Nexa Resources S.A. (NYSE/TSX:NEXA) ("Nexa” or the "Company") reported operating and financial results for the first quarter of 2018 (“1Q18”) and reinforced its production and capex guidance for fiscal year 2018. We also filed our annual report on Form 20-F for the fiscal year ended December 31, 2017 and published a report with updated information relating to mineral reserves and resources estimates as of December 31, 2017.
2. This presentation, prepared by Nexa Resources S.A. (formerly VM Holding S.A., herein referred to as the “Company” or “Nexa”), is solely for informational purposes.
Disclosure of this presentation, its contents, extracts or abstracts to third parties is not authorized without express and prior written consent from the Company.
Certain statements disclosed herein are “forward-looking statements” in which statements contained herein that the information is not clearly historical in nature are forward-
looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” ”strategy,” “project” and similar expressions and future or conditional verbs such
as “will,” “would,” “should,” “could,” “might,” “can,” “may,” or similar expressions are generally intended to identify forward-looking such statements. These forward-looking
statements speak only as of the date hereof and are based on the Company’s current plans and expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond the Company’s control. As a consequence, current plans, anticipated actions, and future financial position and results of
operations may differ significantly from those expressed in any forward-looking statements in the presentation. You are cautioned not to unduly rely on such forward-looking
statements when evaluating the information presented herein and we do not intend to update any of these forward-looking statements.
This presentation includes the Company’s unaudited non-IFRS measures, including: adjusted EBITDA; net debt; working capital. The Company presents non-IFRS measures
when we due to the belief that the additional information is useful and meaningful to investors. Non-IFRS measures do not have any standardized meaning and are therefore
unlikely to be comparable to similar measures presented by other companies. The presentation of non-IFRS measures is not intended to be a substitute for, and should not
be considered in isolation from, the financial measures reported in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board.
The information and opinions contained herein should not be construed as a recommendation to potential investors and no investment decision should be based on the
truthfulness, timeliness or completeness of such information or opinions. None of the advisors to the Company or any parties related to them or their representatives shall be
liable for any losses that may result from the use or contents of this presentation.
This presentation also contains information concerning the Company’s industry that are based on industry publications, surveys and forecasts. The information contained
herein involves and assumes a number of assumptions and limitations, and the Company did not independently verified the accuracy or completeness of such information.
All dollar amounts referenced in this presentation, unless otherwise indicated, are expressed in United States dollars. The contents hereof should not be construed as
investment, legal, tax or other advice and you should consult your own advisers as to legal, business, tax and other related matters concerning an investment in the
Company. The Company is not acting on your behalf and does not regard you as a customer or a client. It will not be responsible to you for providing protections afforded to
clients or for advising you on the relevant transaction. There is no obligation to update the information included in this presentation.
Certain information contained in this presentation with respect to the Company’s Morro Agudo, Aripuanã, Shalipayco, Magistral and Florida Canyon Zinc projects are
preliminary economic assessments within the meaning of NI 43-101 (as defined herein). Such preliminary economic assessments are preliminary in nature, including certain
information as of inferred mineral resources that are too speculative geologically to have the economic considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that such preliminary economic assessments will be realized. The bases for such preliminary economic assessments
(including certain qualifications and assumptions) are described in the Company’s documents filed with the SEC and in each of the provinces and territories of Canada.
