glossary

Metallic zinc: Pure metal (99.995% zinc) obtained from the electrodeposition of a zinc sulfate solution, free of impurities, through the Roaster-Leaching-Electrolysis (“RLE”) process.

181

Glossary

Mineralization: The process or processes by which a mineral or minerals are introduced into a rock, resulting in a potentially valuable or valuable deposit.

Mineralized material: Mineral bearing material that has been physically delineated by one or more methods, including drilling and underground work, and is supported by sampling and chemical analysis. This material has been found to contain a sufficient amount of mineralization of an average grade of metal or metals to have economic potential that warrants further exploration evaluation. While this material is not currently or may never be classified as ore reserves, it is reported as mineralized material only if the potential exists for reclassification into the reserves category. This material cannot be classified in the reserves category until final technical, economic and legal factors have been determined. Under the SEC’s standards, a mineral deposit does not qualify as a reserve unless it can be economically and legally extracted at the time of reserve determination and it constitutes a proven or probable reserve (as defined below).

Mineral Reserve: is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

Mineral Resource: is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for eventual economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable.

Mine site: An economic unit comprised of an underground and/or open pit mine, a treatment plant and equipment and other facilities necessary to produce metals concentrates, in existence at a certain location.

NSR: Net Smelter Return is the net revenue that the owner of a mining property receives from the sale of the mine’s metal/nonmetal products less transportation and refining costs.

Open pit: Surface mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the ore body.

Ore: A mineral or aggregate of minerals from which metal can be economically mined or extracted.

Ore grade: The average amount of metal expressed as a percentage, grams per tonne or in ounces per tonne.

Ounces or oz: Unit of weight. A troy ounce equals 31.1034 grams. All references to ounces in this report are to troy ounces unless otherwise specified.

Probable Mineral Reserve: is the economically mineable part of an indicated and, in some cases, a measured mineral resource.

Production stage property: is a property with material extraction of mineral reserves.

Proven Mineral Reserve: is the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource.

Qualified Person: An individual who is a mineral industry professional with at least five years of relevant experience in the type of mineralization and type of deposit under consideration in the specific type of activity that person is undertaking on behalf of the registrant and an eligible member or licensee n good standing of a recognized professional organization at the time the technical report is prepared.

Reclamation: The process of stabilizing, contouring, maintaining, conditioning and/or reconstructing the surface of disturbed land (i.e., used or affected by the execution of mining activities) to a state of “equivalent land capability.” Reclamation standards vary widely, but usually address issues of ground and surface water, topsoil, final slope gradients, overburden and revegetation.

209

Glossary

Refining: The process of purifying an impure metal; the purification of crude metallic substances.

182

Glossary

Secondary feed materials: By-products of industrial processes such as smelting and refining that are then available for further treatment/recycling. It can cover foundry ashes, zinc oxides from brass and bronze production, electric arc furnace (“EAF”) dust and slags.

SHG: Special High Grade.

Skarn: Metamorphic zone developed in the contact area around igneous rock intrusions when carbonate sedimentary rocks are invaded by large amounts of silicon, aluminum, iron and magnesium. The minerals commonly present in a skarn include iron oxides, calc-silicates, andradite and grossularite garnet, epidote and calcite. Many skarns also include ore minerals. Several productive deposits of copper or other base metals have been found in and adjacent to skarns.

Tailings: Finely ground rock from which valuable minerals have been extracted by concentration.

Tonne: A unit of weight. One metric tonne equals 2,204.6 pounds or 1,000 kilograms. One short tonne equals 2,000 pounds. Unless otherwise specified, all references to “tonnes” in this report refer to metric tonnes.

Zinc equivalent: A metric used to compare mineralization that is comprised of different metals in terms of zinc. Copper, lead, silver and gold contents in our concentrate production have been converted to a zinc equivalent grade at the average benchmark prices for 2019,2023, i.e., US$2,546.342,649.04 per tonne (US¢115.50(US$1.20 per pound) for zinc, US$5,999.738,483.40 per tonne (US¢272.14(US$3.85 per pound) for copper, US$1,999.682,137.18 per tonne (US¢90.70(US$0.97 per pound) for lead, US$16.2123.39 per ounce for silver and US$1,392.601,942.74 per ounce for gold.

Zinc oxide: A chemical compound that results from the sublimation of zinc (Zn-metal) by oxygen in the atmosphere. Zinc oxide is in the form of powder or fine grains that is insoluble in water but very soluble in acid solutions.

 
183210

Exhibits

Exhibits

Exhibit Number

 
1Amended and Consolidated Articles of Association of Nexa Resources S.A., dated as of August 27, 2021.2021 (incorporated by reference to Exhibit 1 to our annual report on Form 20-F (file no. 001-38256) filed with the SEC on March 17, 2022).
2.1Indenture with respect to the 6.500% Notes due 2028, dated June 18, 2020, among Nexa Resource S.A., as issuer, Nexa Resources Cajamarquilla S.A., Nexa Resources Peru S.A. and Nexa Recursos Minerais S.A., as guarantors, and The Bank of New York Mellon, as trustee, registrar, paying agent and transfer agent (incorporated by reference to Exhibit 2.1 to our annual report on Form 20-F (file no. 001-38256) filed with the SEC on March 22, 2021).
2.2Indenture with respect to the 5.375% Notes due 2027, dated as of May 4, 2017, among VM Holding S.A., as issuer, Votorantim Metais Zinco S.A., Compañía Minera Milpo S.A.A. and Votorantim Metais Cajamarquilla S.A., as guarantors, and The Bank of New York Mellon, as trustee, registrar, paying agent and transfer agent (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form F-1 (file no. 333-220552) filed with the SEC on September 21, 2017).
2.3Indenture with respect to the 4.625% Notes due 2023, dated as of March 28, 2013, among Compañía Minera Milpo S.A.A., as issuer, Deutsche Bank Trust Company Americas, as trustee, registrar, paying agent and transfer agent, and Deutsche Bank Luxembourg S.A., as Luxembourg paying agent (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form F-1 (file no. 333-220552) filed with the SEC on September 21, 2017).
2.4Description of Securities.Securities
8List of Subsidiaries.Subsidiaries
12.1Certification of Chief Executive Officer of Nexa Resources S.A. pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
12.2Certification of Chief Financial Officer of Nexa Resources S.A. pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
13.1Certification of Chief Executive Officer and Chief Financial Officer of Nexa Resources S.A., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1Technical Report Summary on the Cerro Lindo Mine, Department of Ica, Peru – S-K 1300 Report (incorporated by reference to Exhibit 15.1 to our annual report on Form 20-F/A filed with the SEC on November 4, 2021).
15.2Technical Report Summary on the Cerro Pasco Complex Integration, Pasco Province, Peru – S-K 1300 Report.
15.3Technical Report Summary on the Vazante Polymetallic Operations, Minas Gerais, Brazil – S-K 1300 Report (incorporated by reference to Exhibit 15.3 to our annual report on Form 20-F/A filed with the SEC on November 4, 2021).
15.4Technical Report Summary on the Aripuanã Zinc Project, State of Mato Grosso, Brazil – S-K 1300 Report (incorporated by reference to Exhibit 15.4 to our annual report on Form 20-F/A filed with the SEC on November 4, 2021).
15.5Consent of SLR Consulting (Canada) Ltd. (“SLR”) with respect to Technical Report Summary on the Cerro Pasco Complex Integration, Pasco Province, Peru (included in Exhibit 15.2).
15.6Consent letter of Nexa’s Qualified Persons.
97Policy Relating to Recovery of Erroneously Awarded Compensation of Nexa Resources S.A.
101.INSXBRL Instance Document -- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
 
184211

Signatures

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 

NEXA RESOURCES S.A.

 

 By:

/s/ Ignacio Rosado

  Name:Ignacio Rosado
  Title:President and Chief Executive Officer

 

 

  
 By:

/s/ Rodrigo MenckJosé Carlos del Valle

  Name:Rodrigo MenckJosé Carlos del Valle
  Title:Senior Vice President of Finance and Group Chief Financial Officer

 

Date: March 17, 2022

27, 2024

 
185212

Financial Statements

Nexa Resources S.A. Financial Statements

 

213

 

 

 

 

 

 

 

 

Nexa Resources S.A.

Nexa Resources S.A.

Consolidated financial statements

at December 31, 2021 and independent auditor’s report

Consolidated financial statements at December 31, 2023 and report of independent registered public accounting firm

 

 
 

 

 

 

Contents

Consolidated financial statements

Consolidated income statement3
Consolidated statement of comprehensive income4
Consolidated balance sheet5
Consolidated statement of cash flows6
Consolidated statement of changes in shareholders’ equity7

 

Notes to the consolidated financial statements

1   General information9
2   Information by business segment109
3   Basis of preparation of the consolidated financial statements12
4   Principles of consolidation12
5   Changes in the main accounting policies and disclosures15
6   Net revenues1617
7   Expenses by nature19
8   Mineral exploration and project evaluation20
9   Other income and expenses, net21
10   Net financial results2122
11   Current and deferred income tax2223
12   Financial risk management2526
13   Financial instruments32
14   Fair value estimates3534
15   Cash and cash equivalents3736
16   DerivativeOther financial instruments3836
17   Trade accounts receivables4039
18   Inventory4140
19   Other assets4241
20   Related parties4341
21   Property, plant and equipment4543
22   Intangible assets5048
23   Right-of-use assets and lease liabilities5249
24   Loans and financings5451
25   Trade Payables5753
26   Confirming PayablesAsset54
27   Dams, asset retirement and environmental obligations5755
27   28   Provisions5856
28   29   Contractual obligations6159
29   Confirming Payables63
30   Shareholders’ equity6361
31   Impairment of non-currentlong-lived assets6663
32   Long-term commitments7069
33   Events after the reporting periodReport of Independent Registered Public Accounting Firm (PCAOB ID: 1351).70

Report of Independent Registered Public Accounting Firm (PCAOB ID: 1351)

 
 Table

 

Nexa Resources S.A.

Consolidated income statement

Years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

        
 Note 2023 2022 2021
Net revenues6   2,573,233   3,033,990   2,622,110
Cost of sales7   (2,276,757)   (2,395,180)   (1,989,019)
Gross profit   296,476   638,810   633,091
        
Operating expenses       
Selling, general and administrative7   (126,948)   (145,543)   (133,803)
 Mineral exploration and project evaluation8   (99,666)   (98,862)   (85,043)
Impairment loss of long-lived assets31   (114,643)   (32,512)   -
Other income and expenses, net9   (110,584)   (2,674)   31,948
Total operating expenses    (451,841)   (279,591)   (186,898)
Operating (loss) income    (155,365)   359,219   446,193
        
Results from associates equity       
Share in the results of associates    23,536   1,885   -
Total results from associates' equity    23,536   1,885   -
Net financial results10      
Financial income    25,503       25,018   11,472
Financial expenses    (204,184)   (168,694)   (142,275)
Other financial items, net    17,040   9,949   (6,099)
Total net financial results     (161,641)   (133,727)   (136,902)
        
(Loss) income before income tax    (293,470)   227,377   309,291
        
Income tax benefit (expense)11 (a)   4,274   (150,983)   (153,204)
        
Net (loss) income for the year    (289,196)   76,394   156,087
Attributable to NEXA's shareholders    (289,354)   49,101   114,332
Attributable to non-controlling interests    158   27,293   41,755
Net (loss) income for the year    (289,196)   76,394   156,087
 Weighted average number of outstanding shares – in thousands    132,439   132,439   132,439
Basic and diluted (losses) earnings per share – USD 30 (f)   (2.18)   0.37   0.86

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A. 
 

 

Nexa Resources S.A.

Consolidated statement of comprehensive income

Years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

        
 Note 2023 2022 2021
Net (loss) income for the year    (289,196)   76,394   156,087
        
Other comprehensive income (loss), net of income tax - items that can be reclassified to the income statement       
Cash flow hedge accounting16 (c)   732   (1,329)   488
Deferred income tax    (1,269)   998   (161)
Translation adjustment of foreign subsidiaries30 (e)   81,315   65,243   (64,575)
Total Other comprehensive income (loss), net of income tax - items that can be reclassified to the income statement    80,778   64,912   (64,248)
        
Other comprehensive income (loss), net of income tax - items that will not be reclassified to the income statement       
Changes in fair value of financial liabilities related to changes in the Company’s own credit risk24 (c)   (583)   521   (5,066)
Deferred income tax    198   (178)   (2,375)
Changes in fair value of investments in equity instruments    (1,466)   (3,608)   (2,632)
Total Other comprehensive loss, net of income tax - items that will not be reclassified to the income statement    (1,851)   (3,265)   (10,073)
Other comprehensive income (loss) for the year, net of income tax    78,927   61,647   (74,321)
        
Total comprehensive (loss) income for the year    (210,269)   138,041   81,766
Attributable to NEXA’s shareholders    (215,324)   105,972   43,828
Attributable to non-controlling interests    5,055   32,069   37,938
Total comprehensive (loss) income for the year  (210,269)   138,041   81,766

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A.

Consolidated statement of balance sheet

Years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

     
AssetsNote2023 2022
Current assets    
Cash and cash equivalents15             457,259              497,826
Financial investments                11,058                18,062
Other financial instruments16 (a)                 7,801                  7,380
Trade accounts receivables17             141,910              223,740
Inventory18             339,671              395,197
Recoverable income tax                15,193                  2,455
Other assets19               86,934                75,486
Tatal Current assets          1,059,826          1,220,146
     
     
Non-current assets    
Investments in equity instruments14 (c)                 5,649                  7,115
Other financial instruments16 (a)                     92                      63
Deferred income tax 11 (b)             235,073              166,983
Recoverable income tax                  6,237                  4,914
Other assets19             129,614              134,474
Investments in associates                44,895                38,990
Property, plant and equipment21          2,438,614           2,295,275
Intangible assets22             909,279           1,016,927
Right-of-use assets23               11,228                  6,895
Total Non-current assets          3,780,681          3,671,636
     
Total assets          4,840,507          4,891,782
     
Liabilities and shareholders’ equity    
Current liabilities    
Loans and financings24 (a)             143,196                50,840
Lease liabilities23 (b)                 3,766                  3,661
Other financial instruments16 (a)               19,077                11,435
Trade payables25             451,603              413,856
Confirming payables26             234,385              216,392
Dividends payable                  2,830                  7,922
Dams, asset retirement and environmental obligations2733,718 23,646
Contractual obligations29               37,432                26,188
Salaries and payroll charges                68,165                79,078
Tax liabilities                49,524                40,610
Other liabilities                31,186                25,136
Total Current liabilities           1,074,882             898,764
     
     
Non-current liabilities    
Loans and financings24 (a)          1,582,370           1,618,419
Lease liabilities23 (b)                 5,452                  1,360
Other financial instruments16 (a)               27,045                20,416
Dams, asset retirement and environmental obligations27             281,201              242,673
Provisions28               56,787                43,897
Deferred income tax11 (b)             183,698              199,499
Contractual obligations29               79,680              105,972
Other liabilities                92,758                50,528
Total Non-current liabilities           2,308,991          2,282,764
     
 Total liabilities           3,383,873          3,181,528
     
Shareholders’ equity30   
Attributable to NEXA’s shareholders            1,201,921           1,442,245
Attributable to non-controlling interests                 254,713              268,009
Total Shareholders' equity           1,456,634          1,710,254
Total liabilities and shareholders’ equity             4,840,507          4,891,782

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A.

Consolidated statement of cash flow

Years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

     
 Note202320222021
Cash flows from operating activities    
(Loss) income before income tax   (293,470)  227,377  309,291
Depreciation and amortization21,22 and 23  298,393  290,937  258,711
Impairment loss of long-lived assets31  114,643  32,512  -
Share in the results of associates   (23,536)  (1,885)  -
Interest and foreign exchange effects   131,988  126,545  143,496
Loss on sale of property, plant and equipment and intangible assets9  3,734  698  4,891
Dams obligations9  6,960  -  -
Changes in provisions and other assets impairments   (37,800)  84,393  21,325
Tax voluntary disclosure – VAT discussions9 (iv)  102,939  -  -
Changes in fair value of loans and financings24 (c)  525  1,472  (19,380)
Changes in fair value of derivative financial instruments16 (c)  (12,514)  (14,947)  26,408
Changes in fair value of energy forward contracts16 (d)  15,663  -  -
Changes in fair value of offtake agreement16 (e)  (2,268)  (24,267)  -
Contractual obligations29 (a)  10,121  10,565  19,580
Generation Scaling Factor recovered costs   -  -  (19,407)
Decrease (increase) in assets    
Trade accounts receivables   58,067  (29,215)  (54,684)
Inventory   127,002  (75,071)  (102,068)
Other financial instruments   13,271  8,648  (14,936)
Other assets   (70,948)  (72,607)  (47,312)
Increase (decrease) in liabilities    
Trade payables   (451)  (32,476)  44,880
Confirming payables   17,074  (16,348)  87,565
Other liabilities   (42,785)  (17,448)  2,759
Cash provided by operating activities   416,608  498,883  661,119
     
Interest paid on loans and financings24 (c)  (113,018)  (109,263)  (121,112)
Interest paid on lease liabilities23 (b)  (553)  (994)  (1,415)
Premium paid on bonds repurchase   -  (3,277)  -
Income tax paid   (56,191)  (118,719)  (45,607)
Net cash provided by operating activities   246,846  266,630  492,985
     
Cash flows from investing activities    
Additions of property, plant and equipment   (310,150)  (382,468)  (485,204)
Additions of intangible assets   (3,087)  (4,595)  -
Net sales of financial investments   19,556  10,647  20,076
Proceeds from the sale of property, plant and equipment   1,229  751  2,210
Investments in equity instruments   -  (7,000)  (6,356)
Acquisition of additional shares in associates   -  (4,136)  -
Dividends received from associates30 (g)  22,100  7,867  -
Net cash used in investing activities   (270,352)  (378,934)  (469,274)
     
Cash flows from financing activities    
New loans and financings24 (c)  56,408  95,621  59,771
Debt issue costs24 (c)  (74)  (63)  (178)
Payments of loans and financings24 (c)  (27,087)  (24,639)  (251,044)
Prepayment of fair value debt   -  -  (90,512)
Bonds repurchase24 (c)  -  (128,470)  -
Payments of lease liabilities23 (b)  (5,818)  (17,091)  (9,827)
Dividends paid30 (g)  (23,713)  (68,466)  (52,344)
Payments of share premium30 (g)  (25,000)  (6,126)  -
Net cash used in financing activities   (25,284)  (149,234)  (344,134)
     
Foreign exchange effects on cash and cash equivalents   8,223  15,547  (21,923)
     
Decrease in cash and cash equivalents   (40,567)  (245,991)  (342,346)
 Cash and cash equivalents at the beginning of the year   497,826  743,817  1,086,163
Cash and cash equivalents at the end of the year   457,259  497,826  743,817
Non-cash investing and financing transactions    
 Additions to right-of-use assets 23 (a)  (10,304)  (2,018)  (5,174)
 Additions to intangible assets related to GSF recovered costs   -  -  (19,407)
 Write-offs of property, plant and equipment 21 (a)  4,089  1,449  3,343
 Write-offs of right of use assets 23 (a)  874  -  -
 Additions to intangible assets related to offtake agreement and other intangibles   -  (52,934)  -
 Increase in investment in associates   -  (32,456)  -
 Derecognition of Nexa’s share of Enercan’s property, plant and equipment, intangible assets and financial investments4(ii)   -  46,858  -

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A.

Consolidated statement of changes in shareholders’ equity

At and for the years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

         
 CapitalShare premiumAdditional paid in capitalRetained earnings (cumulative deficit)Accumulated other comprehensive lossTotal NEXA’s shareholdersNon-controlling interestsTotal shareholders’ equity
At January 1, 2021132,4381,043,7551,245,418(814,675)(229,491)1,377,445243,7991,621,244
Net income for the year---114,332-114,33241,755156,087
Other comprehensive loss for the year----(70,504)(70,504)(3,817)(74,321)
Total comprehensive income (loss) for the year---114,332(70,504)43,82837,93881,766
Transfer of the changes in fair value of prepaid debt related to changes in the Company’s own credit risk to retained earnings---(10,965)10,965---
Dividends distribution to NEXA's shareholders - USD 0.26 per share---(35,000)-(35,000)-(35,000)
Dividends distribution to non-controlling interests------(23,730)(23,730)
Total contributions by and distributions to shareholders---(45,965)10,965(35,000)(23,730)(58,730)
At December 31, 2021132,4381,043,7551,245,418(746,308)(289,030)1,386,273258,0071,644,280
Net income for the year---49,101-49,10127,29376,394
Other comprehensive income for the year----56,87156,8714,77661,647
Total comprehensive income (loss) for the year---49,10156,871105,97232,069138,041

Dividends distribution to NEXA's shareholders – USD 0.33 per share – note 30 (g)

---(43,874)-(43,874)-(43,874)

Share premium distribution to NEXA's shareholders – USD 0.05 per share – note 30 (g)

-(6,126)---(6,126)-(6,126)
Dividends distribution to non-controlling interests------(23,075)(23,075)
Other equity movements------1,0081,008
Total contributions by and distributions to shareholders-(6,126)-(43,874)-(50,000)(22,067)(72,067)
At December 31, 2022132,4381,037,6291,245,418(741,081)(232,159)1,442,245268,0091,710,254

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A.

Consolidated statement of changes in shareholders’ equity

At and for the years ended on December 31

All amounts in thousands of US dollars, unless otherwise stated

         
 CapitalShare premiumAdditional paid in capitalRetained earnings (cumulative deficit)Accumulated other comprehensive lossTotal NEXA’s shareholdersNon-controlling interestsTotal shareholders’ equity
At January 1, 2023132,4381,037,6291,245,418(741,081)(232,159)1,442,245268,0091,710,254
Net (loss) income for the year     -  -  -  (289,354)  -  (289,354)  158  (289,196)
Other comprehensive income for the year  -  -  -  -  74,030  74,030  4,897  78,927
Total comprehensive (loss) income for the year    -  -  -  (289,354)  74,030  (215,324)  5,055  (210,269)

Share premium distribution to NEXA's shareholders – USD 0.19 per share – note 30 (g)

  -  (25,000)  -  -  -  (25,000)  -  (25,000)
Dividends distribution to non-controlling interests – note 30 (g)  -  -  -  -  -  -  (18,351)  (18,351)
Total distributions to shareholders    -  (25,000)  -  -  -  (25,000)  (18,351)  (43,351)
At December 31, 2023132,438  1,012,6291,245,418(1,030,435)  (158,129)  1,201,921  254,713  1,456,634

The accompanying notes are an integral part of these consolidated financial statements

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Consolidated income statementNexa Resources S.A.

Years

Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

 Note 2021 2020 2019
Net revenues6   2,622,110   1,950,929   2,332,715
Cost of sales7   (1,966,036)   (1,563,931)   (1,947,828)
Gross profit    656,074   386,998   384,887
        
Operating expenses       
Selling, general and administrative7   (156,786)   (151,619)   (216,511)
Mineral exploration and project evaluation7 and 8   (85,043)   (57,201)   (119,063)
Impairment of non-current assets31   -   (557,497)   (142,133)
Other income and expenses, net9   31,948   (19,164)   (18,206)
 Total operating expenses    (209,881)   (785,481)   (495,913)
Operating income (loss)    446,193   (398,483)   (111,026)
        
Net financial results10      
Financial income    11,472   11,168   31,054
Financial expenses    (142,275)   (159,759)   (117,399)
Other financial items, net    (6,099)   (129,584)   (18,509)
 Net financial results     (136,902)   (278,175)   (104,854)
        
Income (loss) before income tax    309,291   (676,658)   (215,880)
        
Income tax11 (a)      
Current    (122,081)   (63,192)   (46,382)
Deferred    (31,123)   87,344   104,746
Net income (loss) for the year    156,087   (652,506)   (157,516)
Attributable to NEXA's shareholders    114,332   (559,247)   (145,135)
Attributable to non-controlling interests    41,755   (93,259)   (12,381)
Net income (loss) for the year    156,087   (652,506)   (157,516)
 Weighted average number of outstanding
 shares – in thousands
    132,439   132,439   132,622
Basic and diluted earnings (losses) per
share – USD
30 (f)   0.86   (4.22)   (1.09)

 

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A. 

Consolidated statement of comprehensive income

Years ended December 31

All amounts in thousands of US dollars, unless otherwise stated

 Note 2021 2020 2019
Net income (loss) for the year    156,087   (652,506)   (157,516)
        
Other comprehensive loss, net of income tax - items that can be reclassified to the income statement       
Cash flow hedge accounting16 (b)   488   (98)   1,332
Deferred income tax    (161)   101   (453)
Translation adjustment of foreign subsidiaries30 (e)   (64,575)   (138,840)   (21,115)
 Total other comprehensive income (loss), net of income tax, items that can be reclassified to the income statement     (64,248)   (138,837)   (20,236)
        
Other comprehensive loss, net of income tax - items that will not be reclassified to the income statement       
Changes in fair value of financial liabilities related to changes in the Company’s own credit risk24 (c)   (5,066)   (787)   -
Deferred income tax    (2,375)   (88)   -
Changes in fair value of investments in equity instruments    (2,632)   -   -
 Total other comprehensive income (loss), net of income tax, items that will not be reclassified to the income statement     (10,073)   (875)   -
Other comprehensive loss for the year, net of income tax    (74,321)   (139,712)   (20,236)
        
Total comprehensive income (loss) for the year    81,766   (792,218)   (177,752)
Attributable to NEXA’s shareholders    43,828   (682,132)   (172,453)
Attributable to non-controlling interests   37,938   (110,086)   (5,299)
Total comprehensive income (loss) for the year    81,766   (792,218)   (177,752)

The accompanying notes are an integral part of these consolidated financial statements

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Nexa Resources S.A. 

Consolidated balance sheet

As at December 31

All amounts in thousands of US dollars, unless otherwise stated

     
AssetsNote2021 2020
Current assets    
Cash and cash equivalents15 (a)        743,817     1,086,163
Financial investments           19,202          35,044
Derivative financial instruments16 (a)          16,292          16,329
Trade accounts receivables17        231,174        229,032
Inventory18        372,502        256,522
Recoverable income tax             8,703          12,953
Other assets19          81,119          91,141
 Total current assets    1,472,809   1,727,184
 Non-current assets    
Investments in equity instruments13 (b)            3,723                  -   
Derivative financial instruments16 (a)               102          15,651
Deferred income tax11 (b)        168,205        221,580
Recoverable income tax             4,223          13,110
Other assets19          98,584          93,131
Property, plant and equipment21     2,087,730     1,898,296
Intangible assets22     1,056,771     1,076,405
Right-of-use assets23 (a)          12,689          18,869
 Total non-current assets    3,432,027   3,337,042
     
Total assets    4,904,836   5,064,226
     
Liabilities and shareholders’ equity    
 Current liabilities    
Loans and financings24 (a)          46,713        146,002
Lease liabilities23 (b)          16,246          15,999
Derivative financial instruments16 (a)          22,684            5,390
Trade payables25        411,818        370,122
Confirming payables29        232,860        145,295
Dividends payable           11,441            4,557
Asset retirement and environmental obligations26          31,953          33,095
Contractual obligations28          33,156          27,132
Salaries and payroll charges           76,031          56,107
Tax liabilities           65,063          43,630
Other liabilities           41,317          29,230
 Total current liabilities       989,282      876,559
Non-current liabilities    
Loans and financings24 (a)     1,652,602     1,878,312
Lease liabilities23 (b)            3,393            9,690
Derivative financial instruments16 (a)               241          21,484
Asset retirement and environmental obligations26        232,197        242,951
Provisions27          36,828          30,896
Deferred income tax11 (b)        208,583        218,392
Contractual obligations28        114,076        138,893
Other liabilities           23,354          25,805
 Total non-current liabilities    2,271,274   2,566,423
     
 Total liabilities    3,260,556   3,442,982
     
Shareholders’ equity30   
Attributable to NEXA’s shareholders      1,386,273     1,377,445
Attributable to non-controlling interests           258,007        243,799
 Total shareholders' equity    1,644,280   1,621,244
Total liabilities and shareholders’ equity      4,904,836   5,064,226

The accompanying notes are an integral part of these consolidated financial statements

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Consolidated statement of cash flows

Years ended December 31

All amounts in thousands of US dollars, unless otherwise stated

 Note 2021 2020 2019
Cash flows from operating activities       
Income (loss) before income tax  309,291 (676,658) (215,880)
Impairment loss of non-current assets31 - 557,497 142,133
Depreciation and amortization21, 22 and 23 258,711 243,925 317,892
Interest and foreign exchange effects  143,496 157,806 63,286
Loss on sale of property, plant and equipment and
 intangible assets
9 4,891 2,268 857
Changes in accruals  21,325 13,159 3,854
Changes in fair value of loans and financings10 (19,380) 8,058 6,640
Changes in fair value of derivative financial instruments16 (b) 26,408 7,809 4,649
Contractual obligations28 (a) (25,729) (20,679) (25,660)
GSF recovered costs22 (a) (19,407) - -
Changes in operating assets and liabilities15 (b) (38,487) 105,330 (50,623)
Cash provided by operating activities  661,119 398,515 247,148
        
Interest paid on loans and financings24 (c) (121,112) (69,906) (71,804)
Interest paid on lease liabilities23 (b) (1,415) (1,385) (3,259)
Premium paid on bonds repurchase24 (c) - (14,481) -
Income tax paid  (45,607) (21,043) (49,262)
Net cash provided by operating activities  492,985 291,700 122,823
        
Cash flows from investing activities       
Additions of property, plant and equipment  (485,204) (323,688) (396,672)
Net sales (purchases) of financial investments  20,076 (47,522) 54,710
Proceeds from the sale of property, plant and equipment  2,210 2,014 6,570
Investments in equity instruments  (6,356) - -
Net cash used in investing activities  (469,274) (369,196) (335,392)
        
Cash flows from financing activities       
New loans and financings24 (c) 59,771 1,296,496 106,229
Debt issue costs24 (c) (178) (9,921) (255)
Payments of loans and financings24 (c) (251,044) (542,983) (19,437)
Prepayment of fair value debt24 (c) (90,512) - -
Bonds repurchase24 (c) - (214,530) -
Payments of lease liabilities23 (b) (9,827) (9,100) (13,280)
Dividends paid  (52,344) (55,964) (113,389)
Dividends not withdrawn  - 1,009 -
Repurchase of the Company's own shares  - - (8,103)
Acquisition of non-controlling interests  - - (71,054)
Capital reduction of subsidiary – non-controlling interests  - (13,392) -
Net cash (used in) provided by financing activities  (344,134) 451,615 (119,289)
        
Foreign exchange effects on cash and cash equivalents  (21,923) (16,070) (2,462)
Other high liquid short term investments  - 29,496 -
        
(Decrease) increase in cash and cash equivalents  (342,346) 387,545 (334,320)
 Cash and cash equivalents at the beginning of the year 1,086,163 698,618 1,032,938
Cash and cash equivalents at the end of the year  743,817 1,086,163 698,618

The accompanying notes are an integral part of these consolidated financial statements

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Consolidated statement of changes in shareholders’ equity

At and for the years ended December 31

All amounts in thousands of US dollars, unless otherwise stated

 CapitalTreasury sharesShare premiumAdditional paid in capitalRetained earnings (cumulative deficit)Accumulated other comprehensive lossTotal NEXA’s shareholdersNon-controlling interests Total shareholders’ equity
At January 1, 2019  133,320  (1,352)  1,043,755  1,318,728  18,112  (79,288)  2,433,275  425,208  2,858,483
Net loss for the year  -  -  -  -  (145,135)  -  (145,135)  (12,381)  (157,516)
Other comprehensive loss for the year  -  -  -  -  -  (27,318)  (27,318)  7,082  (20,236)
Total comprehensive loss for the year  -  -  -  -  (145,135)  (27,318)  (172,453)  (5,299)  (177,752)
Acquisition of non-controlling interests  -  -  -  (71,054)  -  -  (71,054)  -  (71,054)
Repurchase of the Company's own shares  -  (8,103)  -  -  -  -  (8,103) -  (8,103)
Dividends distribution to NEXA's shareholders - USD 0.53 per share  -  -  -  -  (69,832)  -  (69,832)  -  (69,832)
Dividends distribution to non-controlling interests  -  -  -  (2,256)  -  -  (2,256)  (47,300)  (49,556)
Total contributions by and distributions to shareholders  -  (8,103)  -  (73,310)  (69,832)  -  (151,245)  (47,300)  (198,545)
At December 31, 2019  133,320  (9,455)  1,043,755  1,245,418  (196,855)  (106,606)  2,109,577  372,609  2,482,186
Net loss for the year  -  -  -  -  (559,247)  -  (559,247)  (93,259)  (652,506)
Other comprehensive loss for the year  -  -  -  -  -  (122,885)  (122,885)  (16,827)  (139,712)
Total comprehensive loss for the year  -  -  -  -  (559,247)  (122,885)  (682,132)(110,086)  (792,218)
Dividends distribution to NEXA's shareholders - USD 0.38 per share  -  -  -  -  (50,000)  -  (50,000)  -  (50,000)
Cancellation of 881,902 treasury shares
acquired for USD 9,455
  (882)  9,455  -  -  (8,573)  -  -  -  -
Dividends distribution to non-controlling interests  -  -  -  -  -  -  -  (5,332)  (5,332)
Capital reduction of subsidiary - non-controlling interests  -  -  -  -  -  -  -  (13,392)  (13,392)
Total contributions by and distributions to shareholders  (882)  9,455  -  -  (58,573)  -  (50,000)  (18,724)  (68,724)
At December 31, 2020  132,438  -  1,043,755  1,245,418  (814,675)  (229,491)  1,377,445  243,799  1,621,244

The accompanying notes are an integral part of these consolidated financial statements

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Consolidated statement of changes in shareholders’ equity

At and for the years ended December 31

All amounts in thousands of US dollars, unless otherwise stated

 CapitalTreasury sharesShare premiumAdditional paid in capitalRetained earnings (cumulative deficit)Accumulated other comprehensive lossTotal NEXA’s shareholdersNon-controlling interests Total shareholders’ equity
At January 1, 2021  132,438  -  1,043,755  1,245,418  (814,675)  (229,491)  1,377,445  243,799  1,621,244
Net income for the year  -  -  -  -  114,332  -  114,332  41,755  156,087
Other comprehensive loss for the year  -  -  -  -  -  (70,504)  (70,504)  (3,817)  (74,321)
Total comprehensive income (loss) for the year  -  -  -  -  114,332  (70,504)  43,828  37,938  81,766
Transfer of the changes in fair value of prepaid debt related to changes in the Company’s own credit risk to retained earnings  -  -  -  -  (10,965)  10,965  -  -  -
Dividends distribution to NEXA's shareholders - USD 0.26 per share - note 30 (g)  -  -  -  -  (35,000)  -  (35,000)  -  (35,000)
Dividends distribution to non-controlling interests - note 30 (g)  -  -  -  -  -  -  -  (23,730)  (23,730)
Total contributions by and distributions to shareholders  -  -  -  -  (45,965)  10,965  (35,000)  (23,730)  (58,730)
At December 31, 2021  132,438  -  1,043,755  1,245,418  (746,308)  (289,030)  1,386,273  258,007  1,644,280

The accompanying notes are an integral part of these consolidated financial statements

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

 

1General information

Nexa Resources S.A. (“NEXA” or “Parent Company”) is a public limited liability company (société anonyme) incorporated and domiciled in the Grand Duchy of Luxembourg. Its shares are publicly traded on the New York Stock Exchange (“NYSE”). As a result of a voluntary delisting, November 30, 2021 was the last trading day of the Company’s shares on the Toronto Stock Exchange (“TSX”), and NEXA intends to cease to be a reporting issuer under Canadian securities laws, when applicable.

