Nexa Resources Stock

Nexa Resources S.A. (Nexa) operates as an integrated zinc producer. The company is developing and operating mining and smelting assets in Latin America.

The company operates and owns six long life polymetallic mines, three located in the Central Andes of Peru, two located in the state of Minas Gerais in Brazil and one located in the state of Mato Grosso in Brazil.

The company’s operations are large-scale, modern, mechanized underground and open pit mines. The company’s mines are proximately located to one another, which creates efficiencies. Two of the company’s mines, Cerro Lindo in Peru and Vazante in Brazil, are among the top 40 largest zinc-producing mines in the world and, combined with its other mining operations, placed it among the top six producers of mined zinc globally in 2022, according to Wood Mackenzie. In addition to zinc, which accounted for 59.8% of its mined metal production in 2022 measured on a zinc equivalent basis, the company produce substantial amounts of copper, lead, silver and gold as by-products.

The company also owns 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. The company’s 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 2022 by production volume, according to Wood Mackenzie. Peru is the third largest producer of mined zinc in the world, assuring long-term supply of zinc concentrates to Cajamarquilla.

The company safely operated its mining and smelting businesses throughout 2022. In January 2022, the Vazante underground mine was partially flooded due to heavy rainfall levels in the state of Minas Gerais, and daily production was reduced from mid-January until the end of March. Nonetheless, following the underground mine dewatering process, operations were resumed at full capacity in the first week of April 2022.

In Peru, although production at Atacocha in 2022 was temporarily suspended for some days due to blockades by local communities, the company was able to operate at high levels of capacity utilization rates throughout the year.

In 2022, the company’s mining operations produced 296.4 thousand tonnes of zinc contained in concentrates, 33.2 thousand tonnes of copper contained in concentrates, 57.4 thousand tonnes of lead contained in concentrates, 9,974.5 thousand ounces of silver and 27.2 thousand ounces of gold, for a total of 495.7 thousand tonnes of metal on a zinc equivalent basis.

The company’s smelters produced 606.9 thousand tonnes of zinc metal and oxide available for sale in different formats and sizes during 2022, along with by-products, including sulfuric acid, silver concentrate, copper cement and copper sulfate.

The company’s smelters process mostly zinc concentrate, 43.6% of which was sourced from its mines during 2022, and 56.4% purchased from third parties or obtained as secondary raw material. The company markets its products in Latin America and globally, through its commercial offices in Luxembourg, the United States, Brazil and Peru. The company also owns energy assets (hydroelectric power plants) in both Brazil and Peru, which provide access to a reliable and competitive power supply.

The Aripuanã ramp-up activities safely started in July 2022. During 3Q22, the company produced its first tonne of copper, lead, and zinc in concentrate.

Principal Subsidiaries

Nexa Resources Cajamarquilla S.A. (Nexa CJM)

Nexa Resources is the beneficial owner of 99.92% of the outstanding shares of Nexa CJM.

Nexa Resources Perú S.A.A. (Nexa Peru)

As of December 31, 2022, approximately 67.02% of the investment shares are free float and 32.98% are treasury shares.

Producing Mines and Smelters

The company’s mines are:

Cerro Lindo: The company’s Cerro Lindo mine is an underground mine located in Peru wholly-owned by Nexa Peru. Operations began in 2007 and, in 2022, the Cerro Lindo mine produced approximately 84.4 thousand tonnes of zinc contained in concentrates, 32.8 thousand tonnes of copper contained in concentrates, 15.6 thousand tonnes of lead contained in concentrates, 4,129.7 thousand ounces of silver contained in concentrates and 4.1 thousand ounces of gold contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity to 21.0 thousand tonnes of ore per day.

Vazante: The company’s Vazante mine is an underground and open pit mine located in Brazil wholly-owned by Nexa Brazil. The Vazante mine produced approximately 131.5 thousand tonnes of zinc contained in concentrates, 1.2 thousand tonnes of lead contained in concentrates and 473.6 thousand ounces of silver contained in concentrates. The ore is treated at a concentrate plant that has a processing capacity of 4.6 thousand tonnes of ore per day.

