Tinka Resources Ltd. press release

Nexa Provides 2023 Operational Results and Guidance Update

2024-02-01

TSXV - TSX Venture Exchange · Zinc · Silver · Tin · Lead · Indium · Gold · Copper · Canada · Production & Operations

LUXEMBOURG / ACCESSWIRE / February 01, 2024/ Nexa Resources S.A. ("Nexa Resources" or "Nexa" or the "Company") (NYSE:NEXA) is pleased to announce operational results for the three and twelve-month periods ended December 31, 2023, and provide its production and metal sales guidance for the three-year period 2024-2026. The Company is also providing cash costs, capital expenditures and other operating expenses guidance for 2024. The figures contained in this report are considered preliminary and are unaudited. The financial results for the fourth quarter and full year 2023 are expected to be published on Wednesday, February 21, 2024 (after trading hours).

2023 Summary Highlights

2023 mining production guidance was achieved, with all metals in the upper range of the guidance. Zinc production totaled 333kt in 2023. Cerro Lindo and Morro Agudo mines achieved the upper range of the guidance, while El Porvenir and Vazante mines exceeded the annual guidance, and Atacocha mine was slightly below the lower range. Aripuanã reached the middle range of the guidance (following the guidance revision disclosed in October 2023). Copper, lead, and silver production of 33kt, 65kt and 10MMoz, respectively, achieved the upper range of the annual guidance. Metal sales totaled 590kt in 2023 and was in the middle range of the annual guidance, as a result of lower production volumes of our smelters compared to 2022, in addition to a decrease in global demand, and lower domestic demand for zinc oxide. 2023 Consolidated run-of-mine mining costs guidance was achieved, and consolidated C1 cash cost guidance was slightly higher. 2023 Consolidated smelting Conversion cost and C1 cash cost guidance was achieved. 2023 CAPEX was in line with our guidance, while Other Operating Expenses were below due to our optimization initiatives throughout the year. (the figures will be provided along with the 4Q23 and Full Year 2023 Financial Results on February 21, 2024).

Production and Sales

| Mining production (Metal in concentrate) | | 2023 | | | Guidance 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Zinc | kt | | | 333 | | | | 299 | | | | - | | | | 334 | | | Cerro Lindo | | | | 78 | | | | 69 | | | | - | | | | 79 | | | El Porvenir | | | | 56 | | | | 51 | | | | - | | | | 55 | | | Atacocha | | | | 8 | | | | 9 | | | | - | | | | 11 | | | Vazante | | | | 146 | | | | 131 | | | | - | | | | 144 | | | Morro Agudo | | | | 23 | | | | 17 | | | | - | | | | 23 | | | Aripuanã | | | | 22 | | | | 20 | | | | - | | | | 23 | | | | | | | | | | | | | | | | | | | | | | Copper | kt | | | 33 | | | | 29 | | | | - | | | | 33 | | | Cerro Lindo | | | | 29 | | | | 25 | | | | - | | | | 28 | | | El Porvenir | | | | 0.4 | | | | 0.2 | | | | - | | | | 0.3 | | | Aripuanã | | | | 4.4 | | | | 4.2 | | | | - | | | | 5.0 | | | | | | | | | | | | | | | | | | | | | | Lead | kt | | | 65 | | | | 53 | | | | - | | | | 65 | | | Cerro Lindo | | | | 13 | | | | 11 | | | | - | | | | 13 | | | El Porvenir | | | | 25 | | | | 20 | | | | - | | | | 26 | | | Atacocha | | | | 11 | | | | 10 | | | | - | | | | 12 | | | Vazante | | | | 1.4 | | | | 1.1 | | | | - | | | | 1.2 | | | Morro Agudo | | | | 8.3 | | | | 4.9 | | | | - | | | | 6.1 | | | Aripuanã | | | | 6.3 | | | | 5.7 | | | | - | | | | 6.9 | | | | | | | | | | | | | | | | | | | | | | Silver | MMoz | | | 10 | | | | 9.1 | | | | - | | | | 10 | | | Cerro Lindo | | | | 3.5 | | | | 3.5 | | | | - | | | | 3.8 | | | El Porvenir | | | | 4.3 | | | | 3.7 | | | | - | | | | 4.5 | | | Atacocha | | | | 1.4 | | | | 1.0 | | | | - | | | | 1.2 | | | Vazante | | | | 0.6 | | | | 0.3 | | | | - | | | | 0.4 | | | Aripuanã | | | | 0.5 | | | | 0.4 | | | | - | | | | 0.5 | |