The Company’s registered office is located at 37A, Avenue J. F. Kennedy in the city of Luxembourg in the Grand Duchy of Luxembourg.

NEXA and its subsidiaries (the “Company”) have operations that compriseinclude large-scale, mechanized underground and open pit mines and smelters. The Company owns and operates three polymetallic mines in Peru, and two polymetallic mines in Brazil and is completingcurrently progressing with the developmentramp-up of its third polymetallic mine in Aripuanã, Brazil. The Company also owns and operates a zinc smelter in Peru and two zinc smelters in Brazil.

The Company’sNEXA’s majority shareholder is Votorantim S.A. (“VSA”), which holds 64.68% of its equity. VSA is a Brazilian privately-owned industrial conglomerate that holds ownership interests in metal, steel, cement, and energy companies, among others.

COVID-19 outbreak impacts on NEXA´s financial statements and operations

In March 2020, the World Health Organization characterized the current COVID-19 disease (“COVID- 19”) as a pandemic. Since then, COVID-19 spread across the world, through different waves, with severe effects that impacted the global economy in general and the Company’s business.

Throughout this pandemic, government authorities in the countries in which the Company operates responded and continue to respond in different ways to deal with this global outbreak. In Peru, for example, during the first and second quarters of 2020, the Company’s Peruvian mines were suspended, and its Peruvian smelter reduced production in response to the Peruvian Government mandated health and safety measures. No other material impacts have occurred within the Company since the beginning of the pandemic.

As a result of a combination of factors, including suspended and reduced production, the decrease in short- and mid-term commodities prices, discontinued projects, and increased operating costs, in 2020, the Company recognized an impairment loss of non-current assets of USD 557,497, as mentioned in note 31.

Currently, although the Peruvian and Brazilian subsidiaries continue to operate subject to additional measures to control and mitigate the spread of COVID-19, they have returned to their pre-pandemic production levels, with the exception of the Atacocha underground mine in Peru, which continues suspended under care and maintenance given its higher operating costs. Ultimately, the impact of the COVID-19 global outbreak on the Company’s financial condition depends on the pandemic’s continuing duration and severity, on the efforts to contain its spread, on the abilities of countries to continue advancing in the distribution of effective vaccines against it, on the recovery of global and regional economies, and on the impact of response measures taken by the Company, governments, and others.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

 

2Information by business segment

Business segment definition

The Company’s Chief Executive Officer has been identified as the chief operating decision maker (“CODM”) since the role encompasses authority over resource allocation decisions and performance assessment. The CODM analyzesassessment, mainly analyzing performance mainly from the production obtained in the operations. The Company has identified two reportableoperating segments:

• Mining: consists of fivesix long-life polymetallic mines, three located in the Central Andes of Peru and twothree located in Brazil (two in the state of Minas Gerais and one in Brazil.the state of Mato Grosso). In addition to zinc, the Company produces substantial amounts of copper, lead, silver, and gold as by-products, which reduce the overall cost to produce mined zinc.

• Smelting: consists of three operating units, one located in Cajamarquilla in Peru and two located in the state of Minas Gerais in Brazil. The facilities recover and produce metallic zinc (SHG zinc and zinc alloys), zinc oxide and by-products, such as sulfuric acid.

Accounting policy

Segment performance is assessed based on Adjusted EBITDA, since net financial results, comprising financial income and expenses and other financial items, and income tax are managed at the corporate level and are not allocated to operating segments.

The Company defines Adjusted EBITDA is defined as follows: net income (loss) for the year, adjusted by (i) share in the results of associates, (ii) depreciation and amortization, (iii) net financial results (iv)and income tax, (v)tax; (ii) non-cash events and non-cash gains or losses that do not specifically reflect its operational performance for the specific period, such as: gain (loss) gain on sale of investments, and (vi)investments; impairment and impairment reversals.reversals; gain (loss) on sale of long-lived assets; write-offs of long-lived assets; remeasurement in estimates of asset retirement obligations; and dams obligations; and (iii) pre-operating and ramp-up expenses incurred during the commissioning and ramp-up phases of greenfield projects. In addition, management may adjust the effect of certain types of transactions that in its judgmentjudgments are not indicative of the Company´s normal operating activities(i) events that are non-recurring, unusual or infrequent, and (ii) other specific events that, by their nature and scope, do not necessarily occur on a regular basis.reflect Nexa’s operational performance for the period.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

The adjusted EBITDA is derived from internal information used for making decisions is prepared usingin accordance with the International Financial Reporting Standards (“IFRS”IFRS Accounting Standards”) and based on accounting measurements and management reclassifications between income statement lines items, which are reconciled to the consolidated financial statements in the column “Adjustments”., as shown in the tables below. These adjustments include reclassifications of the effects of derivative financial instrumentscertain overhead costs and revenues from Other income and expenses, net to Net revenues and Cost of sales; and, of certain overhead costs from Other income and expenses, net toRevenues, Cost of sales and/or Selling”, “general and administrative expenses.

expenses”.

The Company uses customary market terms for intersegment sales. The Company’s corporate headquarters expenses are allocated to the reportableoperating segments to the extent they are included in the measures of performance used by the CODM.

The presentation of segments results and reconciliation to income before income tax in the consolidated income statement is as follows:

Schedule of segments results and reconciliation to income before income tax    2023
 MiningSmeltingIntersegment
sales
AdjustmentsConsolidated
Net revenues 1,090,276 1,946,661 (468,250) 4,546 2,573,233
Cost of sales (1,028,281) (1,726,568) 468,250 9,842 (2,276,757)
Gross profit 61,995 220,093 -    14,388 296,476
      
Selling, general and administrative (61,903) (61,233) -    (3,812) (126,948)
Mineral exploration and project evaluation (90,297) (9,369) -    -    (99,666)
Impairment loss of long-lived assets (109,347) (5,296) -    -    (114,643)
Other income and expenses, net (67,876) (26,412) -    (16,296) (110,584)
Operating (loss) income (267,428) 117,783 -    (5,720) (155,365)
      
Depreciation and amortization 219,957 77,585 -    851 298,393
Miscellaneous adjustments 196,529 51,599 -    -    248,128
Adjusted EBITDA 149,058 246,967 -    (4,869) 391,156
Changes in fair value of offtake agreement (i)  2,268
Impairment loss of long-lived assets - note 31  (114,643)
Ramp-up expenses of greenfield projects (Aripuanã) (ii)  (15,494)
Loss on sale of property, plant and equipment   (3,734)
Remeasurement in estimates of asset retirement obligations            3,125
Remeasurement adjustment of streaming agreement (iii)  (10,121)
Energy forward contracts – Change in fair value (iv)  (15,663)
Tax voluntary disclosure – VAT discussions (v)   (86,906)
Dams obligations (vi) (6,960)
Miscellaneous adjustments      (248,128)
Depreciation and amortization      (298,393)
Share in result of associates      23,536
Net financial results      (161,641)
Loss before income tax      (293,470)

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

The presentation of segment results and reconciliation to income (loss) before income tax

     2022
 MiningSmeltingIntersegment
sales
AdjustmentsConsolidated
Net revenues 1,248,027  2,466,967  (683,583)  2,579  3,033,990
Cost of sales  (905,241)(2,190,903)  683,583  17,381  (2,395,180)
Gross profit  342,786  276,064  -  19,960  638,810
      
Selling, general and administrative  (64,444)  (60,435)  -  (20,664)  (145,543)
Mineral exploration and project evaluation  (88,947)  (9,915)  -  -  (98,862)
Impairment loss of long-lived assets  (32,276)  (236)  -  -  (32,512)
Other income and expenses, net  (32,787)  43,049  -  (12,936)  (2,674)
Operating (loss) income  124,332  248,527  -  (13,640)  359,219
       -
Depreciation and amortization  204,514  78,727  -  7,696  290,937
Miscellaneous adjustments  110,993  (825)  -  -  110,168
Adjusted EBITDA  439,839  326,429  -  (5,944)  760,324
 Changes in fair value of offtake agreement (i)   24,267
Impairment loss of long-lived assets - note 31   (32,512)
Ramp-up expenses of greenfield projects (Aripuanã) (ii)   (87,540)
Impairment of other assets      (9,302)
Loss on sale of property, plant and equipment    (698)
Remeasurement in estimates of asset retirement obligations    6,182
Remeasurement adjustment of streaming agreement (iii)   (10,565)
Miscellaneous adjustments      (110,168)
Depreciation and amortization      (290,937)
 Share in result of associates      1,885
Net financial results      (133,727)
Income before income tax      227,377

     2021
  Mining SmeltingIntersegment
sales
AdjustmentsConsolidated
Net revenues  1,165,584  2,021,787  (636,212)  70,951  2,622,110
Cost of sales  (726,653)(1,842,704)  636,212  (55,874)  (1,989,019)
Gross profit  438,931  179,083  -  15,077  633,091
      
Selling, general and administrative  (64,739)  (51,635)  -  (17,429)  (133,803)
Mineral exploration and project evaluation  (75,550)  (9,493)  -  -  (85,043)
Other income and expenses, net  (32,286)  70,874  -  (6,640)  31,948
Operating (loss) income  266,356  188,829  -  (8,992)  446,193
      
Depreciation and amortization  174,891  78,861  -  4,959  258,711
Miscellaneous adjustments  35,697  3,234  -  -  38,931
EBITDA  476,944  270,924  -  (4,033)  743,835
Aripuanã's pre-operating expenses (ii)      (8,753)
Loss on property, plant and equipment      (4,891)
Remeasurement in estimates of asset retirement obligations   (6,371)
Remeasurement adjustment of streaming agreement (iii)   (19,580)
Other adjustments      664
Miscellaneous adjustments      (38,931)
Depreciation and amortization      (258,711)
Net financial results      (136,902)
Income before income tax      309,291

(i) This amount represents the change in the consolidated income statementfair value of the offtake agreement described in note 16, which is as follows:being measured at Fair value through profit and loss (“FVTPL”). This change in the fair value is a non-cash item and has not been considered in the Company’s Adjusted EBITDA calculation.

Schedule(ii) Excludes the impact of segment resultscommissioning, pre-operating, and reconciliation to (loss) income before income tax

     2021
  Mining SmeltingIntersegment salesAdjustmentsConsolidated
Net revenues 1,165,584 2,028,831 (636,212) 63,907 2,622,110
Cost of sales (719,358)(1,796,111) 636,212 (86,779) (1,966,036)
Gross profit 446,226 232,720 - (22,872) 656,074
      
Selling, general and administrative (70,271) (68,593) - (17,922) (156,786)
Mineral exploration and project evaluation (75,549) (9,494) - - (85,043)
Other income and expenses, net (34,050) 34,196 - 31,802 31,948
Operating income (loss) 266,356 188,829 - (8,992) 446,193
      
Depreciation and amortization174,89178,861-4,959258,711
Miscellaneous adjustments (i)(664)---(664)
Adjusted EBITDA 440,583 267,690 - (4,033) 704,240
      
Miscellaneous adjustments (i)                  664
Depreciation and amortization      (258,711)
Net financial results      (136,902)
Income before income tax     309,291

(i) Related to minor impairment reversalsramp-up expenses of equipment costs previously impaired and that were sold in 2021. Duegreenfield projects. For the year 2023, corresponds to the low amounts, these are included as Other incomeeffects of idle capacity costs of the Aripuanã of USD 55,615 and expenses, net.excludes the net reversal of the net realizable value provision of Aripuanã’s inventory of USD 40,121 (excluding the depreciation portion).

     

 

2020

  Mining SmeltingIntersegment salesAdjustmentsConsolidated
Net revenues  748,462  1,550,323  (375,402)  27,546  1,950,929
Cost of sales  (625,408)(1,287,902)  375,402  (26,023)  (1,563,931)
Gross profit  123,054  262,421  -  1,523  386,998
      
Selling, general and administrative  (70,354)  (64,874)  -  (16,391)  (151,619)
Mineral exploration and project evaluation  (48,555)  (5,466)  -  (3,180)  (57,201)
Impairment of non-current assets  (512,706)  (44,791)  -  -  (557,497)
Other income and expenses, net  (23,648)  (5,545)  -  10,029  (19,164)
Operating (loss) income(532,209)  141,745  -  (8,019)  (398,483)
      
Depreciation and amortization  159,984  82,650  -  1,291  243,925
Impairment of non-current assets  512,706  44,791  -  -  557,497
Adjusted EBITDA  140,481  269,186  -  (6,728)  402,939
       
Impairment of non-current assets      (557,497)
Depreciation and amortization      (243,925)
Net financial results      (278,175)
Loss before income tax      (676,658)

(iii) Annual remeasurement adjustment of the Company’s silver streaming revenues given the changes in long-term prices and in the mine plan for the Cerro Lindo mining unit.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

     2019
  MiningSmeltingIntersegment salesAdjustmentsConsolidated
Net revenues1,000,580 1,865,733  (535,776)  2,178  2,332,715
Cost of sales(805,058)(1,655,062)  535,776  (23,484)  (1,947,828)
Gross profit  195,522 210,671  -  (21,306)  384,887
      
Selling, general and administrative(117,280)(89,540) -  (9,691)  (216,511)
Mineral exploration and project evaluation(109,549)  (9,503) -  (11)  (119,063)
Impairment of non-current assets(142,133)  - -  -  (142,133)
Other income and expenses, net  (13,955)  (29,569) -  25,318  (18,206)
Operating (loss) income(187,395)  82,059  -  (5,690)  (111,026)
      
Depreciation and amortization  217,870  97,975 -  2,047  317,892
Impairment of non-current assets    142,133 - -  -  142,133
Adjusted EBITDA  172,608180,034  -  (3,643)  348,999
      
Impairment of non-current assets        (142,133)
Depreciation and amortization      (317,892)
Net financial results      (104,854)
Loss before income tax      (215,880)

(iv) The fair value adjustment of the energy surplus resulting from electric energy purchase contracts of NEXA’s subsidiary, Pollarix. This adjustment to EBITDA, has the objective to exclude from the current year´s performance the remeasurement effects of energy contracts without cash impact for the specific period.

(v) Impact of accruals related to VAT’s discussions disclosed in note 9 (iv). These liabilities are not directly related to Nexa´s operations and performance and are excluded from EBITDA.

(vi) The impact of the provisions related to dams obligations in Brazil was excluded in Company’s Adjusted EBITDA calculation. This adjustment was made considering these industrial waste containment structures have been closed for more than 20 years, even before they were acquired by Nexa as disclosed in note 27 (a). As such, they have never contributed to Nexa’s operational performance.

 

 

3Basis of preparation of the consolidated financial statements

These consolidated financial statements have been prepared in accordance with the IFRS accounting standards and interpretations, issued by the IFRS Interpretations Committee applicable to companies reporting under IFRS, as issued by the International Accounting Standards Board (“IASB”). and the IFRS Interpretations Committee.

The consolidated financial statements have been prepared under the historical cost convention, except for certain financial assets and financial liabilities (including derivativeother financial instruments) measured at fair value at the end of each reporting period.

The consolidated financial statements of the Company for the year ended on December 31, 2021,2023, were approved for issue in accordance with a resolution of the Board of Directors on February 15, 2022.21, 2024.

 

4Principles of consolidation

The consolidated financial statements comprise the financial statements of NEXA and its direct and indirect subsidiaries (“subsidiaries”), which reflect the assets, liabilities and transactions of the Parent Company and its subsidiaries. Intercompany balances and transactions, which include unrealized profits, are eliminated. A list of the most relevant companies, including subsidiaries, associates and joint operations, and the accounting policies applied in the preparation of the consolidated financial statements are described below.

Schedule of ownership percentages     
 Percentage of sharesCompany  
 20232022controlsHeadquarter Activities 
Subsidiaries     
Nexa Recursos Minerais S.A. - "NEXA BR"100100DirectlyBrazilMining / Smelting
Nexa Resources Cajamarquilla S.A.  - "NEXA CJM"99.9999.99DirectlyPeruSmelting
Nexa Resources US. Inc.100100DirectlyUnited StatesTrading
Exploraciones Chimborazo Metals & Mining100100DirectlyEcuadorHolding and others
L.D.O.S.P.E.  Geração de Energia e Participações Ltda. – “L.D.O.S.P.E."100100IndirectlyBrazilEnergy
L.D.Q.S.P.E.  Geração de Energia e Participações Ltda. - "L.D.Q.S.P.E."100100IndirectlyBrazilEnergy
L.D.R.S.P.E.  Geração de Energia e Participações Ltda. - "L.D.R.S.P.E."100100IndirectlyBrazilEnergy
Mineração Dardanelos Ltda. - "Dardanelos" (i)-100IndirectlyBrazilMining projects
Mineração Santa Maria Ltda.99.9999.99IndirectlyBrazilMining projects
Pollarix S.A. - "Pollarix" (ii)33.3333.33IndirectlyBrazilEnergy
Karmin - Holding Ltda.100100IndirectlyBrazilHolding and others
Mineração Rio Aripuaña Ltda.100100IndirectlyBrazilHolding and others
Votorantim Metals Canada Inc.100100IndirectlyCanadaHolding and others
Nexa Resources El Porvenir S.A.C.99.9999.99IndirectlyPeruMining
Minera Pampa de Cobre S.A.C99.9999.99IndirectlyPeruMining
Nexa Resources Perú S.A.A. - "NEXA Peru"83.5583.55IndirectlyPeruMining
Nexa Resources Atacocha S.A.A. - "NEXA Atacocha"66.6266.62IndirectlyPeruMining
Nexa Resources UK Ltd.  - "NEXA UK"100100IndirectlyUnited KingdomMining
Joint-operations     
Cia. Minera Shalipayco S.A.C7575 PeruMining Projects
Associates     
Campos Novos Energia S.A. - "Enercan" (iii)22.4422.44 BrazilEnergy

(i) Dardanelos was incorporated on December 31, 2021.May 1, 2023, by NEXA BR.

(ii) Nexa, through its wholly owned subsidiary NEXA BR, holds 100% of the common shares of Pollarix which carries the total voting rights. Auren a subsidiary of VSA, holds 100% of the preference shares, which carry the right to receive dividends 93% higher than the amount received for each common share.

(iii) On November 17, 2022, NEXA, through Pollarix, acquired 1.46% of Enercan’s additional shares for BRL 21,731 (USD 4,136) by exercising its proportional pre-emptive rights due to the withdrawal of one of Enercan’s previous shareholders. Prior to this date, NEXA and the other shareholders jointly controlled Enercan’s assets and liabilities. However, with the withdrawal, Enercan’s remaining shareholders exercised their option to acquire these additional shares, resulting in the loss of joint control by NEXA. Since then, NEXA ceased recognizing its share of Enercan’s jointly held assets, liabilities, revenues, and expenses, and began treating it as an investment in an associate through the equity method, maintaining significant influence over the entity.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(a)Subsidiaries

Subsidiaries include all entities over which the Company has control. The Company controls an entity when it (i) has the power over the entity; (ii) is exposed, or has the right, to variable returns from its involvement with the entity; and (iii) has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company, except when the predecessor basis of accounting is applied. Subsidiaries are deconsolidatedunconsolidated from the date that control ceases.

Accounting policies of subsidiaries are usually consistent with the policies adopted by the Company. If there are differences, to ensure the standardization of the accounting policies,policies’ standardization, an adjustment is performed in the consolidation process.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Non-controlling interests in the subsidiaries’ equity and results are shown separately in the consolidated balance sheet, income statement, statement of comprehensive income and statement of changes in shareholders’ equity. A change in a subsidiary’s ownership interest, of a subsidiary, without loss of control, is accounted for as an equity transaction.

If the Company loses control over a subsidiary, it derecognizes the related assets, liabilities, non-controlling interests and other equity components and any resultant gain or loss is recognized in the income statement. Any investment retained is recognized at fair value.

In general, there is a presumption that a majority of voting rights results in control. When the Company has less than a majority of the voting rights of an investee, it considers all relevant facts and circumstances to determine whether it has power over this investee. This may include contractual arrangements with the other holders of voting rights in the investee; rights arising from other contractual arrangements; and the Company’s voting rights and potential voting rights that will give it the practical ability to direct the relevant activities of the investee unilaterally.

Intercompany transactions, balances, and unrealized gains on transactions between companies in the consolidated group are eliminated in full on consolidation. Unrealized losses are also eliminated unless the transaction indicates impairment of the transferred asset.

(b)Joint operations

The Company recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held assets or incurred liabilities or revenues and expenses. These have been included in the consolidated financial statements under the appropriate headings.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

(c)Associates

Transactions, balancesAssociates are initially recognized at cost and unrealized gains and losses between consolidated entities are eliminated. The main entities includedadjusted thereafter for the equity method, being increased, or reduced from its interest in the consolidatedinvestee's income after the acquisition date.

For an entity to become an associate the Company must have significant influence, which is the power to participate in the financial statements are:

Scheduleand operating policy decisions of ownership percentages

 Percentage of sharesCompany Headquarter Activities 
 20212020controls
Subsidiaries     
L.D.O.S.P.E.  Geração de Energia e Participações Ltda. – “L.D.O.S.P.E."100100IndirectlyBrazilEnergy
L.D.Q.S.P.E.  Geração de Energia e Participações Ltda. - "L.D.Q.S.P.E."100100IndirectlyBrazilEnergy
L.D.R.S.P.E.  Geração de Energia e Participações Ltda. - "L.D.R.S.P.E."100100IndirectlyBrazilEnergy
Mineração Dardanelos Ltda. - "Dardanelos"100100IndirectlyBrazilMining projects
Nexa Recursos Minerais S.A. - "NEXA BR"100100DirectlyBrazilMining / Smelting
Mineração Santa Maria Ltda.99.9999.99IndirectlyBrazilMining projects
Pollarix S.A. - "Pollarix" (i)33.3333.33IndirectlyBrazilHolding and others
Karmin Holding Ltda.100100IndirectlyBrazilHolding and others
Mineração Rio Aripuaña Ltda.100100IndirectlyBrazilHolding and others
Votorantim Metals Canada Inc.100100IndirectlyCanadaHolding and others
Nexa Resources El Porvenir S.A.C.99.9999.99IndirectlyPeruMining
Minera Pampa de Cobre S.A.C99.9999.99IndirectlyPeruMining
Nexa Resources Cajamarquilla S.A.  - "NEXA CJM"99.9999.99DirectlyPeruSmelting
Nexa Resources Perú S.A.A. - "NEXA Peru"83.5583.55IndirectlyPeruMining
Nexa Resources Atacocha S.A.A. - "NEXA Atacocha"66.6266.62IndirectlyPeruMining
Nexa Resources UK Ltd.  - "NEXA UK"100100IndirectlyUnited KingdomMining
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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Nexa Resources US. Inc.100100DirectlyUnited StatesTrading
Exploraciones Chimborazo Metals & Mining1000DirectlyEcuadorHolding and others
Joint-operations     
Campos Novos Energia S.A. - "Enercan"20.9820.98 BrazilEnergy
Cia. Minera Shalipayco S.A.C7575 PeruMining projects

the investee, without having its control or joint control of those policies.

(i)NEXA BR owns all the common shares of Pollarix, which represents 33.33% of its total share capital. The remaining shares are preferred shares with limited voting rights, which are indirectly owned by NEXA’s controlling shareholder, VSA.

(c)(d)Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in a loss of control are recognized within shareholders’ equity as transactions with equity owners of the consolidated group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in Additional paid in capital within shareholders’ equity.

(d)(e)Foreign currency translation

(i)Functional and presentation currency

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which each entity operates (“the functional currency”). The Company’s consolidated financial statements are presented in US Dollars ("USD"), which is NEXA’s functional currency and the Company’s reporting currency.

(ii)Transactions and balances

Foreign currency transactions are initially recorded by each entity inof the CompanyCompany’s entities at their respective functional currency spot rates at the date the transaction is recognized. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the functional currency spot ratesrate at the end of each reporting period are recognized in the income statement. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange ratesrate at the datesdate of the initial transaction. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

(iii)Consolidated entities

The results of operations and financial position of the consolidatedCompany’s entities that have a functional currency different from the Company’s reporting currency are translated into the reporting currency as follows:

·Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
·Income and expenses for each income statement and statement of comprehensive income presented are translated at average exchange rates for the annual period of that income statement and statement of comprehensive income, which are a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates; and

All resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of shareholders’ equity. When a foreign operation is totally or partially disposed, the monetary exchange differences that were previously recorded in equity are recognized in the income statement for the respective year.

·All resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of shareholders’ equity.
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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 


5Changes in the main accounting policies and disclosures
(a)New standards and amendments – applicable as of January 1, 20212023 or thereafter

There were some new standards and amendments effective for annual periods commencing on January 1, 2021.2023. The adoption of these new standards and amendments did not have ana material impact on the Company’s financial statements, except for the amendment for IAS 12, which additional disclosures are required and effective for the Company’s December 31, 2023 financial statements.

IAS 12 – Income taxes

Main aspects introduced by the amendments.

On 23 May 2023, the IASB issued an amendments to IAS 12. The amendments provide a temporary exception from the requirement to recognise and disclose deferred taxes arising from enacted or substantively enacted tax law that implements the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD), including tax law that implements qualifying domestic minimum top-up tax (QDMTT) described in those rules.

The amendments to IAS 12 made narrow-scope amendments to IAS 12 to (a) provide a temporary exception from accounting for deferred taxes arising from legislation enacted to implement OECD’s Pillar Two model rules, and (b) introduce additional disclosure requirements.

The mandatory temporary exception – the use of which is required to be disclosed – applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any interim periods ending on or before 31 December 2023.

Impacts of adoption

The amendments require an entity to provide disclosure on expected impacts, which is presented at note 11(e).

(b)Amendments early adopted

The Company has not early adopted any other standard, interpretation orthe following amendment, thatwhich has been issued but is not yet effective. Additionally, it has not early adopted any other standards, interpretations, or amendments that have been issued but are not yet effective, and it does not expectanticipate that the adoption of such issued but not early adopted standard, interpretation or amendmentany of them will have a materialmaterially impact on the Company’s financial statements.statements:

(b)Benchmark interest rate reform

In 2014, developmentsIAS 7 – “Statement of Cash Flow” and IFRS 7 - "Financial Instruments: Disclosure"

The amendments are effective for years starting January 1, 2024, and allow early adoption permitted by IFRS. To enhance transparency in confirming payable operations, the global markets revealed weaknesses inCompany opted for IFRS 7 and IAS 7 early adoption according to note 26.

Main aspects introduced by the London Interbank Offered Rate’s (“LIBOR”) sustainability as a reference rate. Since then, regulators around the world have focused on the transition to a new benchmark that would replace this rate.amendments.

On March 5, 2021,May 25, 2023, the UK Financial Conduct Authority (“FCA”), announced thatIASB issued the LIBOR will either be discontinued or become non-representative:final amendments to IAS 7 and IFRS 7 which addresses the disclosure requirements to improve transparency regarding supplier finance arrangements and their impact on a company’s liabilities, cash flows and exposure to liquidity risk.

·Immediately after December 31, 2021, 1-week and 2-month USD LIBOR tenors and for all EUR, GBP, CHF and JPY LIBOR tenors.
·Immediately after June 30, 2023, for the remaining USD LIBOR tenors (Overnight, and 1-, 3-, 6- and 12-month).

Transition method

The Company doeswill early apply IAS 7 and IFRS 7 amendments starting on December 31, 2023, using the simplified transition approach. There will be not have any financial instruments associated with LIBORrestatement of comparative periods for the years preceding the adoption, in other currencies and continues to discussaccordance with the reliefs available during the initial adoption.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Impacts of adoption

The amendments require an entity to provide information about the impact of supplier finance arrangements on liabilities and cash flows, including:

- Terms and conditions of the supplier finance arrangements.

- The carrying amounts of supplier finance arrangement financial entitiesliabilities and the line items in which interest rate reference will replacethose liabilities are presented;

- The carrying amounts of financial liabilities and the loans measured by USD LIBOR,line items, for which the finance providers have already settled the corresponding trade payables;

- The range of payment due dates for financial liabilities owed to the finance providers and doesfor comparable trade payables that are not expect any significant impacts on itspart of those arrangements;

- The type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial statements.liabilities, which prevent the carrying amounts of the financial liabilities from being comparable.

(c)Credit risk – local rating Peru

Until 2020, the Company used only global ratings for assessing the credit risk of financial institutions in Peru. In 2021, the Company modified its Financial Risk Management Policy, allowing the use of their local ratings, but only if these local agencies were homologated by the global agencies used by NEXA. For more details see note 12 (b).

(d)Critical estimates, assumptions and judgments

The preparation of the Company’s consolidated financial statements requires the use of estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. AccountingCritical estimates, assumptions and assumptions,judgments, by definition, will seldom equal the actual results and are continually evaluated to reflect changing expectations about future events. Management also needs to exercise judgment in applying the Company’s accounting policies.

This note provides an overview of the areas that involve a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong due to their uncertainty. Detailed information about each of these estimates, assumptions and judgments is included in other notes together with information about the basis of calculation for each affected item in the financial statements.

