Contents

Consolidated financial statements

Notes to the consolidated financial statements

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Nexa Resources S.A.
Consolidated income statement Years ended December 31 All amounts in thousands of US dollars, unless otherwise stated

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Nexa Resources S.A.
Consolidated statement of comprehensive income Years ended December 31 All amounts in thousands of US dollars, unless otherwise stated

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Nexa Resources S.A.
Consolidated balance sheet As at December 31 All amounts in thousands of US dollars, unless otherwise stated

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Nexa Resources S.A.
Consolidated statement of cash flows Years ended December 31 All amounts in thousands of US dollars, unless otherwise stated

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Nexa Resources S.A.
Consolidated statement of changes in shareholders’ equity At and for the years ended December 31 All amounts in thousands of US dollars, unless otherwise stated

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Nexa Resources S.A.
Consolidated statement of changes in shareholders’ equity At and for the years ended December 31 All amounts in thousands of US dollars, unless otherwise stated

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Nexa Resources S.A. (“NEXA”) is a public limited liability company (société anonyme) incorporated and domiciled in the Grand Duchy of Luxembourg. Its shares are publicly traded on the New York Stock Exchange (“NYSE”). As a result of a voluntary delisting, November 30, 2021 was the last trading day of the Company’s shares on the Toronto Stock Exchange (“TSX”), and NEXA intends to cease to be a reporting issuer under Canadian securities laws, when applicable.

The Company’s registered office is located at 37A, Avenue J. F. Kennedy in the city of Luxembourg in the Grand Duchy of Luxembourg.

NEXA and its subsidiaries (the “Company”) have operations that comprise large-scale, mechanized underground and open pit mines and smelters. The Company owns and operates three polymetallic mines in Peru, and two polymetallic mines in Brazil and is completing the development of its third polymetallic mine in Brazil. The Company also owns and operates a zinc smelter in Peru and two zinc smelters in Brazil.

The Company’s majority shareholder is Votorantim S.A. (“VSA”), which holds 64.68% of its equity. VSA is a Brazilian privately-owned industrial conglomerate that holds ownership interests in metal, steel, cement, and energy companies, among others.

COVID-19 outbreak impacts on NEXA´s financial statements and operations

In March 2020, the World Health Organization characterized the current COVID-19 disease (“COVID- 19”) as a pandemic. Since then, COVID-19 spread across the world, through different waves, with severe effects that impacted the global economy in general and the Company’s business.

Throughout this pandemic, government authorities in the countries in which the Company operates responded and continue to respond in different ways to deal with this global outbreak. In Peru, for example, during the first and second quarters of 2020, the Company’s Peruvian mines were suspended, and its Peruvian smelter reduced production in response to the Peruvian Government mandated health and safety measures. No other material impacts have occurred within the Company since the beginning of the pandemic.

As a result of a combination of factors, including suspended and reduced production, the decrease in short- and mid-term commodities prices, discontinued projects, and increased operating costs, in 2020, the Company recognized an impairment loss of non-current assets of USD 557,497, as mentioned in note 31.

Currently, although the Peruvian and Brazilian subsidiaries continue to operate subject to additional measures to control and mitigate the spread of COVID-19, they have returned to their pre-pandemic production levels, with the exception of the Atacocha underground mine in Peru, which continues suspended under care and maintenance given its higher operating costs. Ultimately, the impact of the COVID-19 global outbreak on the Company’s financial condition depends on the pandemic’s continuing duration and severity, on the efforts to contain its spread, on the abilities of countries to continue advancing in the distribution of effective vaccines against it, on the recovery of global and regional economies, and on the impact of response measures taken by the Company, governments, and others.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Business segment definition

The Company’s Chief Executive Officer has been identified as the chief operating decision maker (“CODM”) since the role encompasses authority over resource allocation decisions and performance assessment. The CODM analyzes performance mainly from the production obtained in the operations. The Company has identified two reportable segments:

•       Mining: consists of five long-life polymetallic mines, three located in the Central Andes of Peru and two located in the state of Minas Gerais in Brazil. In addition to zinc, the Company produces substantial amounts of copper, lead, silver, and gold as by-products, which reduce the overall cost to produce mined zinc.