Metal sales of 590kt in 2023 achieved the middle range of the annual guidance driven by lower production volumes of our smelters compared to 2022, in addition to overall lower demand. Zinc metal sales of 556kt were also in the middle range of the guidance, while zinc oxide sales of 34kt were slightly below the lower range, mainly explained by a slowdown in domestic demand.

| Smelting sales | | 2023 | | | Guidance 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Metal Saleskt | | | 590 | | | | 580 | | | | - | | | | 605 | | | Zinc metal | | | 556 | | | | 545 | | | | - | | | | 565 | | | Zinc oxide | | | 34 | | | | 35 | | | | - | | | | 40 | |

2023 Cash Costs

| Mining Operating costs | | Cost ROM(US$/t) 2023 | | | Cash Cost(US$/lb) 2023 | | | Cost ROM(US$/t) Guidance 2023 | | | Cash Cost(US$/lb) Guidance 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mining (1) | | | 45.2 | | | | 0.40 | | | | 43.9 | | | | - | | | | 46.4 | | | | 0.35 | | | | - | | | | 0.38 | | | Cerro Lindo | | | 40.6 | | | | (0.06 | ) | | | 40.1 | | | | - | | | | 42.1 | | | | (0.12 | ) | | | - | | | | (0.10 | ) | | El Porvenir | | | 62.8 | | | | 0.29 | | | | 57.3 | | | | - | | | | 60.7 | | | | 0.26 | | | | - | | | | 0.28 | | | Atacocha | | | 32.9 | | | | (0.44 | ) | | | 33.1 | | | | - | | | | 35.4 | | | | (0.45 | ) | | | - | | | | (0.38 | ) | | Vazante | | | 57.1 | | | | 0.61 | | | | 57.2 | | | | - | | | | 59.0 | | | | 0.59 | | | | - | | | | 0.65 | | | Morro Agudo | | | 37.9 | | | | 0.82 | | | | 35.0 | | | | - | | | | 38.2 | | | | 0.80 | | | | - | | | | 0.94 | |

(1) 2023 C1 Weighted Cash cost net of by-products credits is measured with respect to zinc sold per mine.

| Smelting Operating costs | | Conversion cost(US$/lb) 2023 | | | Cash Cost(US$/lb) 2023 | | | Conversion cost(US$/lb) Guidance 2023 | | | Cash Cost(US$/lb) Guidance 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Smelting (2) | | | 0.30 | | | | 1.10 | | | | 0.29 | | | | - | | | | 0.32 | | | | 1.07 | | | | - | | | | 1.12 | | | Cajamarquilla | | | 0.28 | | | | 1.03 | | | | 0.27 | | | | - | | | | 0.29 | | | | 1.04 | | | | - | | | | 1.08 | | | Três Marias | | | 0.26 | | | | 1.16 | | | | 0.27 | | | | - | | | | 0.30 | | | | 1.08 | | | | - | | | | 1.13 | | | Juiz de Fora | | | 0.50 | | | | 1.21 | | | | 0.45 | | | | - | | | | 0.49 | | | | 1.19 | | | | - | | | | 1.28 | |

(2) 2023 C1 Weighted Cash cost net of by-products credits is measured with respect to zinc sold per smelter.