The critical accounting estimates, assumptions and judgments applied by the Company in the preparation of these financial statements are as follows:

• estimation of current and deferred income taxes – note 11

15estimation of 70 current and deferred income taxes – note 11
Tableestimation of Contentsfair value of financial instruments – note 14
estimation of impairment of trade accounts receivables – note 17
Nexa Resources S.A.· 

Notes toestimation of the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousandsnet realizable value of US dollars, unless otherwise stated

inventories – note 18

• estimation of fair value of financial instruments – note 13

• estimation of impairment of trade accounts receivables – note 17

• estimation of quantification of mineral reserves and resources for useful life calculation – note 22

• estimation of asset retirement and environmental obligations – note 26

• estimation of provisions for legal claims – note 27

• estimation of contractual obligations – note 28

• estimation of impairment of non-current assets – note 31

estimation of quantification of mineral reserves and resources for useful life calculation – note 22
estimation of dams, asset retirement and environmental obligations – note 27
estimation of provisions for legal claims – note 28
estimation of contractual obligations – note 29
estimation of impairment of long-lived assets – note 31

 

Estimates, assumptions and judgments are continuously evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

TheAmong others, the Company has considered the effects of COVID-19the Environmental, Social and Governance (“ESG”) commitments when making its critical estimates, assumptions and judgments.judgments based on the updated long-term ESG commitments. Events and changes in circumstances arising after December 31, 2021, including those resulting from the impacts of COVID-19,2023, will be reflected in management’s estimates for future periods.

Nexa integrates sustainability practices into its business, focused on generating a positive social, economic and environmental impact in the places where it operates. Within this context, the Company has a multidisciplinary and integrated task force which is currently complementing and defining its Environmental, Social and Governance (“ESG”) strategy and future actions including risks analyses with respect to climate change and global, regional and local weather conditions,periods, as well as those related to the emission of greenhouse gases, among other matters. The Company’s objective is to continuously evolveeffective disbursements will be capitalized or expensed, depending on its nature and adapt to new frameworks, as well as to respond to its stakeholder feedback. As a result of these definitions, the Company could havefunction, in the future some changeperiod in its accounting estimates, assumptions and judgments regarding new definitions, practices or commitments that would be assumed by management in relation to its ESG strategy.which they are incurred.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

 

6Net revenues

Accounting policy

Revenues represent the fair valueamount of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s activities. Revenues are shown net of value-added tax, returns, rebates and discounts, after eliminating sales between the consolidated companies.

The Company recognizes revenues when a performance obligation is satisfied by transferring a promised good or service to a customer. The asset is transferred when the customer obtains control of that asset. To determine the point in time at which a customer obtains control of a promised asset the Company considers the following indicators: (i) the Company has a present right to payment for the asset; (ii) the customer has legal title to the asset; (iii) the Company has transferred physical possession of the asset; (iv) the customer has the significant risks and rewards of ownership of the asset; (v) the customer has accepted the asset.

Identification and timing of satisfaction of performance obligations

The Company has two distinct performance obligations included in certain sales contracts:

(i) the promise to provide goods to its customers; and (ii) the promise to provide freight and to contract insurance services to its customers.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Promise to provide goods: this performance obligation is satisfied when the control of such goods is transferred to the final customer, which is substantially determined based on the Incoterms agreed upon in each of the contracts with customers.

Promise to provide freight and contracting insurance services: this performance obligation is satisfied when the freight and insurance services contracted to customers are completed.

As a result of the distinct performance obligations identified, part of the Company’s revenues is presented as revenues from services. Cost related to revenues from services is presented as Cost of sales.

Revenues from the sale of goods and from freight and contracting insurance services are recognized at a point in time when control is transferred and when contracted services are provided. It is at this point that a trade receivable is recognized because only the passage of time is required before the consideration is due. The Company does not have any contract assets, which give right to consideration in exchange for goods or services that the Company has transferred to the customer, since all rights to consideration of the contracts are unconditional.

DeferredIn 2023, revenues of USD 773,230 are derived from two main customers. These revenues are relatedattributed to contractboth segments, mining and smelting.

Contractual obligations that are an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer (or the payment is due) but the transfer has not yet been completed. For contracts where performance obligations are satisfied over a period of time, the stage of completion is required to calculate how much revenue should be recognized to date and revenue shall be deducted from the prepayment to the extent that performance obligations are delivered. Refer to note 2829 for the specific accounting policy and information related to NEXA’s contractual obligations.

Determining the transaction price and the amounts allocated to performance obligations

The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration that the Company expects to be entitled to receive in exchange for transferring promised goods or services to its customers. Transaction price is allocated to each performance obligation on a relative standalone selling price basis.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

The transaction prices included in the Company’s sales contracts are mainly based on international prices references and subject to price adjustments based on the market price at the end of the relevant quotation period stipulated in the sales contract. These are referred to as provisional pricing arrangements which are subject to a monthly price adjustment. The period betweenadjustment as per the provisional and final pricing is approximately two months.London Metal Exchange (LME) quotational periods. As of December 31, 2021,2023, the pending price adjustments to be made were not material.

Additionally, the Company has a contractual obligation related to a long-term silver streaming arrangement linked to specific production of its Cerro Lindo mine. The Company received an upfront payment in advance of this specific production. The transaction price is linked to the silver production and spot market prices, which change over time and, therefore, it is accounted for as variable consideration. For more details about this streaming transaction see note 28.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

29.

(a)Composition of net revenues

Schedule of net revenues by billing

(i)Gross billing reconciliation
Schedule of net revenues by billing   
2021 2020 2019202320222021
Gross billing  2,974,850   2,138,786   2,552,275  2,839,5973,440,8632,974,850
Billing from products  2,898,210   2,074,203   2,473,534  2,731,8723,330,9752,898,210
Billing from freight and insurance services  76,640   64,583   78,741
Billing from freight, contracting insurance services and others  107,725109,88876,640
Taxes on sales  (347,311)   (184,714)   (216,141)  (263,979)(402,064)(347,311)
Return of products sales  (5,429)   (3,143)   (3,419)  (2,385)(4,809)(5,429)
Net revenues  2,622,110   1,950,929   2,332,715  2,573,2333,033,9902,622,110

 

In 2021, a gross billing of approximately USD 390,469 was generated from a single customer, and there was no other customer to which the Company sold more than 10% of its gross billing individually. Net revenues were generated by NEXA’s both segments, mining and smelting.

In 2021, taxes on sales include ICMS expenses of USD 71,949 related to the Company’s adoption of the tax incentive allowed by Complementary Law No. 160/2017, as detailed in note 9 (i).

Schedule of net revenues from products

(ii)Net revenues breakdown
Schedule of net revenues from products  
2021 2020 2019202320222021
Zinc  1,844,632   1,323,287   1,592,050  1,682,7112,093,1051,844,632
Lead  223,341   161,964   259,238  321,803276,438223,341
Copper  305,793   197,756   174,697  263,376290,519305,793
Silver  69,691   58,568   63,867  61,59457,92169,691
Other products  102,013   144,771   164,122  136,024206,119102,013
Freight and insurance services76,640 64,583 78,741
Freight, contracting insurance services and others  107,725109,88876,640
Net revenues  2,622,110 1,950,929 2,332,715  2,573,2333,033,9902,622,110
  
Taxes on sales  347,311   184,714   216,141  263,979402,064347,311
Return of products sales  5,429   3,143   3,419  2,3854,8095,429
Gross billing  2,974,850 2,138,786 2,552,275  2,839,5973,440,8632,974,850

 

(b)Information on geographical areas in which the Company operates

The geographical areas are determined based on the location of the Company’s customers. The net revenues of the Company, classified by geographical location and currency, are as follows:

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

Schedule of revenues by geographical location

(i)Net revenues by geographical location
Schedule of revenues by geographical location   
2021 2020 2019202320222021
Peru 774,735  485,850  595,601         654,216         859,760         774,735
Brazil 753,280  583,141  625,033         559,786         827,173         753,280
Singapore         229,278         166,412           56,879
Switzerland         209,312         124,726           78,770
United States 119,564  116,717  159,672         168,965         174,526         119,564
Argentina           94,144           94,433           93,107
Chile           83,459         120,060           54,044
Luxembourg           78,474           95,252           97,462
China           65,910                  -                     -   
Austria           47,919           48,676           45,057
South Africa           41,350           55,864           25,126
South Korea 118,596  77,429  95,913           39,985           32,406         118,596
Luxembourg 97,462  76,072  145,493
Argentina 93,107  56,165  60,850
Switzerland 78,770  68,912  101,636
Colombia           36,066           64,013           54,325
Japan 58,296  46,719  71,352           32,054           71,370           58,296
Singapore 56,879  76,724  99,488
Colombia 54,325  34,768  37,149
Chile 54,044  48,969  80,849
Taiwan 53,752  28,764  33,551           26,901           65,036           53,752
Austria 45,057  35,197  39,897
Turkey 34,493  25,005  33,905           26,606           54,955           34,493
Belgium           19,824           17,905           13,690
Malaysia 25,681  13,948  6,535           18,738           26,032           25,681
South Africa 25,126 -   1,892
Netherlands 17,693  11,740  9,381           16,045           13,623           17,693
Ecuador 15,652  9,095  13,012           14,554           15,433           15,652
Italy 14,834  9,895  9,000             9,479             9,586           14,834
Vietnam 14,555  10,798  3,1425,0068,39614,555
Belgium 13,690  30,174  25,500
Indonesia 11,774  8,609  1,098
Guatemala 11,101  4,738  7,094
Germany 7,297  33,869  20,749
Other 72,347  57,631  54,92395,16288,353102,519
Net revenues2,622,110 1,950,929 2,332,715  2,573,233  3,033,990  2,622,110

 

Schedule of revenues by currency

(ii)Net revenues by currency
 20212020 2019
USD1,914,905  1,388,746   1,731,765
Brazilian Real (“BRL”)707,205  562,183   600,950
Net revenues  2,622,110  1,950,929   2,332,715

Schedule of revenues by currency     
 2023 2022 2021
 USD           2,050,053 2,251,866 1,914,905
Brazilian Real (“BRL”)              523,180 782,124 707,205
Net revenues  2,573,233 3,033,990 2,622,110

 

 

7Expenses by nature

Accounting policy

Cost of sales mainly consists of the cost of manufacturing the products sold by the Company and is recognized in the income statement on the date of delivery to the customer at the same time revenue is recognized from the related sale.

Selling, general and administrative expenses are recognized on the accrual basis regardless of when they are paid and, if applicable, in the same period in which the income with which they are related to is recognized. 

Schedule of expense by nature    
    2023
 Cost of sales
(i/ii)
Selling, general and
administrative

Mineral exploration and

project evaluation

Total
Raw materials and consumables used  (1,327,680)  -  -  (1,327,680)
Third-party services  (436,743)  (20,275)  (73,380)  (530,398)
Depreciation and amortization  (295,510)  (2,800)  (83)  (298,393)
Employee benefit expenses  (203,835)  (53,442)  (13,786)  (271,063)
Others  (12,989)  (50,431)  (12,417)  (75,837)
Total   (2,276,757)  (126,948)  (99,666)  (2,503,371)

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

     
    2022
 Cost of salesSelling, general and
administrative
Mineral exploration and
project evaluation
Total
Raw materials and consumables used  (1,463,472)  -  -  (1,463,472)
Third-party services  (449,373)  (30,878)  (65,041)  (545,292)
Depreciation and amortization  (282,968)  (4,064)  (37)(287,069)
Employee benefit expenses  (182,609)  (58,909)  (18,030)  (259,548)
Others  (16,758)  (51,692)  (15,754)  (84,204)
Total   (2,395,180)  (145,543)  (98,862)  (2,639,585)

Schedule

     
    2021
 Cost of salesSelling, general and
administrative
Mineral exploration and
project evaluation
Total
Raw materials and consumables used  (1,188,365)  (1,363)  -  (1,189,728)
Third-party services  (381,721)  (32,400)  (52,950)  (467,071)
Depreciation and amortization  (254,414)  (4,262)  (35)  (258,711)
Employee benefit expenses  (149,560)  (55,867)  (17,688)  (223,115)
Others  (14,959)  (39,911)  (14,370)  (69,240)
Total   (1,989,019)  (133,803)  (85,043)  (2,207,865)

(i) As of expense by nature

    202120202019
 Cost of sales (i)Selling, general and administrativeMineral exploration and project evaluationTotalTotalTotal
Raw materials and consumables used(1,188,495)(1,233)-(1,189,728)(856,300)(1,063,094)
Third-party services(373,282)(40,839)(52,950)(467,071)(407,695)(574,228)
Depreciation and amortization(251,657)(7,019)(35)(258,711)(243,925)(317,892)
Employee benefit expenses(140,418)(65,009)(17,688)(223,115)(213,865)(254,251)
Others(12,184)(42,686)(14,370)(69,240)(50,966)(73,937)
Total(1,966,036)(156,786)(85,043)(2,207,865)(1,772,751)(2,283,402)

(i) In 2021, costDecember 31, 2023, the Company recognized USD 12,455 in Cost of sales was reduced byrelated to idle-capacity costs: (a) USD 19,4076,191 in the first quarter in Cerro Lindo, due to GSF recoveredthe suspension of the mine for almost two weeks caused by unusually heavy rainfall levels and overflowing rivers originated by cyclone Yaku; (b) USD 3,065 in June and July in Atacocha, due to the Unit’s temporary suspension caused by illegal protest activities undertaken by communities (December 31, 2022 was USD 2,197); and, (iii) USD 3,199 in November due to unplanned maintenance in Cajamarquilla. Idle capacity costs are calculated considering the significant reduction in the level of production due to unusual events.

(ii) Cost of sales of 2023 includes: (i) a reversal of USD 54,906, including depreciation of USD 14,785 (USD 52,215, including depreciation of USD 16,377 as of December 31, 2022) related to the extensionnet realizable value provision of the concession period of NEXA’s Brazilian energy power plantsAripuanã’s inventory, for both its ore stockpile and its produced concentrates, as explained in note 22.

18; and, (ii) USD 77,639, including depreciation of USD 22,024 (USD 15,681, including depreciation of USD 5,911 as of December 31, 2022) related to the idleness of the Aripuanã mine and plant capacity incurred during the ramp-up phase.
The Company started to generate revenues in Aripuanã in November of 2022, and before this event idle capacity were recorded within other income and expenses, net.

 

 

8Mineral exploration and project evaluation

Accounting policy

Mineral exploration and project evaluation costs are expensed in the year in which they are incurred.

 

Mineral exploration activities involve the search for mineral resources from potential areas up to the determination of commercial viability and technical feasibility of an identified resource. Mineral exploration costs include gathering exploration data through geological and geophysical studies, conducting exploratory drilling and sampling, and determining and examining the volume and grade of the identified resources.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

Project evaluation costs are mainly related to scoping, pre-feasibility and feasibility studies for greenfield and brownfield projects. Additionally, these evaluation costs could also include costs incurred for studies related to other corporate projects, research, innovation, automation, and information technology projects.

 

Note 2122 describes when mineral exploration and project evaluation costs begin to be capitalized.

Composition of mineral exploration and project evaluation costs

Schedule of mineral exploration and project evaluation costs

 2021 2020 2019
Mineral exploration  (55,594)   (38,519)   (79,838)
Project evaluation  (29,449)   (18,682)   (39,225)
Mineral exploration and Project development  (85,043)   (57,201)   (119,063)

Schedule of mineral exploration and project evaluation costs   
 202320222021
Mineral exploration  (58,042)  (61,986)  (55,594)
Project evaluation  (41,624)  (36,876)  (29,449)
Mineral exploration and Project development  (99,666)  (98,862)  (85,043)

 

 

9Other income and expenses, net

Schedule of other income and expenses, net   
 202320222021
ICMS tax incentives (i)  32,338  56,697  71,949
Changes in fair value of offtake agreement - note 16 (e)  2,268  24,267  -
Pre-operating expenses related to Aripuanã (ii)  -  (45,800)  (8,753)
Impairment of other assets (iii)  -  (9,302)  -
Changes in fair value of derivative financial instruments – note 16 (c)  (1,385)  1,363  7,486
Changes in asset retirement and environmental obligations - note 27 (ii)  (3,165)  (1,512)  (6,664)
Loss on sale of property, plant and equipment  (3,734)  (698)  (4,891)
Slow moving and obsolete inventory  (4,372)  (11,511)  (985)
Dams obligations - note 27(6,960)--
Contribution to communities  (13,134)  (17,233)  (7,070)
Provision for legal claims  (13,892)  (7,664)  (13,173)
Energy forward contracts – Changes in fair value – Note 16 (d)  (15,663)  -  -
Tax voluntary disclosure – VAT discussions (iv)  (86,906)  -  -
Others  4,021  8,719  (5,951)
 Total other income and expenses, net  (110,584)  (2,674)  31,948

(i) Between December 2021 and December 2023, the Company adhered to a Brazilian Law that states that government grants of the “Imposto sobre circulação de mercadorias e serviços” (“ICMS”) tax incentives are considered investment subsidies and should be excluded from taxable income for the purpose of calculating the Corporate Income Tax and the Social Contribution on Net Income tax.

On December 29, 2023 a new law No. 14,789/2023 was published, revoking the treatment for purposes of IRPJ and CSLL of subsidies for investments by creating a new tax credit mechanism. The new rule also provides a limited concept of subsidy of investments only covering VAT benefits aimed to implement or expand an economic enterprise.

This new regulation will come into effect in 2024. The Company is still evaluating the impacts of the new Law and legal procedures that should be adopted.

(ii) In 2022, the main amounts were related to the idleness of the Aripuanã mine and plant relative to its nameplate capacity, which were recorded in this account until Aripuanã started to generate revenues in November 2022, when the idleness amounts started to be recorded as Cost of sales.

(iii) Amounts mainly related to the write-off of some non-commercial account receivables and taxes, which the Company does not expect to recover.

(iv) As previously reported throughout 2023, Nexa cooperated with the investigation carried out by the Fiscal Office of the State of Minas Gerais and the Public Ministry of Minas Gerais (the “MG Authorities”) of the practices of certain of Nexa’s former customers with respect to commercial transactions and related value-added tax (VAT), as well as Nexa’s relationship with such former customers.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

In the third quarter of 2023, Nexa and the MG Authorities reached a resolution (the “Tax Resolution”) whereby, without admitting primary responsibility for the resolved claims, the Company agreed to make tax payments, including interest and penalties, to the State of Minas Gerais on behalf of certain customers that allegedly failed to properly comply with their tax obligations (“tax portion”), and subsequently on October 20, 2023 entered into a related additional agreement (the “Related Agreement”, and together with the Tax Resolution, the “Agreements”) to make a contribution to the State of Minas Gerais to support its ESG-related efforts (“ESG portion”), recognizing a total amount of USD 75,811 in "Other liabilities”, comprised of USD 65,512 as “Other Income and Expenses, net” and USD 10,299 as “Financial Expenses” related to the interest charged in connection with the VAT-related practices of its former customers. In funding this agreement, the Company applied an offset of USD 24,951 of VAT accumulated credits, paid a portion of USD 1,515 in cash up front, offset an amount of USD 6,398 which was classified as a judicial deposit, and will pay the remainder in up to 46 monthly installments, to be adjusted by the SELIC (the Brazilian federal funds rate) interest rate.

In addition to the Agreements, on February 8, 2024, a second and final Tax Resolution was filed with the MG Authorities whereby Nexa, without admitting primary responsibility for the resolved claims, agreed to make tax payments on behalf of certain customers, including interest and penalties, to the State of Minas Gerais, recognizing a total amount of USD 27,128 in "Other liabilities”, comprised of USD 21,394 as “Other Income and Expenses, net” and USD 5,734 as “Financial Expenses” related to the interest charged in connection with the VAT-related practices of this former customers. In funding this agreement, the Company will apply an offset of USD 10,796 of VAT accumulated credits, will pay USD 828 in cash up front, and will pay the remainder in up to 59 monthly installments, to be adjusted by the SELIC (the Brazilian federal funds rate) interest rate.

This resolution concludes the MG Authorities’ investigation with respect to the Company, and the Company does not expect any further developments or provisions with respect to these matters, although reserves its legal right to recover from certain customers the amounts that it has paid, or will pay, on their behalf in connection with the tax portion of the Agreements. These amounts will only be recognized upon recovery. 

 

9Other income and expenses, net

Schedule of other income and expenses, net

 2021 2020 2019
Remeasurement of asset retirement and environmental obligations – note 26  (6,664)   (900)   4,810
Provision of legal claims – note 27 (13,173)  (10,912)   (4,424)
Contribution to communities  (7,070)   (2,773)   (3,893)
Derivative financial instruments - note 16 (b)  7,486   948   (833)
Loss on sale of property, plant and equipment and intangible assets  (4,891)   (2,268)   (857)
Pre-operating expenses related to Aripuanã   (8,753)   (1,885)   (1,312)
ICMS tax incentives (i)  71,949   -   -
Others  (6,936)   (1,374)   (11,697)
Total other income and expenses, net  31,948 (19,164) (18,206)
(i)The Brazilian Complementary Law No. 160/2017, which amended Law No. 12.973/2014, states that government grants of ICMS tax incentives are considered investment subsidies and excluded from taxable income for the purpose of calculating the corporate income taxes IRPJ and CSLL. In 2021, the Company, supported by the opinion of its external legal advisors, concluded that the ICMS tax incentives obtained in 2021 and 2020 for a total amount of US$ 71,949 could be excluded from the corporate income taxes basis for the fiscal year ended on December 31, 2021 and recognized ICMS taxes in Taxes on Sales and ICMS tax incentives in Other income and expense, net. The ICMS tax incentives are a permanent difference and the related corporate income tax effect in the amount of USD 24,463 reduced the current tax expense in 2021 as shown in note 11 (a).

10Net financial results

Accounting policy

(i) Financial expenses

Financial costs of obligations are recognized as expenses when accrued, except for those directly attributable to the acquisition or the construction of qualifying assets, that is, assets that require a substantial time to be ready for use, which are capitalized at cost within Property,property, plant and equipment and/or Intangiblesintangibles assets to which they relate.

(ii) Financial income

Financial income is mainly composed of interest income and is recognized on an accrual basis to reflect the asset’s effective yield under the effective interest rate method.

(iii) Other financial items, net

(iii) Other financial items, net is composed by the net of the income and expenses related to the fair value of loans and financings, derivative financial instruments, and foreign exchange losses.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Schedule of net financial results

  2021 2020 2019
Financial income      
Interest income on financial investments and cash equivalents 6,074 7,295 20,909
Interest on tax credits 1,377 854 5,498
Other financial income 4,021 3,019 4,647
Total financial income 11,472 11,168 31,054
       
Financial expenses      
Interest on loans and financings (96,565) (97,422) (67,369)
Premium paid on bonds repurchase – note 24 (c) - (14,481) -
Interest on other liabilities (12,371) (8,051) (10,864)
Interest on contractual obligations (6,936) (6,182) (6,526)
Interest on lease liabilities – note 23 (b) (1,272) (1,757) (3,416)
Other financial expenses (25,131) (31,866) (29,224)
Total financial expenses (142,275) (159,759) (117,399)
       
Other financial items, net      
Fair value of loans and financings – note 24 (c) 19,380 (8,058) (6,640)
Derivative financial instruments - note 16 (b) (5,640) (717) 1,024
Foreign exchange losses (i) (19,839) (120,809) (12,893)
Other financial items, net (6,099) (129,584) (18,509)
       
  Net financial results (136,902) (278,175) (104,854)

Schedule of net financial results    
  202320222021
Financial income    
Interest income on financial investments and cash equivalents   11,622  16,913  6,074
Interest on tax credits   1,012  980  1,377
Other financial income   12,869  7,125  4,021
 Total Financial income   25,503  25,018  11,472
     
Financial expenses    
Interest on loans and financings   (110,734)  (104,689)  (96,565)
Premium paid on bonds repurchase   -  (3,277)  -

Interest accrual on asset retirement and environmental obligations - note 27

   (26,969)  (23,662)  (9,667)
Interest on other liabilities   (9,215)  (11,472)  (12,371)
Interest on contractual obligations   (5,329)  (5,801)  (6,936)
Interest on lease liabilities - note 23 (b)   (427)  (542)  (1,272)
Interest on VAT discussions - note 9 (iv)   (16,033)  -  -
Interest on Factoring operations   (16,624)  (4,791)  (2,864)
Other financial expenses   (18,853)  (14,460)  (12,600)
 Total Financial expenses (204,184)  (168,694)  (142,275)
     
Other financial items, net    
Changes in fair value of loans and financings – note 24 (c)   (525)  (1,472)  19,380
Changes in fair value of derivative financial instruments – note 16 (c)   (606)  (83)  (5,640)
Foreign exchange gain (loss) (i)   18,171  11,504  (19,839)
Total Other financial items, net             17,040  9,949  (6,099)
     
  Net financial results       (161,641)  (133,727)  (136,902)

(i) The amounts for years 20212023 and 2020 include losses of USD 10,468 and USD 65,689 respectively, which2022 are relatedmainly due to (i) exchange variation gain on the outstanding USD denominated intercompany debtaccounts receivables and accounts payables of NEXA BR with NEXA in the amount of USD 23,662 and USD 24,010, respectively, and (ii) exchange variation loss of USD 3,863 and USD 331, respectively, mainly related to the intercompany loan of Nexa BR with its related parties which is not eliminated in the consolidation process. The transactions were impacted by the volatility of the BRL,Brazilian Real (“BRL”), which depreciated continuouslyappreciated against the USD during 2021 and 2020.

2023.

 

 

11Current and deferred income tax

Accounting policy

The current income tax is calculated based on the tax laws enacted or substantively enacted as of the balance sheet date in the countries where the Company’s entities operate and generate taxable income. Management periodically evaluates positions taken by the Company in the taxes on income returns with respect to situations in which the applicable tax regulations are subject to interpretation.

ItThe Company establishes provisions or records a liability, where appropriate, and when the Company has a present obligation, considering amounts expected to be paid to the tax authorities.

The current income tax is presented net, separated by tax paying entity, in liabilities when there are amounts payable, or in assets when the amounts prepaid exceed the total amount due on the reporting date.

Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction affects neither the accounting nor the taxable income or loss. Deferred income tax is determined using tax rates (and laws), of the Company’s entities, that have been enacted or substantially enacted at the end of the reporting period and that are expected to be applied when the related deferred income taxestax asset is realized, or the deferred income tax liability is settled.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Deferred tax assets are recognized only to the extent it is probable that future taxable income will be available against which the temporary deductible differences and/or tax losses can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right and an intention to offset them in the calculation of current taxes, generally when they are related to the same legal entity and the same tax authority. Accordingly, deferred tax assets and liabilities in different entities or in different countries are generally presented separately, and not on a net basis.

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amounts and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not be reversed in the foreseeable future.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Critical accounting estimates, assumptions and judgments

The Company is subject to income tax in all countries in which it operates where uncertainties arise in the application of complex tax regulations. Significant judgment, estimates, assumptions and assumptionsjudgments are required to determine the amount of deferred taxestax assets that would be recovered since this amount may be affected by factors including, but not limited to: (i) internal assumptions on the projected taxable income, which are based on production and sales planning, commodity prices, operational costs and planned capital costs; (ii) macroeconomic environment; and (iii) trade and tax scenarios.

In addition, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company also exercises judgment in the identification of these uncertainties over income tax treatments which could impact the consolidated financial statements as the Company operates in a complex multinational environment.

The Company and its subsidiaries are subject to reviews of income tax filings and other tax payments, and disputes can arise with the tax authorities over the interpretation of the applicable laws and regulations.

(a)Reconciliation of income tax (expense) benefit
Schedule of reconciliation of income tax (expense) benefit      
  2023 2022 2021
(Loss) income before income tax   (293,470)   227,377   309,291
Statutory income tax rate 24.94% 24.94% 24.94%
       
Income tax benefit (expense) at statutory rate   73,191   (56,708)   (77,137)
ICMS tax incentives permanent difference   10,995   19,277   24,463

Tax effects of translation of non-monetary assets/liabilities to functional currency

   13,686   6,279   (32,998)
Withholding tax over subsidiary capital reduction   -   (5,263)   (10,526)
Impairment loss of goodwill   (12,585)   (18,247)   -
Special mining levy and special mining tax   (5,366)   (13,321)   (17,279)
Difference in tax rate of subsidiaries outside Luxembourg   24,428   (10,319)   (3,179)
Tax voluntary disclosure – VAT Discussions – note 9 (iv)   (34,999)   -   -
Unrecognized deferred tax on net operating losses (ii)   (52,091)   (66,069)   (36,577)
Other permanent tax differences   (12,985)   (6,612)   29
Income tax benefit (expense)   4,274   (150,983)   (153,204)
       
Current     (75,741)   (146,869)   (122,081)
Deferred     80,015   (4,114)   (31,123)
Income tax benefit (expense)   4,274   (150,983)   (153,204)

Schedule of reconciliation of

(i) VAT expense related to the tax voluntary disclosure (refer to note 9) is not deductible for income tax benefit (expense)purposes and, consequently, Nexa did not recognize a deferred tax asset.

(ii) On December 31, 2023 Nexa has not recognized deferred tax on net operating losses over a taxable basis of USD 154,261 (2022: USD 211,780), after an assessment made by management considering the future recoverability of these net operating losses. As of December 31, 2023 the Company has an estimated accumulated amount of USD 861,295 not recognized as deferred taxes on net operating losses. Of the total amount of unused tax losses, USD 86 have an expiration limit of 5 years, USD 481,342 of 17 years, USD 15,695 of 20 years, and USD 364,172 can be carried forward indefinitely.

  2021 2020 2019
  Income (loss) before income tax   309,291 (676,658) (215,880)
  Statutory income tax rate 24.94% 24.94% 24.94%
       
  Income tax (expense) benefit at statutory rate (77,137) 168,759 53,840

Tax effects of translation of non-monetary assets/liabilities to

functional currency

(32,998) (28,174) (3,575)
  Unrecognized deferred tax benefit on net operating losses  (35,735) (35,849) -
  Special mining levy and special mining tax   (17,279) (5,909) (7,431)
  Withholding tax on dividends paid by subsidiaries - - (9,764)
  Difference in tax rate of subsidiaries outside Luxembourg (i)(3,179) 36,390 24,698
  Withholding tax over subsidiary capital reduction (ii)   (10,526) - -
  Impairment of goodwill   - (78,866) -
  ICMS tax incentives (iii) 24,463 -  
  Other permanent tax differences (813) (32,199) 596
 Income tax (expense) benefit (153,204) 24,152 58,364
       
 Current (122,081) (63,192) (46,382)
 Deferred (31,123) 87,344 104,746
 Income tax (expense) benefit (153,204) 24,152 58,364

 

 

 

      

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(i)The Company’s activities are subject to the income tax regime of each country where it operates. However, NEXA’s Cerro Lindo mining unit had a lower income tax rate in comparison with that of other Peruvian operations because it was taxed under the laws and guarantees of a stability agreement signed by NEXA PERU, which was valid until the end of 2021. The deferred taxes of NEXA’s Cerro Lindo unit, however, are calculated considering the statutory income tax rate of 29.5% applicable as of January 1, 2022, since they will be recovered after 2021.
(ii)On June 10, 2021, NEXA and the other shareholders of NEXA CJM approved a capital reduction of USD 210,703 which was paid on July 27, 2021. Given this capital reduction, the Company recognized USD 10,526 of tax expenses because the tax withheld by NEXA CJM on the corresponding participation of NEXA in its capital was considered not recoverable.
(iii)See note 9.

