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Nexa Resources - Nexa | 2017 Annual Report

Nexa Resources

We are Nexa Resources S.A. (formerly Votorantim Metais Holding – VMH), a publicly-traded company with shares listed on the Toronto Stock Exchange (TSX) in Canada, and New York Stock Exchange (NYSE) in the United States and whose main shareholder is Votorantim S.A. With over 60 years experience, we maintain mining and metallurgy operations in Brazil and Peru, which are primarily geared toward the zinc and copper production. GRI 102-1, 102-5

In Brazil1, we operate four units, all located in Minas Gerais state. There are two mining units, in Vazante and Morro Agudo (Paracatu); and two metallurgy units, in Três Marias and Juiz de Fora. In Peru2, we have a zinc refinery, in Cajamarquilla, and three mines, in El Porvenir and Atacocha in the Pasco region, and Cerro Lindo in the Ica region. In addition to Brazil and Peru, we maintain commercial offices in the United States, Canada, and Austria. Our headquarters are in Luxembourg and our administrative headquarters are located in the cities of São Paulo, Brazil and Lima, Peru. GRI 102-3, 102-4, 102-7

Our product portfolio covers production chains for zinc, copper, lead, silver, and other related minerals, which are marketed to clients in different industrial sectors, such as construction, transportation, consumer goods, agriculture, and health. Our main products and brands are Zinc SHG (Special High Grade) in ingots, jumbos, and granules; Zamac (special zinc-aluminum, magnesium, and copper alloys); Zincal 200 (agricultural limestone); as well as zinc oxide, sulfuric acid, copper sulfate, sulfur dioxide, and zinc, copper, and lead concentrates. GRI 102-2, 102-6, 102-7

The Cerro Lindo and Vazante units are among the 10 largest zinc mines in the world. Combined with our other mining operations, we are among the world’s top five zinc producers, according to Wood Mackenzie. In 2017, our mining operations produced 570 thousand tonnes3 of zinc equivalent and the sales volume for smelterproduced zinc totaled 594 thousand tonnes. Net revenue in 2017 reached US$ 2.4 billion, a 24.7% increase compared to the 2016 result (US$ 2.0 billion), and adjusted EBITDA was US$ 668 million (US$ 404 million in the previous year). As of December 31, we had 5,446 employees and 7,367 contractors from third parties. GRI 102-7

Note 1: The operation of Fortaleza de Minas and ore processing is temporarily suspended, producing only sulfuric acid from elementary sulfur.
Note 2: The operation at Chapi is temporarily suspended.
Note 3: Consolidated mining production in kton of zinc equivalent calculated by converting copper, lead, silver, and gold contents to a zinc equivalent grade at 2017 average benchmark prices. The prices used for this conversion are: zinc: US$ 2,896/t; copper: US$ 6,166/t; lead: US $ 2,317/t; silver: US$ 17/ounce; and gold: US$ 1,257/ounce.

Integration is a key differential

One of our business’ distinguishing features is the integration we have brought about between mines and smelters. In Brazil, the zinc concentrates extracted in the Vazante and Morro Agudo mines are transformed into metallic products in the Três Marias smelter. In addition to concentrates, our Juiz de Fora plant also uses recyclable materials (such as scrap and powder from steelworks) for zinc production. In Peru, most of the zinc concentrates produced in the Cerro Lindo, El Porvenir, and Atacocha mines are processed at the Cajamarquilla smelter. At the mines, copper and lead concentrates are sold directly to the market. The main products marketed by the smelters are zinc ingots, metal alloy ingots, and zinc oxide.