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Exhibit 99.1
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NEXA RESOURCES S.A. TECHNICAL REPORT ON THE ARIPUANÃ ZINC PROJECT, STATE OF MATO GROSSO, BRAZIL NI 43-101 Technical Report Qualified Persons: Jason J. Cox, P.Eng. Sean Horan, P.Geo. Brenna J.Y. Scholey, P.Eng. Luis Vasquez, P.Eng. November 17, 2020 55 University Ave. Suite 501 I Toronto, ON, Canada M5J 2H7 I T + 1 (416) 947 0907 www.rpacan.com |
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Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil FINAL Version Nexa Resources S.A. Rua Guaicui, 20-14°Andar Belo Horizonte, Mato Grosso Brazil 30380-380 Project # 3252 Issue Date Lead Author Peer Reviewer Status & Issue No. November 17, 2020 (Signed) Lance Engelbrecht (Signed) (Signed) Luke Evans Deborah A. McCombe (Signed) Jason J. Cox Report Distribution Name No. of Copies Client RPA Filing 1 (project box) Canada Tel: +1 416 947 0907 Fax: +1 416 947 0395 mining@rpacan.com |
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TABLE OF CONTENTS PAGE SUMMARY1-1 Executive Summary1-1 Economic Analysis1-8 Technical Summary1-15 INTRODUCTION2-1 Sources of Information2-2 List of Abbreviations2-4 RELIANCE ON OTHER EXPERTS3-1 PROPERTY DESCRIPTION AND LOCATION4-1 Location4-1 Land Tenure4-1 Mineral Rights4-5 Surface Rights4-5 Royalties and Other Encumbrances4-8 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY5-1 Accessibility5-1 Climate5-1 Local Resources5-1 Infrastructure5-2 Physiography5-2 HISTORY6-1 History6-1 Exploration and Development History6-2 Historical Resource Estimates6-2 Past Production6-2 GEOLOGICAL SETTING AND MINERALIZATION7-1 Regional Geology7-1 Local Geology7-4 Property Geology7-4 Mineralization7-7 DEPOSIT TYPES8-1 EXPLORATION9-1 1999 to 2002 Exploration9-1 Nexa Exploration9-2 Exploration Potential9-4 DRILLING10-1 |
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Previous Drilling10-1 Recent Drilling10-2 SAMPLE PREPARATION, ANALYSES, AND SECURITY11-1 Sample Method and Approach11-1 Density Analysis11-1 Sample Preparation11-2 Sample Analysis11-2 Database Management11-3 Sample Security11-4 Quality Assurance and Quality Control (QA/QC)11-4 DATA VERIFICATION12-1 Nexa12-1 RPA Audit of Drill Hole Database12-2 MINERAL PROCESSING AND METALLURGICAL TESTING13-1 Introduction13-1 Metallurgical Sampling13-2 Metallurgical Testing13-5 Summary13-40 MINERAL RESOURCE ESTIMATE14-1 Summary14-1 Comparison with Previous Estimate14-6 Net Smelter Return Cut-Off Value14-8 Topography14-9 Arex, Link, and Ambrex14-10 Babaçú14-42 MINERAL RESERVE ESTIMATE15-1 Summary15-1 Dilution15-2 Extraction15-3 Cut-off Grade15-3 MINING METHODS16-1 Mine Design16-1 Mining Method16-6 Underground Mining Fleet16-7 Geotechnical Considerations16-10 Ventilation16-17 Backfill16-18 Production Schedule16-19 RECOVERY METHODS17-1 Process Description17-1 PROJECT INFRASTRUCTURE18-1 Waste Management18-1 Waste Production18-1 |
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Water Collection and Treatment18-8 Power Supply18-9 Water Supply18-9 Site Access18-10 MARKET STUDIES AND CONTRACTS19-1 Markets19-1 Contracts19-5 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ............................................................................................................................................ 20-1 Environmental Setting20-1 Corporate Policy and Commitments20-4 Environmental Studies20-4 Emergency Preparedness and Response20-9 Mine Waste Management20-9 Water Management20-11 Project Permitting20-12 Social or Community Requirements20-13 Mine Closure Requirements20-32 CAPITAL AND OPERATING COSTS21-1 Capital Costs21-1 Operating Costs21-4 ECONOMIC ANALYSIS22-1 Economic Criteria22-1 Cash Flow Analysis22-6 Sensitivity Analysis22-6 ADJACENT PROPERTIES23-1 OTHER RELEVANT DATA AND INFORMATION24-1 INTERPRETATION AND CONCLUSIONS25-1 RECOMMENDATIONS26-1 REFERENCES27-1 DATE AND SIGNATURE PAGE28-1 CERTIFICATE OF QUALIFIED PERSON29-1 LIST OF TABLES PAGE Table 1-1 After-Tax Cash Flow Summary1-10 Table 1-2 Sensitivity Analyses1-15 Table 1-3 Mineral Resources – September 30, 20201-19 Table 1-4 Mineral Reserves – September 30, 20201-20 |
