Nexa Resources (NEXA) 2026 年第三季法說會：EBITDA 達 3.01 億美元

重點提要

• 調整後 EBITDA 達到 3.01 億美元，創下 2026 年最高水準，季增 5%、年增 62%。調整後 EBITDA 利潤率為 32%。
• 淨營收增加至 9.37 億美元，較 2026 年第 2 季成長 3%，較 2025 年第 3 季成長 23%，主要受惠於鋅價上漲、冶煉銷售強勁，以及副產品貢獻年增 6,500 萬美元。
• Nexa 申報淨虧損 4,700 萬美元，主因是 Juiz de Fora 與 Tres Marias 聯合系統計提 1.24 億美元的非現金減損。調整後淨利為 1.44 億美元，即每股盈餘 0.87 美元。
• 自由現金流總計 7,300 萬美元。淨槓桿比率由 6 月的 1.4 倍及前一年的 2.21 倍降至 1.24 倍，本季結束時可用流動資金為 7.35 億美元。
• Aripuanã 廠利用率平均為 84%，9 月達到 90%。管理層預期營運將在未來幾個月內達到滿載，包含 2027 年第 1 季。
• Nexa 將 2026 年資本支出指引上調 10% 至 4.2 億美元，但維持全年產量與銷售指引不變。

關鍵財務數據

業務與營運表現

採礦業務

受惠於 Aripuanã、Vazante 與 El Porvenir 處理量及品位提升，鋅產量季增 7%、年增 1% 至 85,000 公噸。採礦業務淨營收為 4.54 億美元，調整後 EBITDA 季增 7%、年增 44% 至 2.36 億美元。該部門利潤率達 52%。

扣除副產品後的採礦現金成本為負 0.64 美元/磅。改善情況反映出白銀、銅及其他副產品貢獻增加，加上 Aripuanã 成本降低與鋅銷量上升。原礦成本為每公噸 54 美元，季減 5%，但年增 7%。

Aripuanã 處理礦石量達創紀錄的 471,000 公噸，較第 2 季成長 18%。鋅產量增加 48% 至 13,000 公噸。第四座尾礦過濾機在本季處理了 61% 的過濾尾礦，並支持 9 月工廠利用率達到 90%。

在 Cerro Pasco，第一期土木工程與主要設備組裝已經完成。預試運轉與試運轉正在進行中，目標於 2026 年 12 月完成機械竣工。

冶煉業務

隨著 Cajamarquilla 從 5 月的火災中復原並消化累積的陰極極板庫存，冶煉產量季增 28%、年增 8% 至 159,000 公噸。銷量季增 9% 至 146,000 公噸，但仍比去年同期低 2%。

該部門實現營收 6.96 億美元，調整後 EBITDA 為 6,500 萬美元。受惠於鋅價上漲、副產品貢獻及實現的加工費（TC），EBITDA 較上季大致保持穩定，且幾乎是去年同期的三倍。

扣除副產品後的冶煉現金成本季增 15% 至每磅 1.65 美元，主因是鋅價上漲拉高了外購精礦成本。轉換成本為每磅 0.36 美元。

管理層指引

Nexa 維持所有金屬 2026 年的產量與銷售指引。管理層預期第 4 季將是今年產量最高的一季，但由於 Cerro Lindo 礦石品位較低，銅產量預計接近指引區間下限。

公司將 2026 年資本支出指引上調 10% 至 4.2 億美元。增加反映出 Aripuanã 礦山開發加速、Cerro Pasco 尾礦設施提早支出以及巴西雷亞爾走強。Nexa 在前九個月支出 2.72 億美元，約占修訂後預算的 65%。

Cerro Pasco 2026 年專案預算由 3,100 萬美元增至 4,100 萬美元。管理層預期於 2026 年 12 月完成機械竣工，2027 年第 2 季取得抽水系統營運許可，並於 2027 年第 3 季初開始抽水。

在 Aripuanã，管理層預期第 4 季利用率提高且回收率改善。由於較高的處理量抵銷了預期的較低品位，鋅產量應保持穩定。加速礦山開發旨在開闢額外的開採工作面，並支持 2027 年更高的處理量。