•       Smelting: consists of three operating units, one located in Cajamarquilla in Peru and two located in the state of Minas Gerais in Brazil. The facilities recover and produce metallic zinc (SHG zinc and zinc alloys), zinc oxide and by-products, such as sulfuric acid.

Accounting policy

Segment performance is assessed based on Adjusted EBITDA, since financial results, comprising financial income and expenses and other financial items, and income tax are managed at the corporate level and are not allocated to operating segments. Adjusted EBITDA is defined as net income (loss) for the year, adjusted by (i) share in the results of associates, (ii) depreciation and amortization, (iii) net financial results, (iv) income tax, (v) (loss) gain on sale of investments, and (vi) impairment and impairment reversals. In addition, management may adjust the effect of certain types of transactions that in its judgment are not indicative of the Company´s normal operating activities or do not necessarily occur on a regular basis.

The internal information used for making decisions is prepared using International Financial Reporting Standards (“IFRS”) based on accounting measurements and management reclassifications between income statement lines items, which are reconciled to the consolidated financial statements in the column “Adjustments”. These adjustments include reclassifications of the effects of derivative financial instruments from Other income and expenses, net to Net revenues and Cost of sales; and, of certain overhead costs from Other income and expenses, net to Cost of sales and/or Selling, general and administrative expenses.

The Company uses customary market terms for intersegment sales. The Company’s corporate headquarters expenses are allocated to the reportable segments to the extent they are included in the measures of performance used by the CODM.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

The presentation of segment results and reconciliation to income (loss) before income tax in the consolidated income statement is as follows:

(i) Related to minor impairment reversals of equipment costs previously impaired and that were sold in 2021. Due to the low amounts, these are included as Other income and expenses, net.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

These consolidated financial statements have been prepared in accordance with IFRS and interpretations issued by the IFRS Interpretations Committee applicable to companies reporting under IFRS, as issued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements have been prepared under the historical cost convention, except for certain financial assets and financial liabilities (including derivative financial instruments) measured at fair value at the end of each reporting period.

The consolidated financial statements of the Company for the year ended on December 31, 2021, were approved for issue in accordance with a resolution of the Board of Directors on February 15, 2022.

The consolidated financial statements comprise the financial statements of NEXA and its subsidiaries on December 31, 2021.

Subsidiaries include all entities over which the Company has control. The Company controls an entity when it (i) has the power over the entity; (ii) is exposed, or has the right, to variable returns from its involvement with the entity; and (iii) has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company, except when the predecessor basis of accounting is applied. Subsidiaries are deconsolidated from the date that control ceases.

Accounting policies of subsidiaries are usually consistent with the policies adopted by the Company. If there are differences, to ensure the standardization of the accounting policies, an adjustment is performed in the consolidation process.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Non-controlling interests in the subsidiaries’ equity and results are shown separately in the consolidated balance sheet, income statement, statement of comprehensive income and statement of changes in shareholders’ equity. A change in ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction.

If the Company loses control over a subsidiary, it derecognizes the related assets, liabilities, non-controlling interests and other equity components and any resultant gain or loss is recognized in the income statement. Any investment retained is recognized at fair value.

In general, there is a presumption that a majority of voting rights results in control. When the Company has less than a majority of the voting rights of an investee, it considers all relevant facts and circumstances to determine whether it has power over this investee. This may include contractual arrangements with the other holders of voting rights in the investee; rights arising from other contractual arrangements; and the Company’s voting rights and potential voting rights that will give it the practical ability to direct the relevant activities of the investee unilaterally.

Intercompany transactions, balances, and unrealized gains on transactions between companies in the consolidated group are eliminated in full on consolidation. Unrealized losses are also eliminated unless the transaction indicates impairment of the transferred asset.

The Company recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held assets or incurred liabilities or revenues and expenses. These have been included in the consolidated financial statements under the appropriate headings.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Transactions, balances and unrealized gains and losses between consolidated entities are eliminated. The main entities included in the consolidated financial statements are:

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

(i) NEXA BR owns all the common shares of Pollarix, which represents 33.33% of its total share capital. The remaining shares are preferred shares with limited voting rights, which are indirectly owned by NEXA’s controlling shareholder, VSA.

Transactions with non-controlling interests that do not result in a loss of control are recognized within shareholders’ equity as transactions with equity owners of the consolidated group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in Additional paid in capital within shareholders’ equity.