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Table 1-5 Pre-Production Capital Cost Estimate1-24 Table 1-6 Operating Cost Estimate1-25 Table 4-1 Exploration Authorization Permits4-2 Table 4-2 Surface Rights4-6 Table 4-3 Royalty Data4-8 Table 9-1 Anglo American and Karmin Exploration – 1999 to 20029-1 Table 9-2 Babaçú NW Exploration Target Potential – September 30, 20209-5 Table 10-1 Drill Hole Database10-1 Table 11-1 Certified Reference Materials11-6 Table 12-2 Summary of RPA Audits of the Resource Database12-3 Table 13-1 Phase 1 - LCT 2 Results13-6 Table 13-2 CWi Results13-8 Table 13-3 SMC Results13-8 Table 13-4 SPI Results13-9 Table 13-5 BWi Results13-10 Table 13-6 Ai Results13-11 Table 13-7 RWi Results13-11 Table 13-8 Summary of Key Optimization LCT Results13-14 Table 13-9 LCT 028 Conditions and Results– Arex Stratabound Master Composite13-16 Table 13-10 LCT 011 Conditions and Results– Arex Stringer Master Composite13-17 Table 13-11 LCT 025 Conditions and Results– Arex Stringer Master Composite13-18 Table 13-12 LCT 030 Conditions and Results– Arex Blended (75% Stratabound, 25% Stringer)13-19 Table 13-13 LCT 009 Conditions and Results– Ambrex Stratabound Master Composite....... .......................................................................................................................................... 13-20 Table 13-14 LCT 029 Conditions and Results– Ambrex Stratabound Master Composite....... .......................................................................................................................................... 13-21 Table 13-15 Summary of Settling Tests Using Magnafloc 10 Flocculant (3 g/t)13-23 Table 13-16 Summary of Filtration Test Work Conducted by Andritz13-27 Table 13-17 LCT 003F2 Conditions and Results – Link Stringer Composite13-29 Table 13-18 LCT 004F2 Conditions and Results – Stringer Global Composite13-30 Table 13-19 LCT 005F2 Conditions and Results – Link Stratabound Composite13-31 Table 13-20 LCT 006F2 Conditions and Results – Ambrex Stringer Composite13-32 Table 13-21 LCT 007F2 Conditions and Results – Ambrex Stratabound Composite13-33 Table 13-22 LCT 008F2 Conditions and Results – Strata Global Composite13-34 Table 13-23 2018 Pilot Plant Samples13-35 Table 13-24 Head Assays – Quarterly Composites13-37 Table 13-25 Head Assays and Test Results – Quarterly Composite BLEND13-38 Table 13-26 Comminution Data Used for Grinding Circuit Simulations13-39 Table 14-1 Summary of Mineral Resources – September 30, 202014-2 Table 14-2 Mineral Resources by Type and Area - September 30, 202014-3 Table 14-3 Comparison With Previous Mineral Resource Estimates14-7 Table 14-4 Mineralization Zones by Area - Arex, Link, and Ambrex14-12 Table 14-5 Arex, Link, and Ambrex Grade Capping Levels14-18 Table 14-6 Arex, Link, and Ambrex Uncapped versus Capped Assay Statistics14-19 Table 14-7 Arex, Link, and Ambrex Composite Statistics14-22 Table 14-8 Arex, Link, and Ambrex Correlogram Parameters14-25 Table 14-9 Arex, Link, and Ambrex Block Model Setup14-29 Table 14-10 Arex, Link, and Ambrex Sample Selection Strategy14-30 Table 14-11 Nexa Search Ellipse Ranges for Classification Criteria - Arex, Link, and Ambrex14-31 Table 14-12 Babaçú Grade Capping Levels14-44 |