El Porvenir: The company’s r El Porvenir mine is an underground mine located in Peru wholly-owned by Nexa Resources El Porvenir S.A.C. The El Porvenir mine produced approximately 51.6 thousand tonnes of zinc contained in concentrates, 0.3 thousand tonnes of copper contained in concentrates, 23.2 thousand tonnes of lead contained in concentrates, 4,195.6 thousand ounces of silver contained in concentrates and 9.2 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: The company’s Atacocha mine is an underground and open pit mine located in Peru wholly-owned by Nexa Resources Atacocha S.A.A. Operations began in 1938 and, in 2022, the Atacocha mine produced approximately 9.6 thousand tonnes of zinc contained in concentrates, 11.2 thousand tonnes of lead contained in concentrates, 1,155.0 thousand ounces of silver contained in concentrates and 13.6 thousand ounces of gold contained in concentrates.

Aripuanã: The company’s Aripuanã mine is an underground mine located in Brazil wholly-owned by Nexa Brazil. In July 2022, the ocmpany started ramp-up activities at the Aripuanã mine and started to sell concentrates within market specifications in the fourth quarter of 2022, with an increase in sales in 1Q23. In 2022, the Aripuanã mineral exploration strategy focused on increasing mineral resources at the Ambrex orebody and Babaçu exploration target. The 2022 Ambrex infill drilling campaign was completed during 3Q22, and the drill rigs were moved to the Babaçu for an exploratory campaign and infill program during 4Q22.

Morro Agudo: The company’s Morro Agudo mine is an underground mine located in Brazil wholly-owned by Nexa Brazil. Operations began in 1988 and, in 2022, the Morro Agudo mine produced approximately 18.7 thousand tonnes of zinc contained in concentrates and 6.2 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.

The company’s smelters are:

Cajamarquilla: The company’s Cajamarquilla smelter, which is wholly-owned by Nexa CJM. It is the largest zinc smelter in Latin America and was the fifth largest zinc smelter in the world in 2022, 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 332.8 thousand tonnes of zinc metal available for sales in 2022 and 328.1 thousand tonnes in 2021.

Business Overview

Três Marias: The company’s Três Marias smelter, which is wholly-owned by Nexa Brazil. Três Marias processes zinc silicate concentrate from the company’s Vazante mine and zinc sulfide concentrate from its Morro Agudo mine and uses Roast-Leach-Electrowinning technology. With a nominal production capacity of 192.2 thousand tonnes of refined metal per year, Três Marias produced 189.9 thousand tonnes of zinc metal and oxide in 2022 and 198.4 thousand tonnes in 2021. In 2022, 77.8% of the zinc contained in raw materials used by Três Marias was sourced from the company’s mining operations in Brazil and Peru and 22.2% was purchased from third parties or obtained from secondary feed materials.

Juiz de For a: The company’s Juiz de Fora smelter, which is wholly-owned by Nexa Brazil, is located in Brazil 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 84.2 thousand tonnes of zinc metal in 2022 and 81.1 thousand tonnes in 2021.

In addition to its operating mines and smelters, the company has interests in three greenfield projects in Peru (Magistral, Hilarión and Florida Canyon Zinc) and one in Namibia, as well as a number of prospects in Peru, Brazil and Namibia.

Cerro Lindo

The Cerro Lindo mine is an underground, polymetallic mine located in the Chavín District, Chincha Province, Peru. All mineral concessions are held in the name of Nexa Peru. The tenure consists of 68 mining concessions totaling approximately 43,750.2 hectares and one beneficiation concession, covering an area of 518.8 hectares.

Nexa Peru 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.

Cerro Lindo is subject to payment of royalties. Cerro Lindo holds a number of permits in support of the operations.

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.

Vazante

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.

Nexa Brazil owns 100.0% of the Vazante project. Mineral concessions are divided into core tenements, where the known mineral deposits are located and where the company has active mining operations and the surrounding exploration concessions. Nexa Brazil holds one mining concession application, two mining concessions, and one group of mining concessions in the core area with a total area of 2,120.8 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 one mining concession application and seven mining concessions with a total area of 1,894.3 hectares, which host the active mining operations.

Nearby the main area, Nexa Brazil also holds one exploration application totaling 168.0 hectares, 54 exploration authorizations totaling 43,337.1 hectares, one right to apply for mining concession totaling 344.5 hectares, two mining concession applications totaling 243.7 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. 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 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 2022 were focused on identifying the continuity of mineralized bodies along the Vazante hydrothermal breccia. The company is conducting ongoing tests to explore extensions of known mineralization, infilling areas where no data is currently available, and identifying other areas where mineralization may be present.

In 2022, the company completed approximately 4.6 km of diamond drilling, divided between exploratory (1.8 km) and extension drilling (2.8 km). The focus of the exploratory drilling was on the extension of the Vazante mine ore bodies, exploring the target Extremo Norte, which confirmed the mineralized system and opened lateral and depth continuity.