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which each entity operates (“the functional currency”). The Company’s consolidated financial statements are presented in US Dollars ("USD"), which is NEXA’s functional currency and the Company’s reporting currency.

Foreign currency transactions are initially recorded by each entity in the Company at their respective functional currency spot rates at the date the transaction is recognized. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the functional currency spot rates at the end of each reporting period are recognized in the income statement. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

The results of operations and financial position of the consolidated entities that have a functional currency different from the Company’s reporting currency are translated into the reporting currency as follows:

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

There were some new standards and amendments effective for annual periods commencing on January 1, 2021. The adoption of these new standards and amendments did not have an impact on the Company’s financial statements. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective and does not expect that the adoption of such issued but not early adopted standard, interpretation or amendment will have a material impact on the Company’s financial statements.

In 2014, developments in the global markets revealed weaknesses in the London Interbank Offered Rate’s (“LIBOR”) sustainability as a reference rate. Since then, regulators around the world have focused on the transition to a new benchmark that would replace this rate.

On March 5, 2021, the UK Financial Conduct Authority (“FCA”), announced that the LIBOR will either be discontinued or become non-representative:

The Company does not have any financial instruments associated with LIBOR in other currencies and continues to discuss with the financial entities which interest rate reference will replace the loans measured by USD LIBOR, and does not expect any significant impacts on its financial statements.

Until 2020, the Company used only global ratings for assessing the credit risk of financial institutions in Peru. In 2021, the Company modified its Financial Risk Management Policy, allowing the use of their local ratings, but only if these local agencies were homologated by the global agencies used by NEXA. For more details see note 12 (b).

The preparation of the Company’s consolidated financial statements requires the use of estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Accounting estimates and assumptions, by definition, will seldom equal the actual results and are continually evaluated to reflect changing expectations about future events. Management also needs to exercise judgment in applying the Company’s accounting policies.

This note provides an overview of the areas that involve a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong due to their uncertainty. Detailed information about each of these estimates, assumptions and judgments is included in other notes together with information about the basis of calculation for each affected item in the financial statements.

The critical accounting estimates, assumptions and judgments applied by the Company in the preparation of these financial statements are as follows:

• estimation of current and deferred income taxes – note 11

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

• estimation of fair value of financial instruments – note 13

• estimation of impairment of trade accounts receivables – note 17

• estimation of quantification of mineral reserves and resources for useful life calculation – note 22

• estimation of asset retirement and environmental obligations – note 26

• estimation of provisions for legal claims – note 27

• estimation of contractual obligations – note 28

• estimation of impairment of non-current assets – note 31

Estimates, assumptions and judgments are continuously evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

The Company has considered the effects of COVID-19 when making its estimates, assumptions and judgments. Events and changes in circumstances arising after December 31, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Nexa integrates sustainability practices into its business, focused on generating a positive social, economic and environmental impact in the places where it operates. Within this context, the Company has a multidisciplinary and integrated task force which is currently complementing and defining its Environmental, Social and Governance (“ESG”) strategy and future actions including risks analyses with respect to climate change and global, regional and local weather conditions, as well as those related to the emission of greenhouse gases, among other matters. The Company’s objective is to continuously evolve and adapt to new frameworks, as well as to respond to its stakeholder feedback. As a result of these definitions, the Company could have in the future some change in its accounting estimates, assumptions and judgments regarding new definitions, practices or commitments that would be assumed by management in relation to its ESG strategy.

Accounting policy

Revenues represent the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s activities. Revenues are shown net of value-added tax, returns, rebates and discounts, after eliminating sales between the consolidated companies.

The Company recognizes revenues when a performance obligation is satisfied by transferring a promised good or service to a customer. The asset is transferred when the customer obtains control of that asset. To determine the point in time at which a customer obtains control of a promised asset the Company considers the following indicators: (i) the Company has a present right to payment for the asset; (ii) the customer has legal title to the asset; (iii) the Company has transferred physical possession of the asset; (iv) the customer has the significant risks and rewards of ownership of the asset; (v) the customer has accepted the asset.