(b)(b)Analysis of deferred income tax assets and liabilities

Schedule of analysis of deferred income tax assets and liabilities

Schedule of analysis of deferred income tax assets and liabilities    
 2021 2020 2023 2022
Tax credits on net operating losses (i)   116,284   108,767
Tax credits on net operating losses   228,283   127,016
  
Uncertain income tax treatments   (5,279)   (6,712) (17,292) (10,980)
Tax credits on temporary differences  
Foreign exchange losses   -   33,123
Environmental liabilities   13,923   16,611   18,407   15,764
Asset retirement obligations   17,698   20,507   25,492   18,175
Inventory provisions   10,850   10,569
Tax, labor and civil provisions   7,797   7,162   9,588 8,882
Other provisions   8,613   9,825
Provision for obsolete and slow-moving inventory   7,224   6,813
Provision for employee benefits   7,138   5,299   7,319   7,099
Revaluation of derivative financial instruments   506   3,056   111   754
Other   7,039   6,513
Others   16,938 12,144
    
Tax debits on temporary differences  
Capitalized interest (23,060) (10,504)
Foreign exchange gains   (16,365)   - (26,766) (25,542)
Capitalized interest   (9,261)   (10,274)
Revaluation of loans and financings   (1,945)   (88)
Depreciation, amortization and asset impairment   (189,799)   (190,970)
Other   (3,951)   (6,444)
Depreciation, amortization, and asset impairment (178,410) (178,041)
Others (20,085) (7,852)
   (40,378)   3,188 51,375 (32,516)
  
Deferred income tax assets    168,205   221,580 235,073 166,983
Deferred income tax liabilities    (208,583)   (218,392) (183,698) (199,499)
   (40,378)   3,188 51,375 (32,516)

 

(i)As a result of adopting Complementary Law No. 160/2017, as described in note 9, there was also an increase in the amount of USD 11,996(c) in the balance of tax losses for the year, amount which is included in the tax credits on net operating losses.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

(c)Effects of deferred income tax on income statement and other comprehensive income

Schedule of effects of deferred tax and taxes on profit or loss and other comprehensive income

Schedule of effects of deferred tax on income statement and other comprehensive income      
 2021 2020 2019 2023 2022 2021
Balance at the beginning of the year   3,188   (48,212)   (136,810)   (32,516) (40,378) 3,188
Effect on income (loss) for the year   (31,123)   87,344   104,746   80,015 (4,114) (31,123)
Effect on other comprehensive income (loss) - Fair value adjustment  (2,536)   13   453
Effect on other comprehensive loss – Fair value adjustment   (1,071) 820 (2,536)
Prior years uncertain income tax treatment payment   -   4,706   -   - 1,923 -
Impact of adoption IFRIC 23   -   -   (10,070)
Foreign exchange (loss) gain   (9,907)   (40,663)   (6,531)
Effect on other comprehensive income – Translation effect included in cumulative translation adjustment    9,415 8,481 (9,907)
Derecognition of Nexa's share of Enercan's deferred income taxes - note 4(ii)   - 3,338 -
Uncertain income tax treatments   (4,468) (2,586) -
Balance at the end of the year   (40,378)   3,188   (48,212)   51,375 (32,516) (40,378)

 

(d)Summary of contingent liabilitiesuncertain tax positions on income taxestax

There are uncertaintiesdiscussions and legal proceedingsongoing disputes with tax authorities related to uncertain tax positions adopted by the Company in the calculation of its income tax, and for which management, supported by its legal counsel, has concluded that it is not probablemore-likely-than-not that an outflow of resourcesits positions will be required. In such cases, a provision is not recognized. sustained upon examination.

As of December 31, 2021,2023, the main legal proceedings are related to: (i) the interpretation of the application of the Cerro Lindo´s stability agreement; and (ii) the carryforward calculationlitigation of net operating losses; and, (iii) the deductibility of foreign exchange losses and expenses.transfer pricing adjustments over transactions made with related parties. The estimated amount of these contingent liabilities on December 31, 20212023, is USD 134,804478,329 which decreased in comparisonincreased compared to the estimatethat estimated on December 31, 2022, of USD 163,670349,322 on December 31, 2020, mainly due to a favorable decision receivedthe new tax assessment of Cerro Lindo Stability Agreements for 2017 and the change of the risk evaluation from remote to possible of some expenses deductions, in 2021 with respect to oneview of its pending incomethe evaluation made by internal and external advisors. In such cases, tax assessments as recognized by the corresponding tax authority.provisions are not recognized.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Regarding Cerro Lindo´s stability agreement, in December 2021, the Peruvian tax authority (“SUNAT”) concluded its income tax inspection of NEXA PERU’s fiscal year 2014. As a result of this procedure, SUNAT determined an amount to be paid by(hereinafter SUNAT) issued unfavorable decisions against the Company of USD 47,575 (including principal, penaltiesfor the years 2014, 2015, 2016 and interest)2017, arguing that NEXA PERU’s income tax expense should be calculated considering the Peruvian statutorystability income tax rate for 2014 fiscal year of 30% instead of the 20% income tax rate thatgranted by the stability agreement grantedapplies only to Cerro Lindo’s operations. According to SUNAT, the Company should separate the income cominggenerated from the facilities built under the approved feasibility study (which includes a plant with a5,000 tons per day of its production, and not from its entire production capacity of 5,000 tpd) from that coming fromexpanded over time. The Company has filed strong appeals against these decisions. SUNAT is currently auditing 2018 and 2019, while the other facilitiesyears 2020 and since this is not possible, SUNAT disregarded2021 (when the stabilized rate. On January 18, 2022, the Company filed its defense stating to SUNAT’s reclamation office that this assessment was non-compliant with applicable law mainly because: i) SUNAT determined a presumed tax base that is expressly denied by the Peruvian Tax Code; and, ii) SUNAT misinterpretedterm of the stability agreement scope.  Company’s management, supported by the opinion of its external advisors, concluded that there are strong legal grounds to obtain a favorable outcome (“more likely than not”) in this discussion and, accordingly, no contingency provision has been set up. Finally, fiscal years 2015 through 2021 are still opened to be audited by SUNAT. Even ifexpires) remain open. Although SUNAT maintains its position disregarding the stabilized rate and taxing the wholeCompany’s total income of the Company at the statutory income tax rate for these years, the entity will keep maintainingCompany continues to maintain its position in relation to the applicability of the Cerro Lindo stability agreement. The Company’s Management, supported by the opinion of its external advisors, continues to conclude that no provision shouldthere are legal grounds to obtain a favorable outcome in these matters related to the tax stability rate discussion. However, the Company may have to pay the disputed amounts under discussion to continue the legal process either in the judicial or international arbitration levels. Such payments may be recognized. This evaluation must be updated year by year, reflecting changes on tax jurisprudencemade in several installments provided that a guarantee is placed before the courts and regulations in force.

may impact the Company’s results.

 

(e)Pillar 2 – analysis on estimated effects

NEXA is within the scope of the OECD Pillar Two model rules which establish a new global minimum tax framework of 15% minimum tax. Pillar Two legislation was enacted in Luxembourg and will come into effect for financial year beginning 1 January 2024, however, no legislation regarding Pillar Two was enacted in Peru and Brazil yet.

The Company has performed an assessment of the group’s potential exposure to Pillar Two income taxes by running initial testing under the OECD transitional safe harbor rules based on the most recent information available of tax filings, country-by-country reporting and financial statements for the constituent entities in the group. Based on the assessment performed, the jurisdictions where the Company operates should qualify for one of the transitional safe harbor rules and management is not currently aware of any circumstances under which this might change. Therefore, the Company does not expect a potential exposure to Pillar Two top-up tax.

12Financial risk management

Financial risk factors

The Company’s activities expose it to a variety of financial risks: a) market risk (including currency risk, interest rate risk and commodities risk); b) credit risk; and c) liquidity risk.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

A significant portion of the products sold by the Company are commodities, with prices pegged to international indices and denominated in USD. Part of the production costs, however, is denominated in BRL and Peruvian Soles (“PEN”), and therefore, there is a mismatch of currencies between revenues and costs. Additionally, the Company has debts linked to different indices and currencies, which may impact its cash flows.

In order to mitigate the potential adverse effects of each financial risk factor, the Company follows a Financial Risk Management Policy that establishes governance and guidelines for the financial risk management process, as well as metrics for measurement and monitoring. This policy establishes guidelines and rules for: (i) Commodities Exposure Management, (ii) Foreign Exchange Exposure Management, (iii) Interest Rate Exposure Management, (iv) Issuers and Counterparties Risk Management, and (v) Liquidity and Financial Indebtedness Management. All strategies and proposals must comply with the Financial Risk Management Policy guidelines and rules, be presented to and discussed with the Finance Committee of the Board of Directors, and, when applicable, submitted for the approval of the Board of Directors, under the governance structure described in the Financial Risk Managementsuch Policy.

(a)Market risk

The purpose of the market risk management process and all related actions are intended to protect the Company’s cash flows against adverse events, such as changes in foreign exchange rates, interest rates and commodity prices, to maintain the ability to pay financial obligations, and to comply with liquidity and indebtedness levels defined by management.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(i)Sensitivity analysis

Presented below is a sensitivity analysis of the main risk factors that affect the pricing of the outstanding financial instruments relatingrelated to cash and cash equivalents, financial investments, loans and financings, and derivativeother financial instruments. The main sensitivities are the exposure to changes in the USD exchange rate, the Interbank Deposit Certificate (“CDI”) interest rates, the National Broad Consumer Price Index (“IPCA”) and the commodity prices. The scenarios for these factors are prepared using market sources and other relevant sources, in compliance with the Company's policies. The scenarios on December 31, 20212023 are described below:

·Scenario I: considers a change in the market forward yield curves and quotations as of December 31, 2021,2023, according to the base scenario defined by the Company for March 31, 2022.2024.
·Scenario II: considers a change of + or -25% in the market forward yield curves as of December 31, 2021.2023.
·Scenario III:III considers a change of + or -50% in the market forward yield curves as of December 31, 2021.2023.

Schedule of sensitivity analysis risk factors affecting price of financial instrument

Schedule of sensitivity analysis risk factors affecting price of financial instrument      
  Impacts on income statement Impacts on statement of comprehensive income   Impacts on income statement Impacts on statement of comprehensive income
   Scenarios II and III Scenarios II and III  Scenarios II and III Scenarios II and III
Risk factorQuotation at December 31, 2021Cash and cash equivalents and financial investmentsLoans and financingsDerivative financial instruments Changes from 2021Scenario I-25%-50%+25%+50% Scenario I-25%-50%+25%+50% Quotation at December 31, 2023 Amount Changes from 2023Scenario I -25% -50% +25% +50% Scenario I -25% -50% +25% +50%
Cash and cash equivalents and financial investments Cash and cash equivalents and financial investments     
Foreign exchange rates      Foreign exchange rates      
BRL5.580565,403272,323(66) 1.46%(1)1938(19)(38) (3,029)51,730103,460(51,730)(103,460)4.841372,646 (1.20%)-(2)  (5)  2  5   (870)(18,159)  (36,318)  18,159  36,318
EUR1.13273,604-- 1.53%55(901)(1,802)9011,802 -----1.1054495 (1.39%)(7)(124)  (247)  124  247   -  -  -  -  -
PEN4.006923,8461,783- -0.33%(72)(5,515)(11,031)5,51511,031 -----3.710229,817 0.62%184(7,454)  (14,909)  7,454  14,909   -  -  -  -  -
CAD1.27181,040-- 0.94%----- 10(260)(520)2605201.32601,255 (1.23%)--  -  -  -   (15)  (314)  (627)  314  627
NAD15.96001,427-- -6.08%----- (87)(357)(713)35771318.54701,590 1.52%--  -  -  -   24  (397)  (795)  397  795
Interest rates           
BRL - CDI - SELIC9.15%64,87181,473(66) 191 bps(40)1,4663,083(1,339)(2,570) -----11.65%70,252 (69) bps(482)(2,046)  (4,092)  2,046  4,092   -  -  -  -  -
USD - LIBOR0.22%-88,677(6,465) 2 bps(24)53107(53)(107) 4(5)(10)510
       
Loans and financings Loans and financings      
Foreign exchange rates Foreign exchange rates      
BRL4.8413280,909 (1.20%)  -  -  -  -  -   3,365  70,227  140,454(70,227) (140,454)
Interest rates      
BRL - CDI - SELIC11.65%  79,122 (69) bps  542  2,304  4,609  (2,304)  (4,609)   -  -  -  -  -
USD - SOFR                       5.28%233,671 6 bps  (149)3,085  6,170(3,085)(6,170)   -  -  -  -  -
IPCA - TLP10.06%-171,346- -456 bps7,8134,3098,619(4,309)(8,619) -----4.62%174,971 38 bps  (665)  2,021  4,042  (2,021)  (4,042)   -  -  -  -  -
TJLP5.32%-19,325- 44 bps(85)257514(257)(514) -----6.53%  26,816 (2) bps  5  438  876  (438)  (876)   -  -  -  -  -
       
Other financial instruments Other financial instruments      
Foreign exchange rates Foreign exchange rates      
BRL4.8413  (450) (1.20%)  6  (150)  (450)  90  150   -  -  -  -  -
Interest rates       
BRL - CDI - SELIC11.65%  (450) (69) bps  92  622  1,307  (567)  (1,086)   -  -  -  -  -
USD - SOFR                       5.28%  (2,149) 6 bps  (8)  (23)  (48)  23  45   (1)  (27)  (55)  27  54
Commodities
price
      Commodities price      
Zinc3,630--(6,465) -18.73%33,48523,74047,481(23,740)(47,481) (6,613)(4,689)(9,378)4,6899,3782,641  (2,149) (4.69%)  3,962  9,003  18,006  (9,003)  (18,006)   263  597  1,193  (597)  (1,193)

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(ii)Foreign exchange risk

Foreign exchange risk is managed through the Company’s Financial Risk Management Policy, which states that the objectives of derivative transactions are to reduce cash flow volatility, hedge against foreign exchange exposure and minimize currency mismatches.

Presented below are the financial assets and liabilities in foreign currencies on December 31, 2021.2023. These mainly result from NEXA BR’s operations, for which the functional currency is the BRL.

Intercompany loans balances are fully eliminated in the consolidated financial statements. However, the related foreign exchange gain or loss is not, and is presented as foreign exchange effects.

Summary of financial assets and liabilities in foreign currency

    
Schedule of foreign exchange effects  
USD amounts of foreign currency balances 2021 202020232022
Assets   
Cash, cash equivalents and financial investments 95,320 257,706  105,802  97,397
Derivative financial instruments 314 22,376
Other Financial Instruments  29  143
Trade accounts receivables 34,858 42,612  19,885  19,132
Total assets 130,492 322,694
Total Assets  125,716  116,672
Liabilities   
Loans and financings 272,353 454,372  279,341  276,634
Derivative financial instruments 380 21,484
Other Financial Instruments  479  435
Trade payables 200,983 165,019  227,687  182,275
Lease liabilities 7,921 20,792  634  2,738
Use of public assets 24,384 20,787  22,733  23,263
Total liabilities 506,021 682,454
Total Liabilities  530,874  485,345
   
Net exposure (375,529) (359,760)  (405,158)  (368,673)

 

(iii)Interest rate risk

The Company's interest rate risk arises mainly from long-term loans. Loans at variable rates expose the Company to cash flow interest rate risk. Loans at fixed rates expose the Company to fair value risk associated with interest rates. For further information related to interest rates, refer to note 24.

The Company’s Financial Risk Management Policy establishes guidelines and rules to hedge against changes in interest rates that impact the Company’s cash flows. Exposure to each interest rate is projected until the maturity of the assets and liabilities exposed to this index. Occasionally the Company enters into floating to fixed interest rate swaps to manage its cash flow interest rate risk. In the case of loans and financings contracted together with swaps, the Company accounts for them under the fair value option to eliminate the accounting mismatch that would arise if amortized cost were used. For more information, please refer to note 24 (c).

(iv)Commodity price risk

The commodity price risk is related to the volatility in the prices of the Company's commodities. Prices fluctuate depending on demand, production capacity, producers' inventory levels, the commercial strategies adopted by large producers, and the availability of substitutes for these products in the global market.

The Company’s Financial Risk Management Policy establishes guidelines to mitigate the risk of fluctuations in commodity prices that could impact the Company's cash flows. The exposure to the price of each commodity considers the monthly production projections, inputs purchases and the maturity flows of hedges associated with them.

Commodity prices hedge transactions are classified into the following hedging strategies:

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Hedges for sales of zinc at a fixed price (Customer Hedge)

The objective is to convert fixed priced sales to floating prices, observed on the London Metal Exchange (LME). The purpose of the strategy is to maintain the revenues of a business unit linked to the LME prices. These transactions usually relate to purchases of zinc for future settlement on the over-the-counter market.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Hedges for mismatches of quotational periods (Hedge Book)

The objective is to hedge quotational periods mismatches arising between the purchases of metal concentrate or processed metal and the sale of the processed metal. These transactions usually relate to purchases and sales of zinc and silver for future trading on the over-the-counter market.

Hedges for the operating margin of metals (Strategic Hedges)

The objective is to reduce the volatility of the cash flow from LME prices for zinc, copper and silver and ensure a more predicable operating margin. This strategy is carried out through the sale of zinc forward contracts. For NEXA BR, the transaction also involves the sale of USD forward contracts to hedge the operating margin in BRL.

(b)Credit risk

Trade receivables, derivative financial instruments, term deposits, bank deposit certificates ("CDBs") and government securities create exposure to credit risk with respect to the counterparties and issuers. The Company has a policy of making deposits in financial institutions that have, at least, a rating from two of the following international rating agencies: Fitch, Moody’s or Standard & Poor’s. The minimum rating required for counterparties is determined as follows:

- Onshore operations: rating "A", or equivalent, on a local scale by two rating agencies. In the case of foreign financial institutions that have a local rating by only one rating agency, it should be at least "AA-", and its headquarters should have a rating "A" minimum on a global scale.

 

- Offshore operations: rating "BBB-", or equivalent, on a global scale by two rating agencies.

In the case of financial institutions in Peru or in Luxembourg, local ratings from local agencies associated with rating agencies approved in the Company’s policy are accepted. In case that only a global rating is available, it will be eligible provided that it has a rating "BBB-" at least by one rating agency.

In the case of financial institutions that do not have a rating available for a specific country, it will be eligible provided that its headquarters follow the minimum ratings specified above.

The pre-settlement risk methodology is used to assess counterparty risks in derivative transactions.

This methodology consists of determining the risk associated with the likelihood (via Monte Carlo simulations) of a counterparty defaulting on the financial commitments defined by contract.

The global ratings were obtained from the rating agencies Fitch, Moody’s or Standard & Poor’s ratings and are related to commitments in foreign or local currency and, in both cases, they assess the capacity to honor these commitments, using a scale applicable on a global basis. Therefore, both ratings in foreign currency and in local currency are internationally comparable ratings.

The ratings used by the Company are always the most conservative ratings of the referred agencies.

In the case of credit risk arising from customer credit exposure, the Company assesses the credit quality of the customer, considering mainly the history of the relationship and financial indicators defining individual credit limits, which are continuously monitored.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

The Company performs initial analyses of customer credit and, when deemed necessary, guarantees or letters of credit are obtained to mitigate the credit risk. Additionally, most sales to the United States of America, Europe and Asia are collateralized by letters of credit and credit insurance.

The carrying amount of the Company’s financial instruments best represents the maximum exposure to their credit risk.

The following table reflects the credit quality of issuers and counterparties for transactions involving cash and cash equivalents, financial investments and derivative financial instruments. The variations presented are mainly related to the Company's transactions in the year and not to changes in the counterparties’ ratings.

Schedule of credit quality of financial assets

      2021     2020
   Local rating  Global rating  Total  Local rating  Global rating  Total (ii)
 Cash and cash equivalents          
 AAA 117,439 - 117,439 131,489 - 131,489
 AA+ - - - 1,959 - 1,959
 AA 19 - 19 30,178 - 30,178
 AA- - 21,252 21,252 8,754 21,632 30,386
 A+ 35,923 318,120 354,043 164,987 249,197 414,184
 A 25,354 115,653 141,007 69,608 257,999 327,607
 A- - 104,528 104,528 - 116,992 116,992
 BBB+ - - - - - -
 BBB - - - - - -
 BBB- - - - - 30,706 30,706
 BB- - - - - - -
 No rating (i) 2,660 2,869 5,529 1,289 1,373 2,662
  181,395 562,422 743,817 408,264 677,899 1,086,163
             
 Financial investments           
 AAA 16,849 - 16,849 32,411 - 32,411
 AA+ - - - 2,257 - 2,257
 AA 2,353 - 2,353 46 - 46
 AA- - - - 330 - 330
  19,202 - 19,202 35,044 - 35,044
             
 Derivative financial instruments          
 AAA 314 - 314 2,068 - 2,068
 A+ - 8,491 8,491 - 1,977 1,977
 A- - 7,589 7,589 - 27,935 27,935
  314 16,080 16,394 2,068 29,912 31,980

 

(i)Refers to subsidiaries29 of international financial institutions that do not have a global rating available in the international rating agencies. According to the Company's policy, for these financial institutions, the rating of the financial institution controlling entities is assumed, which must be at least BBB-.

(ii)As mentioned in note 5 (c), in 2021, the Company modified its Financial Risk Management Policy, allowing the use of local ratings available from local agencies in Peru, for assessing the credit risks of financial institutions in Peru. Therefore, the Company is presenting the 2020 comparative balances according to the updated policy.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Schedule of credit quality of financial assets            
      2023     2022
   Local rating  Global rating  Total  Local rating  Global rating  Total
 Cash and cash equivalents          
 AAA   189,582   -   189,582   191,269   -   191,269
 AA   1   -   1   10,259   -   10,259
 AA-   -   46,317   46,317   -   15,958   15,958
 A+   -   72,315   72,315   -   117,968   117,968
 A   -   66,342   66,342   -   93,117   93,117
 A-   -   70,155   70,155   -   54,737   54,737
 BB+   -   1   1   -   -   -
 No rating (i)   76   12,470   12,546   8,451   6,067   14,518
    189,659   267,600   457,259   209,979   287,847   497,826
 Financial investments          
 AAA   10,994   -   10,994   18,006   -   18,006
 No rating (i)   64   -   64   56   -   56
    11,058   -   11,058   18,062   -   18,062
 Derivative financial instruments          
 AAA   29   -   29   144   -   144
 A+   -   978   978   -   3,061   3,061
 A   -   53   53   -   -   -
 A-   -   6,667   6,667   -   4,238   4,238
 BBB+   -   166   166   -   -   -
    29   7,864   7,893   144   7,299   7,443

(i) Refers to subsidiaries of international financial institutions that do not have a global rating available in the international rating agencies. According to the Company's policy, for these financial institutions, the rating of the financial institution controlling entities is assumed, which must be at least BBB-.

 

(c)Liquidity risk

Liquidity risk is managed through the Company's Financial Risk Management Policy, which aims to ensure the availability of funds to meet the Company’s financial obligations. The main liquidity measurement and monitoring instrument is the cash flow projection, using a minimum projection period of 12 months from the benchmark date. Financial institutions that provide the Company with financial services are within Nexa’s rating policies and in the same level of the ones provided for the Company’s credit risk.

A substantial part of the confirming payables arrangement is with one financial institution. However, there are other financial institutions that the Company has relations with that could be considered for future supplier financing transactions. If this service is not available, the entity may be required to increase its debt levels which may negatively impact its leverage ratios.

The table below shows the Company's financial obligations to be settled by the Company based on their maturity (the remaining period from the balance sheet up to the contractual maturity date). The amounts below represent the estimated undiscounted future cash flows, which include interests to be incurred and, accordingly, do not reconcile directly with the amounts presented in the consolidated balance sheet.

Summary of estimated future cash flow

       
2021  Less than 1 year Between 1 and 3 years Between 3
and 5 years
 Over 5 yearsTotal
 Loans and financings   114,240  443,780  247,226  1,439,295  2,244,541
 Lease liabilities   17,3403,744  -  -21,084
 Derivative financial instruments   22,684  146  71  24  22,925
 Trade payables   411,818  -  -  -  411,818
 Confirming payables   232,860  -  -  -  232,860
 Salaries and payroll charges   76,031  -  -  -  76,031
 Dividends payable   11,441  -  -  -  11,441
 Related parties   321  71  -  -  392
Asset retirement and environmental obligations   31,953  64,752  85,021  243,076  424,803
 Use of public assets     1,368  3,244  3,657  21,840  30,109
    920,056  515,737  335,975  1,704,235  3,476,004

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

2020 Less than 1 yearBetween 1 and 3 years

Between 3

and 5 years

Over 5 yearsTotal
Schedule of liquidity risk  
2023 Less than 1 yearBetween 1 and 3 yearsBetween 3 and 5 yearsOver 5 yearsTotal
Loans and financings   214,614  484,579  459,215  1,490,253  2,648,661   232,941  181,147  1,591,705  173,436  2,179,229
Lease liabilities   15,999  9,690  -  25,689   4,450  5,658  441  117  10,666
Derivative financial instruments   5,390  51  21,374  5926,874   10,343  108  42  -  10,493
Trade payables   370,122  -  370,122   451,603  -  -  451,603
Confirming payables   145,295  -  145,295   234,385  -  234,385
Salaries and payroll charges   56,107  -  56,107   68,165  -  68,165
Dividends payable   4,557  -  4,557   2,830  -  2,830
Related parties   -  561  -  561   1,062  2,873  -  3,935
Asset retirement and environmental obligations   33,714  53,501  70,444  220,241  377,900
Dams, asset retirement and environmental obligations 33,591  85,675  95,302  358,333  572,901
Use of public assets    1,270  2,943  5,131  20,200  29,544   1,902  3,240  3,921  17,570  26,633
   847,068  551,325  556,164  1,730,753  3,685,310 1,041,272278,7011,691,411549,4563,560,840

 

2022 Less than 1 yearBetween 1 and 3 yearsBetween 3 and 5 yearsOver 5 yearsTotal
 Loans and financings 136,348391,201981,759704,9442,214,252
 Lease liabilities 4,1051,410--5,515
 Derivative financial instruments 9,71221586510,018
 Trade payables 413,85612,154--426,010
 Confirming payables 216,392---216,392
 Salaries and payroll charges 79,078---79,078
 Dividends payable 7,922---7,922
 Related parties 487546--1,033
Asset retirement and environmental obligations 19,36029,62528,868241,258319,111
 Use of public assets   2,4844,9724,89016,58428,930
  889,744440,1231,015,603962,7913,308,261

 

(d)Capital management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so it can continue to provide returns for shareholders and benefits for other stakeholders; and to maintain an optimal capital structure to reduce the cost of capital.

 

To maintain or adjust the capital structure, the Company may adjust the dividends level paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital mainly using the leverage ratio, calculated as net debt to Adjusted EBITDA.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

 

Net debt and Adjusted EBITDA measures should not be considered in isolation or as a substitute for net income or operating income, as indicators of operating performance, or as alternatives to cash flow as measures of liquidity. Additionally, management’s calculation of Adjusted EBITDA may be different from the calculation used by other companies, including competitors in the mining and smelting industry, so these measures may not be comparable to those of other companies.

Schedule of leverage ratio       
 Note 2023 2022 2021
 Loans and financings 24 (a)   1,725,566   1,669,259   1,699,315
 Derivative financial instruments 16 (a)   2,600   2,575   6,531
 Lease liabilities 23 (b)   9,218   5,021   19,639
 Cash and cash equivalents  15   (457,259)   (497,826)   (743,817)
 Financial investments  (11,058) (18,062) (19,202)
 Net debt (i)    1,269,067   1,160,967   962,466
        
 Net income (loss) for the year    (289,196)   76,394   156,087
 Plus (less):       
 Depreciation and amortization 21,22 and 23   298,393   290,937   258,711
 Share in the results of associates    (23,536)   (1,885)   -
 Net financial results  10   161,641   133,727   136,902
 Income tax expense (benefit)   11 (a)   (4,274)   150,983   153,204
 Miscellaneous adjustments  2   248,128   110,168   38,931
 Adjusted EBITDA (ii)    391,156   760,324   743,835
        
Leverage ratio (Net debt/Adjusted EBITDA)  3.24   1.53   1.29

Summary

(i) Net debt is defined as (a) loans and financings, plus lease liabilities, plus or minus (b) the fair value of leverage ratioderivative financial instruments, less (c) cash and cash equivalents, less (d) financial investments.

 Note 2021 2020 2019
 Loans and financings  24   1,699,315   2,024,314   1,508,557
 Derivative financial instruments  16 (a)   6,531   (5,106)   2,294
 Lease liabilities 23 (b)   19,639   25,689   34,384
 Cash and cash equivalents  15   (743,817)   (1,086,163)   (698,618)
 Financial investments  -   (19,202)   (35,044)   (58,775)
 Net debt (i)    962,466   923,690   787,842
        
 Net income (loss) for the period    156,087   (652,506)   (157,516)
 Plus (less):       
     Depreciation and amortization 21, 22 and 23   258,711   243,925   317,892
     Net financial results  10   136,902   278,175   104,854
     Income tax expense (benefit)   11 (a)   153,204   (24,152)   (58,364)
 EBITDA      704,904   (154,558)   206,866
        
 Impairment of non-current assets  -     557,497   142,133
 Miscellaneous adjustments   (664)   -   -
 Adjusted EBITDA (ii)    704,240   402,939   348,999
        
 Leverage ratio (Net debt/Adjusted EBITDA)    1.37   2.29   2.26

(ii) Adjusted EBITDA for capital management calculation uses the same assumptions described in note 2 for Adjusted EBITDA by segment.

 

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Nexa Resources S.A.

Notes to the consolidated financial statements

At and financings, plus lease liabilities, plus or minus (b)for the fair valueyear ended on December 31, 2023

All amounts in thousands of derivative financial instruments less (c) cash and cash equivalents, less (d) financial investments.US dollars, unless otherwise stated

(ii)Adjusted EBITDA for capital management calculation uses the same assumptions described in note 2 for Adjusted EBITDA by segment.

 

 

13Financial instruments

Accounting policy

Normal purchases and sales of financial assets are recognized on the trade date – the date on which the Company commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss, if any, are initially recognized at fair value, and transaction costs are expensed in the income statement.

 

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all the risks and rewards of ownership. Financial assets at fair value through profit or loss and at fair value through other comprehensive income are subsequently carried at fair value. Financial assets at amortized costs are subsequently measured using the effective interest rate method.

 

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Equity instruments may be irrevocably elected on their initial recognition for their fair value changes to be presented in other comprehensive income instead of in the income statement. Since the objective of the Company’s equity instruments is to buy more participation in a project and not sell the investment, they arehave been classified as fair value through other comprehensive income.

 

Then, the Company classifies its financial assets and liabilities under the following categories: amortized cost, fair value through profit or loss and fair value through other comprehensive income.

(i)Amortized cost

Financial assets measured at amortized cost are assets held within a business model whose objective is to hold financial assets to collect contractual cash flows and for which the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

 

Financial liabilities are measured at amortized cost, except for financial liabilities at fair value through profit or loss such as derivatives and some specific loans and financings.

 

(ii)Fair value through profit or loss

Financial assets measured at fair value through profit or loss are assets which an entity manages with the objective of realizing cash flows through the sale of such assets and financial assets that do not give rise to cash flows that are SPPI on the principal amount outstanding.

 

Financial liabilities measured at fair value through profit or loss are liabilities which were not measured at amortized cost, such as derivatives and loans and financings that are designated at fair value option when is necessary to eliminate the accounting mismatch that would arise if amortized cost were used.

For these loans and financings, the portion of the variation in credit risk is recorded in the OCI.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(iii)Fair value through other comprehensive income

Financial assets measured at fair value through other comprehensive income are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and for which the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding. Also, investmentsInvestments in equity instruments are measured at fair value through other comprehensive income as mentioned above.

before.

(a)Breakdown by category

The Company’s financial assets and liabilities are classified as follows:

Schedule of financial instruments breakdown by category     
     2023
 Assets per balance sheetNote Amortized cost   Fair value through
profit or loss
 Fair value through Other
comprehensive income
 Total  
 Cash and cash equivalents15  457,259  -  -  457,259
 Financial investments   11,058  -  -  11,058
 Other financial instruments16 (a)  -  7,893  -  7,893
 Trade accounts receivables17  53,328  88,582  -  141,910
 Investments in equity instruments14 (c)  -  -  5,649  5,649
 Related parties (i)20 (a)  3  -  -  3
    521,648  96,475  5,649  623,772
      
      
     2023
 Liabilities per balance sheetNote Amortized cost   Fair value through
profit or loss  
 Fair value through Other
comprehensive income
 Total  
 Loans and financings24 (a)  1,634,163  91,403  -  1,725,566
 Lease liabilities23 (b)  9,218  -  -  9,218
 Other financial instruments16 (a)  -  46,122  -  46,122
 Trade payables25  451,603  -  -  451,603
 Confirming payables26  234,385  -  -  234,385
 Use of public assets (ii)   22,733  -  -  22,733
 Related parties (ii)20 (a)  3,935  -  -  3,935
    2,356,037  137,525  -  2,493,562

Schedule of financial instruments breakdown by category

        2021  2022
Assets per balance sheet Note  Amortized cost    Fair value through profit or loss  Fair value through Other comprehensive income  Total  NoteAmortized costFair value through
profit or loss
Fair value through Other
comprehensive income
Total
Cash and cash equivalents  15   743,817   -   -   743,81715497,826-497,826
Financial investments   19,202   -   -   19,202 18,062-18,062
Derivative financial instruments 16 (a)   -   16,394   -   16,394
Other financial instruments16 (a)-7,443-7,443
Trade accounts receivables  17   84,969   146,205   -   231,1741753,123170,617-223,740
Investments in equity instruments 13 (b)   -   -   3,723   3,72314 (c)-7,1157,115
Related parties (i) 20   2   -   -   220 (a)2-2
   847,990   162,599   3,723   1,014,312 569,013178,0607,115754,188
  
  
  2022
Liabilities per balance sheetNoteAmortized costFair value through
profit or loss
Fair value through Other
comprehensive income
Total
Loans and financings24 (a)1,578,86490,395-1,669,259
Lease liabilities23 (b)5,021-5,021
Other financial instruments16 (a)-31,851-31,851
Trade payables25413,856-413,856
Confirming payables26216,392-216,392
Use of public assets (ii) 23,263-23,263
Related parties (ii)20 (a)1,033-1,033
 2,238,429122,246-2,360,675

(i) Classified as Other assets in the consolidated balance sheet.