風險與關注焦點

• 長期加工費假設調降以及巴西雷亞爾走強，導致 Juiz de Fora 與 Tres Marias 發生 1.24 億美元的減損。中國現貨加工費在本季結束時為每公噸負 236 美元，凸顯了煉廠利潤率面臨的壓力。
• Aripuanã 由於地理位置偏遠，持續面臨物流成本高昂、勞動力取得困難以及員工離職率偏高的問題。管理層表示成本正常化將會漸進進行。
• Cerro Lindo 品位較低以及第 3 季礦山開發受限導致秘魯產量下滑，儘管管理層預期第 4 季營運將更加強勁。
• El Porvenir 與 Atacocha 的環境許可變更仍處於 SENACE 審查階段。預計分別將於 2027 年 3 月和 4 月獲得批准。
• 標普將 Nexa 的長期發行人及優先無擔保債券評級由 BBB- 下調至 BB+，展望穩定。預計當 Boliden 完成收購 Votorantim 的控股股權時，將觸發 2028 年到期債券的控制權變更條款。
• Boliden 交易仍有待慣常的監管批准，管理層預計將於 2027 年第 1 季完成交割。

分析師問答環節亮點

管理層表示，在第四座尾礦過濾機的支撐下，Aripuanã 應在未來幾個月內達到滿載。較高的處理量預計將改善固定成本吸收狀況，但物流費用與員工離職率意味著單位成本的改善仍需要時間。管理層預期到 2027 年底，該營運點的成本結構將趨近於 Vazante。

關於 Cerro Pasco，管理層表示目前未看到重大施工或啟動風險。現有的尾礦容量可在過渡至新抽水系統期間提供緩衝，而試運轉預計於機械竣工後開始。

關於秘魯業務，管理層將第 3 季產量較弱歸因於 Cerro Lindo 計劃內的較低品位及臨時的礦山開發限制。管理層預計第 4 季 Cerro Lindo 與 Cerro Pasco 的產量皆將提升，從而支持維持不變的全年產量展望。

法說會逐字稿全文

完整財報電話會議逐字稿

管理層陳述

Operator

Good morning, ladies and gentlemen, and welcome to Nexa Resources Third Quarter 2026 Earnings Conference Call. Please note that today's event is being recorded and broadcast live via Zoom with access also through Nexa's Investor Relations website. A slide presentation accompanying the webcast is available for download as well as a replay of the conference call, following its conclusion. [Operator Instructions]

Now I would like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations and Treasury, for his opening remarks. Please go ahead.

Rodrigo Cammarosano

Good morning, everyone, and welcome to Nexa Resources Third Quarter 2026 Earnings Call. Thank you for joining us. Today, we will walk through the results we released yesterday. The presentation is available through the webcast, if you would like to follow along. Before we begin, please take a moment to look at Slide number 2, which contains our forward-looking statements disclaimer. We encourage you to review it along with the related risk factors.

Here with me today are Ignacio Rosado, our CEO; Jose Carlos del Valle, our CFO; and Leonardo Coelho, our Senior Vice President of Mining Operations.

Ignacio, over to you.

Ignacio Rosado

Thank you, Rodrigo, and good morning, everyone. Let me start on Slide number 3. The third quarter marked another step forward for Nexa. Adjusted EBITDA reached $301 million, our highest of the year, up 62% from a year ago and 5% from the second quarter with a 32% margin. We generated $73 million in free cash flow and net leverage decreased to 1.2x, down from 1.4x in June and 2.2x a year ago. On the bottom line, we reported a net loss of $47 million, mainly due to a $124 million noncash impairment of our Juiz de Fora and Tres Marias system units in Brazil. It has no impact on cash, and Jose Carlos will provide you with more details in a few minutes.

So what drove the quarter? Three things. First, higher zinc prices and compared with last year, a much stronger by-product contribution, especially from silver and copper. Second, our Peruvian operations continue to normalize and Aripuana stepped up with the fourth tailing filter operating as expected. And third, Cajamarquilla operated normally throughout the quarter after the May fire and sales volumes recovered.

In mining, zinc production reached 85,000 tonnes, up 7% from the second quarter, driven mainly by Aripuana. In smelting, production jumped 28% to 159,000 tonnes as Cajamarquilla processed most of the cathode inventory buildup after the fire. Sales grew 9% to 146,000 tonnes, and slower than production as part of the output was allocated to fourth quarter sales.