In 2023, run-of-mine mining costs of US$45.2/t was in line with our 2023 guidance, and C1 cash cost of US$0.40/lb, was slightly higher than our 2023 guidance. Smelting C1 cash cost of US$1.10/lb and Conversion cost of US$0.30/lb in 2023 were in line with our 2023 guidance.

2023 Operational Results

Mining segment

| Mining production (Metal in concentrate) | | 4Q23 | | | 4Q22 | | | 2023 | | | 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | Zinc | kt | | | 90 | | | | 75 | | | | 333 | | | | 296 | | | Cerro Lindo | | | | 25 | | | | 21 | | | | 78 | | | | 84 | | | El Porvenir | | | | 14 | | | | 13 | | | | 56 | | | | 52 | | | Atacocha | | | | 2.6 | | | | 2.6 | | | | 8.2 | | | | 10 | | | Vazante | | | | 35 | | | | 34 | | | | 146 | | | | 132 | | | Morro Agudo | | | | 6.8 | | | | 4.6 | | | | 23 | | | | 19 | | | Aripuanã | | | | 7.4 | | | | 0.7 | | | | 22 | | | | 0.7 | | | | | | | | | | | | | | | | | | | | | | Copper | kt | | | 9.4 | | | | 9.3 | | | | 33 | | | | 33 | | | Cerro Lindo | | | | 7.9 | | | | 9.1 | | | | 29 | | | | 33 | | | El Porvenir | | | | 0.1 | | | | 0.0 | | | | 0.4 | | | | 0.3 | | | Aripuanã | | | | 1.4 | | | | 0.2 | | | | 4.4 | | | | 0.2 | | | | | | | | | | | | | | | | | | | | | | Lead | kt | | | 18 | | | | 16 | | | | 65 | | | | 57 | | | Cerro Lindo | | | | 3.8 | | | | 3.2 | | | | 13 | | | | 16 | | | El Porvenir | | | | 6.5 | | | | 6.3 | | | | 25 | | | | 23 | | | Atacocha | | | | 2.9 | | | | 4.1 | | | | 11 | | | | 11 | | | Vazante | | | | 0.3 | | | | 0.4 | | | | 1.4 | | | | 1.2 | | | Morro Agudo | | | | 1.9 | | | | 1.8 | | | | 8.3 | | | | 6.2 | | | Aripuanã | | | | 2.3 | | | | 0.0 | | | | 6.3 | | | | 0.0 | | | | | | | | | | | | | | | | | | | | | | Silver | MMoz | | | 2.7 | | | | 2.6 | | | | 10.3 | | | | 10.0 | | | Cerro Lindo | | | | 1.0 | | | | 0.8 | | | | 3.5 | | | | 4.1 | | | El Porvenir | | | | 1.0 | | | | 1.2 | | | | 4.3 | | | | 4.2 | | | Atacocha | | | | 0.4 | | | | 0.4 | | | | 1.4 | | | | 1.2 | | | Vazante | | | | 0.1 | | | | 0.1 | | | | 0.6 | | | | 0.5 | | | Aripuanã | | | | 0.2 | | | | 0.0 | | | | 0.5 | | | | 0.0 | |

Cerro Lindo:Zinc production of 78kt in 2023 was down 7% year-over-year, as a result of the temporary reduction in daily production in 1Q23 due to unusual heavy rainfall levels and overflowing rivers caused by cyclone Yaku, which partially flooded the mine, as previously disclosed. Copper, lead, and silver production decreased to 29kt (-13%), 13kt (-17%) and 3.5MMoz (-14%), respectively, for the abovementioned reasons.

El Porvenir:In 2023, zinc production of 56kt was up 8% compared to 2022, positively driven by higher treated ore volume. Lead and silver production increased by 8% and 2% to 25kt and 4.3MMoz, respectively.

Atacocha:Zinc production in 2023 was 8kt, down 14% compared to 2022, mainly driven by the temporary suspension of production due to illegal protest activities occurring in different periods throughout 1H23, as previously disclosed. Despite these temporary suspensions, lead production remained relatively flat, and silver increased by 21%.