Identification and timing of satisfaction of performance obligations

The Company has two distinct performance obligations included in certain sales contracts:

(i) the promise to provide goods to its customers; and, (ii) the promise to provide freight and insurance services to its customers.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Promise to provide goods: this performance obligation is satisfied when the control of such goods is transferred to the final customer, which is substantially determined based on the Incoterms agreed upon in each of the contracts with customers.

Promise to provide freight and insurance services: this performance obligation is satisfied when the freight and insurance services contracted to customers are completed.

As a result of the distinct performance obligations identified, part of the Company’s revenues is presented as revenues from services. Cost related to revenues from services is presented as Cost of sales.

Revenues from the sale of goods and from freight and insurance services are recognized at a point in time when control is transferred and when contracted services are provided. It is at this point that a trade receivable is recognized because only the passage of time is required before the consideration is due. The Company does not have any contract assets, which give right to consideration in exchange for goods or services that the Company has transferred to the customer, since all rights to consideration of the contracts are unconditional.

Deferred revenues are related to contract obligations that are an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer (or the payment is due) but the transfer has not yet been completed. For contracts where performance obligations are satisfied over a period of time, the stage of completion is required to calculate how much revenue should be recognized to date and revenue shall be deducted from the prepayment to the extent that performance obligations are delivered. Refer to note 28 for the specific accounting policy and information related to NEXA’s contractual obligations.

Determining the transaction price and the amounts allocated to performance obligations

The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration that the Company expects to be entitled to receive in exchange for transferring promised goods or services to its customers. Transaction price is allocated to each performance obligation on a relative standalone selling price basis.

The transaction prices included in the Company’s sales contracts are mainly based on international prices references and subject to price adjustments based on the market price at the end of the relevant quotation period stipulated in the sales contract. These are referred to as provisional pricing arrangements which are subject to a monthly price adjustment. The period between the provisional and final pricing is approximately two months. As of December 31, 2021, the pending price adjustments to be made were not material.

Additionally, the Company has a contractual obligation related to a long-term silver streaming arrangement linked to specific production of its Cerro Lindo mine. The Company received an upfront payment in advance of this specific production. The transaction price is linked to the silver production and spot market prices, which change over time and, therefore, it is accounted for as variable consideration. For more details about this streaming transaction see note 28.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

In 2021, a gross billing of approximately USD 390,469 was generated from a single customer, and there was no other customer to which the Company sold more than 10% of its gross billing individually. Net revenues were generated by NEXA’s both segments, mining and smelting.

In 2021, taxes on sales include ICMS expenses of USD 71,949 related to the Company’s adoption of the tax incentive allowed by Complementary Law No. 160/2017, as detailed in note 9 (i).

The geographical areas are determined based on the location of the Company’s customers. The net revenues of the Company, classified by geographical location and currency, are as follows:

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Accounting policy

Cost of sales mainly consists of the cost of manufacturing the products sold by the Company and is recognized in the income statement on the date of delivery to the customer at the same time revenue is recognized from the related sale.

Selling, general and administrative expenses are recognized on the accrual basis regardless of when they are paid and, if applicable, in the same period in which the income with which they are related is recognized. 

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

(i) In 2021, cost of sales was reduced by USD 19,407 due to GSF recovered costs related to the extension of the concession period of NEXA’s Brazilian energy power plants as explained in note 22.

Accounting policy

Mineral exploration and project evaluation costs are expensed in the year in which they are incurred.

Mineral exploration activities involve the search for mineral resources from potential areas up to the determination of commercial viability and technical feasibility of an identified resource. Mineral exploration costs include gathering exploration data through geological and geophysical studies, conducting exploratory drilling and sampling, and determining and examining the volume and grade of the identified resources.

Project evaluation costs are mainly related to scoping, pre-feasibility and feasibility studies for greenfield and brownfield projects. Additionally, these evaluation costs could also include costs incurred for studies related to other corporate projects, research, innovation, automation, and information technology projects.

Note 21 describes when mineral exploration and project evaluation costs begin to be capitalized.

Composition of mineral exploration and project evaluation costs

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Accounting policy

(i) Financial expenses

Financial costs of obligations are recognized as expenses when accrued, except for those directly attributable to the acquisition or the construction of qualifying assets, that is, assets that require a substantial time to be ready for use, which are capitalized at cost within Property, plant and equipment and/or Intangibles to which they relate.