Looking ahead, 3 factors support the fourth quarter. At Aripuana, plant utilization averaged 84% for the quarter and reached 90% in September. We expect utilization to continue to improve in the next quarter. In smelting, the metal inventory at Cajamarquilla position us to meet seasonally stronger demand in the fourth quarter. And at Cerro Pasco, the integration project is on track for mechanical completion in December.

On guidance, we raised our 2026 CapEx to $420 million, mainly to advance mine development at Aripuana, bring forward investments at Cerro Pasco and reflect the stronger Brazilian real. We also updated our cost guidance to reflect higher metal prices and a stronger real. Our production and sales guidance for the year remains unchanged.

Now let's move to Slide number 4 for a closer look at mining. Zinc production rose 7% from the second quarter to 85,000 tonnes on higher throughput and grades. Aripuana, Vazante and El Porvenir drove the increase with higher zinc production. Compared with last year, production was up 1%. Our production guidance for all metals remains unchanged, and we expect the fourth quarter to be our stronger quarter of the year. For copper, given the lower grades at Cerro Lindo, we expect to finish at the lower end of the range.

On costs, cash cost net of by-products was negative $0.64 per pound, better than both the second quarter and last year versus the second quarter, which reflects mark-to-market adjustments on lead and copper concentrates, lower costs and higher zinc sales at Aripuana. The year-over-year change is mainly driven by a stronger by-product contribution. We lowered our 2026 cash cost guidance, reflecting much higher by-product prices. So far this year, we are negative at $0.45 per pound towards the lower end of the new range. Cost per tonne of run-of-mine was $54, down 5% from the second quarter and up 7% from last year.

We adjusted the guidance mainly due to the stronger Brazilian real and higher costs at Aripuana. For the first 9 months, we are at $55.07 near the top of the range, and we expect this to improve in the fourth quarter with higher volumes. Financially, mining had a stronger quarter. Net revenues were $454 million and adjusted EBITDA was $236 million, up 7% from the second quarter and 44% year-over-year. Margin reached 52%, up 10 points from the second quarter.

Now let's move to Aripuana on Slide number 5. Aripuana had a very good quarter. Treated ore reached a record 471,000 tonnes, up 18% from the second quarter and zinc production rose 48% to 13,000 tonnes, matching its best quarter, driven by higher throughput and better grades. The fourth filter is performing well. It handled 61% of all the tailings filter in the quarter. Plant utilization averaged 84%, up from 71% in the second quarter and reached 90% in September. For the fourth quarter, we expect higher utilization and improved recoveries. Zinc production should remain stable as higher throughput offset lower grades in the mine plan. We are also accelerating mine development at Aripuana to open more mining fronts and support higher throughput in 2027.

Now to Cerro Pasco on Slide number 6. At Cerro Pasco, Phase 1 construction is advancing as planned. During the quarter, we completed all civil works, the major equipment assembly, the access road and the raise of the Atacocha Dam. Pre-commissioning and commissioning are already underway. We expect mechanical completion in December, followed by commissioning activities in the first quarter of 2027. The operating authorization for the pumping system is expected in the second quarter, and we expect to start pumping in the early third quarter of 2027, as planned.

On permitting, the Environmental Impact Study Modifications for El Porvenir and Atacocha are still under review by SENACE, and we now expect approvals in March and April 2027. On CapEx, we invested $15 million in the quarter and $31 million so far this year. We raised the project's 2026 budget to $41 million, up from $31 million as we bring forward investments.

Now let's move to smelting on the Slide number 7. In smelting, production reached 159,000 tonnes, up 28% from the second quarter and 8% from last year, driven by the recovery at Cajamarquilla and the processing of the cathode inventory buildup after the fire. Sales were 146,000 tonnes, up 9% from the second quarter. Compared with last year, sales were down 2%. The inventory we built up Cajamarquilla, together with seasonally stronger demand in the fourth quarter, supports our [indiscernible] full year sales guidance. [Technical Difficulty] important, sulfuric sales rose 18% from the second quarter to 178,000 tonnes and silver and copper cement sales were both up 14%.