Vazante:Zinc production in 2023 was 146kt, up 11% compared to 2022, driven by better plant performance year-over-year, in addition to higher treated ore volumes. Lead and silver production increased by 25% and 22%, respectively.

Morro Agudo:In 2023, zinc production of 23kt increased by 24% compared to 2022, mainly driven by higher treated ore volumes.

Aripuanã:Zinc production in 2023 was 22kt and reached the middle range of the guidance (following the guidance revision disclosed in October 2023). This performance was mainly driven by challenges at the plant and process adjustments that occurred during the continued ramp-up of this operation throughout the year, as previously disclosed.

Smelting segment

| Smelting sales | | | 4Q23 | | | | 4Q22 | | | | 2023 | | | | 2022 | | | | | | | | | | | | | | | | | | | | | | | Zinc metal | kt | | | 135 | | | | 159 | | | | 556 | | | | 576 | | | Cajamarquilla | | | | 79 | | | | 93 | | | | 326 | | | | 340 | | | Três Marias | | | | 33 | | | | 44 | | | | 147 | | | | 152 | | | Juiz de Fora | | | | 23 | | | | 22 | | | | 82 | | | | 84 | | | | | | | | | | | | | | | | | | | | | | Zinc oxide | kt | | | 8 | | | | 9 | | | | 34 | | | | 40 | | | Três Marias | | | | 8 | | | | 9 | | | | 34 | | | | 40 | | | | | | | | | | | | | | | | | | | | | | Metal Sales | kt | | | 143 | | | | 167 | | | | 590 | | | | 616 | |

Peru:Cajamarquilla metal sales were 326kt in 2023, down 4% year-over-year, following lower production volumes, as well as a slowdown in demand.

Brazil:In 2023, total sales (zinc metal + zinc oxide) were 263kt, down 4% compared to 2022, mainly driven by lower production volumes in Três Marias, in addition to lower demand in our domestic market.

In Três Marias, metal sales amounted to 147kt, down 3% year-over-year.

In Juiz de Fora, metal sales also decreased by 1% to 82kt.

Guidance 2024-2026

Guidance is based on several assumptions and estimates and is subject to the continuous evaluation of several factors, including but not limited to metal prices; operational performance; maintenance and input costs; and exchange rates.

Nexa will continue to monitor risks associated with global supply chain disruptions, which could be exacerbated, among other factors, by the ongoing Russia-Ukraine war, and the Israel-Hamas conflict, unusual weather conditions, the global recession, and its potential impact on the demand for our products, inflationary cost pressure, metal prices, and community protests, and changes to the political situation or regulatory frameworks in the countries in which we operate that could affect our production levels and our costs. Refer to "Risks and Uncertainties" and "Cautionary Statement on Forward-Looking Statements" for further information.

Summary Highlights

In 2024, zinc production at the mid-range of the guidance is estimated to increase 6% over 2023, driven primarily by higher production volumes expected at Aripuanã, assuming the ramp-up activities will continue to progress as planned and conclude in mid-2024. For 2025 and 2026, zinc production is estimated to be similar compared to 2024. At the midpoint of 2024 guidance range, copper production is estimated to be slightly lower compared to 2023. For 2025, copper production is estimated to decrease by 4% over 2024 due to expected lower grades in Aripuanã, following the mining plan. For 2026, copper production is estimated to decrease by 15% compared to 2025, mainly driven by the Cerro Lindo mining plan. For 2024-2026, lead production at mid-ranges is estimated to increase an average of 6%, while silver production is expected to increase an average of 4% compared to 2023. At the midpoint of 2024 guidance range, metal sales are estimated to be similar to 2023. Smelters should continue to run at normal utilization rates, and we do not anticipate any third-party material resales in the period. For 2025-2026, metal sales are estimated to remain unchanged at 580-605kt.