(ii) Classified as Other liabilities in the consolidated balance sheet.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

         2021
 Liabilities per balance sheet Note Amortized cost Fair value through profit or loss Fair value through Other comprehensive income Total
 Loans and financings 24 (a)   1,610,638   88,677   -   1,699,315
 Lease liabilities 23 (b)   19,639   -   -   19,639
 Derivative financial instruments 16 (a)   -   22,925   -   22,925
 Trade payables  25   411,818   -   -   411,818
 Confirming payables  29   232,860   -   -   232,860
 Use of public assets (ii)    24,384   -   -   24,384
 Related parties (ii) 20   392   -   -   392
     2,299,731   111,602   -   2,411,333

         2020
 Assets per balance sheet Note  Amortized cost    Fair value through profit or loss  Fair value through Other comprehensive income  Total  
 Cash and cash equivalents  15   1,086,163   -   -   1,086,163
  Financial investments    35,044   -   -   35,044
 Derivative financial instruments 16 (a)   -   31,980   -   31,980
 Trade accounts receivables  17   64,262   164,770   -   229,032
 Related parties (i) 20   2   -   -   2
     1,185,471   196,750   -   1,382,221

         2020
 Liabilities per balance sheet Note  Amortized cost    Fair value through profit or loss    Fair value through Other comprehensive income  Total  
 Loans and financings 24 (a)   1,822,756   201,558   -   2,024,314
 Lease liabilities 23 (b)   25,689   -   -   25,689
 Derivative financial instruments 16 (a)   -   26,874   -   26,874
 Trade payables  25   370,122   -   -   370,122
 Confirming payables  29   145,295   -   -   145,295
 Use of public assets (ii)    19,215   -   -   19,215
 Related parties (ii)20    561   -   -   561
   2,383,638 228,432 - 2,612,070
(i)Classified as Other assets in the consolidated balance sheet.
(ii)Classified as Other liabilities in the consolidated balance sheet.

(b)Investment in equity instruments – Tinka shares acquisition

On March 17, 2021, the Company acquired 29,895,754 common shares of Tinka Resources Limited (“Tinka”), an exploration and development company which holds 100% of the Ayawilca zinc-silver project in Peru, from an arm’s length shareholder in a private transaction at a market price of CAD 0.26 per share for a total consideration of CAD 7,773 thousand (USD 6,220).

On April 16, 2021, the Company acquired 654,758 additional common shares of Tinka at the same market price for a total consideration of approximately CAD 170 thousand (approximately USD 136).

After these acquisitions, the Company holds approximately 9.0% of the issued and outstanding common shares of Tinka. This transaction is accounted for as an investment in equity instruments at its acquisition cost and is being subsequently measured at fair value through other comprehensive income.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

 

 

 

14Fair value estimates

Critical accounting estimates, assumptions and judgments

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses judgment to select among a variety of methods and makes estimates and assumptions that are mainly based on market conditions existing at the end of each reporting period.

Although management has used its best judgment in estimating the fair value of its financial instruments, any technique for making said estimates and assumptions involves some level of inherent fragility.

(a)Analysis

The main financial instruments and the estimates and assumptions made by the Company for their valuation are described below:

·Cash and cash equivalents, financial investments, trade accounts receivables and other current assets – considering their nature, terms and maturity, the carrying amounts approximate their fair value.
·Financial liabilities – these instruments are subject to the usual market interest rates. The fair value is based on the present value of expected future cash disbursements, at interest rates currently available for debt with similar maturities and terms and adjusted for the Company’s credit risk. Loans and financings are measured at amortized cost, except for certain contracts for which the Company has elected the fair value option.
·DerivativeEnergy forward contracts - part of the fair value of these financial instruments are estimated based on the published price quotations in the active markets, as far as the data are existent and accessible in the market. The other part is estimated based on the use of valuation techniques that consider: (i) prices established in purchase and sale operations; (ii) supply risk margin; and, (iii) projected market price in the period of availability.
·Other financial instruments – the fair value is determined by calculating their present value through yield curves at the closing dates. The curves and prices used in the calculation for each group of instruments are developed based on data from Brazilian Securities, Commodities and Futures Exchange – B3, Central Bank of Brazil, LME and Bloomberg, interpolated between the available maturities. The main derivative financial instruments are:

 

·Swap contracts – the present value of both the assets and liabilities are calculated through the discount of forecasted cash flows by the interest rate of the currency in which the swap is denominated. The difference between the present value of the assets and the liabilities generates its fair value.

·Forward contracts – the present value is estimated by discounting the notional amount multiplied by the difference between the future price at the reference date and the contracted price. The future price is calculated using the convenience yield of the underlying asset. It is common to use Asian non-deliverable forwards for hedging non-ferrous metals positions. Asian contracts are derivatives in which the underlying is the average price of certain asset over a range of days.
·Option contracts – the present value is estimated based on the Black and Scholes model, with assumptions that include the underlying asset price, strike price, volatility, time to maturity and interest rate. The underlying asset price is the average price

34 of the foreign exchange rate in the fixing month.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

(b)Fair value by hierarchy
Schedule of by fair value hierarchy     
     2023
  Note Level 1 Level 2 (ii) Total
 Assets       
 Other financial instruments 16 (a) - 7,893 7,893
 Trade accounts receivables  - 88,582 88,582
 Investments in equity instruments (i) 14 (c) 5,649 - 5,649
   5,649 96,475 102,124
 Liabilities       
 Other financial instruments 16 (a) - 46,122 46,122
 Loans and financings designated at fair value (ii) - 91,403 91,403
   - 137,525 137,525

Classification of financial assets and liabilities in

        
     2022
  Note Level 1 Level 2 Total
 Assets       
 Other financial instruments 16 (a) - 7,443 7,443
 Trade accounts receivables  - 170,617 170,617
 Investment in equity instruments (i) 14 (c) 7,115 - 7,115
   7,115 178,060 185,175
 Liabilities       
 Other financial instruments 16 (a) - 31,851 31,851
 Loans and financings designated at fair value (ii) - 90,395 90,395
   - 122,246 122,246

(i) To determine the fair value hierarchyof the investments in equity instruments, the Company uses the share’s quotation as of the last day of the reporting period.

       2021
  Note   Level 1     Level 2   Total
 Assets       
 Derivative financial instruments 16 (a)   -   16,394   16,394
 Trade accounts receivables    -   146,205   146,205
 Investments in equity instruments (i)    3,723   -   3,723
     3,723   162,599   166,322
 Liabilities       
 Derivative financial instruments 16 (a)   -   22,925   22,925
 Loans and financings designated at fair value (ii)    -   88,677   88,677
     -   111,602   111,602

(ii) Loans and financings are measured at amortized cost, except for certain contracts for which the Company has elected the fair value option.

       2020
  Note   Level 1     Level 2   Total
 Assets       
 Derivative financial instruments 16 (a)   -   31,980   31,980
 Trade accounts receivables    -   164,770   164,770
     -   196,750   196,750
 Liabilities       
 Derivative financial instruments 16 (a)   -   26,874   26,874
 Loans and financings designated at fair value (ii)    -   201,558   201,558
     -   228,432   228,432

(i)The Level 1 fair value amount of the investments in equity instruments is determined using the share´s quotation as of the last day of the reporting period.
(ii)As explained above, certain loans and financings are measured at fair value. The carrying amount of other financial instruments measured at amortized cost do not differ significantly from their fair value.

 

The Company discloses fair value measurements based on their level on the following fair value measurement hierarchy:

Level 1:

QuotedWhen fair value is calculated with quoted prices (unadjusted) in active markets for identical assets and liabilities traded in active markets at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the current bid price.

Level 2:

FinancialWhen fair value is calculated with valuation techniques since the financial instruments are not traded in an active market for which fair value is determined using valuation techniques, whenand all of the significant inputs required to identify the fair value of an instrument are observable. Specific valuation techniques used to value financial instruments include:

·Quoted market prices or dealer quotes for similar instruments are used where available;
·The fair values of interest rate swaps are calculated at the present value of the estimated future cash flow based on observable yield curves; and
·The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted to present value.

Other techniques, such as discounted cash flows analysis, are used to determine the fair value of the remaining financial instruments.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Level 3:

InputsWhen fair value is calculated with inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) are classified as Level 3.. As of December 31, 2021,2023, there were no financial assets and liabilities carried at fair value classified as Level 3.

(c)Investments in equity instruments – Increase of equity interest in Tinka Resources

Fair value estimates were assessed byIn 2021, the Company to evaluate the impactsacquired 9.0% of the COVID-19issued and outstanding common shares of Tinka Resources Limited (“Tinka”), an exploration and development company which holds 100% of the only impact identified is relatedAyawilca zinc-silver project in Peru. On May 31, 2022, the Company subscribed to an additional 40,792,541 common shares in a private transaction at a price of CAD 0.22 per share (approximately USD 0.17) for a total consideration of CAD 8,974 thousand (USD 7,000). After this subscription, the Company holds 18.23% of the issued and outstanding common shares of Tinka. Similar to the changesoriginal acquisitions made in the Company’s credit risk which affect the2021, this transaction has been accounted for as an investment in equity instruments at its acquisition cost and all are being subsequently measured at fair value of debts which are designated as fair value option. Refer to note 24.

through other comprehensive income.

 

15Cash and cash equivalents

Accounting policy

Cash and cash equivalents include cash, bank deposits, and highly liquid short-term investments (investments with an original maturity less than 90 days), which are readily convertible into a known amount of cash and subject to an immaterial risk of changes in value. Bank overdrafts are shown within Loans and financings in current liabilities in the balance sheet.

(a)Composition

Schedule of cash and cash equivalents

Schedule of cash and cash equivalents    
 2021 2020 2023 2022
Cash and banks   276,761   113,017   352,814 330,653
Term deposits   467,056   973,146   104,445 167,173
Total cash and cash equivalents   743,817   1,086,163   457,259 497,826

 

(b)Changes in operating assets and liabilities

Schedule of changes in operating assets and liabilities

  2021 2020 2019
 Decrease (increase) in assets      
  Trade accounts receivables   (9,375)   (68,896)   (8,634)
  Inventory   (102,068)   8,883   (35,425)
  Derivative financial instruments   (14,936)   (7,809)   (4,649)
  Other assets   (47,312)   30,557   (45,872)
       
 Increase (decrease) in liabilities      
  Trade payables   44,880   21,589   18,823
  Confirming payables   87,565   62,525   12,278
  Other liabilities   2,759   58,481   12,856
Changes in operating assets and liabilities   (38,487)   105,330   (50,623)

(c)Main non-cash investing and financing transactions

During 2021, the Company had: (i) additions to right-of-use assets in the amount of USD 5,174 (December 31, 2020: USD 5,785); (ii) write-offs of property, plant and equipment in the amount of USD 3,343; (iii) decreases in loans and financings in the total amount of USD 14,314 related to a decrease in their fair value of USD 19,380 net of the changes in the Company´s credit risk of USD 5,066, see note 24; and (iv) additions in intangible assets in the amount of USD 19,407 related to the GSF recovered costs.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

16DerivativeOther financial instruments

Accounting policy

Derivatives are initially recognized at fair value as at the date on which a derivative contract is entered into and are subsequently measured at fair value. Derivatives are only used for risk mitigation purposes and not as speculative investments. When derivatives do not meet the hedge accounting criteria, they are classified as held for trading and accounted for at fair value through profit or loss.

TheFor derivatives that meet the hedge accounting criteria, the Company documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking the hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, whether the derivatives that are used in hedging transactions and accounted for as hedge accounting were, and will continue to be, highly effective in offsetting changes in the fair value or cash flow of hedged items.

(i)CashDerivative financial instruments designated as cash flow hedge

Derivatives that are designated for hedge accounting recognition are qualified as cash flow hedges when they are related to a highly probable forecasted transaction. The effective portion of the changes in fair value is recognized in shareholders’ equity in Accumulated other comprehensive income and is subsequently reclassified to the income statement in the same period when the hedged expected cash flows affect the income statement.

The reclassification adjustment is recognized in the same income statement line item affected by the highly probable forecasted transaction, while gains or losses related to the non-effective portion are immediately recognized as Other“Other income and expenses, net.net”.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

When a hedging instrument expires, is sold or no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in shareholders’ equity at that time remains in shareholders’ equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was previously accounted in shareholders’ equity is immediately transferred to the income statement within Other income and expenses, net.

Currently, the Company classifies as cash flow hedge only thesome strategies related to mismatches of quotational periods.

(ii)FairDerivative financial instruments designated as fair value hedge

Derivatives that are designated for hedge accounting recognition are qualified as fair value hedges when they are related to assets or liabilities already recognized in the consolidated balance sheet. Changes in the fair values of derivatives that are designated and qualify as fair value hedges and changes in the fair value of the hedged item are recorded in the income statement in the same period.

Currently, the Company classifiesdoes not have any derivatives designated as fair value hedge the strategies related to interest rate risk, foreign exchange risk, and some mismatches of quotational periods.hedge.

(iii)Derivatives financial instruments not designated as hedging instrumentshedge accounting

Changes in the fair value of derivative financial instruments not designated as hedging instrumentshedge accounting are recognized immediately in the income statement within Otherin the line affected by the related transaction.

(iv)Energy forward contracts

The Company through its energy subsidiaries is an energy self-producer and authorized to sell energy both in the free and regulated markets as Energy Traders. A portion of these transactions involve contracts for delivery of energy for internal use to meet production demands and are not therefore classified as financial instruments.

Another portion of these transactions consists of sales of energy not used in production process. These transactions take place in an active market meet the definition of financial instruments, because they are settled in energy and readily convertible into cash. Such contracts are recorded as derivatives and are recognized in the Company's statement of balance sheet at fair value on the date on which the derivative is entered, and subsequently revalued at their fair values at the reporting date. The fair value recognition and realization of these financial instruments are recorded under “Other income and expenses, net when relatednet”.

The fair values of these derivatives are estimated partly based on price quotes in active markets, as long as such market data exists, and partly through the use of valuation techniques, which consider: (i) prices established in the purchase and sale operations; (ii) the risk margin on the supply; and (iii) the projected market price during the period of availability. Whenever the fair value upon initial recognition for these contracts differs from the transaction price, a loss or gain on the fair value is recognized in the profit or loss for the year. The transactions carried out by the company Pollarix S.A. in the Free Contracting Environment (“ACL”) led to price risk and within Net financial results when related to interest rate or foreign exchange rate risk.a loss from the sale of surplus energy, which was recognized at its fair value on the transaction date.

(v)Offtake agreement

On January 25, 2022, the Company signed an offtake agreement with an international offtaker (the “Offtaker”) a subsidiary of a BBB rated company, in which it agreed to sell 100% of the copper concentrate to be produced by Aripuanã for a 5-year period starting in February 2023 up to a total of 30,810 tons, at the lower of current spot market prices or a price cap.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Currently,The offtake agreement resulted from negotiations with the Company do not designate as hedging instrumentsOfftaker to sell the strategiescopper concentrate in lieu of paying future royalties related to the salesprevious acquisition of zincthe Aripuanã project mining rights from the Offtaker. The amount of USD 46,100, representing the fair value of the agreement at its inception date, was recognized as an intangible asset and will be amortized over the life of the mine according to the Units of Production (“UoP”) method.

Additionally, the Company opted to voluntarily and irrevocably designate the entire offtake agreement at fair value through profit and loss within the scope of IFRS 9, rather than separate the value of the embedded derivative associated with the price cap, recognizing a fixed price.

non-cash accumulated gain of USD 2,268 in the income statement for year ended on December 31, 2023.

(a)Composition
Schedule of derivative financial instruments       
 Derivatives financial instruments Offtake agreement measured at FVTPL Energy futures contracts
at FVTPL (i)
 2023
 Current assets7,801 - - 7,801
 Non-current assets92 - - 92
 Current liabilities(10,343) (2,091) (6,643) (19,077)
 Non-current liabilities(150) (17,474) (9,421) (27,045)
  Other financial instruments, net  (2,600) (19,565) (16,064) (38,229)

        
 Derivatives financial instruments Offtake agreement measured at FVTPL Energy futures contracts
at FVTPL
 2022
 Current assets7,380 - - 7,380
 Non-current assets63 - - 63
 Current liabilities(9,711) (1,724) - (11,435)
 Non-current liabilities(307) (20,109) - (20,416)
  Other financial instruments, net  (2,575) (21,833) - (24,408)

(i) On December 31, 2023, due to the current scenario of high energy supply in Brazil, the Company has a projected energy surplus on forward contracts with some suppliers. Consequently, the Company recognized the fair value arising from the mark-to-market of current purchase until 2026, which resulted in an expense in the amount of USD 15,663. This amount was accounted for as a loss within “Other income and expenses, net” (Note 9) and will vary according to the market’s energy prices.

(b)Derivative financial instruments: Fair value by strategy

Schedule of fair value by strategy

      2021   2020
 Strategy Per Unit Notional Fair value Notional Fair value
 Mismatches of quotational periods          
Zinc forward ton 215,809 (9,898) 204,394 2,398
      (9,898)   2,398
 Sales of zinc at a fixed price          
 Zinc forward ton 8,787 3,433 15,695 1,815
      3,433   1,815
 Interest rate risk          
 IPCA vs. CDI BRL 226,880 (66) 226,880 1,310
      (66)   1,310
 Foreign exchange risk          
 BRL vs. USD (i) BRL - - 477,000 (417)
      -   (417)
           
      (6,531)   5,106
 Current assets     16,292   16,329
 Non-current assets     102   15,651
 Current liabilities     (22,684)   (5,390)
 Non-current liabilities     (241)   (21,484)
(i)Related to a derivative financial instrument entered into at the same time of a debt contract (a term loan in NEXA PERU) in order to manage some of the risks of such debt contract. As explained in note 24 (c), both the debt and the related derivative were prepaid on July 09, 2021

Schedule of fair value by strategy       
      20232022
 Strategy Per Unit Notional Fair valueNotional Fair value
 Mismatches of quotational periods        
 Zinc forward ton 209,951  (3,175)209,319(2,357)
       (3,175)  (2,357)
 Sales of zinc at a fixed price        
 Zinc forward ton 7,233 1,0268,297 74
      1,026  74
 Interest rate risk        
 IPCA vs. CDI BRL 100,000 (451)226,880 (292)
       (451)  (292)
         
        (2,600)   (2,575)

 

(b)(c)Derivative financial instruments: Changes in fair value

Schedule of changes in fair value

2021
StrategyInventoryCost of salesNet revenuesOther income and expenses, netNet financial resultsOther comprehensive
income
Realized (loss) gain
Mismatches of quotational
periods
  1,146  (37,963)  9,709  1,820  -  454  (12,538)
Sales of zinc at a fixed price  -  -  -  5,666  -  34  4,082
Interest rate risk – IPCA vs. CDI  -  -  -  -  1,211  -  2,587
Foreign exchange ri–k - BRL vs USD (i)  -  -  -  -  (6,851)  -  (7,268)
 2021  1,146  (37,963)  9,709  7,486  (5,640)  488  (13,137)
        
(i)Related to a derivative financial instrument entered into at – At the same timeend of a debt contract (a term loan in NEXA PERU) in order to manage some of the risks of such debt contract. As explained in note 24 (c), both the debt and the related derivative were prepaid on July 09, 2021.each year

 

Schedule of changes in fair value       
StrategyInventoryCost of
sales
Net
revenues
Other income and
expenses, net
Net
financial
results
Other
comprehensive
income
Realized
(loss) gain
 Mismatches of quotational  periods-14,9882,676(1,385)-73217,829
 Sales of zinc at a fixed price--(3,159)---(4,111)
 Interest rate risk – IPCA vs. CDI----(606)-(447)
 2023-14,988(483)(1,385)(606)73213,271
        
 20221,01419,394(5,727)1,363(83)(1,329)8,648

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(d)Energy forward contracts
Schedule of energy forward contracts    
   NotionalNotional
 2023202220232022
 Balance at the beginning of the year----
 Changes in fair value(15,663)---
 Foreign exchanges effects(401)---
 Energy forward contracts (Megawatts)--688,877-
 Balance at the end of the year(16,064)-688,877-

(e)Offtake agreement measured at FVTPL: Changes in fair value
Schedule of changes in fair value offtake agreement    
 20232022Notional
2023
Notional
2022
 Balance at the beginning of the year  (21,833)  (46,100)30,810  30,810
 Changes in fair value  2,268  24,267  -  -
 Deliveries of copper concentrates (i)   -  -  (3,248)  -
 Balance at the end of the year  (19,565)  (21,833)  27,562  30,810
     

(i) On January 25, 2022, the Company signed an offtake agreement with an Offtaker to sell 100% of the copper concentrate produced by Aripuanã for a 5-year period, up to a specified volume, at the lower of current market prices or a price cap. In June 2023, the Company began with the deliveries of copper concentrates in relation to the offtake agreement mentioned above. In 2023, when the sales occurred the copper price was lower than the price cap, and therefore, there was no fair value impact on revenues for these deliveries.

 

17Trade accounts receivables

Accounting policy

Trade accounts receivables are amounts due from customers for goods sold or services provided in the ordinary course of the Company’s business.

Trade accounts receivables are recognized initially at fair value and subsequently measured at:

(i) Fair value through profit or loss when are related to the Company’s accounts receivables portfolio outstanding at the balance sheet date that is designated at inception to be included in a forfaiting program whereby the Company, at its discretion, can discount certain outstanding trade accounts receivables and receive payments in advance. The program is used to meet short-term liquidity needs. Trade accounts receivables within this program are derecognized since all risks and rewards, control of the assets and contractual rights to receive the assets cash flows are transferred to the counterparty.

(ii) Fair value through profit or loss when are related to sales that are subsequently adjusted to changes in LME prices.prices, which is recorded on net revenues. These accounts receivable do not meet the SPPI criteria because there is a component of commodity price risk that modifies the cash flows that otherwise would be required by the sales contract.

(iii) Amortized cost using the effective interest rate method, less impairment, when the receivables do not meet the aforementioned classifications.

Credit risk can arise from non-performance by counterparties of their contractual obligations to the Company. To ensure an effective credit risk evaluation, management applies procedures related to the application for credit granting and approvals, renewal of credit limits, continuous monitoring of credit exposure in relation to established limits and events that trigger requirements for secured payment terms. As part of the Company’s process, the credit exposures with all counterparties are regularly monitored and assessed.

The Company applies the IFRS 9 simplified approach to measure the impairment losses for trade accounts receivables. This approach requires the use of the lifetime expected credit losses on its trade accounts receivables measured at amortized cost. To calculate the lifetime expected credit losses the Company uses a provision matrix and forward-looking information. The additions to impairment of trade accounts receivables are included in selling expenses. Trade accounts receivables are generally written off when there is no expectation of recovering additional cash.

Schedule of composition of trade accounts receivables

(a)Composition
 2021 2020
 Trade accounts receivables  233,623   229,800
 Related parties - note 20  1,016   2,411
 Impairment of trade accounts receivables  (3,465)   (3,179)
   231,174   229,032

Schedule of changes in impairment of trade accounts receivables

 

(b)Changes in impairment39 of trade accounts receivables
  20212020
 Balance at the beginning of the year   (3,179)  (2,337)
 Additions   (1,586)  (2,643)
 Reversals   1,206  1,288
 Foreign exchange gains   94  513
 Balance at the end of the year   (3,465)  (3,179)

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(a)Composition
Schedule of composition of trade accounts receivables  
 20232022
 Trade accounts receivables  147,619  227,265
 Related parties - note 20  852  801
 Impairment of trade accounts receivables  (6,561)  (4,326)
   141,910  223,740
(b)Changes in impairment of trade accounts receivables
Schedule of changes in impairment of trade accounts receivables  
 20232022
 Balance at the beginning of the year(4,326)(3,465)
 Additions  (4,101)(1,793)
 Reversals  2,0231,005
 Foreign exchange (losses)  (157)(73)
 Balance at the end of the year(6,561)(4,326)

 

Schedule of analysis of trade accounts receivables by currency

(c)Analysis by currency
  20212020
 USD   196,316  186,420
 BRL   34,464  41,601
 Other   394  1,011
    231,174  229,032

Schedule of aging of trade accounts receivables

Schedule of analysis of trade accounts receivables by currency  
 20232022
 USD  122,025  204,608
 BRL  19,435  18,740
 Other  450  392
   141,910  223,740
(d)Aging of trade accounts receivables
  2021 2020
 Current   222,083   222,670
 Up to 3 months past due   9,201   6,728
 From 3 to 6 months past due  51   102
 Over 6 months past due   3,304   2,711
    234,639   232,211
 Impairment   (3,465)   (3,179)
    231,174   229,032

Schedule of aging of trade accounts receivables  
 20232022
 Current  125,625  212,814
 Up to 3 months past due  18,529  10,495
 From 3 to 6 months past due  1,405  2,181
 Over 6 months past due2,912  2,576
   148,471  228,066
 Impairment of trade accounts receivables  (6,561)  (4,326)
   141,910  223,740

 

 

18Inventory

Accounting policy

Inventory is stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related fixed production overheads (based on normal operating capacity). The normal operating capacity is supported by the historical annual production. The idle capacity cost is calculated considering the reduction in the level of production due to unusual events and the level of production not achieved in the ramp-up period. Variable production overhead costs are included in inventory costcosts based on the actual production level. Imports in transit are stated at the accumulated cost of each import. At the end of the reporting period, the net realizable value of inventories is assessed and a provision for non-realizable, losses on obsolete or slow-moving inventory may be recognized.

The provision for net realizable value is estimated considering the estimatedcurrent selling price in the ordinary course of business, less any additional selling expenses. Imports in transitThe write-downs and reversals are stated at the accumulated costrecognized within Cost of each import. sales.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

A provision for obsolete inventory, - finished products, semi-finished products, raw materials and auxiliary materials - is recognized when items cannot be used in normal production or sold because they are damaged or do not meet the Company’s specification. specification and is recognized as Other income and expenses.

Slow-moving provision is recognized for inventory items that are in excess of the expected normal use or sale. The amount of slow-moving provision recognized is determined based on 20% of the carrying amount for each six-month period without use or sale.

Schedule of inventoriessale and is recognized as Other income and expenses.

(a)Composition
Schedule of inventories  
 2021202020232022
Finished products   157,285  94,033  97,396  142,935
Semi-finished products    60,315  56,335  90,220  163,805
Raw materials (i)   90,087  66,278
Raw materials  69,439  68,497
Auxiliary materials and consumables   94,564  68,950  121,126  115,562
Inventory provisions   (29,749)  (29,074)  (38,510)  (95,602)
Total   372,502  256,522  339,671  395,197
(b)Changes in the provision of the year
Schedule of changes in the provision for obsolescence  
 20232022
Balance at the beginning of the year(95,602)(29,749)
Additions  (28,428)(69,761)
Reversals  89,2004,634
Exchange variation (losses)  (3,680)(726)
Balance at the end of the year  (38,510)(95,602)

 

The main amount is related to the reversal of the net realizable value provision of Aripuanã’s inventory for both its ore stockpile and its produced concentrates in the total amount of USD 54,906 (including depreciation of USD 14,785) as of December 31, 2023.

19Other assets
Schedule of the composition of other assets  
 20232022
 Other recoverable taxes (i)  128,738139,168
 Advances to third parties    7,4527,057
 Prepaid expenses  9,4279,858
 Judicial deposits  13,74016,753
 Works-for-taxes program  -7,902
 Receivables from mining contractors  14,72210,028
 Other assets  42,46919,194
Total other assets  216,548209,960
 Current assets  86,93475,486
 Non-current assets  129,614134,474

(i) Other recoverable taxes is composed mainly from tax credits related to ICMS (Tax on Circulation of Goods and Services), primarily generated from purchases. Additionally, there are PIS and COFINS credits, essentially arising from credits on the acquisition of fixed assets.

20Related parties

The Company’s related parties are subsidiaries, joint ventures, associates, shareholders and its related entities and key management personnel of the Company.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(i)(a)Raw materials include a USD 23,009 reclassification from Assets and projects under construction, within Property, plant and equipment, to Inventory, related to the ore pile costs that were incurred during Aripuanã’s commissioning phase and which should already be included in the Company's inventory.Balances
Schedule of related parties balances         
  Trade accounts receivables  Related parties’ assets  Trade payables  Dividends payable Related parties’ liabilities
Assets and liabilities20232022 20232022 20232022 20232022 20232022
Parent              
Votorantim S.A.  -  -   3  2   1,985  765   -  -   2,522  -
               
Related parties              
Andrade Gutierrez Engenharia S.A.  -  -   -  -   10,908  3,353   -  -   -  -
Auren Comercializadora de Energia Ltda.  -  1   -  -   -  976   -  -   -  -
Campos Novos Energia S.A.  -  -   -  -   14,835  9,652   -  -   -  -
Companhia Brasileira de Alumínio    193  187   -  -   -  263   -  -   (9)  -
Votorantim Cimentos S.A.  653  607   -  -   137  163   -  -   -  -
Votorantim International CSC S.A.C  -  -   -  -   -  1   -  -   891  487
Other  6  6   -  -   127  164   2,830  7,922   531  546
   852  801   3  2   27,992  15,337   2,830  7,922   3,935  1,033
Current  852  801   -  -   27,992  15,337   2,830  7,922   -  -
Non-current  -  -   3  2   -  -   -  -   3,935  1,033
   852  801   3  2   27,992  15,337   2,830  7,922   3,935  1,033

Schedule of changes in the provision for obsolescence

(b)Changes in the provision of the yearTransactions
  2021 2020
 Balance at the beginning of the year (29,074) (28,398)
 Additions (15,094) (11,439)
 Reversals 13,986 9,647
 Exchange variation gains 433 1,116
 Balance at the end of the year (29,749) (29,074)
Schedule of related parties transactions      
  Sales Purchases
Profit and loss202320222021202320222021
Parent      
Votorantim S.A.  -  -  -  7,484  4,704  3,735
       
Related parties        
Andrade Gutierrez Engenharia S.A. Group (i)  -  -  -  73,757  38,907  41,498
Auren Comercializadora de Energia Ltda.  744  744  5,993  7,971  4,974  16,207
Campos Novos Energia S.A.  -  -  -  61,545  4,954  -
Companhia Brasileira de Alumínio    161  9,708  8,988  210  3,787  3,736
Votorantim Cimentos S.A.    -  -  -  1,050  1,494  661
Votorantim International CSC S.A.C  -  -  -  5,122  5,049  4,278
Other    -  -  113  436  1,157  1,120
   905  10,452  15,094  157,575  65,026  71,235
       

(i) As part of the execution of the Aripuanã project, in June 2019 the Company entered into a mining development services agreement with Andrade Gutierrez Engenharia S.A., in which one of the Company director’s close family members may have significant influence at its holding level. Additionally, in June 2020, NEXA entered into one additional agreement with Consórcio Construtor Nova Aripuanã (a consortium of the Andrade Gutierrez group of companies) in connection with construction and operational services for the Aripuanã project.