On costs, cash cost net of by-products was $1.65 per pound, up 15% from the second quarter as higher zinc prices raised the cost of the concentrate we purchased. We raised the guidance range considering higher zinc prices and a strong real, partially offset by higher by-product prices. For the 9 months, we are at $1.50 per pound within the new range. Conversion cost was $0.36 per pound in the quarter and $0.35 per pound for the first 9 months. We adjusted the guidance mainly for currency and higher fixed costs. Higher volumes in the fourth quarter should dilute fixed costs and keep us within the new range.

Financially, the segment generated net revenues of $696 million and adjusted EBITDA of $65 million, which was broadly stable for the second quarter and nearly 3x higher than a year ago. The year-over-year improvement was mainly driven by by-products, higher zinc prices and higher realized treatment charges. The EBITDA margin was 9%.

With that, I will hand it over to Jose Carlos, our CFO, for the financial.

José Carlos del Valle Castro

Thank you, Ignacio, and good morning, everyone. Let's go to Slide number 8. Net revenues totaled $937 million, up 3% from the second quarter and 23% from the same period last year. Versus the second quarter, the increase came from higher smelting sales and higher zinc and copper prices, partly offset by lower silver prices and lower mining sales volumes versus last year, the improvement came from higher zinc prices and from a $65 million higher by-product contribution.

Adjusted EBITDA was $301 million, up 5% from the second quarter with a 32% margin. Higher zinc prices, the recovery in smelting sales and stronger by-products more than offset higher raw material costs that resulted from a larger share of third-party concentrates in our smelter feed as well as lower cash dividend for Enercan. Versus last year, quarterly adjusted EBITDA was up 62% as higher zinc prices and by-products more than offset higher operating costs, a stronger Brazilian real and lower smelting sales.

At the bottom line, we reported a net loss of $47 million or $0.47 per share. The main driver was a $124 million noncash impairment related to our combined Juiz de Fora and Tres Marias system. It mainly reflects lower long-term treatment charge assumptions in a tighter concentrate market as well as a stronger Brazilian real, which more than offset the benefit of higher long-term metal price assumptions. It has no cash impact and is excluded from adjusted EBITDA. Excluding this and other items, adjusted net income was $144 million and adjusted earnings per share was -- were $0.87.

Let's move to investments on Slide number 9. We raised our 2026 CapEx guidance by 10% to $420 million. There are 3 drivers: higher mine development at Aripuana; higher investment in tailings facilities as we bring forward investments at Cerro Pasco that were originally planned for 2027; and the stronger Brazilian real. We invested $111 million in the quarter and $272 million so far this year, about 65% of the new guidance. So we expect that spending will increase in the fourth quarter in line with prior years. In exploration and project evaluation, we invested $21 million in the quarter, up 24% from the second quarter with a faster pace of drilling. We are at about 62% of our full year budget of $86 million, which remains unchanged.

Now to cash flow on Slide number 10. Operating cash flow before working capital was $306 million, up 7% from the second quarter and up 50% from last year. Working capital and other variations consumed $58 million, primarily reflecting inventory buildup. This included zinc metal inventories at Cajamarquilla to support fourth quarter sales as well as higher zinc concentrate inventories as part of our El Nino preparedness strategy. We expect that metal inventory at Cajamarquilla to unwind with fourth quarter sales.

This line also includes a $16.7 million payment to SUNAT made in August related to tax contingencies for fiscal years 2016 and 2017 under the Cerro Lindo's Tax Stability Agreement. No further installments remain for those years. This payment preserves our right for the admissibility of our appeal before the tax court and does not represent acceptance of SUNAT's position.

Furthermore, we continue to believe that our technical and legal position provides a strong basis for the future recovery of these amounts. After the $63 million in interest and taxes and the $112 million in CapEx, free cash flow was $73 million. As a reminder, free cash flow is defined as net operating cash flow minus CapEx.

On the capital structure side, debt and lease payments net totaled $25 million. Other cash components are dividends to minority shareholders and the $17.5 million share premium reimbursement net of the dividend received from Enercan, which totaled $23 million. Overall, cash and cash equivalents increased by $25 million to $405 million at the end of the quarter.

