Nexa Resources S.A.(NEXA) - 2021 Q4 - Annual Report

Mineral Reserves and Resources - As of December 31, 2021, Proven and Probable Mineral Reserves estimates amounted to 97.0 million tonnes containing 5,146kt of zinc equivalent, a decrease from 106.1 million tonnes containing 5,584kt of zinc equivalent as of December 31, 2020, primarily due to mining production depletion[5]. - The Proven and Probable Mineral Reserves at Cerro Lindo were estimated to total 44.0Mt at 1.43% Zn, a 15% decrease from 52.1Mt at 1.44% Zn as of December 31, 2020[8]. - The Proven and Probable Mineral Reserves at El Porvenir increased by 10% to 15.91Mt at 3.57% Zn, mainly due to an infill drilling campaign[8]. - The Proven and Probable Mineral Reserves at Vazante were estimated to total 15.91Mt at 8.77% Zn, down 5% from 16.7Mt at 8.61% Zn as of December 31, 2020, due to mining production depletion[8]. - The Proven and Probable Mineral Reserves at the Aripuanã project decreased by 7% to 21.8Mt at 3.61% Zn, attributed to revisions in stope design and economic parameters[8]. - The estimated Measured and Indicated Mineral Resources at year-end 2021 were 6,157kt of contained zinc equivalent, down from 6,538kt at the end of 2020, reflecting a net decrease of -387kt[10]. - Inferred Mineral Resources increased to 10,095kt of contained zinc equivalent at year-end 2021, up from 9,735kt at the end of 2020, with notable additions from exploration drilling[10]. - At Cerro Lindo, the total measured and indicated Mineral Resources amount to 7.44 Mt with an average zinc grade of 1.50%[24]. - At El Porvenir, the total measured and indicated Mineral Resources amount to 3.68 Mt with an average zinc grade of 2.91%[24]. - At Vazante, the total measured and indicated Mineral Resources amount to 5.28 Mt with an average zinc grade of 4.68%[24]. - Atacocha's total measured and indicated Mineral Resources amount to 8.17 Mt with an average zinc grade of 4.48%[24]. - The total contained metal across all projects includes 2,994.5 kt of zinc, 16.4 kt of copper, and 75,674 koz of silver[26]. - The Aripuana project has a total of 3.24 million tonnes in measured and indicated resources, with an average zinc grade of 2.13%[26]. - The Hilarion project has measured resources of 24.73 million tonnes with an average zinc grade of 3.43%[26]. - The Florida Canyon project has a total of 2.44 million tonnes in measured and indicated resources, with an average grade of 10.63% zinc[26]. - The effective date for the mineral resources estimation is December 31, 2021, for most projects[30]. - All Mineral Reserve and Mineral Resource estimates are prepared in accordance with the CIM Definition Standards[39]. Exploration and Drilling Programs - The 2022 drilling program aims to extend known ore bodies and investigate new mineralized zones, with a total of 39,000 meters planned at Cerro Lindo and 19,000 meters at El Porvenir[12]. - Nexa's exploration strategy for 2022 will focus on Mineral Resource expansion through brownfield and infill drilling, with approximately 40% of the program in Brazil and 52% in Peru[11]. - The exploration program in 2021 was limited by COVID-19 protocols, impacting the ability to replace Mineral Reserves, but positive results were achieved in identifying new ore bodies[3]. Economic and Financial Aspects - At Cerro Lindo, Mineral Reserves are estimated at an NSR break-even cut-off value of US$38.73/t processed, with some incremental material valued between US$29.13/t and US$38.84/t included[20]. - At El Porvenir, Mineral Reserves are estimated at NSR cut-off values ranging from US$57.63/t to US$62.19/t depending on the zone and mining method[20]. - At Vazante, Mineral Reserves are estimated at a cut-off grade of 4% Zn[20]. - At Aripuanã, Mineral Reserves are estimated at an NSR break-even cut-off value of US$47.91/t processed, with some incremental material valued between US$39.79/t and US$47.91/t included[20]. - Forecast long-term metal prices for the Aripuanã project are Zn: US$2,722.20/t, Pb: US$1,997.21/t, Cu: US$7,228.26/t, Ag: US$19.68/oz, and Au: US$1,454.12/oz[21]. - The exchange rate for Vazante, Brazil is R$/US$ rate of 4.98[21]. - Forecast long-term metal prices for copper are estimated at US$8,383 per tonne[33]. Company Overview and Strategy - Nexa is a large-scale, low-cost integrated zinc producer with over 60 years of experience in mining and smelting assets in Latin America[38]. - The company operates five long-life underground mines and is developing the Aripuanã Project as its sixth underground mine in Brazil[38]. - Nexa was among the top five producers of mined zinc globally in 2021, according to Wood Mackenzie[38]. - Nexa's operational strategy includes a focus on cost management and efficiency improvements across its mining operations[38]. Forward-Looking Statements - Forward-looking statements include estimates regarding future zinc prices, mining production, and financial liquidity[46]. - The company assumes no obligation to update forward-looking statements except as required under securities laws[48]. Mineral Reserves Viability - There are no Mineral Reserves at Atacocha u/g and o/p, Morro Agudo, Shalipayco, Magistral, Hilarión, Pukaqaqa, Florida Canyon, and Caçapava do Sul projects[35]. - Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability[35].