 

 

19Other assets

Schedule of the composition of other assets

  2021 2020
 Other recoverable taxes 128,377 127,815
 Advances to third parties   8,545 15,006
 Prepaid expenses 10,361 10,522
 Judicial deposits 5,446 5,566
 Other assets 26,974 25,363
Total other assets 179,703 184,272
 Current assets 81,119 91,141
 Non-current assets 98,584 93,131

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

20Related parties

Schedule of related parties transactions

  Trade accounts receivables  Related parties’ assets  Trade payables  Dividends payable Related parties’ liabilities
Assets and liabilities20212020 20212020 20212020 20212020 20212020
Parent              
 Votorantim S.A. (i)  -  -   2  2   1,102  809   -  -   -  -
               
Related parties              
 Andrade Gutierrez Engenharia S.A. (ii)  -  -   -  -   1,890  1,160   -  -   -  -
 Companhia Brasileira de Alumínio    158  1,479   -  -   264  175   -  -   -  -
 Votorantim Cimentos S.A.  551  595   -  -   64  121   -  -   -  -
 Votener - Votorantim Comercializadora de Energia Ltda.  302  332   -  -   945  6,330   -  -   -  -
 Votorantim International CSC S.A.C  -  -   -  -   306  421   -  -   152  -
 Other  5  5   -  -   240  871   11,441  4,557   240  561
   1,016  2,411   2  2   4,811  9,887   11,441  4,557   392  561
               
Current  1,016  2,411   -  -   4,811  9,887   11,441  4,557   -  -
Non-current  -  -   2  2   -  -   -  -   392  561
   1,016  2,411   2  2   4,811  9,887   11,441  4,557   392  561
               

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

  Sales  Purchases
 Profit and loss202120202019 202120202019
 Parent       
 Votorantim S.A. (i)  -  -  26   3,735  4,378  6,176
        
 Related parties         
  Andrade Gutierrez Engenharia S.A. (ii)  -  -  -   41,498  26,280  5,046
  Companhia Brasileira de Alumínio    8,988  7,828  2,157   3,736  1,156  1,964
  Votorantim Cimentos S.A.    -  -  196   661  524  2,186
  Votener - Votorantim Comercializadora de Energia Ltda.    5,993  9,740  3,288   16,207  7,721  9,596
  Votorantim International CSC S.A.C  -  -  -   4,278  6,638  5,584
  Other    113  11  510   1,120  582  1,581
   15,094  17,579  6,177   71,235  47,279  32,133

(i)The Company entered into an agreement with VSA on September 4, 2008, for services provided by its Center of Excellence (“CoE”) related to administrative activities, human resources, back office, accounting, taxes, technical assistance, and training, among others. Under a cost sharing agreement, the Company reimburses VSA for the expenses related to these activities in respect of the Company.
(ii)As part of the execution of the Aripuanã project, in June 2019 the Company entered into a mining development services agreement with Andrade Gutierrez Engenharia S.A., in which one of the Company director’s close family member may have significant influence at its holding level. Additionally, in June 2020, NEXA entered into one additional agreement with Consórcio Construtor Nova Aripuanã (a consortium of the Andrade Gutierrez group of companies) in connection with construction services for the Aripuanã project.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

(a)(c)Key management compensation

Key management includes the members of the Company's global executive team and Board of Directors. Key management compensation, including all benefits, was as follows:

Schedule of key management compensation

Schedule of key management compensation   
202120202023 2022
Short-term benefits6,6026,765  7,276   7,371
Other long-term benefits6641,791  77   158
Total key management compensation7,266  8,556 7,353   7,529

Short-term benefits include fixed compensation, payroll charges and short-term benefits under the Company’s variable compensation program. Other long-term benefits relate to the variable compensation program.

 

21Property, plant and equipment

Accounting policy

Property, plant and equipment are stated at their historical cost of acquisition or construction less accumulated depreciation and any recognized impairment losses. Historical cost includes expenditures that are directly attributable to the acquisition and construction of the assets. The mining projects development costs that are registered within Property, plant and equipment include (i) direct and indirect costs attributed to building the mining facilities; (ii) financial charges incurred during the construction period; (iii) depreciation of other fixed assets used during construction; and (iv) estimated decommissioning and site restoration expenses.

Subsequent costs are included in the asset’s carrying amount, or recognized as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and they can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

Replacement costs are included in the carrying amount of the asset when it is probable that the Company will realize future economic benefits in excess of the benefits expected from the asset in its current condition. Replacement costs are depreciated over the remaining useful life of the related asset.

Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to reduce their costs to their residual values over their estimated useful lives.

The assets' residual values and useful lives are reviewed annually and adjusted if appropriate.

An asset's carrying amount is reduced to its recoverable amount when it is greater than the estimated recoverable amount, in accordance with the criteria adopted by the Company to determine the recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within Other income and expenses, net in the income statement.

Loans and financings costs directly related to the acquisition, construction or production of a qualifying asset that requires a substantial period of time to prepare for its intended use or sale are capitalized as part of the cost of that asset when it is probable that future economic benefits associated with the item will flow to the Company and costs can be measured reliably.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Stripping costs

In its surface mining operations, the Company must remove overburden and other waste to gain access to mineral ore deposits. The removal process is referred to as stripping. During the development of a mine, before production commences, when the stripping activity improves access to the ore body, the component of the ore body for which access has been improved can be identified and the costs can be measured reliably, a stripping activity asset is capitalized as part of the investment in the construction of the mine and is accounted for as part of Property, plant and equipment within Assetsassets and projects under construction. Subsequently, when the operation starts, the stripping costs are transferred to Buildings“Dams and Buildings” and are depreciated by a linear calculation considering the asset’s useful life.

Stripping costs incurred during the production phase of operations are treated as production costs and are part of the inventory cost.

Mining Projects

The Company starts to capitalize a project’s mineral exploration and evaluation costs at the beginning of its feasibility study phase, following completion of a pre-feasibility study in which probability of economic feasibility has been established and where there is sufficient geologic and economic certainty of converting mineral resources into proven and probable mineral reserves at a development stage (construction or execution phase) or production stage based on various factors including the known geology, metallurgy and life-of-mine (“LOM”) plans.

 

Capitalized costs incurred during a project’s mineral exploration and evaluation stages are classified within Mining projects, under Property, plant and equipment until the project starts its development stage and are only depreciated by the units of production (“UoP”)UoP method once the development stage finishes and the project’s operation starts.

Costs incurred during a project’s development stage are also capitalized under Property, plant, and equipment but within Assets and projects under construction. In this way, the capitalized mineral exploration and evaluation costs will remain within Mining projects and will only be depreciated by the UoP method once the development stage finishes and the project´s operation starts.

Once the development stage is finished and the project’s operation starts, the capitalized development costs are reclassified to the appropriate group of assets considering their nature and are depreciated on a linear calculation based on the assets’ useful life.

 

Based on the above, once a project begins operation, there will be depreciation coming from the project’s capitalized mineral exploration and evaluation costs within the Mining projects account and based on the UoP method and from the project’s capitalized development costs within the corresponding group of assets based on their useful life.

The carrying value of the capitalized mineral exploration and evaluation costs, which remain within Mining projects, and the capitalized development costs, which are within Assets and projects under construction, of the projects are assessed for impairment at least annually or whenever evidence indicates that the assets may be impaired in accordance with IFRS 6 and IAS 36. If the Company decides at any moment to discontinue the project, this could be an impairment indicator that will be assessed under the impairment test. For purposes of this impairment assessment, the projects are

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

allocated to cash-generatingcash generating units (“CGUs”) when applicable. The annual impairment test is disclosed in note 31.

Refer to note 8 for the Company’s accounting policy related to expensed mineral exploration and project evaluation costs for mining projects.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Costs to acquire exploration legal mining rights are included as Intangible within Rights to use natural resources as explained in note 23.

Asset retirement obligations

An asset retirement obligation is an obligation related to the permanent removal from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a tangible long-lived asset. At the initial recognition of an asset retirement obligation and at the periodical revisions of the expected disbursements and the discount rate, the changes in the liability are charged to Property, plant and equipment.

The capitalized amount recognized in Property, plant and equipment is depreciated based on the UoP method. Any reduction in the provision that exceeds the carrying amount of the asset, is immediately recognized in the income statement as Other“Other income and expenses, net.

Impairment

Refer to note 31 for the Company’s accounting policy related to impairment of Property, plant and equipment.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(a)Changes in the year

Schedule of detailed information about property, plant and equipment

Schedule of detailed information about property, plant and equipment 
         2021      2023
 Dam and buildingsMachinery, equipment, and facilitiesAssets and projects under constructionAsset retirement obligationsMining projects (iii)Other TotalDam and buildingsMachinery, equipment, and facilitiesAssets and projects under constructionAsset retirement obligations

Mining projects (i)

OtherTotal
Balance at the beginning of the year Balance at the beginning of the year   
 Cost 1,022,4322,360,426596,675211,650292,32236,816 4,520,321
 Accumulated depreciation and impairment (567,829)(1,734,232)(69,143)(124,838)(108,698)(17,285) (2,622,025)
Net balance at the beginning of the year 454,603626,194527,53286,812183,62419,531 1,898,296
 Reclassification (i) -(31,851)- (31,851)
Net balance at the beginning of the year - adjusted 454,603626,194527,53286,812151,77319,531 1,866,445
 Additions (ii) 12671507,907-1,576 510,166
 Disposals and write-offs (567)(7,663)(454)-(1,751) (10,435)
 Depreciation (56,493)(110,895)-(6,436)(2,062)(1,143) (177,029)
 Foreign exchange effects (15,963)(23,188)(40,278)(2,452)(1,027)(631) (83,539)
 Transfers (iv) 57,39382,252(182,612)-16,5532,657 (23,757)
 Remeasurement of asset retirement obligations – note 26 -5,879- 5,879
Cost  1,512,360  2,636,582  521,191  200,665  221,077  44,094  5,135,969
Accumulated depreciation and impairment  (671,028)  (1,870,591)  (65,386)  (125,118)  (92,652)  (15,919)  (2,840,694)
Balance at the beginning of the year  841,332  765,991  455,805  75,547  128,425  28,175  2,295,275
Additions  113  953  309,039  318  -  45  310,468
Disposals and write-offs  -(212)(3,834)  -(43)(4,089)
Depreciation(90,258)(121,004)  -(5,165)(1,372)(1,212)(219,011)
Impairment loss of long-lived assets - note 31  (16,857)  (27,748)  (10,890)  (6,691)  (7,257)  (2,513)  (71,956)
Foreign exchange effects  47,840  43,495  18,088  4,698  1,502  1,455  117,078
Transfers  132,196  186,945  (322,768)  -  462  2,360  (805)
Remeasurement  -  11,654  -  11,654
Balance at the end of the year Balance at the end of the year 438,985567,371812,09583,803165,23720,239 2,087,730  914,366  848,420  445,440  80,361  121,760  28,267  2,438,614
 Cost 1,054,4132,330,748874,776202,242158,64235,266 4,656,087
 Accumulated depreciation and impairment (615,428)(1,763,377)(62,681)(118,439)6,595(15,027) (2,568,357)
Cost  1,710,083  2,896,565  512,925  219,449  215,913  44,601  5,599,536
Accumulated depreciation and impairment  (795,717)  (2,048,145)  (67,485)  (139,088)  (94,153)  (16,334)  (3,160,922)
Balance at the end of the year Balance at the end of the year 438,985567,371812,09583,803165,23720,239 2,087,730  914,366  848,420  445,440  80,361  121,760  28,267  2,438,614
   
Average annual depreciation rates % Average annual depreciation rates % 47-UoP 49-UoP 

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

               2020
   Dam and buildings Machinery, equipment, and facilities Assets and projects under construction Asset retirement obligation Mining projects Other Total
 Balance at the beginning of the year              
  Cost   1,050,632   2,419,034   549,903   201,892   261,117   45,035   4,527,613
  Accumulated depreciation and impairment   (511,973)   (1,666,480)   (14,811)   (97,233)   (93,009)   (21,417)   (2,404,923)
 Net balance at the beginning of the year   538,659   752,554   535,092   104,659   168,108   23,618   2,122,690
  Additions   -   3,315   336,457   -   -   935   340,707
  Disposals and write-offs   (240)   (1,732)   (662)   -   -   (42)   (2,676)
  Depreciation   (48,938)   (110,515)   -   (6,096)   (869)   (1,261)   (167,679)
  Impairment of non-current assets   (45,188)   (26,521)   (57,621)   (13,804)   (15,805)   (106)   (159,045)
  Foreign exchange effects   (60,934)   (78,038)   (83,982)   (12,821)   (3,852)   (4,182)   (243,809)
  Transfers – note 22   71,244            88,047   (201,752)   -   36,042   1,770   (4,649)
  Reclassification   -   (916)   -   -   -   (1,201)   (2,117)
  Remeasurement of asset retirement obligations   -   -   -   14,874   -   -   14,874
 Balance at the end of the year   454,603   626,194   527,532   86,812   183,624   19,531   1,898,296
  Cost   1,022,432   2,360,426   596,675   211,650   292,322   36,816   4,520,321
  Accumulated depreciation and impairment   (567,829)   (1,734,232)   (69,143)   (124,838)   (108,698)   (17,285)   (2,622,025)
 Balance at the end of the year   454,603   626,194   527,532   86,812   183,624   19,531   1,898,296
                
 Average annual depreciation rates %   4   7   -  5  UoP    
(i)Reclassification of USD 31,851 from Mining projects to Intangible assets (Rights to use natural resources), as explained in note 22 (a).
(ii)Additions include capitalized borrowing costs on Assets and projects under construction in the amount of USD 19,614 for the year ended on December 31, 2021 (December 31, 2020: USD 2,023).
(iii)Only the amounts related to the operating unit Atacocha are being depreciated under the UoP method.
(iv)Amount includes: (i) a transfer from Assets and projects under construction to Inventories (raw materials) of USD 23,009 related to the ore pile costs that were incurred during Aripuanã´s commissioning phase and which should already be included in the Company's inventory; and, (ii) USD 748 thousand related to other intangibles.
       2022
 Dam and buildingsMachinery, equipment, and facilitiesAssets and projects under constructionAsset retirement obligationsMining projects (i)OtherTotal
 Balance at the beginning of the year       
 Cost1,054,4132,330,748874,776202,242181,52835,2664,678,973
 Accumulated depreciation and impairment(615,428)(1,763,377)(62,681)(118,439)(16,291)(15,027)(2,591,243)
 Balance at the beginning of the year  438,985567,371812,09583,803165,23720,2392,087,730
 Additions4706381,22322,25247956404,720
 Disposals and write-offs(568)(369)(430)--(82)(1,449)
 Depreciation(82,293)(109,009)-(5,169)(2,120)(1,302)(199,893)
 Impairment (loss) reversal of long-lived assets - note 3119,8027,513(6,168)-(39,910)-(18,763)
 Derecognition of Nexa’s share of Enercan's property, plant and equipment(19,688)(8,711)(634)--(183)(29,216)
 Foreign exchange effects18,57723,85537,2803,6861,21583985,452
 Transfers466,513284,635(767,561)-3,5248,608(4,281)
 Remeasurement of asset retirement obligations---(29,025)--(29,025)
 Balance at the end of the year841,332765,991455,80575,547128,42528,1752,295,275
 Cost1,512,3602,636,582521,191200,665221,07744,0945,135,969
 Accumulated depreciation and impairment(671,028)(1,870,591)(65,386)(125,118)(92,652)(15,919)(2,840,694)
 Balance at the end of the year841,332765,991455,80575,547128,42528,1752,295,275
        
 Average annual depreciation rates %48-UoPUoP  

 

(i) Only the amounts of the operating unit Atacocha are being depreciated under the UoP method.


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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

22Intangible assets

Accounting policy

Goodwill

Goodwill arising from business combinations is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net assets acquired. Goodwill is not amortized but is tested for impairment annually and whenever circumstances indicate that the carrying amount may not be recovered. Refer to note 31 for the Company’s impairment accounting policy and critical estimates and assumptions and judgments.

Rights to use natural resources

The significant costs incurred for the acquisition of legal rights to explore mining concessions and develop mineral properties are capitalized and are amortized as production costs when the associated projects start their commercial operation using the UoP method over their useful lives. Useful lives consider the period of extraction for both mineral reserves and mineral resources, which includes a portion of the Company’s inferred resources in the Company’s mining operations. The costs for the acquisition of legal rights attributed to mining projects are not depreciated until the project becomes operational and production activities start.

The costs incurred are impaired if the Company determines that the projects and their mineral rights associated have no future economic value. For purposes of impairment assessment, rights to use natural resources are allocated to Cash Generating Units (“CGUs”).CGUs. Refer to note 31 for the Company’s impairment accounting policy.

Critical accounting estimates, assumptions and judgments - Quantification of mineral reserves and resources for useful life calculation

The Company classifies proven and probable reserves, and measured, indicated and inferred resources based on the definitions of the Canadian InstituteUnited States Securities and Exchange Commission’s (SEC) Modernized Property Disclosure Requirements for Mining Registrants as described in Subpart 229.1300 of Regulation S-K, Disclosure by Registrants Engaged in Mining MetallurgyOperations (S-K 1300) and Petroleum (or CIM) Definition Standards for Mineral Resources and Mineral Reserves (or the 2014 CIM Definition Standards).Item 601 (b)(96) Technical Report Summary.

The useful life determination applied to the rights to use natural resources reflect the pattern in which the benefits are expected to be derived by the Company and is based on the estimated life of mine.mine (“LOM”). Any changes to the life of mine,LOM, based on new information regarding estimates of mineral reserves and mineral resources and mining plan, may affect prospectively the life of mineLOM and amortization rates.

The estimation process of mineral reserves and mineral resources is based on a technical evaluation, which includes geological, geophysics, engineering, environmental, legal and economic estimates and may have relevant impact on the economic viability of the mineral reserves and mineral resources. These estimates are reviewed periodically, and any changes are reflected in the expected life of mine.LOM. Management is confident based on testing, continuity of the ore bodies and conversion experience that a part of the inferred resources will be converted into measured and indicated resources, and if they are economically recoverable, and such inferred resources may also be classified as proven and probable mineral reserves. Where the Company can demonstrate the expected economic recovery with a high level of confidence, inferred resources are included in the amortization calculation.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

However, the future conversion of inferred resources is inherently uncertain and involves estimates, and assumptions and judgments that could have a material impact on the Company’s results of operations.

Schedule of reconciliation of changes in intangible assets

(a)Changes in the year
Schedule of reconciliation of changes in intangible assets 
       2021   2023
 GoodwillRights to use natural resources Other TotalGoodwill
(i)
Rights to use natural resourcesOtherTotal
Balance at the beginning of the year Balance at the beginning of the year   
 Cost 673,7761,665,149 53,463 2,392,388
 Accumulated amortization and impairment (267,342)(1,016,279) (32,362) (1,315,983)
Net balance at the beginning of the year 406,434648,870 21,101 1,076,405
 Reclassification (i) -31,851 - 31,851
Net balance at the beginning of the year - adjusted 406,434680,721 21,101 1,108,256
  Additions (ii) - 21,821 21,821
 Disposals - (9) (9)
 Amortization -(67,829) (3,550) (71,379)
 Foreign exchange effects (206)(622) (1,838) (2,666)
 Transfers – note 21    - 748 748
Cost  611,909  1,855,014  65,246  2,532,169
Accumulated amortization and impairment  (267,342)  (1,207,596) (40,304)  (1,515,242)
Balance at the beginning of the year  344,567  647,418  24,942  1,016,927
Additions  -  3,087  3,087
Amortization  -  (71,488)  (3,041)  (74,529)
Impairment loss of long-lived assets – note 31  (42,660)  -  (27)  (42,687)
Foreign exchange effects  346  3,489  1,727  5,562
Transfers  4,859  132  (4,072)  919
Balance at the end of the year  307,112  579,551  22,616  909,279
Cost  630,787  1,859,147  53,865  2,543,799
Accumulated amortization and impairment  (323,675)  (1,279,596) (31,249)  (1,634,520)
Balance at the end of the year Balance at the end of the year 406,228612,270 38,273 1,056,771  307,112  579,551  22,616  909,279
 Cost 673,5701,791,643 72,414 2,537,627 
 Accumulated amortization and impairment (267,342)(1,179,373) (34,141) (1,480,856)
Balance at the end of the year 406,228612,270 38,273 1,056,771
   
 Average annual depreciation rates % -UoP - 
Average annual depreciation rates %-UoP- 

 

       2020   2022
 GoodwillRights to use natural resources Other   Total

Goodwill

(i)

Rights to use natural resourcesOther  Total
Balance at the beginning of the year Balance at the beginning of the year  
 Cost   674,645  1,668,956   59,408   2,403,009
 Accumulated amortization and impairment  -  (825,163)   (39,320)   (864,483)
Net balance at the beginning of the year  674,645  843,793   20,088   1,538,526
 Disposals   -   (55)   (55)
 Amortization   -  (60,936)   (2,842)   (63,778)
 Impairment of non-current assets  (267,342)  (131,110)   -   (398,452)
 Foreign exchange effects   (869)  (2,877)   (739)   (4,485)
 Transfers – note 21   -   4,649   4,649
Cost  673,570  1,791,643  72,414  2,537,627
Accumulated amortization and impairment(267,342)(1,179,373)(34,141)(1,480,856)
Balance at the beginning of the year Balance at the beginning of the year  406,434  648,870   21,101   1,076,405  406,228  612,270 38,273  1,056,771
 Cost   673,776  1,665,149   53,463   2,392,388
 Accumulated amortization and impairment  (267,342)  (1,016,279)   (32,362)   (1,315,983)
Additions  -  57,529  -  57,529
Amortization  -  (76,695)  (5,639)  (82,334)
Impairment (loss) reversal of long-lived assets – note 31  (61,856)  48,107  -  (13,749)
Derecognition of Nexa’s share of Enercan's intangible assets  -  (9,382)  (9,382)
Foreign exchange effects  195  3,661  (45)  3,811
Transfers  -  2,546  1,735  4,281
Balance at the end of the year  344,567  647,41824,942  1,016,927
Cost  611,909  1,855,014  65,246  2,532,169
Accumulated amortization and impairment(267,342)(1,207,596)(40,304)(1,515,242)
Balance at the end of the year Balance at the end of the year  406,434  648,870   21,101   1,076,405  344,567  647,41824,942  1,016,927
   
 Average annual depreciation rates %  - UoP   - 
Average annual depreciation rates %  - UoP  - 

(i)The Company identified USD 31,851 of legal mining rights that were being classified as Mining projects within Property, Plant and Equipment, instead of as Rights to use natural resources within Intangible assets. Given the nature of this reclassification, only between Property, Plant and Equipment and Intangible assets, the Company made an out-of-period adjustment, to account for the correct classification of those legal mining rights as of December 31, 2021.
(ii)The main addition is due to GSF recovered costs. In past years, Brazilian energy power plants were charged with increased costs related to the Generation Scaling Factor (GSF), which showed a
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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

generation deficit in relation(i) At December 31, 2023, the balances of the Company’s recognized goodwill were: USD 95,830 (2022 - USD 95,485) allocated to Cajamarquilla CGU, USD 4,972 (2022 - USD 4,613) allocated to Juiz de Fora, and USD 206,423 (2022 - USD 249,082) allocated to the total energy expected forMining Peru group of CGU. In 2023, the National Energy System calculated by the regulator. However,recoverability of goodwill was tested, as the generation deficit was not due to hydrological risks, the generators should not have been charged with these increased costs since non-hydrological risks are not managed by them. The affected energy power plants include those of NEXA: Picada, Armador Aguiar I, Armador Aguiar II, Igarapava and Enercan.

Law No. 14.052 published on September 09, 2020 established new conditions for the renegotiation of hydrological risks, providing compensation to the energy power plants that were affected by the increased costs related to GSF, including the plants owned by NEXA, by extending their concession periods.

In 2021, the Brazilian Electric Energy Chamber (“CCEE”) finalized the necessary calculations for the extension of the concession period for the energy power plants that were affected by the increased costs related to GSF and after evaluating the amounts involved, NEXA agreed to accept the renegotiation agreement with the Brazilian Electricity Regulator Agency (“ANEEL”) and to waive any future judicial claim related to the increased GSF costs. This had an impact of USD 19,407 (Picada – 5 years of extended concession period: USD 4,592; Armador Aguiar I – 6 years and 2 months of extended concession period: USD 3,293; Igarapava – 2 years and 7 months of extended concession period: USD 2,565; and, Enercan – 3 years and 6 months of extended concession period: USD 8,957).

These amounts have been recognized as an Intangible asset against recovered energy costs (note 7)explained in the income statement within Cost of sales, and will be amortized using the straight-line method until the end of the extended concession period without any direct cash benefit in 2021.

As of December 31, 2021, the adhesion of Armador Aguiar II energy power plant was still pending and will be recognized once all the external and internal approvals are obtained during the following months.note 31.

 

 

23Right-of-use assets and lease liabilities

Accounting policy

Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Lease terms are negotiated on an individual asset basis and contractual provisions contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

The Company accounts for non-lease components such as service costs separately, whenever applicable. The Company’s lease terms may include options to extend or terminate the lease and when it is reasonably certain that we will exercise that option, the financial effect is included in the contract’s measurement.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Measurement

Liabilities arising from a lease contract are initially measured on a present value basis, using the incremental borrowing rate approach. The incremental borrowing rate is determined by the Company based on equivalent financial costs that would be charged by a counterparty for a transaction with the same currency and a similar amount, term and risk of the lease contract. The finance cost charged to the income statement produces a constant periodic rate of interest over the lease term. On December 31, 2021, interest rates2023, incremental borrowing rate were between 5.68% to 11.39% for Brazil; and 2.65%2.85% to 5.93%9.53% for Peru.

Lease contracts are recognized as a liability with a corresponding right-of-use asset at the date at which the leased asset is available for use by the Company. The right-of-use asset also includes any lease payments made and it is amortized over the shorter of the asset’s useful life and the lease term on a straight-line basis. Amortization expenses are classified either in Cost of sales or Administrative expenses based on the designation of the related assets.

SummaryWhen the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of rights-of-use-assets - Changesthe right-of-use asset or is recorded in profit or loss if the yearcarrying amount of the right-of-use asset has been reduced to zero.

(a)Right-of-use assets - Changes in the year
Schedule of rights-of-use-assets - Changes in the year      
     20232022
 BuildingsMachinery, equipment, and facilitiesIT equipmentVehiclesTotalTotal
Balance at the beginning of the year      
Cost7,30018,10628218,83044,51850,004
Accumulated amortization(4,467)(15,394)(84)(17,678)(37,623)(37,314)
Balance at the beginning of the year2,8332,7121981,1526,89512,690
New contracts3757,1091172,70310,3042,018
Disposals and write-offs-(874)--(874)-
Amortization  (1,034)(1,874)(61)(1,884)(4,853)(8,710)
Remeasurement197(275)(120)-(198)419
Transfers-(114)--(114)-
Foreign exchange effects1745(1)768478
Balance at the end of the year2,3886,7291331,97811,2286,895
Cost6,27816,07931722,76645,44044,518
Accumulated amortization(3,890)(9,350)(184)(20,788)(34,212)(37,623)
Balance at the end of the year2,3886,7291331,97811,2286,895
       
 Average annual amortization rates %31343334  

 

      2021 2020
  BuildingsMachinery, equipment, and facilitiesIT equipmentVehiclesTotal Total
 Balance at the beginning of the period       
  Cost6,46110,6395,84624,61647,562 45,772
  Accumulated amortization(3,129)(5,699)(5,562)(14,303)(28,693) (16,225)
 Net balance at the beginning of the period3,3324,94028410,31318,869 29,547
  New contracts02,72302,4515,174 5,785
  Amortization  (1,063)(2,668)(284)(6,288)(10,303) (12,468)
  Remeasurement(290)---(290) 0
  Foreign exchange effects(92)(192)-(477)(761) (3,995)
 Balance at the end of the period1,8874,80305,99912,689 18,869
  Cost5,73117,5605,42721,28550,003 47,562
  Accumulated amortization(3,844)(12,757)(5,427)(15,286)(37,314) (28,693)
 Balance at the end of the period1,8874,803-5,99912,689 18,869
         
  Average annual amortization rates %31343334   

 

Summary of lease liabilities - changes in the year

(b)Lease liabilities - Changes in the year
  2021 2020
 Balance at the beginning of the year   25,689   34,384
 New contracts   5,174   5,785
 Payments of lease liabilities   (9,827)   (9,100)
 Interest paid on lease liabilities   (1,415)   (1,385)
 Remeasurement   (302)   -
 Accrued interest – note 10   1,272   1,757
 Foreign exchange effects   (952)   (5,752)
 Balance at the end of the year   19,639   25,689
    Current liabilities   16,246   15,999
    Non-current liabilities   3,393   9,690

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 
(b)Lease liabilities - Changes in the year
Schedule of lease liabilities - changes in the year  
 20232022
Balance at the beginning of the year  5,02119,638
New contracts  10,3042,018
Payments of lease liabilities(5,818)(17,091)
Interest paid on lease liabilities(553)(994)
Remeasurement  (198)419
Accrued interest– note 10  427542
Foreign exchange effects  35489
Balance at the end of the year  9,2185,021
Current liabilities  3,7663,661
Non-current liabilities  5,4521,360

24Loans and financings

Accounting policy

Loans and financings are initially recognized initially at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, unless they are designated as fair value option, if necessary to eliminate the accounting mismatch that would arise if amortized cost were used. Any difference between the proceeds (net of transaction costs) and the total amount payable is recognized in the income statement as interest expense over the period of the loans using the effective interest rate method, except for the loans measured at fair value.

Loans and financings are classified as current liabilities unless the Company has the unconditional right to defer repayment of the liability for at least 12 months after the reporting period.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs.

To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

(a)Composition
Schedule of analysis of the loans and financings       
     Total Fair value
    2023202220232022
Type Average interest rate  CurrentNon-currentTotalTotalTotalTotal

Eurobonds

– USD

 Pre-USD 5.84%    18,539  1,194,015  1,212,5541,210,4831,207,9181,162,741
BNDES TJLP + 2.82%
 SELIC + 3.10%
 TLP - IPCA +
 5.46%
  28,602  180,345  208,947216,316187,796183,452

Export

credit notes

LIBOR + 1,54% (i)

CDI 134.20%
SOFR TERM + 2.5%
SOFR + 1,54%

  95,719  142,143  237,862232,790237,791227,201
Other   336  65,867  66,2039,67064,4977,054
    143,196  1,582,370 1,725,5661,669,2591,698,0021,580,448

Current portion of long-term

loans and financings (principal)

115,904     
 Interest on loans and financings27,292     

Schedule(i) On June 30, 2023 LIBOR (London Interbank Offered Rate) was last issued and discontinued. The decision to discontinue LIBOR was made due to concerns about a lack of analysisliquidity and the lack of underlying transactions supporting the loanstaxes. As a result, regulators and financingsfinancial authorities around the world have encouraged the transition to more robust and sustainable alternative benchmark interest rates. The transition involves transferring financial contracts and instruments that rely on LIBOR to other reference rates, such as short-term interest rates based on real transactions, such as SOFR (Secured Overnight Financing Rate).

    2021 2020
 Type   Average interest rate    Current    Non-current    Total    Total
 Eurobonds – USD Fixed + 5.73 %  20,081  1,318,253  1,338,334   1,338,972
 BNDES TJLP + 2.82 %
 SELIC + 3.10 %
 TLP - IPCA + 5.46 %
  18,721  197,080  215,801   179,828
 Export credit notes

LIBOR + 1.54 %
134.20 % CDI

115.55% CDI

  1,466  133,611  135,077   234,221
 Term loans LIBOR + 1.27 %
 Fixed + 8.49 %
  -  -  -   213,735
 Debentures 107.5 % CDI  4,916  -  4,916   10,388
 Other   1,529  3,658  5,187   47,170
    46,713  1,652,602  1,699,315   2,024,314
       
 Current portion of long-term loans and financings (principal)  19,276    
 Interest on loans and financings  27,437    

Therefore, as guided by regulators and financial authorities, the Company adopted the change in indexes in its financial contracts and instruments indexed on LIBOR to SOFR as of July 1, 2023.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(b)Loans and financing transactions during the year ended on December 31, 20212023

PrepaymentOn October 20, 2023, the Company entered into a sustainability-linked revolving credit facility with a group of debtsfinancial institutions of lenders, which allows the Company to borrow up to USD 320,000. The revolving credit facility has a term of five years, and the amounts drawn are subject to an initial interest rate of 1.60% plus Term SOFR (Secured Overnight Financing Rate). The applicable margin is subject to compliance with certain sustainability key performance indicators. The new facility replaces Nexa’s 2019 USD 300,000 revolving credit facility, which was set to mature in October 2024.

As of December 31, 2023, the Company has not drawn on this revolving credit facility.

On January 22, 2021,December 12, 2023, the Company prepaid the outstanding principal of an Exportentered into a Bank Credit Note in Brazilagreement in the amount of BRL 250,000 thousand, with accrued interest of BRL 12,905 thousand (a total of approximately USD 51,105).