Mining Segment

| Mining production (Metal in concentrate) | | 2023 | | | 2024e | | | 2025e | | | 2026e | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Zinc | kt | | | 333 | | | | 323 | | | | - | | | | 381 | | | | 326 | | | | - | | | | 381 | | | | 330 | | | | - | | | | 378 | | | Cerro Lindo | | | | 78 | | | | 73 | | | | - | | | | 86 | | | | 78 | | | | - | | | | 86 | | | | 82 | | | | - | | | | 94 | | | El Porvenir | | | | 56 | | | | 51 | | | | - | | | | 57 | | | | 59 | | | | - | | | | 72 | | | | 43 | | | | - | | | | 50 | | | Atacocha | | | | 8 | | | | 8 | | | | - | | | | 9 | | | | 9 | | | | - | | | | 11 | | | | 17 | | | | - | | | | 20 | | | Vazante | | | | 146 | | | | 130 | | | | - | | | | 148 | | | | 122 | | | | - | | | | 139 | | | | 121 | | | | - | | | | 140 | | | Morro Agudo | | | | 23 | | | | 18 | | | | - | | | | 23 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Aripuanã | | | | 22 | | | | 42 | | | | - | | | | 57 | | | | 58 | | | | - | | | | 72 | | | | 67 | | | | - | | | | 75 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Copper | kt | | | 33 | | | | 30 | | | | - | | | | 35 | | | | 28 | | | | - | | | | 35 | | | | 24 | | | | - | | | | 29 | | | Cerro Lindo | | | | 29 | | | | 24 | | | | - | | | | 28 | | | | 24 | | | | - | | | | 28 | | | | 19 | | | | - | | | | 23 | | | El Porvenir | | | | 0.4 | | | | 0.2 | | | | - | | | | 0.3 | | | | 0.4 | | | | - | | | | 0.5 | | | | 0.3 | | | | - | | | | 0.4 | | | Aripuanã | | | | 4.4 | | | | 5.7 | | | | - | | | | 7.3 | | | | 4.1 | | | | - | | | | 5.9 | | | | 4.4 | | | | - | | | | 6.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lead | kt | | | 65 | | | | 66 | | | | - | | | | 82 | | | | 67 | | | | - | | | | 78 | | | | 71 | | | | - | | | | 83 | | | Cerro Lindo | | | | 13 | | | | 11 | | | | - | | | | 13 | | | | 12 | | | | - | | | | 13 | | | | 9.5 | | | | - | | | | 11 | | | El Porvenir | | | | 25 | | | | 23 | | | | - | | | | 28 | | | | 23 | | | | - | | | | 24 | | | | 24 | | | | - | | | | 28 | | | Atacocha | | | | 11 | | | | 11 | | | | - | | | | 12 | | | | 12 | | | | - | | | | 15 | | | | 15 | | | | - | | | | 17 | | | Vazante | | | | 1.4 | | | | 1.0 | | | | - | | | | 1.4 | | | | 1.0 | | | | - | | | | 1.2 | | | | 1.0 | | | | - | | | | 1.1 | | | Morro Agudo | | | | 8.3 | | | | 4.3 | | | | - | | | | 6.6 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Aripuanã | | | | 6.3 | | | | 16 | | | | - | | | | 20 | | | | 19 | | | | - | | | | 24 | | | | 22 | | | | - | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Silver | MMoz | | | 10 | | | | 11 | | | | - | | | | 13 | | | | 11 | | | | - | | | | 13 | | | | 11 | | | | - | | | | 13 | | | Cerro Lindo | | | | 3.5 | | | | 4.0 | | | | - | | | | 4.2 | | | | 3.7 | | | | - | | | | 4.0 | | | | 2.6 | | | | - | | | | 3.0 | | | El Porvenir | | | | 4.3 | | | | 4.6 | | | | - | | | | 5.4 | | | | 4.3 | | | | - | | | | 4.7 | | | | 4.8 | | | | - | | | | 5.7 | | | Atacocha | | | | 1.4 | | | | 1.1 | | | | - | | | | 1.2 | | | | 1.2 | | | | - | | | | 1.5 | | | | 1.2 | | | | - | | | | 1.4 | | | Vazante | | | | 0.6 | | | | 0.3 | | | | - | | | | 0.5 | | | | 0.3 | | | | - | | | | 0.4 | | | | 0.4 | | | | - | | | | 0.4 | | | Aripuanã | | | | 0.5 | | | | 1.0 | | | | - | | | | 1.5 | | | | 1.5 | | | | - | | | | 1.9 | | | | 1.7 | | | | - | | | | 2.2 | |