Let's move to Slide number 11 to talk about liquidity, indebtedness and credit rating. Our liquidity position remains solid. We ended the quarter with $735 million available, including our undrawn $320 million revolving credit facility. Our debt profile is long dated. Only 8% of our debt or $136 million matures through the end of 2027, and the average maturity is 6.8 years at an average cost of 6.7% Net leverage continued to come down to 1.24x from 1.4x in June and from 2.21x a year ago, driven by last 12 months adjusted EBITDA of almost $1.2 billion.

On credit ratings, in August, Fitch placed our BBB- rating on rating watch negative after the Boliden transaction announcement, citing limited visibility on our ties with the future controlling shareholder. Earlier this week, S&P lowered Nexa's long-term issuer and senior unsecured notes rating to BB+ from BBB-, removing them from CreditWatch Negative where they had been placed in July 2026. At the same time, it assigned a stable outlook and affirmed its A3 short-term issuer credit rating.

According to S&P, the downgrade reflects its view that although Nexa will remain a strategically important subsidiary of Boliden, the proceed support level is one category lower than what it was with Votorantim. As a result, the change of control provisions of the 2028 notes will become applicable upon closing of the transaction. On the other hand, change of control provisions under the 2034 and the 2037 notes will only become applicable if another downgrade takes place. Going forward, our priorities remain the same: free cash flow generation; disciplined capital allocation; and gross debt reduction.

With that, I'll hand it back to Rodrigo for an overview of market fundamentals.

Rodrigo Cammarosano

Thank you, Jose Carlos. Let's turn to markets, starting with zinc and copper on Slide number 12. Zinc prices reached their highest level since 2022, driven primarily by a deepening shortage of concentrate. The LME zinc price averaged $3,825 per tonne in the quarter, 35% higher than a year ago. For smelters, however, margins remain under pressure. Spot treatment charges in China ended the quarter at negative $236 per tonne, more than double the negative level in June. What cushions that pressure is by-products, especially sulfuric acid and silver, and that is where we are well positioned as a net producer of sulfuric acid with significant silver production.

Refined metal inventories also play an important role in the current price environment. Combined LME and Shanghai exchange inventories cover only about 1 week of global consumption. As a result, we expect tight fundamentals to continue supporting zinc prices, while treatment charges remain under pressure through the year-end. In copper, the LME price averaged $14,104 per tonne, up 44% from a year ago and hit a record in September, supported by tight supplies and U.S. stockpiling ahead of a tariff decision. The key near-term uncertainty is the Section 232 decision, but demand should remain structurally strong, driven by power grids, renewables, energy storage and AI-related infrastructure.

Now let's turn to Slide number 13 for a look at precious metals. Silver averaged $62.6 per ounce in the third quarter, up 59% from a year ago, but down 14% from the second quarter. After closing June at $58.8 per ounce, it recovered and held around $65 per ounce from August onwards despite rate hikes in September by the Fed, the European Central Bank and the Bank of Japan. Looking ahead, higher real rates and stronger U.S. dollar could weigh on silver, while demand from solar, electrification and AI should remain supportive. This matters for us, with 10 million to 11 million ounces expected this year, Nexa is a significant silver producer.

Gold prices averaged $4,262 per ounce, up 23% from a year ago and about 5% below the second quarter. Investment demand, central bank buying and geopolitical uncertainty continue to support prices, while higher bond yields raised the relative cost of holding gold. Together, silver and gold by-product credits keep lowering unit cash cost at our polymetallic operations.

Finally, on Slide 14, a few takeaways from the LME week in London earlier this month. The macro backdrop was a constant theme with persistent inflation, geopolitical tensions and tariffs contributing to a more cautious market sentiment. Even so, sentiment on base metals remain constructive, particularly for copper and zinc. Copper captured the headlines, but zinc drew a lot of attention and there was broad consensus that its fundamentals are supportive and should stay that way for longer. Why? First, supply. The concentrate market is tight. Major producers are facing lower ore grades. Some polymetallic miners are prioritizing copper production, disruptions continue, and there is limited new supply coming. Demand is modest, but it is backed by infrastructure investment and to a lesser extent, the energy transition.