On June 23, 2021, the Company prepaid the outstanding principal of an Export Credit Note in Brazil in the amount of BRL 245,000 thousand, with accrued interest of BRL 2,974 thousand (a total of approximately USD 50,077).

On June 28, 2021, the Company prepaid the outstanding principal of a Credit Facility in the amount of USD 42,96950,000, (equivalent to BRL 245,250 thousand) with accruedmaturity in 2028, and an interest rate of 2.57% plus the 12-month TERM SOFR (Secured Overnight Financing Rate).

On December 18, 2023, the Company entered into a financing agreement in the total principal amount of USD 2946,012. with maturity in 2031, and an interest rate of 0.86% plus TJLP index.

(c)Changes in the year
Schedule of movements in loans and financings  
 20232022
Balance at the beginning of the year  1,669,259  1,699,315
New loans and financings  56,408  95,621
Debt issue costs  (74)  (63)
Payments of loans and financings  (27,087)  (24,639)
Bonds repurchased  -  (128,470)
Foreign exchange effects  23,996  22,695
Changes in fair value of financing liabilities related to changes
in the Company´s own credit risk
  583  (521)
Changes in fair value of loans and financings - note 10  525  1,472
Interest accrual    112,612  110,679
Interest paid on loans and financings    (113,018)  (109,263)
Amortization of debt issue costs  2,362  2,433
Balance at the end of the year  1,725,566  1,669,259

(d)54Maturity profile
Schedule of maturity profile of the loans and financings       
       2023
 20242025202620272028As from
 2029
 Total
 Eurobonds – USD (i)  18,539(2,200)(2,270)  698,567  499,918  -  1,212,554
 BNDES  28,602  26,734  23,675  14,500  14,500  100,936  208,947
 Export credit notes  95,719  52,143  -  90,000  -  -  237,862
 Other  336  1,390  2,413  2,413  52,412  7,239  66,203
 143,196  78,067  23,818805,480566,830  108,1751,725,566

(i)The negative balances refer to related funding costs (fee) amortization.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

On July 09, 2021, NEXA PERU prepaid the outstanding principal of a term loan it had with a global financial institution in the amount of BRL 477,000 thousand (approximately USD 90,512), with accrued interest of BRL 12,592 thousand (approximately USD 2,389). The contracted cross-currency swap associated with this debt, as explained in note 16 (b), was also unwound in the amount of USD 12,398.

On July 28, 2021, the Company prepaid the outstanding principal of a Loan Facility in the amount of USD 80,000, with accrued interest of USD 211.

BNDES disbursements

In relation to the loan agreement subscribed in July 2020 between NEXA, through its subsidiary Dardanelos, and the Brazilian Economic and Social Bank (“BNDES”), to finance the ongoing construction of the Aripuanã project, during the second quarter of 2021, the Company drew down the following amounts:

a. On May 28, 2021, BRL 160,000 thousand (approximately USD 30,608); and

b. On June 18, 2021, BRL 101,300 thousand (approximately USD 20,136).

Of the total facility of BRL 750,000 thousand approved by BNDES, the Company has drawn down BRL 736,300 thousand (BRL 261,300 thousand in 2021; and, BRL 475,000 thousand in 2020) which corresponds to approximately USD 140,000 (USD 50,744 in 2021; and, USD 87,664 in 2020). This loan is guaranteed by NEXA BR and NEXA and was contracted at a cost of TLP (“Taxa a longo prazo” or “Long term rate”) + 3.39%, with a maturity date in 2040.

(c)Changes in the year

Schedule of movements in loans and financings

 2021 2020
  Balance at the beginning of the year    2,024,314   1,508,557
  New loans and financings  59,771   1,296,496
  Debt issue costs    (178)   (9,921)
  Payments of loans and financings    (251,044)   (542,983)
  Prepayment of fair value debt – note 24 (b)  (90,512)   -
  Bonds repurchase     -   (214,530)
  Foreign exchange effects    (21,066)   (45,295)

Changes in fair value of financing liabilities related to changes in the Company´s

own credit risk (i)

  5,066   787
  Fair value of loans and financings (ii) - note 10  (10,784)   8,058
  Write off of fair value of loans and financings (iii) - note 10  (8,596)   -
  Interest accrual    113,456   107,532
  Premium paid on bonds repurchase – note 10  -   (14,481)
  Interest paid on loans and financings    (121,112)   (69,906)
  Balance at the end of the year  1,699,315   2,024,314

(i)On June 30, 2021, NEXA had two debt contracts measured at fair value through profit or loss, of which one was prepaid in July 2021. In 2021, the Company’s credit risk decreased, in comparison to 2020, mainly due to the normalization of its operations, with a consequent increase in the fair value of these debts in USD 5,066 (USD 5,188 related to the term loan in NEXA PERU which was prepaid as mentioned above, partially compensated by USD 122 related to a Brazilian Export Credit Note which is the only fair value debt outstanding as of December 31, 2021).
(ii)During the year, the Company recognized a gain in the income statement of USD 10,784 related to the fair value adjustment of the two debts mentioned above, composed by a gain of USD 12,228 on the term loan already prepaid and a loss of USD 1,444 on the Export Credit Note.
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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

(iii)As mentioned above, on July 9, the Company prepaid its term loan debt, together with the respective SWAP contract. The carrying amount of the debt at the date of prepayment was USD 102,042 and the amount paid was USD 92,902 resulting in a gain of USD 9,140, of which USD 8,596 was included in other financial items, net – fair value of loans and financings and USD 544 was included in Other financial items – foreign exchange.

(d)Maturity profile

Schedule of maturity profile of the loans and financings

       2021
 20222023202420252026As from
 2027
Total
 Eurobonds – USD20,081126,370---1,191,8831,338,334
 BNDES18,72121,38122,33621,42919,216112,718215,801
 Export credit notes1,466--133,611--135,077
 Debentures4,916-----4,916
 Other1,529461354514512,2605,187
 46,713148,21222,371155,49119,6671,306,8611,699,315

(e)Analysis by currency

Schedule of analysis of the loans and financings, by currency

Schedule of analysis of the loans and financings, by currency 
 2021 2020 20232022
  Current    Non-current    Total    Total  Current  Non-current  Total Total
USD  20,281  1,406,681  1,426,962   1,569,942  112,210  1,334,015  1,446,225  1,392,625
BRL  25,073  245,498  270,571   451,634  30,986  248,355  279,341  276,190
Other  1,359  423  1,782   2,738  -  444
  46,713  1,652,602  1,699,315   2,024,314  143,196  1,582,370  1,725,566  1,669,259

 

(f)Analysis by index

Schedule of analysis of the loans and financings, by index

Schedule of analysis of the loans and financings, by index 
 2021 2020 20232022
  Current  Non-current  Total  Total  Current  Non-current  Total Total
Fixed rate  21,530  1,318,717  1,340,247   1,456,090  18,540  1,194,014  1,212,554  1,210,972
SOFR  93,671  140,000  233,671  91,657
TLP  15,064  158,936  174,000  175,272
CDI  2,242  52,143  54,385  50,722
BNDES SELIC  9,455  14,990  24,445  27,796
TJLP  4,224  22,287  26,511  22,354
LIBOR  248  88,429  88,677   230,574  -  90,411
TLP  8,559  161,765  170,324   132,280
BNDES SELIC  6,613  23,067  29,680   30,683
CDI  6,134  45,182  51,316   156,683
TJLP  3,629  15,442  19,071   17,962
Other  -   42  -  75
  46,713  1,652,602  1,699,315   2,024,314  143,196  1,582,370  1,725,566  1,669,259

 

(g)Guarantees and covenants

The Company has loans and financings that are subject to certain financial covenants at the consolidated level, which are measured annually and semiannually, as required by the debt contracts. These financial covenants include the:such as: (i) leverage ratio; (ii) capitalization ratio; and (iii) debt service coverage ratio. When applicable, these compliance obligations are standardized for all debt agreements. No changes to the contractual guarantees occurred in the year ended on December 31, 2023.

As of December 31, 2021,2023, the Company was in compliance with all its financial covenants. There were no changes to the contractual guarantees provided bycovenants, as well as the Company during the year and as of December 31, 2021.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

was compliant with other qualitative covenants.

 

25Trade Payables

Accounting policy

Trade payables represent liabilities for goods and services that were provided to the Company before the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. These amounts are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

(a)Composition
Schedule of trade payables    
  2023 2022
 Trade payables   423,611   398,519
 Related parties - note 20   27,992   15,337
  Total 451,603   413,856

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

26Confirming Payables

Accounting policy

The Company has contracts with some suppliers whose commercial payment varies between Schedule90 and 180 days, which can be negotiated individually with the supplier and reach 210 days, without any additional guarantees, except for a specific supplier for which a letter of tradeguarantees is provided. In these contracts, the supplier has the option to request a bank to advance the payment of their commercial invoice within 180 days, before the invoice matures. As a result of those contracts between the suppliers and the bank, the commercial terms agreed with the Company do not change. In accordance with the commercial agreement, the supplier communicates to the Company its interest in selling the invoice to the bank, and it is only the supplier who can decide to sell its invoice at any time during the commercial period. With this option, suppliers can improve their working capital position. The bank pays the supplier with an interest discount and the Company assumes part of the interest payment to the supplier, in certain cases the supplier assumes the integral payment of interest. The Company, however, understands that the separate presentation of these accounts within “Confirming payables” is relevant to the understanding of the Company's financial position.

  2021 2020
 Trade payables   407,007   360,235
 Related parties - note 20   4,811   9,887
Trade payables   411,818   370,122

Based on concepts of IFRS 9, the Company assesses whether the payment term extension arrangement substantially modifies the original liability based on qualitative and quantitative assessments. If the original liability has not been substantially modified, the original liability remains and is disclosed as “Confirming Payable”. If the original liability has been substantially modified, the Company derecognizes the original liability (confirming payables) and recognizes a new financial liability as “Other financial liabilities”. Any gain/loss is recognized in the “Income Statement”.

 

The Company concluded that for December 31, 2023, the transactions maintain their essence as “confirming payables” taking into consideration Nexa’s assessment policy.

Payments of the principal amounts and interest reimbursements are presented within the “operating activities group” in the Company's cash flow statement, in accordance with IAS 7, as the Company classifies the actual transactions as confirming payable.

 

26(a)Carrying amount of financial liabilities
Schedule of carrying amount of financial liabilities  
 20232022
Confirming Payables234,385 216,392

As of December 31, 2023, financial institutions have paid the total amount of confirming payables to the suppliers.

(b)Range of payments due dates
Schedule of range of payments due
2023
AssetDays after invoice
Liabilities that are part of confirming payables60 - 210
Comparable trade payables thar are not part of a confirming payables30 - 120

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(c)Non-cash changes

There were no business combinations or material foreign exchange differences in either periods.

27Dams, asset retirement and environmental obligations

Accounting policy

Provision for asset retirement obligations include costs tofor restoration and closure of the mining assets and is recognized due to the development or mineral production, based on the net present value of estimated closure costs. Dam obligations regarding the de-characterization of their structures includes estimated mandatory costs as required by the Brazilian Government. Management uses its judgment and previous experience to determine the potential scope of rehabilitation work required and the related costs associated with that work, which are recognized as a Property, plant and equipmentequipment” for asset retirement obligations relating to operating mining assets or as Other income and expenses, net for non-operating structures.

Environmentalstructures and for de-characterization of dams, environmental obligations include costs related to rehabilitation of areas damaged by the Company in its extractive actions (for example - soil contamination, water contamination, among others) or penalties. Therefore, it becomes an event that creates obligations when these environmental damages are detected by the Company, when a new law requires that the existing damage be rectified or when the Company publicly accepts any responsibility for the rectification, creating a constructive obligation. The costs to remedy an eventual unexpected contamination, which give rise to a probable loss and can be reliably estimated, must be recognized in Other income and expenses, net in income statement.

 

In addition, investments in infrastructure, machinery and equipment regarding operational improvements to avoid future environmental damage, are not provisioned, because it is expected that these assets will bring future economic benefits to the operating units, thus it is capitalized as Property, plant and equipment.

The cash flowsliabilities are discounted to present value using a credit risk-adjusted rate that reflects current market assessments of the time value of the money and the specifics risks for the asset to be restored. The interest rate charges relating to the liability are recognized as an accretion expense in the Net financial results. Difference in the settlement amount of the liability is recognized in the income statement.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Critical accounting estimates, assumptions and judgments

The initial recognition and the subsequent revisions of the asset retirement obligations, dams obligations, and environmental obligations consider critical future closure and repairing costs and several assumptions such as interest rates, inflation, useful lives of the assets and the estimated moment that the expenditure will be executed. These estimates are reviewed annually by the Company or when there is a relevant change in these assumptions.

Cost estimates can vary in response to many factors of each site that include timing, expected life of mine,LOM, changes to the relevant legal or government requirements and commitments with stakeholders, review of remediation and relinquishment options, emergence of new restoration techniques, stage of engineering evaluation maturity among others. Engineering projects for each liability are in different stages of maturity, some of them still in the conceptual engineering phase, for which the estimation of expenditures includes in its methodology a high degree of uncertainty in the definition of the total cost of the project in accordance with best market practices.

External experts support the cost estimation process where appropriate. These factors either isolated or consolidated could significantly affect the future financial resultsincome statement and balance sheet position.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(a)Changes in the year
Schedule of changes in dams, asset retirement and environmental obligations     
    20232022
  Asset retirement obligations Environmental obligations

Dams

Obligations (iii)

 Total Total

Balance at the

beginning of the year

219,923          46,396                         -     266,319  264,151
Additions (ii)  4,292  2,727  6,960  13,979  35,036
Payments  (6,036)  (6,347)  -  (12,383)  (25,393)
Foreign exchange effects  8,027  3,729  161  11,917  9,160
Interest accrual - note 10  22,770  4,199  -  26,969  23,662

Remeasurement –

discount rate (i) / (ii)

  4,557  3,561  -  8,118  (40,297)

Balance at the

end of the year

  253,533  54,265  7,121  314,919  266,319
Current liabilities  24,264  8,438  1,016  33,718  23,646
Non-current liabilities  229,269  45,827  6,105  281,201  242,673

Summary

(i) As of changesDecember 31, 2023, the credit risk-adjusted rate used for Peru was between 10.86% and 12.52% (December 31, 2022: 10.92 % and 12.04 %) and for Brazil was between 6.94% and 11.11% (December 31, 2022: 8.22% and 8.61%).

(ii) The change in the year ended on December 31, 2023, was mainly due to the time change in the expected disbursements on decommissioning obligations in certain operations, in accordance with updates in their asset retirement and environmental obligations studies, and by the increase in the discount rates, as described above. In this way, asset retirement obligations for operational assets, increased in an amount of USD 11,972 (December 31, 2022: decrease of USD 6,773) as shown in note 21; and asset retirement and environmental obligations for non-operational assets expense in USD 3,165 (December 31, 2022: expense of USD 1,512) as shown in note 9.

   20212020
  Asset retirement obligations Environmental obligations Total Total
 Balance at the beginning of the year             227,189            48,857  276,046  293,828
 Payments  (19,932)  (6,323)  (26,255)  (10,426)
 Foreign exchange effects  (4,848)  (3,003)  (7,851)  (37,145)
 Interest accrual  7,051  2,616  9,667  14,015
 Remeasurement and additions (i)    12,250  293  12,543  15,774
 Balance at the end of the year  221,710  42,440  264,150  276,046
 Current liabilities  20,826  11,127  31,953  33,095
 Non-current liabilities  200,884  31,313  232,197  242,951
(i)As of December 31, 2021, the credit risk-adjusted rate used for Peru was between 3.54% to 7.28% (December 31, 2020: 1.70% to 4.00%) and for Brazil was between 7.68% to 8.67% (December 31, 2020: 0.07% to 6.75%). Besides, as part of its annual asset retirement and environmental obligations review, the Company increased its expected disbursements on decommissioning obligations in certain operations, in accordance with updates in their asset retirement or environmental obligations studies and update in the discount rates. For operational assets, Property, plant and equipment has been increased in an amount of USD 5,879; and, for non-operational structures and environmental obligations, an expense of USD 6,664 was recognized in Other income and expenses, net, according to the updates mentioned above.

(iii) The Company has been conducting engineering studies to confirm the construction method of some very old inactive industrial waste containment structures that have been closed for more than 20 years.  None of them contain mining tailings, water or liquid waste. Based on results of the conceptual engineering studies, the Company has reserved amounts related to estimated costs of anticipated additional obligations in relation to these closed dams.

 

 

2728Provisions

Accounting policy

Provisions for legal claims and judicial deposits

Provisions for legal claims are recognized when there is a combination of the following conditions: (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is probable (more likely than not) that an outflow of resources will be required to settle the obligation;

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

And, (iii) the amount can be reliably estimated. The provisions are periodically estimated, and the likelihood of losses is supported by the Company's legal counsel.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as Financial expenses.Expenses.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

When a claim is secured by a judicial deposit, the Company offsets the provision with the judicial deposit amount in the consolidated balance sheet. However, the Company also has judicial deposits for claims for which the likelihood of loss is possible or remote and for which no provision is recognized. In such cases, these amounts are recognized as outstanding judicial deposits in the Company’s assets.

Critical accounting estimates and assumptions – Provisions for legal claims

The Company is part of ongoing tax, labor, civil and environmental lawsuits which are pending at different court levels. The provisions for potentially unfavorable outcomes of litigation in progress are established and updated based on management evaluation and require a high level of judgment regarding the matters involved, supported by the positions of external legal advisors. Income tax claims are discussed at the current and deferred income tax section (note 11).

(a)Changes in the year

Schedule of provisions

     20212020
  Tax Labor Civil Environmental Total Total
 Balance at the beginning of the year  6,234  15,208  785  8,669  30,896  26,070
 Additions  9,943  12,328  1,676  9,358  33,305  24,052
 Reversals  (8,572)  (7,012)  (754)  (3,794)  (20,132)  (13,140)
 Interest accrual  (418)  1,131  40  (7)  746  1,389
 Payments  (2,162)  (1,739)  (935)  (491)  (5,327)  (1,721)
 Foreign exchange effects  (448)  (1,087)  (30)  (820)  (2,385)  (5,147)
 Other  (43)  (150)  (82)  -  (275)  (607)
 Balance at the end of the year  4,534  18,679  700  12,915  36,828  30,896

Schedule of changes in provisions      
     20232022
  Tax LaborCivilEnvironmental Total Total
 Balance at the beginning of the year8,159 20,520 244  14,974  43,897  36,828
 Additions  49  10,655  53  10,200  20,957  13,148
 Derecognition of Nexa’s share of Enercan’s provisions - - note 4(ii)  -  -  -  -  -  (311)
 Reversals  (186)  (3,960)  (6)  (2,913)  (7,065)  (5,484)
 Interest accrual  774  (382)  23  40  455  1,754
 Payments(387)(5,351)(11)(1,217)(6,966)(4,584)
 Foreign exchange effects  1,806  1,429  19  775  4,029  2,266
 Other  (303)  (617)  438  1,962  1,480  280
 Balance at the end of the year  9,912 22,294  760  23,821  56,787  43,897

 

(b)Breakdown of legal claims provisions

The provisions and the corresponding judicial deposits are as follows:

Schedule of provisions and judicial deposits

  
Schedule of provisions    
 2021 2020 2023 2022
 Judicial depositsProvisionsCarrying amount Judicial depositsProvisions Carrying amount Judicial deposits ProvisionsCarrying amount Judicial deposits ProvisionsCarrying amount
Tax  (1,528)  6,062  4,534  (1,594)  7,828  6,234  (1,372)  11,284  9,912  (1,200)  9,359  8,159
Labor  (2,752)  21,431  18,679  (2,797)  18,005  15,208  (1,810)  24,104  22,294  (3,399)  23,919  20,520
Civil  (751)  1,451  700  (722)  1,507  785  -  760  760  -  244  244
Environmental  -  12,915  12,915  -  8,669  8,669  -  23,821  23,821  -  14,974  14,974
Balance at the end of the year  (5,031)  41,859  36,828  (5,113)  36,009  30,896  (3,182)  59,969  56,787  (4,599)  48,496  43,897

 

The outstanding judicial deposits of the Company as of December 31, 20212023 that are not presented net of the provisions are USD 5,44620,287 (December 31, 2020:2022: USD 5,56616,753).

(c)Contingent liabilities

Legal claims that have a possible likelihood that an obligation will arise are disclosed in the Company’s financial statements. The Company does not recognize a liability because it is not probable that an

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

outflow of resources will be required or because the amount of the liability cannot be reliably calculated. These legal claims are summarized below:

Schedule of contingent liabilities

Schedule of provisions and judicial deposits 
2021202020232022
Tax (i)  156,779                   182,380  133,038  134,637
Labor (ii)  36,215                    33,205  48,274  41,454
Civil (iii)  14,617                     17,502  12,823  16,946
Environmental (iv)  97,027                    85,390  124,773  112,541
  304,639         318,477  318,908  305,578

 

As of December 31, 2021, contingent liabilities decreased in comparison to those of December 31, 2020 mainly related to an agreement with the corresponding tax authority, by which NEXA desisted from a litigation related to social security contributions levied upon profit sharing (PLR), receiving a 50% discount over principal, interest and penalties.
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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(i)Comments on contingent tax liabilities

The main contingent liabilities relating to tax lawsuits are discussed below.

Income tax over transfers of shares in Peru

Relates to assessments issued by the SUNAT, where the Company was jointly and severally liable for the payment of income tax by a foreign investor, in a supposed capital gain on transfer of shares. The estimated financial effect of this contingent liability is USD 91,78184,050.

Compensation for exploration for mineral resources

Relates to assessments issued by the Brazilian National Department of Mineral Production for the alleged failure to pay or underpayment of financial compensation for the exploration of mineral resources (“CFEM”). The estimated financial effect of this contingent liability is USD 10,17612,927.

Indirect taxes on sales

Relates to assessments issued by the Brazilian Internal Revenues Service concerning certain credits taken by the Company when calculating those indirect taxes on sales. The estimated financial effect of this contingent liability is USD 3,4914,272.

Value-added tax on sales

Relates to assessments issued by the tax authorities of the State of Minas Gerais concerning the following:

·Incidence of value-added tax on sales of certain energy contracts. The estimated financial effect of this contingent liability is USD 11,49820,903.
·The tax rate applied to interstate sales for manufactured goods with imported content. The estimated financial effect of this contingent liability is USD 3,131.
·The Company was challenged by the tax authorities regarding certain credits to the purchases of property, plant and equipment. The estimated financial effect of this contingent liability is USD 6,0758,052.
(ii)Comments on contingent labor liabilities

Include several claims filed by former employees, third parties and labor unions and labor public attorney’s office mostly claiming the payment of indemnities related to dismissals, such as overtime, work at night hours, commuting hours, health hazard premiums and hazardous duty premiums, as well as indemnity claims by former employees and third parties based on alleged occupational

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

illnesses, work accidents and payment of social benefits. The individual amount of the claims are not material.

(iii)Comments on contingent civil liabilities

The main contingent civil liability is related to indemnity lawsuits against the Company alleging property, contractual and general damages/losses. The estimated financial effect of this contingent liability is USD 15,45612,823.

(iv)Comments on contingent environmental liabilities

The main contingent environmental liabilities in Brazil were filed by fishermen communities against the Company for indemnification, compensation for material and moral damages due to alleged pollution of the São Francisco River close to the Company’s Três Marias operation in Brazil. The estimated financial effect of these contingent liabilities is USD 67,38585,399. In Peru, the main environmental liabilities come from alleged non-compliance of NEXA’s Atacocha mine closure plan regarding inoperative tailing dams. This process was filed by the Peruvian environmental enforcement agency (OEFA) and its estimated financial effect is of USD

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Nexa Resources S.A. 6,934.

 

Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

 

2829Contractual obligations

Accounting policy

Contractual obligations consist of advance payments received by the Company under a silver streaming agreement, signed with a counterparty (the Streamer)“Streamer”) and by which referential silver contents found in the ore concentrates produced by the Company’s Cerro Lindo mining unit are sold to the Streamer.

Determining the accounting treatment of silver streaming transactions requires the exercise of high degree of judgment.

The Company assesses whether those advances obtained under this agreement should be recognized as contractual obligations (a sale of a non-financial item) or as a financial liability. For that purpose, the Company takes into consideration factors such as which party is exposed to the operational risk, the risk of access to the resources, the price risk, and assesses whether the transaction involves a sale of an own use asset for the counterparty. In those cases, in which the Company concludes that, in essence, the Streamer shares substantially the operational risks, the resource access and price risks, it delivers a non-financial item that qualifies as an “own use” item; any advance payment obtained is recognized as a contractual obligation in the framework of IFRS 15: Revenue from contracts with customers. Otherwise, the Company would recognize a financial liability in the framework of the provisions of IFRS 9: Financial instruments.

When a contractual obligation is recognized, the balance is initially recognized at the amount received, and it is subsequently recognized as revenue when the control of the respective assets is transferred, that is, upon the physical delivery of the nonfinancial item (silver certificate). Contractual obligations are recognized within non-current liabilities, except for the portion of silver certificates that are estimated to be delivered over the 12 months following the balance sheet date.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

The advance payment obtained under the silver streaming transaction entered by the Company in 2016 is recognized as contractual obligation to the extent that the risk assessment conducted by the management indicates the relevant risks are substantially shared with the Streamer and the qualifying conditions of a sale of an “own use” item are met.

Determination of the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in return for transferring the promised goods to its counterparty. The transaction price is allocated to each performance obligation based on the relative standalone selling prices. In the silver streaming transaction, the Company has variable considerations related to the production capacity of the mine linked to its life of mineLOM and to the LME. IFRS 15 requires that for contracts containing variable considerations, the transaction price be continually updated and re-allocated to the transferred goods. For this purpose, the contractual obligations require an adjustment to the transaction price per unit each time there is a change in the underlying production profile of a mine or the expected metal prices. The change in the transaction price per unit results in a retroactive adjustment to revenues in the period in which the change is made, reflecting the new production profile expected to be delivered under the streaming agreement or the expected metal prices. A corresponding retroactive adjustment is made to accretion expenses, reflecting the impact of the change in the contractual obligation balance.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

Critical accounting estimates, assumptions and judgments

The recognition of revenues and of the contractual obligation related to the silver transaction require the use of critical accounting estimates and assumptions including, but not limited to: (i) allocation of revenues on relative prices; (ii) estimativeestimate prices for determining the upfront payment; (iii) discount rates used to measure the present value of future inflows and outflowsoutflows; and (iv) estimativeestimates of life of mine,LOM, reserves and mineral production.

(a)Composition

In 2016, the Company entered a silver streaming arrangement which consisted of an upfront payment of USD 250,000 for the anticipated sale of a portion of the silver contained in the ore concentrates produced by the Cerro Lindo mining unit, which consisted of: i) an upfront payment of USD 250,000 and ii) additional payments at the date of each delivery of the ounces of payable silver equivalent to 10% of the spot price at the date of settlement. In addition, by this agreement, sales of silver certificates to Triple Flag are limited to a total of 19.5 million of the ounces that Nexa Peru sells to its customers. Once that limit is reached, sales under the streaming will be made for 25% of the silver content in the Nexa Peru’s sales of concentrate for a period equivalent to the life of said mining unit.

The advance payment was recognized as a Contractual obligation and the corresponding revenues are recognized as the silver is delivered, which is the time that the contractual performance obligations are satisfied.

The changes in the contractual obligation are shown below:below:

 20212020
 Balance at the beginning of the year  166,025  180,522
 Revenues recognition upon ore delivery  (45,309)  (28,492)
 Remeasurement of revenues based on new reserves (i)  19,580  7,813
 Accretion for the year  6,936  6,182
 Balance at the end of year  147,232  166,025
 Current  33,156  27,132
 Non-current  114,076  138,893
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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

Schedule of changes in the contractual obligation  
 20232022
Balance at the beginning of the year  132,160  147,232
Revenues recognition upon ore delivery  (30,498)  (31,438)
Remeasurement adjustment (i)    10,121  10,565
Accretion for the year - note 10  5,329  5,801
Balance at the end of year  117,112  132,160
Current  37,432  26,188
Non-current  79,680  105,972

i)(i) In September 2021,2023 and December 2023, the Company recognized a remeasurement adjustment in its contractual obligations of silver streaming with a corresponding reduction in revenues for an amount of USD19,312 (December 31, 2020: 2,323 and USD 7,813)8,252, respectively, and an increase in accretion for an amount of USD1,658 284 and USD 989 (September 30, 2022: reduction in revenues for an amount of USD 10,565 and an increase in accretion for an amount of USD 1,041), given the higher long-term prices and the updated miningmine plan for its Cerro Lindo Mining Unit. According to the Company’s silver streaming accounting policy, prices and changes in the life of mineLOM given an update in miningmine plans are variable considerations and then, the recognized income under the streaming agreement should be adjusted to reflect the updated variables.

 

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

 

 

29Confirming Payables

Accounting policy

The Company has contracts with some suppliers in which the commercial payment term is 180 days. In these contracts, the suppliers have the option to request a bank to advance the payment of their commercial invoice within 180 days, before the invoice matures. As a result of those contracts between the suppliers and the bank, the commercial terms agreed with the Company do not change. In accordance with the commercial agreement, the supplier communicates to the Company its interest in selling the invoice to the bank, and it is only the supplier who can decide to sell its invoice at any time during the commercial period. With this option, suppliers can improve their working capital position. The bank pays the supplier with an interest discount and the Company assumes part of the interest payment to the supplier.

Applying the concepts of IFRS 9, this transaction maintains its essence as a trade account payable since the Group has not derecognized the original liabilities to which the agreement applies because neither a legal release was obtained, nor the original liability was substantially modified in the execution of the agreement. The Company understands that the 180-day period can be considered common for the sector, as it is a specific product and the 90% of the outstanding balance of the concentrate belongs to these suppliers. The Company, however, understands that the separate presentation of these accounts within Confirming payables is relevant to the understanding of the entity's financial position.

Payments of the principal amounts and interest reimbursements are presented within the operating activities group in the Company's cash flow statement, in accordance with IAS 7.

The total amount of interests paid in the reverse factoring program in 2021 was of USD 1,290 (December 31, 2020: USD 1,234).

As of December 31, 2021, accounts payable of USD 232,860 were included in these contracts (December 31, 2020: USD 145,295; December 31, 2019: USD 82,770).

30Shareholders’ equity

Accounting policy

Common shares are classified in shareholders’ equity. Each time a share premium is paid to the Company for an issued share, the respective share premium is allocated to the share premium account. Each time the repayment of a share premium is decided, such repayment shall be done pro-rata to the existing shareholders.

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Notes to the consolidated financial statements

At and for the year ended December 31, 2021

All amounts in thousands of US dollars, unless otherwise stated

The distribution of dividends to the Company’s shareholders is recognized as a liability in the Company’s consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders.

Shares repurchased under buyback programs that are not cancelled, are reported as treasury shares and are deducted from shareholders’ equity. These shares are also deducted in the earnings per share calculation.

(a)Capital

As of December 31, 2021,2023, the outstanding capital of USD 132,439 (2020:(2022: USD 132,439) is comprised of 132,439 thousand subscribed and issued common shares (2020:(2022: 132,439 thousand), with par value of US$ 1.00 per share. In addition to the subscribed and issued common shares, NEXA also has an authorized, but unissued and unsubscribed share capital set at USD 231,925.

(b)Treasury shares

On September 20, 2018, the Company’s Board of Directors approved a share buyback program to repurchase up to USD 30,000 of its outstanding common shares, over the 12-month period beginning on November 6, 2018 and ending on November 6, 2019. The repurchased shares were not cancelled but held in treasury at that time. As of December 31, 2019, the Company had repurchased USD 9,435, corresponding to 881,902 shares.

On June 4, 2020, at NEXA’s Extraordinary General Meeting (“EGM”), the Company’s shareholders approved the cancellation of the 881,902 shares held in treasury, previously repurchased as explained above.purchased based on a share buyback program in prior years. For this reason, after the cancellation sharesthat occurred on June 4, 2020, VSA holds 64.68% of NEXA’s equity.

(c)Share premium

The share premium, if any, may be distributed to the shareholders in accordance with Luxembourg Commercial Companies Act by a resolution of the Board of Directors.

(d)Additional paid in capital

Additional paid in capital arises from transactions recognized in equity that do not qualify as capital or share premium in accordance with Luxembourg Commercial Companies Act and, therefore, cannot be distributed to the shareholders of the Company.