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Table 14-13 Babaçú Uncapped versus Capped Assay Statistics14-45 Table 14-14 Babaçú Composite Statistics14-48 Table 14-15 Babaçú Block Model Setup14-49 Table 14-16 Babaçú Sample Selection Strategy14-50 Table 14-17 Comparison Between ID³ and NN Means - Babaçú14-52 Table 15-1 Mineral Reserves – September 30, 202015-1 Table 15-2 Dilution15-2 Table 15-3 Extraction Percentage15-3 Table 15-4 NSR Data15-5 Table 16-1 Development Dimensions16-6 Table 16-2 Main Underground Mining Fleet16-8 Table 16 3 Backfill Specification16-19 Table 16-4 Production Schedule16-20 Table 17-1 Key Process Design Criteria17-1 Table 20-1 Environmental Impacts and Management Measures (GeoMinAs, 2017)20-6 Table 20-2 Socio-economic Impacts and Management Measures (GeoMinAs, 2017)20-17 Table 20-3 Impacts on Indigenous Communities and Identified Management Measures (Comtexto Consulting, 2018)20-30 Table 20-4 Summary of pre-closure, closure and post-closure activities (SETE, 2018) 20-35 Table 21-1 Pre-Production Capital Cost Estimate21-2 Table 21-2 Sustaining Capital Cost Estimate21-2 Table 21-3 Operating Cost Estimate21-4 Table 22-1 After-Tax Cash Flow Summary22-3 Table 22-2 Sensitivity Analyses22-8 LIST OF FIGURES PAGE Figure 1-1 Pre-Tax Sensitivity Analysis Example1-14 Figure 4-1 Location Map4-3 Figure 4-2 Property Map4-4 Figure 4-3 Surface Rights4-7 Figure 7-1 Regional Geology7-2 Figure 7-2 Geological Map of the Amazonian Shield7-3 Figure 7-3 Property Geology7-6 Figure 8-1 Target Model8-2 Figure 9-1 Location of Babaçú NW Exploration Target9-6 Figure 9-2 Conceptual Vertical Section Showing the Babaçú NW Exploration Target9-7 Figure 10-1 Drill Hole Collar Map – Arex, Link, and Ambrex10-4 Figure 11-1 Control Chart for CRM AP0004: Zinc11-7 Figure 11-2 Control Chart for CRM AP0004: Lead11-8 Figure 11-3 Control Chart for CRM AP0001: Copper11-8 Figure 11-4 2005 to 2020 Results of Blank Samples (Zinc, Lead, and Copper)11-10 Figure 11-5 Analysis of Field Duplicate Data (Lead)11-11 Figure 11-6 Analysis of Coarse Rejectduplicate Data (Zinc)11-11 Figure 11-7 Analysis of Pulp Reject Duplicate Data (Copper)11-12 Figure 11-8 Analysis of External Laboratory Checks (Zinc)11-13 Figure 12-1 Density Measurements at Ambrex by Rock Unit12-4 Figure 12-2 Density Measurements at Arex by Rock Unit12-5 |
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Figure 13-1 Location of 2017 Arex Metallurgical Samples13-3 Figure 13-2 Location of 2017 Ambrex Metallurgical Samples13-4 Figure 13-3 Simplified Sequential Flotation Circuit13-13 Figure 13-4 Variation of Metal Assays in Flotation Products13-24 Figure 13-5 Variation of Metal Assays in Flotation Products13-25 Figure 13-6 Yield Stress versus Solids Percentage13-26 Figure 13-7 Viscosity versus Solids Percentage13-26 Figure 14-1 Isometric View Showing the Potentially Mineable Shapes Used for Reporting ............................................................................................................................................ 14-5 Figure 14-2 3D Isometric View of the Arex, Link, and Ambrex Wireframes14-13 Figure 14-3 Arex Geological Model14-14 Figure 14-4 Link Geological Model14-15 Figure 14-5 Ambrex Geological Model14-16 Figure 14-6 Capping Analysis for Body=117 (Arex)14-20 Figure 14-7 Cu Capping Analysis for Body=606 (Ambrex Stringer)14-21 Figure 14-8 Comparison of Histograms for Assay and Composite Length - Arex, Link, and Ambrex14-23 Figure 14-9 Correlation Matrices by Type and Area - Arex, Link, and Ambrex14-24 Figure 14-10 Arex Stratabound Correlograms (Plotted as Variograms)14-27 Figure 14-11 Ambrex Stringer Correlograms (Plotted as Variograms)14-28 Figure 14-12 Global Variograms Used for Classification Criteria - Arex and Ambrex14-32 Figure 14-13 Arex, Link, and Ambrex Final Classification Designation14-33 Figure 14-14 Comparison Between OK and NN Means (Stratabound) - Arex, Link, and Ambrex14-35 Figure 14-15 Comparison Between OK And NN Means (Stringer) - Arex, Link, and Ambrex .......................................................................................................................................... 