Second, treatment charges. With concentrate this tight, the market expects the 2027 benchmark to settle below this year's $85 per tonne. Third, and this was the standout topic, by-product. Sulfuric acid is at multiyear high and together with silver, it has become a key part of smelter margins. The smelters with recovery capabilities are the ones best placed to absorb lower treatment charge. And with refined inventories at low levels, further smelting production cuts may become increasingly likely, creating upside risk for premiums and leading to a more frequent arbitrage opportunities.

On Slide 15, you can see what we will be watching more closely and where Nexa stands. On treatment charges, lower levels pressure smelters, but benefit our mines. So our integration helps offset the impact. On by-products, our recovery capabilities, especially in sulfuric acid, allows us to capture that value. On prices, zinc is holding above roughly $3,700 per tonne, supported by tight concentrate and low stocks.

On supply, older mines are declining and new supply seems limited, while Aripuana is adding more concentrate to our own system. And on trade, the volatile geopolitical landscape reinforces our strategic position as a leading zinc producer in the Americas. In short, a tight concentrate market support our mines and by-products support our smelters. That's where our integrated model pays off.

Now let's move to our ESG agenda on Slide 16. We continue to advance our ESG priorities in the quarter. On safety, our recordable injury frequency rate improved to 1.34 from 1.50 a year ago. While this is an important improvement, we remain vigilant. Year-to-date, we are still above last year's level. So we are reinforcing controls on critical risks, including fatigue monitoring at the Cerro de Pasco complex and the Line of Fire campaign at El Porvenir and Atacocha.

In our communities in Peru, we continued our health campaigns and higher education scholarships and launched a new community contact channel. On circular economy, we are advancing new uses for jarosite, Waelz aggregate and pyrite and the fourth filter's expanded dry stacking tailings capacity at Aripuana. On climate, we are closely monitoring El Nino. There was no impact in the quarter. And with the support of a specialized consultancy, we have reviewed our preparedness plans. In Peru, we are building inventories of critical materials and reinforcing drainage and geotechnical inspections. In Brazil, we are focused on water management and wildfire prevention.

With that, I will hand it back to Ignacio for the closing remarks.

Ignacio Rosado

Thank you, Rodrigo. Before we open for questions, let me close on Slide number 17 with our priorities. First, the transaction. In August, Votorantim signed a definite agreement to sell its controlling stake in Nexa to Boliden. We continue to work constructively with all parties towards closing, which is expected in the first quarter of 2027, subject to customary approvals. Until then, Nexa continues to operate as an independent company and our strategy, capital allocation priorities and commitments to our stakeholders are unchanged.

Second, Aripuana. With the plant at 90% utilization in September and mine development accelerating, we are preparing the operation to support higher throughput in 2027. Aripuana is one of the key pillars of our long-term cash generation. Third, Cerro Pasco. Phase 1 is on track for mechanical completion in December with pumping expected to start in the early third quarter of 2027. This is a high potential polymetallic district and the project strengthens our integrated position in the district.

Fourth, exploration. We have completed about 2/3 of this year's drilling program, which is focused on extending the life of our mines. Underpinning all of this are the same priorities, operating safely, generating free cash flow, allocating capital with discipline and reducing gross debt, always with a view to creating long-term value for our shareholders and the communities where we operate. We are entering the last quarter of the year with stronger operations, a healthier balance sheet and a clear set of priorities.

With that, let's open the line for questions.

Operator

[Operator Instructions] The first question comes from Pedro Mello with Citi.

分析師問答

Pedro Macedo Ferreira de Mello

First, congratulations on the strong results and on stabilizing the savings future at Aripuana, which helped plant utilization reached 90% in September. So how should we think about the quarter-over-quarter ramp-up pace going forward, supported by the additional mine development CapEx? And how should we expect the asset cost roll and unit cash cost to evolve as higher processing volumes due to fixed costs? And second, regarding the Cerro Pasco Project Integration, you raised the CapEx guidance to $41 million and maintained the target for mechanical completion by this year-end. But could you provide your view as the key operational or risks to starting up savings into next year? So if you, please?

Ignacio Rosado

So good questions. Thank you very much. I will start with Cerro Pasco. As we said, the pumping system is already finishing now in December, and the ramp-up is going to be starting in January. We don't see any risks here because we have been following construction very closely. And we have some months in our current tailings dam also that is a cushion for the overlap of the new system. So we don't see any risks here. And as we said in the presentation, permits are also on time, and we don't expect any negative news on permits. So Cerro Pasco is going really well.