The Vazante operation consists of two mechanized underground mines, the Vazante Mine and Extremo Norte Mine, 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 power supply to the Vazante operation is provided by one independent 138 kV transmission line that feeds 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 secondaries to power mine equipment.

The Vazante mine is in the production stage and has a treatment plant with a nominal design processing capacity of approximately 4,600 tonnes of ore per day.

El Porvenir

The El Porvenir mine is an underground, polymetallic mine located 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 mine is located in the Central Cordillera zone, which contains the communities of Parán, Lacsanga and Santo Domingo de Apache.

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 4,846.7 hectares, as well as a beneficiation plant, Acumulacion Aquiles 101. With respect to the surface property at El Porvenir project, 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. The El Porvenir Mine holds several permits in support of the operations. The permits are Directorial Resolutions issued by the Peruvian authorities upon approval of mining environmental management instruments filed by the mining companies. The El Porvenir mine is a typical skarn deposit. The El Porvenir mine is in the production stage and has a treatment plant capacity of 6,500 tonnes of ore per day.

Atacocha

Atacocha is a polymetallic underground and open pit mine located 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, 88304000m N, using the UTM WGS84 datum, Z18S and approximately 4,050 meters above sea level.

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. With respect to the surface property at the Atacocha project, 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.

The Atacocha mine holds a number of permits in support of the current operations. Atacocha operates two mines: the Atacocha underground mine and the San Gerardo open pit mine. The Atacocha mine has a treatment plant capacity of 4,300 tonnes of ore per day.

Aripuanã

The Aripuanã mine 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 project is located at an average elevation of 250 meters above sea level.

In July 2022, the company started ramp-up activities at the Aripuanã mine and started to sell concentrates within market specifications in the fourth quarter of 2022.

The project 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), 13 exploration authorizations (33,810.9 hectares) and two exploration applications (7,833.7 hectares), totaling 47,671.7 hectares.

The Aripuanã project 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 project 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), 13 exploration authorizations (33,810.9 hectares) and two exploration applications (7,833.7 hectares), totaling 47,671.7 hectares.

The Aripuanã project 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.

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 Ambrosia Trend (Ambrosia Sul, Ambrosia Norte, and Bonsucesso). The Morro Agudo mine site is situated on Traíras Farm, about 45 km south of the municipality of Paracatu, Brazil. The Ambrosia Trend deposits are situated about 15 to 20 km northeast of Paracatu.

Nexa Brazil owns 100.0% of Morro Agudo. The total Morro Agudo project 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 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.

Nearby the Morro Agudo mine site and Ambrosia trend areas, Nexa Brazil also holds 36 exploration authorizations totaling 28,966.4 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, 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.

In 2022, mineral exploration activities in Morro Agudo focused on the search for new mineral deposits in regions close to the unit that enable the extraction of ore and its processing at the Morro Agudo plant to extend the life of mine. The Morro Agudo mine has a treatment plant capacity of 3,400 tonnes of mill feed per day.

Concentrate Sales

All the metal produced by its mines is processed into concentrates. The company’s mining operations sell the concentrates that they produce to third parties and to its own smelters pursuant to arm’s length transactions.

Growth Projects

Vazante Mine Deepening Project

One of the company’s main brownfield projects is the Vazante Mine Deepening Project, which involves extending the mine life of Vazante. In addition, the company is conducting exploration activities below the mine’s operating level and alongside the orebody.

Bonsucesso

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

Mining Operations

The company is revisiting the project and the potential impact on the life of mine of Morro Agudo mine.

Pasco Mining Complex

The Pasco mining complex project involves the continued 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, reducing its environmental footprint and extending the mine life of the mines.

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. An EIA modification is in progress to adjust the location of some facilities.

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.

Exploration Developments

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.

Hilarión

The Hilarión project is located in the Department of Ancash. It consists of 72 mineral concessions covering an area of approximately 15,841.3 hectares. Hilarión is a skarn mineral deposit made of vertical tabular ore bodies containing sulfide zinc, lead, silver and copper deposits.

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 16 contiguous mining concessions, covering approximately 12,600.0 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, 2022, Nexa Peru owned a 61.00% interest in this joint venture, which may increase up to 70.00% upon Nexa Peru’s satisfaction of certain conditions.