(ii) Financial income

Financial income is mainly composed of interest income and is recognized on an accrual basis to reflect the asset’s effective yield under the effective interest rate method.

(iii) Other financial items, net

Other financial items net is composed by the net of the income and expenses related to the fair value of loans and financings, derivative financial instruments, and foreign exchange losses.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

(i) The amounts for years 2021 and 2020 include losses of USD 10,468 and USD 65,689 respectively, which are related to the outstanding USD denominated intercompany debt of NEXA BR with NEXA, which is impacted by the volatility of the BRL, which depreciated continuously during 2021 and 2020.

Accounting policy

The current income tax is calculated based on the tax laws enacted or substantively enacted as of the balance sheet date in the countries where the Company’s entities operate and generate taxable income. Management periodically evaluates positions taken by the Company in the taxes on income returns with respect to situations in which the applicable tax regulations are subject to interpretation.

It establishes provisions, where appropriate, considering amounts expected to be paid to the tax authorities.

The current income tax is presented net, separated by tax paying entity, in liabilities when there are amounts payable, or in assets when the amounts prepaid exceed the total amount due on the reporting date.

Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction affects neither the accounting nor the taxable income or loss. Deferred income tax is determined using tax rates (and laws), of the Company’s entities, that have been enacted or substantially enacted at the end of the reporting period and that are expected to be applied when the related deferred income taxes asset is realized, or the deferred income tax liability is settled.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Deferred tax assets are recognized only to the extent it is probable that future taxable income will be available against which the temporary differences and/or tax losses can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right and an intention to offset them in the calculation of current taxes, generally when they are related to the same legal entity and the same tax authority. Accordingly, deferred tax assets and liabilities in different entities or in different countries are generally presented separately, and not on a net basis.

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amounts and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not be reversed in the foreseeable future.

Critical accounting estimates and judgments

The Company is subject to income tax in all countries in which it operates where uncertainties arise in the application of complex tax regulations. Significant judgment, estimates and assumptions are required to determine the amount of deferred taxes that would be recovered since this amount may be affected by factors including, but not limited to: (i) internal assumptions on the projected taxable income, which are based on production and sales planning, commodity prices, operational costs and planned capital costs; (ii) macroeconomic environment; and, (iii) trade and tax scenarios.

In addition, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company also exercises judgment in the identification of these uncertainties over income tax treatments which could impact the consolidated financial statements as the Company operates in a complex multinational environment.

The Company and its subsidiaries are subject to reviews of income tax filings and other tax payments, and disputes can arise with the tax authorities over the interpretation of the applicable laws and regulations.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

(i) The Company’s activities are subject to the income tax regime of each country where it operates. However, NEXA’s Cerro Lindo mining unit had a lower income tax rate in comparison with that of other Peruvian operations because it was taxed under the laws and guarantees of a stability agreement signed by NEXA PERU, which was valid until the end of 2021. The deferred taxes of NEXA’s Cerro Lindo unit, however, are calculated considering the statutory income tax rate of 29.5% applicable as of January 1, 2022, since they will be recovered after 2021.

(ii) On June 10, 2021, NEXA and the other shareholders of NEXA CJM approved a capital reduction of USD 210,703 which was paid on July 27, 2021. Given this capital reduction, the Company recognized USD 10,526 of tax expenses because the tax withheld by NEXA CJM on the corresponding participation of NEXA in its capital was considered not recoverable.

(iii) See note 9.

(i) As a result of adopting Complementary Law No. 160/2017, as described in note 9, there was also an increase in the amount of USD 11,996 in the balance of tax losses for the year, amount which is included in the tax credits on net operating losses.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

There are uncertainties and legal proceedings for which it is not probable that an outflow of resources will be required. In such cases, a provision is not recognized. As of December 31, 2021, the main legal proceedings are related to: (i) the interpretation of the application of Cerro Lindo´s stability agreement; (ii) the carryforward calculation of net operating losses; and, (iii) the deductibility of foreign exchange losses and expenses. The estimated amount of these contingent liabilities on December 31, 2021 is USD 134,804 which decreased in comparison to the estimate of USD 163,670 on December 31, 2020 due to a favorable decision received in 2021 with respect to one of its pending income tax assessments as recognized by the corresponding tax authority.