For the forecasted periods, consolidated average zinc head grade is expected to be in the range of 2.86% and 3.18%, consolidated average copper head grade is expected to be in the range of 0.26% and 0.32%, and consolidated average lead head grade is expected to be in the range of 0.67% and 0.77%.

Cerro Lindo:Annual zinc production is estimated to be between 73-86kt over the next two years. Zinc production at the midpoint of the 2024 guidance range is estimated to increase by 2% over 2023, mainly driven by higher treated ore and slightly higher average grade. For 2026, zinc production at mid-range is expected to increase over 2024-2025 to be between 82-94kt explained by higher throughput and the production planned in higher-grade ore bodies following our mine plan.

Copper production (assuming mid-range production) in 2024 and 2025 is expected to decrease by 3kt over 2023 due to lower copper average grade. For 2026, copper production is estimated to decrease by 18% over 2024 and 2025 to be between 19-23kt following Cerro Lindo's mining plan. Lead follows this same trend and for 2024-2025 production is expected to total between 11-13kt, while in 2026, production is expected to total between 9.5kt-11kt.

For 2024, silver production is expected to total between 4.0-4.2MMoz, while in 2025 is expected to total between 3.7-4.0MMoz, and in 2026 is expected to total between 2.6-3.0MMoz.

El Porvenir:In 2024, zinc production at the midpoint of the guidance range is estimated to decrease by 3% over 2023, to 51-57kt. For 2025, zinc production is estimated to increase to 59-72kt due to access to areas with higher grades. For 2026, zinc production is estimated to decrease to 43-50kt as the execution of the shaft improvement project is expected.

For 2024, lead production (assuming mid-range production) is estimated to be similar to 2023, before decreasing in 2025 to 23-24kt, following lower throughput. For 2026, lead production is estimated to be between 24-28kt.

Silver production in 2024 at the midpoint of the guidance range is expected to increase by 17% over 2023. For 2025, silver production at mid-range is expected to decrease by 10% and increase by 16% in 2026 due to higher silver average grade areas, following our mining plan.

Atacocha:Zinc production at the midpoint of the 2024 guidance range is estimated to increase by 7% over 2023. For 2025, zinc production at mid-range is expected to increase by 1.4kt.

Lead production (assuming mid-range production) in 2024 is estimated to increase by 5% over 2023. For 2025, lead production is estimated to increase by 20% with production planned in higher-grade ore bodies following our mine plan, before increasing to 15-17kt due to the expected higher lead average grade.

Vazante:Zinc production at the midpoint of the 2024 guidance range is estimated to decrease by 4%, mainly driven by lower zinc average grade compared to 2023. For 2025, zinc production is estimated to be between 122-139kt and 121-140kt in 2026.

Morro Agudo:Zinc production for 2024 is estimated to be between 18-23kt. As previously mentioned, we continue to assess risk-return alternatives for our Morro Agudo mine, which may result in a guidance update for the 3-year period (2024-2026).

Aripuanã:Three-year guidance reflects the updated mine plan and assumes Aripuanã ramp-up activities will continue to progress, achieving nameplate capacity in mid-2024. Zinc production in 2024 is expected to be between 42-57kt. For 2025, zinc production at mid-range is estimated to increase by 32% over 2024 to 58-72kt and increase by a further 9% in 2026 over 2025.