Pukaqaqa

The Pukaqaqa project contemplated the development of an open pit copper and molybdenum mine, with gold credits, and is located in the Huancavelica region of Peru. The Pukaqaqa project has a total of 34 concessions covering approximately 11,247.5 hectares.

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. The Shalipayco mineralization is mainly located within the Chambará formation that is part of the Pucará Group. The Shalipayco project has a total of 56 concessions covering approximately 22,551 hectares and one mineral claim in process totaling 740.6 hectares.

Mining Operations

Other Greenfield Exploration Projects

Project in Namibia

The company is developing exploratory work in Namibia, 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.

Smelter Sales

The company produces various kinds of refined zinc products. In 2022, the company sold a total of 575.9 thousand tonnes of its metallic zinc line of products (including SHG, CGG jumbos, alloys, Galvalume and Zamac). In addition, the company commercialized 40.3 thousand tonnes of zinc oxide at 80.0% standard zinc content in 2022, totaling 616.2 thousand tonnes of zinc metal products sold, including the resale of 9.3 thousand tonnes from third parties.

Cajamarquilla

The Cajamarquilla smelter is located in the district of Lurigancho/Chosica in Lima, Peru. The Cajamarquilla smelter is the largest zinc smelter in Latin America and the only zinc smelter in Latin America outside Mexico and Brazil. 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 332.8 thousand tonnes of zinc metal available for sale in 2022.

The Cajamarquilla smelter produces zinc primarily from zinc concentrates and, to a lesser extent, recycled zinc secondary feeds (also referred to as pre-treated concentrate). In 2022, the Cajamarquilla smelter consumed approximately 343.7 thousand tonnes of zinc contained in concentrates. In 2022, 30.3% of the zinc contained in concentrates used by the Cajamarquilla smelter was sourced from its mines in Peru and 69.7% was purchased from third parties.

In 2022, the Cajamarquilla smelter sold approximately 340.4 thousand tonnes of metallic zinc, of which 38.3% of the volume was sold to Latin America (including Mexico), 17.0% to Europe, 13.2% to the United States, 8.0% to international traders, 20.6% to Asia and 2.7% to Africa. The Cajamarquilla smelter also produces sulfuric acid, silver concentrate, copper cement, manganese dioxide, oxides (ashes) and cadmium sticks.

Brownfield Project

Conversion to Jarosite Process

In 2017, the company announced its intention to convert its 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. The company initiated the construction phase in 2018 and during 2019 civil works and procurement activities continued to progress.

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, from Nexa Peru and from third-party concentrates. This smelter is integrated with the operations of the Vazante and Morro Agudo mines, and it uses the RLE process to produce metallic zinc and zinc oxide. The annual production capacity of its Três Marias smelter is 192.2 thousand tonnes of refined metal per year. Production in 2022 totaled 189.9 thousand tonnes of zinc metal 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 2022, this smelter consumed approximately 184.3 thousand tonnes of zinc contained in concentrates and 3.3 thousand tonnes of secondary raw material.

In 2022, Três Marias sold approximately 151.8 thousand tonnes of metallic zinc and 40.3 thousand tonnes of zinc oxide, of which 74.7% of the volume was sold to Latin America (including Mexico), 4.2% to international traders, 14.0% to Africa, 3.5% to Asia, 3.5% to Europe and 0.1% to the United States. The Três Marias smelter also produces copper/cobalt cement, Oxides (ashes) and cadmium briquettes. These products are sold to local customers.

Smelting Operations

The Três Marias smelter contains a zinc oxide production plant intended for the chemical, pneumatic, ceramic, animal feed and fertilizer industries. In 2022, the production of zinc oxide was approximately 40.3 thousand tonnes. In zinc content, approximately 61.9% of the raw material was electrolytic zinc that originated from the melting stage. In addition, the company purchased 38.1% 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.

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 its Juiz de Fora smelter is 96.9 thousand tonnes of metallic zinc per year. In 2022, Juiz de Fora produced 84.2 thousand tonnes of zinc metal available for sale.

The Juiz de Fora smelter produces zinc from zinc concentrates and recycled zinc secondary feeds. In 2022, this smelter consumed 71.3 thousand tonnes of zinc contained in concentrates and 17.6 thousand tonnes of zinc from secondary raw material and secondary sources. This smelter also produces sulfuric acid, sulfur dioxide, silver concentrate and copper sulfate.

In 2022, the Juiz de Fora smelter sold approximately 83.7 thousand tonnes of metallic zinc, of which 98.1% of the volume was sold to Latin America (including Mexico) and 1.9% to international traders outside of Latin America.