(e)Accumulated other comprehensive income

The changes in the accumulated other comprehensive income are as follows:

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

(e)Accumulated other comprehensive income

 

The changes in the accumulated other comprehensive income are as follows:

 Cumulative translation adjustmentHedge accountingChanges in fair value of financial instrumentsTotal
 At January 01, 2019(109,788)384-(109,404)
 Translation adjustment on foreign subsidiaries(21,115)--(21,115)
 Cash flow hedge accounting-879-879
 At December 31, 2019(130,903)1,263-(129,640)
 Translation adjustment on foreign subsidiaries(138,840)--(138,840)
 Cash flow hedge accounting-3-3
 Changes in fair value of financial liabilities  
 related to changes in the Company’s own credit risk  
--(875)(875)
 At December 31, 2020(269,743)1,266(875)(269,352)
 Translation adjustment on foreign subsidiaries(64,575)--(64,575)
 Cash flow hedge accounting-327-327
 Changes in fair value of financial liabilities  
 related to changes in the Company’s own credit risk  
--(7,441)(7,441)
 Changes in fair value of investments in equity instruments--(2,632)(2,632)
 At December 31, 2021(334,318)1,593(10,948)(343,673)
 Attributable to NEXA's shareholders     (299,995)
 Attributable to non-controlling interests     (43,678)
Schedule of accumulated other comprehensive income    
 Cumulative translation adjustmentHedge accountingChanges in fair value of financial instrumentsTotal
At January 01, 2021(269,743)1,266(875)(269,352)
Translation adjustment on foreign subsidiaries(64,575)--(64,575)
Cash flow hedge accounting-327-327

Changes in fair value of financial liabilities

related to changes in the Company’s own credit risk

--(7,441)(7,441)
Changes in fair value of investments in equity instruments--(2,632)(2,632)
At December 31, 2021(334,318)1,593(10,948)(343,673)
Translation adjustment on foreign subsidiaries65,243--65,243
Cash flow hedge accounting-(331)-(331)

Changes in fair value of financial liabilities

related to changes in the Company’s own credit risk

--343343
Changes in fair value of investments in equity instruments--(3,608)(3,608)
At December 31, 2022(269,075)1,262(14,213)(282,026)
Translation adjustment on foreign subsidiaries  81,315  -  -  81,315
Cash flow hedge accounting  -  (537)  -  (537)

Changes in fair value of financial liabilities

related to changes in the Company’s own credit risk

  -  -  (385)  (385)
Changes in fair value of investments in equity instruments  -  -  (1,466)  (1,466)
At December 31, 2023  (187,760)  725  (16,064)  (203,099)
Attributable to NEXA's shareholders       (169,094)
Attributable to non-controlling interests       (34,005)

 

(f)Earnings per share

Basic earnings per share are computed by dividing the net income attributable to the NEXA’s shareholders by the average number of outstanding shares for the year. Diluted earnings per share is computed in a similar way, but with the adjustment in the denominator when assuming the conversion of all shares that may be dilutive. The Company does not have any potentially dilutive shares and consequently the basic and diluted earnings per share are the same.

Schedule of earnings per share information

Schedule of earnings per share information     
2021 2020 20192023 2022 2021
Net income (loss) for the year attributable to NEXA's shareholders  114,332   (559,247)   (145,135)  (289,354)   49,101   114,332
Weighted average number of outstanding shares – in thousands  132,439   132,439   132,622  132,439   132,439   132,439
Earnings (losses) per share - USD  0.86   (4.22)   (1.09)  (2.18)   0.37   0.86

 

(g)Dividend distribution

On February 11, 2021,15, 2023, the Company’s Board of Directors approved, subject to ratification by the Company’s shareholders at the 20222024 annual shareholders’ meeting in accordance with Luxembourg laws, a cash dividend distribution to the Company’s shareholders of recordapproximately USD 25,000, which was paid on March 12, 2021 of USD 35,00024, 2023 as share premium (special cash dividend).

 

Additionally, duringOn May 15, 2023, Enercan’s Board of Directors approved an additional dividend distribution to its shareholders related to the 2022 fiscal year endedand the Company’s subsidiary Pollarix S.A. (“Pollarix”) will be entitled to receive USD 15,426 (BRL 76,430). Pollarix received in cash the amount of (i) USD 1,059 (BRL 5,245) on April 27, 2023, (ii) USD 5,474 (BRL 27,124) on June 7, 2023, (iii) USD 9,199 (BRL 44,887) on September 20, 2023, (iv) USD 4,556 (BRL 22,567) on November 21, 2023, and (v) USD 1,812 (BRL 8,977) on December 31, 2021,14, 2023, from the Company’s subisidiary Pollarix declared USD 23,730outstanding amount of the dividend’s distribution.

On August 2, 2023, Pollarix's Board of Directors approved an additional distribution of dividends to its shareholders for the 2022 fiscal year. Nexa BR will be entitled to receive USD 4,959 (BRL 24,197) for common shares and the non-controlling interests ownedinterest will be entitled to receive USD 12,397 (BRL 60,492) for preferred shares. Pollarix paid in cash the total amount of USD 13,282 (BRL 64,806) by Votorantim Geração de Energia S.A., a related party.the end of September to the non-controlling interest.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

 

On December 15, 2023, Pollarix’s Board of Directors approved an early distribution of dividends to its shareholders for the 2023 fiscal year. Nexa BR will be entitled to receive USD 1,542 (BRL 7,638) for common shares and the non-controlling interest will be entitled to receive USD 5,954 (BRL 29,489) for preferred shares. Pollarix paid in cash the total amount of USD 10,307 (BRL 51,058) by the end of December to the non-controlling interest.

Additionally, it is important to mention that Nexa Peru paid a total amount of USD 124 to the non-controlling interest regarding to the dividends distributed in previous years.

(h)Non-controlling interests

Schedule of Summarised financial information of the non-controlling interests

Schedule of summarized financial information of the non-controlling interests 
Summarized balance sheetNEXA PERU Pollarix S.A.NEXA PERU Pollarix S.A.
20212020 2021202020232022 20232022
Current assets  680,609  590,948   23,070  14,537  581,466  658,099   12,283  9,822
Current liabilities  288,736  225,424   13,279  7,699  292,067  260,980   11,734  8,820
Current net assets  391,872  365,524   9,791  6,838  289,399  397,119   549  1,002
  
Non-current assets  1,345,420  1,472,015   53,516  48,831  1,361,412  1,282,556   73,312  68,984
Non-current liabilities  566,059  745,179   -  385,208  409,106   9,421  -
Non-current net assets  779,361  726,836   53,516  48,831  976,204  873,450   63,891  68,984
  
Net assets  1,171,233  1,092,360   63,307  55,669  1,265,603  1,270,569   64,440  69,986
  
Accumulated non-controlling interests  213,997  201,964   44,011  41,835  207,966  217,167   46,747  50,842
 
   
Summarized income statementNEXA PERU Pollarix S.A.
20232022 20232022
Net revenues  735,337  892,389   11,740  6,906
Net income for the year  12,491  106,501   13,700  29,635
Other comprehensive income (loss)  -  7,308   5,606  9,686
Total comprehensive income for the year12,491  113,809   19,306  39,321
 
Comprehensive income attributable to non-controlling interests  (9,206)  1,199   14,261  30,870
Dividends paid to non-controlling interests 124  -   23,589  24,592
 
   
Summarized statement of cash flowsNEXA PERU Pollarix S.A.
20232022 20232022
Net cash provided by (used in) operating activities   206,163  196,850   (5,189)  4,474
Net cash used in investing activities  (226,991)  (86,969) 36,993  -
Net cash (used in) provided by financing activities  (3,604)  (137,426)   (32,185)  (6,945)
(Decrease) increase in cash and cash equivalents  (26,145)  (28,582)   (381)  (2,471)

 

Summarized income statementNEXA PERU Pollarix S.A.
20212020 20212020
 Net revenues  828,571  541,099   20,9968,591
 Net income (loss) for the year  94,706  (207,866)   39,136  26,943
 Other comprehensive loss  (940)  (5,575)   (2,977)(28,548)
 Total comprehensive income (loss) for the year   93,766(213,441) 36,159(1,605)
      

Comprehensive income (loss) attributable to non-controlling

interests

12,991  (99,500)  24,947(10,586)
 Dividends paid to non-controlling interests    -  -   23,730  5,332

Summarized statement of cash flowsNEXA PERU Pollarix S.A.
20212020 20212020
 Net cash provided by (used in) operating activities  179,842  31,370 (8,522)  (82)
 Net cash used in investing activities  (93,632)  (48,883)   -  -
 Net cash (used in) provided by financing activities  (92,905)  (113,415)   8,997  (868)
 (Decrease) increase in cash and cash equivalents  (8,542)  (132,544)   475  (950)

 

31Impairment of non-currentlong-lived assets

Accounting policy

Impairment of goodwill

As part of the impairment testing procedures, the goodwill arising from a business combination is allocated to a CGU or groups of CGUs that are expected to benefit from the related business combination and is tested at the lowest level that goodwill is monitored by management. Goodwill is tested annually for impairment, as of September 30, regardless of whether there has been an impairment indicator or, more frequently, if circumstances indicate that the carrying amount may not be recovered.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Impairment of non-financiallong-lived assets

The Company assesses at each reporting date, whether there are indicators that the carrying amount of an asset or CGU, including goodwill balance, may not be recovered. If any indicator exists, such
as a change in forecasted commodity prices, a significant increase in operational costs, a significant decrease in production volumes, a reduction in life of mine,LOM, the cancelation or significant reduction in the scope of a project, foreign exchange rate, market conditions or unusual events that can affect the business, the Company estimates the recoverable amount of the assets or CGUs.

The recoverable amount is estimated by reference to the higher of an asset’s or CGU’s fair value less cost of disposal (“FVLCD”) and its value in use (“VIU”). The recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the asset is tested as part of a larger CGU to which it belongs.

If the carrying amount of an asset or CGU exceeds its recoverable amount, the asset or CGU is considered impaired and is reduced to its recoverable amount. Non-financial assets other than goodwill that were adjusted due to impairment are subsequently reviewed for possible reversal of the impairment at each reporting date. Generally, the opposite of indicators that gave rise to an impairment loss would be considered indicators that impairment losses might have to be reversed. If the underlying reasons for the original impairment have been removed or the service potential of the asset or CGU has increased, an assessment of impairment reversals is performed by the Company. Reversals of impairment losses that arise simply from the passage of time or related with prior goodwill impairments are not recognized.

For individual assets, if there is any indicator that an asset become unusable by damage or a decision that would lead the asset to not contribute economically to the Company, it is impaired. In addition, greenfield projects for which the Company decides to quit exploration and there is no expectation that in the future will bring cash inflows are also impaired.

Impairment of mineral exploration and evaluation costs and project development projects costs

Exploration assets (greenfield) representing mineral rights acquired in business combinations, mineral rights, and other capitalized mineral exploration and evaluation costs, in accordance with the accounting policy described in note 8, as well as project development projects costs capitalized included in Property, plant and equipment are tested for impairment in aggregation with CGU or groups of CGUs that include producing assets or tested individually through FVLCD when there are indicators that capitalized costs might not be recoverable. The allocation of mineral exploration and evaluation costs, and development project development costs to CGUs or group of CGUs is based on 1) expected synergies or share of producing assets infrastructure, 2) legal entity level, and 3) country level. When testing a CGU or a group of CGUs that include mineral exploration and evaluation costs and development projectsproject costs, the Company performs the impairment test in two steps. In the first step, producing assets ouror group of producing assets are tested for impairment on an individual basis. In the second step, mineral exploration and evaluation costs and development project development costs are allocated to a CGU or a group of CGUs and tested for impairment on a combined basis.

 

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Valuation methods and assumptions for recoverable amount based on FVLCD

FVLCD

FVLCD is an estimate of the price that the Company would receive to sell an asset, CGU or group of CGUs in an orderly transaction between market participants at the measurement date, less the cost of disposal. FVLCD is not an entity-specific measurement but is focused on market participants’ assumptions for a particular asset when pricing the asset. FVLCD is estimated by the Company using discounted cash flows techniques (using a post-tax discount rate) and market past transaction multiples (amount paid per ton of minerals for projects in similar stages) for greenfield projects for which resources allocation is under review, although the Company considers observable inputs, a substantial portion of the assumptions used in the calculations are unobservable. These cash flows are classified as level 3 in the fair value hierarchy. No CGUs are currently assessed for impairment by reference to a recoverable amount based on FVLCD classified as level 1 or level 2.

VIU

VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its current condition and its residual value. VIU is determined by applying assumptions specific to the Company’s continued use and does not consider enhancements or future developments. These assumptions are different from those used in calculating FVLCD and consequently the VIU calculation is likely to give a different result (usually lower) than a FVLCD calculation. Additionally, it is applied to the estimated future cash flows a pre-tax discount rate.

Forecast assumptions

The cash flow forecasts are based on management’s best estimates of expected future revenues and costs, including the future production cash costs of production, capital expenditure, and closure, restoration, and environmental costs. The resulting estimates are based on detailed life of mineLOM and long-term production plans. When calculating FVLCD, these forecasts include anticipatedcapital and operating expenditures related to expansions (greenfield projects),and restructurings of both brownfield and greenfield projects that a market participant would consider in seeking to obtain the highest and best use of the asset, considering their evaluation, eventual changechanges in their scope or feasibility, and thetheir development stage.

The cash flow forecasts may include net cash flows expected to be realized from the extraction, processing and sale of material that does not currently qualify for inclusion in ore reserves. Such non-reserve material is only included whenif the Company has a high level of confidence that it will be converted to reserves. This expectation is usually based on preliminary drilling and sampling of areas of mineralization that are contiguous with existing ore reserves, as well as on the historical internal conversion ratio. Typically, the additional evaluation required for conversion to reserves of such material has not yet been done because this would involve incurring evaluation costs earlier than is required for the efficient planning and operation of the producing mine.

For purposes of determining FVLCD from a market participant’s perspective, the cash flows incorporate management’s internal price forecasts.forecasts that also reflects the view of market participants. The internal price forecasts are developed using a robust model that incorporates market-based supply, demand and cost data. The internal price forecasts used for ore reserve estimation testing and the Company’s strategic planning are generally consistent with those used for the impairment testing.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Cost levels incorporated in the cash flow forecasts are based on the current life of mineLOM plan and long-term production plan for the CGU, which are based on detailed research, analysis and iterative modeling to optimize the level of return from investment, output and sequence of extraction. The mine plan takes into accountconsiders all relevant characteristics of the orebody, including waste-to-ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore, process recoveries and capacities of processing equipment that can be used. The life of mineLOM plan and long-term production plans are, therefore, the basis for forecasting production output and production costs in each future year.

The discount rates applied to the future cash flow forecasts represent the Company’s estimate of the rate that a market participant would apply to have regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The Company’s weighted average cost of capital is generally used for determining the discount rates, with appropriate adjustments for the risk profile of the countries in which the individual CGUs operate.

With respect to the estimated future cash flows of capitalized mineral exploration assets and development projects, for some assets the Company applies a price to net assets value ratio discount in order to reflect the inherent risk of such projects and that are neither adjusted in the discount rate nor in the future cash flows.

The discount is based on the stage of the project and the type of metal.

Critical accounting estimates, assumptions and judgments - Impairment of non-currentlong-lived assets

Impairment is assessed at the CGU level. A CGU is the smallest identifiable asset or group of assets that generates independent cash inflows. Judgment is applied to identify the Company’s CGUs, particularly when assets belong to integrated operations, and changes in CGUs could impact impairment charges and reversals. When applying its judgment in grouping CGUs, the Company concluded that its mining operations in Vazante and Morro Agudo should be grouped with its Três Marias smelter operation, as these two mines are vertically integrated operations with the smelter.

External and internal factors are quarterly monitored for impairment indicators. Judgment is required to determine, for example, whether the impact of adverse spot commodity price movements is significant and structural in nature. Also, the Company’s assessment of whether internal factors, such as an increase in production costs and delays in projects, result in impairment indicators requirerequires significant judgment. Among others, the long-term zinc price, foreign exchange rate considering Brazilian real (BRL) per US dollar (USD) for Brazilian operations, and the discount rate may have a significant impact inon the Company’s’ impairment estimations.

The process of estimating the recoverable amount involves the use of estimates and assumptions, judgment and projections for future cash flows. These calculations use cash flow projections based on approved financial and operational budgets for a five-year period. After the five-year period, the cash flows are extended until the end of the useful life of mineLOM or indefinitely for the smelters. The smelters cash flows do not use growth rates in the cash flow projections of the terminal value. Management’s estimatesassumptions and assumptionsestimates of future cash flowflows used for the Company’s impairment testing of goodwill and non-financiallong-lived assets are subject to risk and uncertainties, including metal prices and macroeconomic conditions, which are particularly volatile and partially or totally outside the Company’s control. Future changes in these variables may differ from management’s expectations and may materially change the recoverable amounts of the CGUs.

Impairment test analysis

Along 2023 the Company, at each reporting date, assessed whether there were indicators that the carrying amount of an asset, goodwill, or cash generation unit (CGU) might not be recoverable, or if a previously recorded impairment needed to be reversed for its entire CGU located in Brazil and Peru.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 20212023

All amounts in thousands of US dollars, unless otherwise stated

 

Impairment analysisGoodwill assessment

According to NEXA’s policy, the Company performsAs of December 31, 2023, Nexa conducted its annual impairment test for the CGUs that haveto which goodwill has been previously allocated, including Mining Peru group of CGUs (composed of Cerro Pasco and Cerro Lindo CGUs), Cajamarquilla and Juiz de Fora.

As a result, there was an impairment loss of USD 42,660 in the goodwill allocated (Cerroto the Mining Peru Group of CGUs. The Company assessed for impairment the goodwill allocated to the Cajamarquilla CGU and Juiz de Fora CGU and did not identify any loss to be recognized.

Três Marias System and Morro Agudo CGUs

During 2023, after analyzing the operational optimization and strategic alternatives for the Três Marias System (STM) (previously formed by the combined operations of the Três Marias smelter and the Vazante and Morro Agudo mines), based on the current and projected macroeconomic and price scenarios, as well as on possible future operational scenarios, management concluded that the implied value of processing zinc concentrate from Morro Agudo in the Três Marias smelter could no longer continue to be recognized.

As a result, the Company concluded that there could be scenarios where it was not necessary to consider the two operations in an integrated manner. Thus, the CGU of the STM was split in two: (i) the STM CGU (comprising the Três Marias smelter and the Vazante mine) and (ii) the Morro Agudo CGU (comprised of Morro Agudo mine and Bonsucesso greenfield). This triggered an impairment test for Morro Agudo and Três Marias System CGUs.

Considering key assumptions from the strategic planning process, as of December 31, 2023, the impairment assessment resulted in the recognition of an impairment loss of USD 59,007 for Morro Agudo CGU, concluding that its long-lived assets were entirely impaired. Furthermore, the Company assessed Três Marias System for impairment and did not identify impairment loss to be recognized.

Aripuaña and Juiz de Fora CGUs

The Company tested Juiz de Fora and Aripuanã CGUs after identifying impairment indicators related to (i) reduction in Aripuanã's life of mine; (ii) a lower exchange rate of BRL/USD; and (iii) an increase in operational costs for their operations. No impairment was identified after the impairment assessment for both CGUs.

In addition, in relation to Aripuanã CGU, Nexa observed that there is no more excess over recoverable amount. Based on that, the Company performed a sensitivity analysis and concluded that there is no impairment to be recognized as of December 31, 2023. However, the Company continues to work to finalize the operational ramp-up and stabilize the operation as well as to reduce the operation costs and idle capacity.

Peruvian CGU

As of December 31, 2023, Nexa conducted its annual impairment test for the CGUs Cerro Pasco, Cerro Lindo and Cajamarquilla) and every quarter it performs an additional assessment ofCajamarquilla, after identifying impairment indicators mainly related to increased operational costs. For these CGUs, an impairment assessment was performed, considering key assumptions from the strategic planning process, and as a result, no impairment was identified.

Impairment test summary

In addition to the economic impairments described above, the Company recognized individual assets impairments for all its CGUs. ForUSD 12,976, mainly related to “Assets and projects under construction”.

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

In summary, Nexa recognized a net impairment loss of USD 114,643 (after-tax USD 90,349) registered for the year ended on December 31, 2021, the Company performed its annual test and analyzed all impairment indicators and found no need to recognize an additional impairment loss or reversal.2023.

For the year ended on December 31, 2020,2022, the Company recognized an impairment loss of USD 557,49732,512 (after-tax USD 30,971).

 

(a)Key assumptions used in impairment tests

The recoverable amounts for each CGU were determined based on the FVLCD method, which were higher than those determined based on the VIU method. 

The Company identified long-term zinc prices, discount rate, exchange rate considering Brazilian real (BRL) and LOM as key assumptions for the recoverable amounts determination, due to the material impact such assumptions may cause on the recoverable value. Part of these assumptions are summarized below:

Schedule of key assumptions used in impairment test   
 202320222021
Long-term zinc price (USD/t)2,8002,7872,724
Discount rate (Peru)7.22%6.93%6.22%
Discount rate (Brazil)8.02%8.03%7.33%
Exchange rate (BRL x USD)4.845.225.58
Brownfield projects - LOM (years)From 4 to 21From 5 to 24from 4 to 25

(b)Impairment loss - Mining Peru group of CGUs Goodwill

Before the impairment test performed on December 31, 2023, the Mining Peru group of CGU’s, which also includes greenfield projects including the Magistral, Florida Canyon and Hilarion Projects, included a goodwill of USD 249,082. After the impairment loss mentioned above, the goodwill, included in Intangible assets, has a balance of USD 206,423.

Schedule of impairment loss   
 Carrying amount prior to impairmentImpairmentCarrying amount after impairment
Goodwill- Mining Peru249,082(42,660)206,422

The Company performed a stress test on the key assumptions used for the calculation of the recoverable amount of the CGU Mining Peru. A decrease of 5% in the long-term LME zinc price to USD 2,660 per ton compared to management´s estimation as of December 31, 2023, would have resulted in an impairment loss of USD 79,590 (or an additional impairment loss of USD 36,931). Also, an increase of 5% in the discount rate compared to management´s estimation as of December 31, 2023, would have resulted in an impairment loss of USD 49,820 (or an additional impairment loss of USD 7,161).

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Notes to the consolidated financial statements

At and for the year ended on December 31, 2023

All amounts in thousands of US dollars, unless otherwise stated

(c)Sensitivity analysis –Tested CGUs and Cajamarquilla Goodwill

The Company estimated the amount by which the value assigned to the key assumptions must change in order for the assessed CGU recoverable amount, which was not impaired, to be equal to its carrying amount:

Schedule of Sensitivity Analysis          
CGUExcess over recoverable amount Decrease in Long term Zinc (USD/t)Increase in WACCAppreciation of BRL over USD
 Change PriceChange RateChangePrice
Três Marias System128,136 (3.97%) 2,68943.21% 11.49%(3.75%)4.66
Juiz de fora42,469 (4.42%) 2,67617.58% 9.43%(3.34%)4.68
Cajamarquilla335,380 (11.40%) 2,48148.90% 10.76%--
Cerro Lindo101,871 (13.43%) 2,42481.70% 13.12%--

 

 

32Long-term commitments
(a)Capital commitments – Aripuanã project

At December 31, 2021, the Company had contracted USD 75,250 (December 31, 2020: 156,893) of capital expenditures for the purchase of property, plant and equipment that had not been incurred yet, mainly related to the Aripuanã project.

(b)Projects evaluation

As part of NEXA’s activities for the execution of certain greenfield projects, the Company has agreed, with the Peruvian Government, to minimum investments levels in the Magistral Project, that if the Company does not meet by September 2024,August 2028, would require additional disbursements of 30% over the unexecuted minimum investment commitment. As of December 31, 2023, the unexecuted minimum investment commitment was USD 102,900323,000 as a, and if not completed by August 2028, the penalty for the non-execution of the agreed levels.

33Events after the reporting period
(a)Offtake agreement

On January 21, 2022, the Company signed an Offtake Agreement, in which it undertakes to sellexposition would be USD 10097,029% of the copper concentrate produced by Aripuanã for a 5-year period, at market price but subject to a price cap.

.

(b)Cash distributionEnvironmental Guarantee for Dams

On December 30, 2023, the Decree 48,747 of 2023 of Minas Gerais State was published, which regulates the need for an environmental guarantee, provided for in Law 23,291, of February 15, 2022,25, 2019 – State Policy for Dam Safety, to guarantee environmental recovery in the Company’s Boardevent of Directors approved, subjectan accident or deactivation of the dams. According to ratificationthe Decree, the environmental guarantee is applicable to all dams that present the characteristics established by the Company’s shareholders at the 2023 annual shareholders’ meeting in accordance with Luxembourg laws,Law. The Company estimates a cash distribution to the Company’s shareholdersguarantee need of approximately USD 50,00027,283 (BRL 132,083) for all structures in the state of Minas Gerais which was calculated based on a methodology specified by the decree itself, which takes into account the reservoir area, a cost factor related to the decommissioning of dams, and considerations about risk classification of the dam and inflation for the period. The Company has until March 28, 2024, to submit a proposal and may choose the following methods: (i) cash deposit; (ii) Bank Deposit certificate-CDB; (iii) bank guarantee; and (iv) guarantee insurance. By December 31, 2024, the Company will contract 50% of the guarantee chosen, 25% must be paid on March 25, 2022.

made by December 31, 2025, and 25% by the end of 2026.

 

 

*.*.*

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Management’s report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for assessing its effectiveness.

Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and our chief financial officer, and effected by our board of directors, management and other employees, and is designed to provide reasonable assurance regarding the reliability of financial reporting and of preparation of our consolidated financial statements, in accordance with IFRS as issued by the IASB.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with our policies or procedures may deteriorate.

Our management has assessed the effectiveness of internal control over financial reporting as of December, 31, 2021, based upon the criteria established in Internal Controls – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of Treadway Commission (COSO). Based on this assessment and criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

Audit of the effectiveness of internal control over financial reporting

Our independent registered public accounting firm, PricewaterhouseCoopers Auditores Independentes Ltda has audited the effectiveness of internal control over financial reporting, as stated in their report as of December 31, 2021.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during 2021, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Sincerely,

Nexa Resources S.A.

/s/ Juan Ignacio Rosado Gomez de La Torre/s/ Rodrigo Nazareth Menck
Juan Ignacio Rosado Gomez de La TorreRodrigo Nazareth Menck
President and Chief Executive OfficerSenior VP Finance and Group CFO

 

 

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Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Shareholders of

Nexa Resources S.A.

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

 

We have audited the accompanying consolidated balance sheets of Nexa Resources S.A. and its subsidiaries (the “Company”) as of December 31, 20212023 and 2020,2022, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for each of the three years in the period ended December 31, 2021,2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’sCompany's internal control over financial reporting as of December 31, 2021,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20212023 and 2020, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20212023 in conformity with International Financial ReportingIFRS Accounting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

 

Basis for Opinions

 

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management'sManagement’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

 

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Critical Audit MatterMatters

The critical audit mattermatters communicated below is a matterare matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattermatters below, providing separate opinionopinions on the critical audit mattermatters or on the accounts or disclosures to which they relate.

 

Impairment AssessmentAssessmentsnon-currentGoodwill and long-lived assets

 

As described in NoteNotes 22 and 31 to the consolidated financial statements, managementthe Company’s goodwill balance

was US$ 307,112 thousand as of December 31, 2023, comprised by the goodwill allocated to the following cash generating units (CGU): Cajamarquilla in the amount of US$ 95,830 thousand, Juiz de Fora in the amount of US$ 4,972 thousand and Mining Peru in the amount of US$ 206,423 thousand. Management conducts a goodwill impairment test on an annual impairment test as of September 30 of each year for non-current assets of the Cash Generating Units where goodwill is allocated, regardless of whether there has been an impairment indicator,basis or, more frequently, if events or circumstances indicate that the carrying amountvalue of non-current assets of Cash Generating Unitsgoodwill may be impaired. Management also evaluates impairment indicators for the long-lived assets, such as intangible, property plant and equipment and investments in associate companies. Potential impairment is identified by comparing the recoverable amountFair Value Less Cost of Disposal (FVLCD) of a reporting unit to its carrying amount,value, including goodwill, wherewhen applicable. The recoverable amountFair value is the higher of fair value less costs of disposal and value in use. Management estimated the fair value less cost of disposalby management using a discounted cash flow techniques.model or by market past transaction multiples. Management’s cash flow projections for each Cash Generating Units tested for impairment included significant judgments and assumptions relatingmainly related to long-term metal priceszinc price and discount rate. Norates. The impairment adjustmentsassessments performed by management resulted in the recognition of an impairment loss of US$ 42,660 thousand on the goodwill allocated to the Mining Peru CGU and US$ 59,007 thousand on Morro Agudo CGU, which long-lived assets were required as a resultfully impaired.

Additionally, the Company recognized an impairment loss of the annualUS$ 12,976 thousand related to individual assets classified in “Assets and projects under construction”. The total impairment testloss of US$ 114,643 thousand was recorded in 2021.2023.

 

The principal considerationconsiderations for our determination that performing procedures relating to impairment assessmentassessments of Cash Generating Unitsthe goodwill and long-lived assets is a critical audit matter is there wasare (i) the significant judgment by management when developing the recoverablefair value estimates of the Cash Generating Units. This in turn led toCGUs; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluateand evaluating management’s cash flow projections and significant assumptions includingrelated to long-term metal priceszinc price and discount rate. In addition,rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing design and the effectiveness of controls relating to management’s impairment assessments, including controls related to the significant assumptions. These procedures also included, among others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the discounted cash flow model used by management; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to long-term zinc price and discount rates. Evaluating management’s assumptions related to long-term zinc price and discount rates involved evaluating whether the assumptions used by management were reasonable considering (i) the consistency with external market and industry data; and (ii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the long-term zinc price and discount rates used.

VAT discussions

As described in Note 9 to the consolidated financial statements, the Company has incurred costs and recorded provisions, as a result of the investigation being carried out by the Fiscal Office of the State of Minas Gerais and the Public Ministry of Minas Gerais (the “MG Authorities”) with respect to certain commercial transactions and related Value-Added Taxes (VAT) between the Company and certain of its former customers. Nexa and the MG Authorities entered into two main tax agreements whereby the Company, without admitting primary responsibility for the resolved claims, agreed to make tax payments, including interest and penalties, to the State of Minas Gerais on behalf of certain former customers that allegedly failed to properly comply with their tax obligations. In connection with the first agreement signed during the third quarter of 2023, the Company recorded the total amount of US$ 75,811 thousand in "Other liabilities”, of which US$ 24,951 thousand was offset by VAT credits, US$ 6,398 thousand was offset by judicial deposits and the amount of US$ 1,515 thousand was paid in cash, while the remaining amount due will be paid in forty-six consecutive monthly installments. In connection with the second agreement signed on February 8, 2024, the Company recorded the total amount of US$ 27,128 thousand in "Other liabilities", of which US$ 10,796 thousand will be offset by VAT credits and the amount of US$ 828 thousand will be paid in cash, while the remaining amount due will be paid in fifty-nine consecutive monthly installments.

The principal considerations for our determination that performing theseprocedures relating to VAT discussions is a critical audit matter are (i) a high degree of auditor effort in performing procedures and evaluating audit evidence related to management’s assessment of the recorded amounts; (ii) the audit evidence obtained.effort involved the use of professionals with specialized skill and knowledge; and (iii) it relates to accounts and disclosures that are material to the consolidated financial statements.

 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment assessment including controls over the valuation of the Company’s Cash Generating Units.loss and provision recorded as well as financial statement disclosures. These procedures also included, among others testing management’s process for developing(i) confirming with internal and external legal counsel the recoverable amount;possibility or probability of an unfavorable outcome and the extent to which the loss is reasonably estimable; (ii) evaluating the appropriatenessreasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably probable and reasonably estimable; and (iii) evaluating the sufficiency of the discounted cash flow model; testing the completeness and accuracy of underlying data used in the model; and evaluating the significant assumptions used by management, related to the long-term metal prices and discount rate. Evaluating management’s assumptions related to long-term metal prices and discount rate involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Cash Generating Units, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. ProfessionalsCompany’s disclosures. In addition, professionals with specialized skillskills and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and certain significant assumptions, includingreasonableness of the discount rate.estimate of loss.

 

 

/s/ PricewaterhouseCoopers Auditores Independentes Ltda.Ltda.

Curitiba, Brazil,

February 15, 202221, 2024

 

We have served as the Company’s auditor since 2001.