Disclaimer
Important information concerning this presentation
2
3. • CEO Message and Highlights
Tito Martins, Nexa CEO
• Nexa Results
Mario Bertoncini, Nexa CFO
• Projects & Closing Remarks
Tito Martins, Nexa CEO
Agenda
3
4. Preliminary environmental license granted
for the Aripuanã Greenfield project
• Project development is on schedule and
implementation is expected to begin in 2H18 after
all necessary approvals
• The other Greenfield and Brownfield projects are
also on track
CEO Message
4
Positive credit revision from major rating
agencies
Payment of US$ 80 million to shareholders
through share premium reimbursement
• $0.60 per share
• 3.4% yield
Update on the reserves and resources of
our mines, with net increase of 8.9 million
tons in reserves
• Successful exploration program
• Improvement in operational conditions
Growth on metal sales back to normalized
levels
• 4.9% increase in 1Q18 compared to 1Q17
Ba2 Stable
BB+ Stable
BBB- Stable
5. Mining production in line with 1Q17, mainly due to better performance in El Porvenir
and Vazante
5% higher metallic zinc sales volume in the 1Q18, with smelting performance recovered
from heavy rains and floods in 1Q17
1Q18 revenue of US$676 million, 23% higher than 1Q17 mainly driven by positive base
metals prices, stable mining volumes and growth on smelting volumes
US$191 million adjusted EBITDA in 1Q18, a 33% increase compared to 1Q17, reaching
a 28% adjusted EBITDA margin
Net Debt/Adjusted EBITDA of 0.37x as of March 31, 2018, with average maturity of 6.6
years and only 23% of the gross debt maturing up to 2022
Performance Highlights
5
6. 253
1,236
213
2 Jan 09 29 Mar 1806 Dec 12
1Based on daily stocks, as reported by the London Metal Exchange
2Based on daily prices, as traded in the London Metal Exchange
2,780
3,421
1Q17 1Q18
LME average price2
US$/ton
LME price evolution
US$/ton
LME stocks1
kton
• Strong zinc prices due to mining supply constraints
and low metal inventories even after some shadow
stocks became visible at LME
• Consistent demand and sound Chinese macro data
supported LME prices
2,783
3,332
1Q17 2Q17 3Q17 4Q17 1Q18
Market Fundamentals
Strong LME prices across base metals markets
Zinc Copper Lead
6
LME average price2
US$/ton
LME price evolution
US$/ton
LME average price2
US$/ton
LME price evolution
US$/ton
+23%
5,831
6,961
1Q17 1Q18
+19% 2,278
2,523
1Q17 1Q18
+11%
2,310
2,411
1Q17 2Q17 3Q17 4Q17 1Q18
5,849
6,685
1Q17 2Q17 3Q17 4Q17 1Q18
34 days of consumption
at the end of March
7. • 1Q18 production in line with the same period of the previous
year. The increase in copper and silver grades were able
to offset the reduction in zinc
• Production in 1Q18 in terms of zinc equivalent reached
101% of volume the planned for the quarter
• Lower cash cost due to higher by-product credits and
lower TCs
Mining Production
Production in line with annual plan
7 1Copper, lead, silver and gold contents in concentrate production, converted to a zinc equivalent grade at FY17 benchmark prices (average LME, LBMA and Gold prices)
Mining production per metal
Mining production per mine
Metal contained in concentrates (kton)
Zinc equivalent¹ (kton)
Metal 1Q17 1Q18
Zinc 92 87
Lead 12 12
Copper 9 11
Silver (kOz) 1,706 1,884
Gold (kOz) 8 7
Zinc Equivalent¹ 135 134
Metal 1Q17 1Q18
Cerro Lindo 67 57
Vazante 35 36
El Porvenir 16 24
Atacocha 11 12
Morro Agudo 6 5
Zinc Equivalent¹ 135 134
-0,9%
Cash cost after by-product credits
US$ per pound zinc sold
0.10
0.49 0.48
0.80 0.74
0.38
-0.23
0.38
0.13
0.58
0.98
0.22
ATCL VZ EP MA Combined
-337%
-23% -73%
-28%
+32%
-43%
1Q17
1Q18
8. • 1Q18 smelting sales were 4.9% higher than 1Q17,
recovering from the heavy rains and floods in Peru that
impacted production in Cajamarquilla
• Brazilian smelting sales were aligned with 1Q17
• Smelters operating at almost full capacity
• Cash cost impacted by higher LME prices and lower TCs
Metal Sales
Sales growth, back at normalized levels
8
Metal sales per product
Metal sales per plant
(kton)
(kton)
Metal 1Q17 1Q18
Cajamarquilla 73 79
Três Marias 47 49
Juiz de Fora 20 18
Total 140 146
+4,9%
Metal 1Q17 1Q18
Metallic zinc 131 137
Zinc oxide 9 9
Total 140 146
Cash cost after by-product credits
US$ per pound zinc sold
1.06 1.11 1.13 1.10
1.49 1.46 1.40 1.43
CombinedTM JF CJM
+41% +31% +23% +30%
1Q18
1Q17
9. • Robust Revenue and Adjusted EBITDA growth as a
result of the increase in base metals prices
• Main projects during 1Q18: Vazante LOM extension
(US$7 million) and Aripuanã (US$2 million)
• Higher investments in working capital due to higher LME