Other Operations

Transportation and Shipping

Concentrates in Mines

The company’s 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, or to the Cajamarquilla smelter. This transportation is covered by long-term contracts entered with two trucking companies.

The company’s 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, or to the Cajamarquilla smelter. The company also use railway transportation to secure logistic availability and maintain high environmental standards. The company’s 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 the company’s 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. The company’s smelters use zinc concentrate supplied from its 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 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 the company’s 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 exported in accordance with its annual contracts with container shipping lines.

All the zinc concentrates produced at the company’s 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 loaded into containers at the mine and are 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 the company’s 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 the company’s 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.

The company ships all its 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 85.0% of these shipments.

Sales and Marketing

The company sells most of its products through supply contracts with terms between one and four years. Only a small portion of the company’s products is sold on the spot market. The agreements with the company’s customers include customary international commercial terms, such as CIF, FOB and other delivery terms based on Incoterms 2010/2020. The company’s ability to deliver significant volumes across several regions worldwide makes it a significant supplier to a client base of end users and global traders. In 2022, the company’s top 10 metallic zinc customers represented approximately 50.5% of the total sales volume for such products, with its top 10 zinc oxide customers representing 63.0% of the total sales volume for that product, and its top five concentrate customers represented approximately 88.1% of the total sales volume for such products, in each case excluding intercompany sales.

Concentrates

In 2022, 99.8% of the company’s total production volume of zinc concentrates went to its smelting operations in Peru and Brazil. The company also purchases zinc contained in concentrate from third-party suppliers to meet its raw material requirements. In 2022, 43.6% of the total zinc raw material consumption in the company’s smelters was produced by its mines and 56.4% was purchased from third parties or obtained from secondary raw materials.

Refined Metals

The company’s metallic zinc and zinc oxide are sold worldwide through its commercial offices located in São Paulo, Brazil; Lima, Peru; Houston, United States; and Luxembourg, Grand Duchy of Luxembourg.

The company holds a leadership position in its home market, Latin America (excluding Mexico), with an estimated market share of 89.3% in 2022. In other regions, the company holds a strategic position, with estimated market share of 30.6% in Africa, 3.4% in North America, 2.9% in Europe and 0.8% in Asia, according to its sales volumes, import databases and demand forecasts sourced from specialized consultancy groups and customs websites.

In 2022, 81.4% of the company’s total sales of refined metals were to customers in the continuous galvanizing, general galvanizing, die casting, transformers and alloy segments and 18.6% of its total sales were to international traders. The company’s products are sold to end users in the transport, construction, infrastructure, consumer goods and industrial machinery industries.

Other Operations

By-Products

The company sells a wide variety of chemical and metallurgic by-products generated during the production processes in its smelters and mines to a broad customer base. The company’s sales include more than 25 different by-products, most of which are sold based on the characteristics of each market or region.

Power and energy supply

Peru

With respect to its Peruvian operating units, the company obtained 97.5% (1,878.7 GWh) of the electricity for its operations from the SEIN and 2.5% (47.5 GWh) from its own hydroelectric power plants and the Cajamarquilla cogeneration power plant. The company owns three hydroelectric power plants, two at Atacocha and one at El Porvenir, with a total installed gross rated capacity of 9,726 kilowatts, or kW. The company also received its energy from third parties through electricity supply contracts. The company’s Cerro Lindo, El Porvenir and Atacocha units have electricity supply contracts with Electroperú S.A., which cover 100% (278.1 GWh), 100% (126.3 GWh) and 57.8% (36.1 GWh) of their electricity requirements, respectively. In July 2019, the company signed a new long-term energy agreement with Electroperú S.A, a well-known Peruvian state-owned company, which started supplying energy its operations in Peru in January 2020, totaling a supply of 1,826.0 GWh in 2022. Electroperú was the sole supplier for its 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. In June 2021, however, another spot contract was signed with Kallpa Generación S.A. for the supply of electricity to the Cajamarquilla unit. The contract, which expired on December 31, 2021, was automatically renewed for another six months, supplying a total of 19.4 GWh in 2021. In 2022, it supplied a total of 52.6 GWh of energy.

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.

Other Operations

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. During 2022, Atacocha consumed 26.4 GWh from these plants, which represented approximately 57.8% of the energy usage of the mine.

Brazil

With respect to its Brazilian operations, as of December 31, 2022, energy supply comes from various contracts, and the company’s subsidiary Pollarix S.A (Pollarix).