And for us, is -- this is the first phase. This is an operational phase that brings, I would say, stability to El Porvenir in terms of still producing and having a new tailings dam that is the Atacocha tailings dam. For us, what is more important in Cerro Pasco is the future, which is all the mineral that we are finding, how are we going to accommodate it in the next phases. And this is things that are coming in '27 and '28, okay? So Pasco is something that is going really well, and we have recovered from the previous 3 years and it's going to be strong in 2027.

Regarding Aripuana, as you said, we are at 90% capacity today, very important because the fourth filter is performing really well. It's an automated filter. It's a different technology and has been built in a very efficient and specific way. With this filter and the ones that we had before, we expect to have to deliver 100% of capacity in the coming months. If you remember, the summer that is a rainy season was a difficult season for us. But given the capacity of the filter and the filtration we get from the tailings, we don't expect any impact on production. So coming months, first quarter, we're going to be at full capacity.

Cost is still a tricky one because some of the problems that we face is that this operation is far away from any other city and the costs related to bringing all these materials to the operation are high -- higher. And then finding the right people to work in Aripuana is key for us and the rotation is high. So it's a process for us, and that's why costs have been higher. Having said that, with the full throughput and the measures we are taking to mitigate all these things that are affecting cost, we are expecting to start reducing the cost in the third quarter and in the next year. This operation towards the end of next year should be similar to the other Brazilian operations to Vazante, but it's going to be a process for us.

So having said that as well, if you see this -- all this operating performance of Aripuana, Aripuana is now a mine. It's -- if you see any KPI of mine development, of the plant, of recoveries, of quality of concentrate, of quality of tailings, is really, really getting there. And it's been a process. It's been a very difficult process, but now we are starting to have a normal mine. Now we are working on profitability, on reducing the costs, and we are on the right track to do that. And again, with all the potential that Aripuana has, we believe that in the next 2, 3 years, Aripuana is going to bring a lot of profitability. So it's a solid advance that we have, and we're going to -- we are expecting this solid profitability in the next 3 years.

Operator

[Operator Instructions] Now I would like to turn the call over to the company for the reading questions. Please go ahead.

Rodrigo Cammarosano

Thank you, operator. We have one question from the audience. It comes from Alex Emery from S&P Global. So the question is production of most metals was down year-over-year at Nexa Peruvian operations. So apart from lower grades at Cerro Lindo, were there other factors that constrained output in Q3 and the company expects operations to return to normal levels in Q4?

Ignacio Rosado

Yes. Thank you for the question again. Yes, Cerro Lindo is having lower grades, and this is expected in the life-of-mine plan and in the reserves. And specifically in the third quarter, we have some development problems that reduce a little bit the tonnage that we extract from the mines. This is not going to be the case in the fourth quarter. Fourth quarter is going to be a strong quarter. And this combined with a stronger quarter also in Cerro Pasco, we believe that we are going to be right on track on the projections that we have. And that's why we convey the message that the fourth quarter in the Peruvian mines and in the Brazilian mines are going to be much stronger.

Operator

This concludes our question-and-answer session. I would now like to hand the call over to Mr. Ignacio Rosado for his closing remarks. Mr. Rosado, please go ahead.

Ignacio Rosado

Again, thank you all for attending the call. This has been still a very challenging quarter, but we have been delivering as expected. As we said before, the fourth quarter is going to be a stronger one. That combined with the current prices, we believe that our cash flow generation is going to be also in the projections very strong.

I would like to comment also that we are starting to interact in general terms with the senior management of Boliden. We know them very well. They are very senior and very talented. And this closing process is going as expected. We believe it's going to close in the first quarter of next year. And we are looking forward to start interacting with them more and we -- to start integrating with this know-how of them, our know-how and all of these quality teams altogether working for the benefit of Boliden and Nexa as well.

So thank you very much. Thank you. We will speak in the first half of next year regarding our closing results for the year. Have a good day.

Operator

Thank you. This concludes today's conference call. We appreciate your participation and interest in Nexa. You may now disconnect.