prices and a increase in inventories
549
676
1Q17 1Q18
144
191
1Q17 1Q18
Financial Results
Robust Revenue, EBITDA and Cash Flow
9
Net Revenues
(US$ million)
Adjusted EBITDA
(US$ million)
Capex
+23%
+33%
26% 28%
Margin
1Q18 Cash Flow
(US$ million)
191
64
46
33
34
Capex
14
Financial ResultAdjusted EBITDA¹ Working Capital² Taxes Free cash flow
before
debt/investment
principals and
dividends
31 33
1Q17 1Q18
+6%
29%
71%
Non-Expansion
Expansion
61%
30%
9%
Smelting
Mining
Others
Total capital expenditures, by category
(1Q18, %)
Total capital expenditures
(US$ million)
¹Reconciliation of adj. EBITDA to Net Income available at the Earnings Release
²Trade accounts receivable; inventory; other taxes recoverable; other assets; trade payable; salaries and payroll charges; taxes payable; other liabilities
10. 1Q18 mining adjusted EBITDA was
59% higher than 1Q17 mainly due to
higher base metals prices
Segments
10
Revenue by segment
FY (US$ million)
Adj. EBITDA per segment
FY (US$ million)
1Includes intersegment revenues;
101
161
1Q17 1Q18
45
30
1Q17 1Q18
258
327
1Q17 1Q18
445
557
1Q17 1Q18
Mining¹Smelting
Margin
The smelting business EBITDA was
impacted by lower treatment charges,
non-recurring provision on energy
supply and zinc calcine acquisition in
the smelters
39% 49%
Margin
10% 5%
+27% +59%
+25% -33%
Growing revenues and consistent EBITDA
11. 2018 Guidance
11
Metal contained in
concentrate
2017(a) 1Q18 2018(e)
Zinc (kton) 375.4 87.2 370 - 390
Copper (kton) 52.6 10.7 55 - 60
Lead (kton) 44.2 12.3 39 - 42
Silver (koz) 7,759 1,884 7,600 - 8,000
Gold (koz) 32.5 7.4 17 - 19
Smelting sales 2017(a) 1Q18 2018(e)
Zinc Metal (kton) 555.4 137.3 560 - 580
Zinc Oxide (kton) 38.5 9.1 37 - 39
Total (kton) 593.9 146.4 597 - 619
Main assumptions
• Increase in total treated ore by more
than 6%
• Lower grades, especially in the Cerro
Lindo mine, in line with expectations
Main assumptions
• Increase in the performance of the
roasters in all Company’s smelters
• Expected full capacity production
through 2018 compared to a 2017 which
experienced atypical rains and floods in
1Q17
These estimates should be considered preliminary and subject to change. These estimates are based on a number of assumptions that management believes to be reasonable and reflect the
Company’s expectations as of February 15, 2018. Our independent registered public accounting firm has not audited, compiled, performed any procedures on or reviewed these estimates, and
accordingly does not express an opinion or any other form of assurance with respect to these estimates. Accordingly, you should not place undue reliance on these estimates, which may differ
materially from our final results.
Nexa reiterates its guidance for 2018
12. 2018 Guidance
12
Exploration and Project
Development (US$mm)
2017(a) 1Q18 2018(e)
Mineral exploration 77.7 13.4 86
Project development 16.6 3.3 54
Total 94.3 16.7 140
Capex per segment
(US$mm)
2017(a) 1Q18 2018(e)
Smelter 81.0 10.1 108
Mining 107.1 20.0 172
Others 9.5 2.9 -
Total 197.6 33.0 280
Capex per category
(US$mm)
2017(a) 1Q18 2018(e)
Expansion/Greenfield 48.8 9.6 90
Modernization 21.4 1.0 20
Sustaining 59.4 9.4 68
HS&E/Tailing dams 62.1 11.2 92
IT/others 5.9 1.7 10
Total 197.6 33.0 280
Main projects for 2018 and their capex for the year:
• Vazante’s life of mine extension (US$43
million)
• Implementation of dry stack tailings in
Vazante (US$22 million)
• FEL 3 and potential execution of Aripuanã
(US$20 million)
• Process conversion at the Cajamarquilla
Smelter – Goethite to Jarosite – to increase
recovery of zinc (US$20 million)
• Expenses increasing as projects exploration and
drilling campaigns advance, granting long term
growth for Nexa
These estimates should be considered preliminary and subject to change. These estimates are based on a number of assumptions that management believes to be reasonable and reflect the
Company’s expectations as of February 15, 2018. Our independent registered public accounting firm has not audited, compiled, performed any procedures on or reviewed these estimates, and
accordingly does not express an opinion or any other form of assurance with respect to these estimates. Accordingly, you should not place undue reliance on these estimates, which may differ
materially from our final results.
13. 1,117
24 64
110 107
18
348
3 2 2
700
Cash 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
76%
14%
6%
4%
Debt repayment schedule (US$ million)
Average debt maturity: 6.6 years
Average cost of debt: 5.0% p.a.