On November 17, 2022, Nexa, through Pollarix, acquired 1.46% of (Campos Novos Energia S.A.) Enercan’s additional shares by exercising its proportional preemptive rights given the withdrawal of one of Enercan’s previous shareholders. The five hydroelectric plants in which the company’s subsidiary Pollarix has directly or indirectly the following interests: a 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. All hydroelectric power plants of Pollarix provide electricity to the four operating units (Vazante, Morro Agudo, Três Marias and Juiz de Fora).

The company owns all the common shares of Pollarix, which represents 33.33% of its total share capital.

The company has a contract with Auren, which provides energy from various sites, with a total of supply of 5.0 MWavg of energy in 2022. During 2022, it provided electricity only to the Aripuanã mine.

In January 2020, the company began a new long-term energy supply agreement with Furnas, a Brazilian energy company, controlled by Eletrobras, to help address the increased electricity demand in its operations. Nexa Brazil consumes nearly all the energy supplied by Pollarix and Votorantim Energia in its existing operations. Furnas provides electricity to the four operating units (Vazante, Morro Agudo, Três Marias and Juiz de Fora), with 13.8 MWavg per year of energy, which represented 7.2% of its total energy purchased. The agreement is valid for 15 years.

Hydroelectric Plants

Campos Novos

Campos Novos is a hydroelectric plant located along the Canoas River. The plant has an installed capacity of 880 MW and has been authorized by the Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Eletrica or ANEEL), to produce 379.7 MWavg. In 2022, the plant’s physical guarantee for ballast purposes was 3,901.2 GWh, 17.3% of this total was acquired to its operating plants. During 2022, the company’s Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 674.4 GWh from Campos Novos, which represented approximately 39.6% of its total energy purchased.

Picada

Picada is a hydroelectric plant located along the Peixe River. The plant has an installed capacity of 50 MW and has been authorized by ANEEL to produce 30.8 MWavg. During 2022, the company’s Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 264.4 GWh, which represented 15.5% of its total energy purchased.

Igarapava

Igarapava is a hydroelectric plant located along the Grande River. The plant has an installed capacity of 210 MW and has been authorized by ANEEL to produce 32.1 MWavg. During 2022, the company’s Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 276.1 GWh from Igarapava, which represented approximately 16.2% of its total energy purchased.

Amador Aguiar I

Amador Aguiar is a hydroelectric plant located along the Araguari River. The plant has an installed capacity of 240 MW and has been authorized by ANEEL to produce 19.5 MWavg. During 2022, the company’s Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 155.5 GWh from Amador Aguiar I, which represented 9.1% of its total energy purchased.

Amador Aguiar II

Amador Aguiar is a hydroelectric plant located along the Araguari River. The plant has an installed capacity of 210 MW and has been authorized by ANEEL to produce 16.65 MWavg. During 2022, the company’s Morro Agudo, Vazante, Três Marias and Juiz de Fora units acquired 155.5 GWh from Amador Aguiar II, which represented 9.1% of its total energy purchased.

Regulatory Matters

In Brazil, the company holds 563 exploration authorizations, 20 mining concessions, ten mining concession applications, eight rights to apply for mining concession and 37 exploration authorization applications, which it broadly and collectively refers herein to as mineral rights, that cover a total area of 2,066,834.3 hectares, of which 1,516,378.3 hectares, or 90.1%, are exploration authorizations, 11,990.85 hectares, or 0.7%, are mining concessions, 8,281.9 hectares, or 0.5%, are mining concession applications, 5,661.9 hectares, or 0.3%, are rights to apply for mining concession and 139,957.2 hectares, or 8.3%, remain as exploration authorization applications and are under initial geological reconnaissance.

In Peru, the company holds, through Nexa Peru and its subsidiaries, 841 mining and exploration concessions, which cover a total area of 359,727.6 hectares and 92 mineral claims totaling 71,560.7 hectares. Of its 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 4,846.7 hectares and one beneficiation concession, the Cerro Lindo mine has 68 mining concessions that cover an area of 43,750.2 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, the company has 124 mineral rights concessions for greenfield projects in Peru that cover a total area of 44,695.5 hectares. The company’s prospective projects include 445 mining concessions that cover an area of 258,937.2 hectares.

History

The company was founded in 1956. It was incorporated in 2014 under the laws of Luxembourg as a public limited liability company (societe anonyme). The company was formerly known as VM Holding S.A. and changed its name to Nexa Resources S.A. in 2017.