Regarding Cerro Lindo´s stability agreement, in December 2021, the Peruvian tax authority (“SUNAT”) concluded its income tax inspection of NEXA PERU’s fiscal year 2014. As a result of this procedure, SUNAT determined an amount to be paid by the Company of USD 47,575 (including principal, penalties and interest) arguing that NEXA PERU’s income tax expense should be calculated considering the Peruvian statutory income tax rate for 2014 fiscal year of 30% instead of the 20% income tax rate that the stability agreement granted to Cerro Lindo’s operations. According to SUNAT, the Company should separate the income coming from the facilities built under the approved feasibility study (which includes a plant with a production capacity of 5,000 tpd) from that coming from the other facilities and since this is not possible, SUNAT disregarded the stabilized rate. On January 18, 2022, the Company filed its defense stating to SUNAT’s reclamation office that this assessment was non-compliant with applicable law mainly because: i) SUNAT determined a presumed tax base that is expressly denied by the Peruvian Tax Code; and, ii) SUNAT misinterpreted the stability agreement scope.  Company’s management, supported by the opinion of its external advisors, concluded that there are strong legal grounds to obtain a favorable outcome (“more likely than not”) in this discussion and, accordingly, no contingency provision has been set up. Finally, fiscal years 2015 through 2021 are still opened to be audited by SUNAT. Even if SUNAT maintains its position disregarding the stabilized rate and taxing the whole income of the Company at the statutory income tax rate, the entity will keep maintaining its position that no provision should be recognized. This evaluation must be updated year by year, reflecting changes on tax jurisprudence and regulations in force.

Financial risk factors

The Company’s activities expose it to a variety of financial risks: a) market risk (including currency risk, interest rate risk and commodities risk); b) credit risk; and c) liquidity risk.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

A significant portion of the products sold by the Company are commodities, with prices pegged to international indices and denominated in USD. Part of the production costs, however, is denominated in BRL and Peruvian Soles (“PEN”), and therefore, there is a mismatch of currencies between revenues and costs. Additionally, the Company has debts linked to different indices and currencies, which may impact its cash flows.

In order to mitigate the potential adverse effects of each financial risk factor, the Company follows a Financial Risk Management Policy that establishes governance and guidelines for the financial risk management process, as well as metrics for measurement and monitoring. This policy establishes guidelines and rules for: (i) Commodities Exposure Management, (ii) Foreign Exchange Exposure Management, (iii) Interest Rate Exposure Management, (iv) Issuers and Counterparties Risk Management, and (v) Liquidity and Financial Indebtedness Management. All strategies and proposals must comply with the Financial Risk Management Policy guidelines and rules, be presented to and discussed with the Finance Committee of the Board of Directors, and, when applicable, submitted for the approval of the Board of Directors, under the governance structure described in the Financial Risk Management Policy.

The purpose of the market risk management process and all related actions are intended to protect the Company’s cash flows against adverse events, such as changes in foreign exchange rates, interest rates and commodity prices, to maintain the ability to pay financial obligations, and to comply with liquidity and indebtedness levels defined by management.

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Presented below is a sensitivity analysis of the main risk factors that affect the pricing of the outstanding financial instruments relating to cash and cash equivalents, financial investments, loans and financings, and derivative financial instruments. The main sensitivities are the exposure to changes in the USD exchange rate, the Interbank Deposit Certificate (“CDI”) interest rates, the National Broad Consumer Price Index (“IPCA”) and the commodity prices. The scenarios for these factors are prepared using market sources and other relevant sources, in compliance with the Company's policies. The scenarios on December 31, 2021 are described below:

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	Nexa Resources S.A.
	Notes to the consolidated financial statements At and for the year ended December 31, 2021 All amounts in thousands of US dollars, unless otherwise stated

Foreign exchange risk is managed through the Company’s Financial Risk Management Policy, which states that the objectives of derivative transactions are to reduce cash flow volatility, hedge against foreign exchange exposure and minimize currency mismatches.

Presented below are the financial assets and liabilities in foreign currencies on December 31, 2021. These mainly result from NEXA BR’s operations, for which the functional currency is the BRL.

Intercompany loans balances are fully eliminated in the consolidated financial statements. However, the related foreign exchange gain or loss is not, and is presented as foreign exchange effects.