Bonds
Banks
BNDES
Others
91%
9%
USD
BRL
225
261
0.34x 0.37x
Net Debt/EBITDA
Debt by Category
Total debt: 1,380
Liquidity and Indebtedness
Extended debt profile and unleveraged position
13 1Principal only / 2Considering interest accrual and costs, according to the Company’s covenants criteria
Debt profile1 (as of March 2018) Net debt2
• During 1Q18, we amortized US$60 million in Export Credit Notes in order to reduce our interest costs.
• On March 28, Nexa distributed US$ 80 million to shareholders through share premium reimbursement
(US$ million)
Mar 17 Mar 18
Mar 17 Mar 18
14. Important milestones achieved
EIA approved for new waste disposal area
FEL3 completed to seawater pipeline replacement
Dry Stacking Tailings Project
Ausenco contracted to develop the detailed engineering
Long lead time orders already executed (filters, thickener and belt conveyors)
Life of Mine Extension (Deepening)
Overall physical progress: 64% completed
Production from lower mining levels contributed to 52% of 1Q18 Vazante production
Cerro Lindo
Projects and Operations Highlights
14
Vazante
Aripuanã Preliminary Environmental License granted
58% of project FEL3 development concluded
Magistral and
Pukaqaqa
As part of FEL2, the focus in 1Q18 was drilling campaign execution for further
metallurgical testwork
Engineering advisors awarded for FEL2 development: Ausenco for Magistral and
JRI for Pukaqaqa
15. Greenfield: Aripuanã Overview
15
Project development on schedule
Location
Juiz de Fora
Três Marias
Aripuanã
Vazante
Morro Agudo
• Polymetallic underground VMS deposit hosting zinc, lead, copper, gold and silver
• In April, 2018, Aripuanã was granted the Preliminary Environmental License
which certifies that the project complies with the environmental standard
requirements of projects with such characteristics
• FEL3 is 58% concluded and expected to be completed in the second half of 2018
• Attractive regional infrastructure including availability of power, water and labor
force
• Processing capacity: 1.8 Mtpa
• Expected start-up: 2020
• Initial life of mine: 24 years
Key highlights*
Class
Tonnage
Grade
Zinc Copper Silver Lead Gold
(Mt) (%) (%) (g/t) (%) (g/t)
Measured 10.90 4.68 0.48 45.2 1.72 0.43
Indicated 10.90 4.83 0.18 44.0 1.82 0.36
Subtotal 21.80 4.76 0.33 44.6 1.77 0.40
Inferred 24.60 3.90 0.42 37.9 1.53 0.93
Resources as of July 31, 2017
Mato Grosso - Brazil
*As set out in the preliminary economic assessment (“PEA”)
16. Mining Reserves Replenishment and Growth
16
1. Assuming 100% ownership of Milpo and Atacocha; reserves replacement calculated by subtracting Dec 17 Zn Eq. reserves from July 2017 Zn Eq. reserves, plus Zn Eq. Ore Mined
2. Zinc equivalent is calculated as (zinc content x zinc price + copper content x copper price + lead content x lead price + silver content x silver price + gold content x gold price) ÷ zinc price; zinc equivalent ore mined is based on respective metal content in ore mined and 2016
average metal prices of US$ 2,896/t Zn, US$ 2,317/t Pb, US$ 6,166/t Cu, US$ 17/oz Ag, US$ 1,257/oz Au; zinc equivalent reserves are based on in situ metal content before considering metallurgical recoveries and metal prices used in the definition of the respective reserves
3. H1 2017 Mine Life based on prospectus assuming beginning of 2018; 2H17 mine life calculated through dividing Reserves by Ore Mined capacity; Morro Agudo was not included because it has only resources
Cerro Lindo Vazante
El Porvenir Atacocha
Mine
Life
(Years)
Reserves
(Mt)
52.4
55.6
1H2017 2H2017
8 8
15.0
18.1
1H2017 2H2017
10 12
22.6 22.1
1H2017 2H2017
10 10
16.9
19.9
1H2017 2H2017
11 12
Reserves have been replaced and have grown after successful drilling campaigns and development
Nexa Reserves Replacement at its Operating Mines
(Mt Zn Eq.)1;2
2.84
3.47
2.70
0.36
0.81
2.51
Reserve
replacement
Jun 2017 Dec 2017Zn Eq Ore
Mined 2H17
5.54
5.99
Proven reservesProbable reserves
Nexa Reserves and Life of Mine3
Mine
Life
(Years)
Reserves
(Mt)
Reserves have grown by ~8%
17. Guidance reiterated for mining production, smelting sales, CAPEX and OPEX related
to exploration and project development
Reserves and resources updated with significant growth in reserves
Expansion projects on schedule, highlighting the success in the environmental
license process for Aripuanã
Sound financial performance and solid cash generation
Closing Remarks
17