14-36 Figure 14-16 Swath Plot – Stratabound – Easting14-37 Figure 14-17 Swath Plot – Stringer – Easting14-38 Figure 14-18 Arex Vertical Section Showing Zn and Cu Block versus Composite Grades ..... .......................................................................................................................................... 14-39 Figure 14-19 Link Vertical Section Showing Zn and Cu Block versus Composite Grades...... .......................................................................................................................................... 14-40 Figure 14-20 Ambrex Vertical Section Showing Zn and Cu Block versus Composite Grades .......................................................................................................................................... 14-41 Figure 14-21 Plan View of Ambrex and Babaçú Mineralization Wireframes14-43 Figure 14-22 Babaçú Capping Analysis for Stringer14-46 Figure 14-23 Histograms for Assay (Left) and Composite (Right) Lengths - Babaçú14-47 Figure 14-24 Correlation Matrices by Mineralization Type - Babaçú14-49 Figure 14-25 Babaçú Final Classification Designation14-51 Figure 14-26 Babaçú Zn Stratabound Swath Plot – Easting14-53 Figure 14-27 Babaçú Pb Stratabound Swath Plot – Easting14-53 Figure 14-28 Babaçú Ag Stratabound Swath Plot – Easting14-54 Figure 14-29 Babaçú Cu Stringer Swath Plot – Easting14-54 Figure 14-30 Babaçú Au Stringer Swath Plot – Easting14-55 Figure 14-31 Babaçú Vertical Sections Showing Zn Block versus Composite Grades14-56 Figure 14-32 Babaçú Vertical Sections Showing Cu Block versus Composite Grades14-57 Figure 16-1 Aripuanã Long Section16-2 Figure 16-2 Arex Long Section16-3 Figure 16-3 Link Long Section16-4 Figure 16-4 Ambrex Long Section16-5 Figure 16-5 Perspective 3D Solid Geomechanical Schematic16-12 Figure 16-6 Ventilation Requirements16-18 |
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Figure 17-1 Simplified Process Flow Sheet17-4 Figure 18-1 General Site Plan18-3 Figure 18-2 TMF Stack 1 Plan View (End of Phase 3)18-4 Figure 18-3 Double Lining and Leak Detection System for TMF (Stack 1) and Waste Rock Facility (Stack 2)18-6 Figure 18-4 Engineered Wetlands Concept18-8 Figure 18-5 Aripuanã Wetland Water Treatment18-9 Figure 19-1 Zinc Price Outlook (2020-2025)19-3 Figure 19-2 Refined Copper Market Balance (2020-2025)19-4 Figure 19-3 Copper Price Outlook (2020-2025)19-5 Figure 22-1 Pre-Tax Sensitivity Analysis Example22-7 |
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1 SUMMARY EXECUTIVE SUMMARY Roscoe Postle Associates Inc. (RPA), now part of SLR Consulting Ltd (SLR), was retained by Nexa Resources S.A. (Nexa) to prepare an independent Technical Report on the Aripuanã Zinc Project (Aripuanã or the Project), located in the state of Mato Grosso, Brazil. The purpose of this Technical Report is to support the disclosure of updated Mineral Resource and Mineral Reserve estimates. This Technical Report conforms to National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). RPA visited the property in February and June 2017. Nexa is a publicly traded company on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). It is a reporting issuer in all provinces and territories of Canada and is under the jurisdiction of the Ontario Securities Commission. Nexa is a large-scale, low-cost, integrated zinc producer with over 60 years of experience developing and operating mining and smelting assets in Latin America. Nexa has a diversified portfolio of polymetallic mines (zinc, lead, copper, silver, and gold) and also greenfield projects at various stages of development in Brazil and Peru. In Brazil, Nexa owns and operates two underground mines, Vazante and Morro Agudo (Zn and Pb). It also operates two zinc smelters in Brazil (Três Marias and Juiz de Fora). In Peru, Nexa operates the El Porvenir (Zn, Pb, Cu, Ag, and Au), Cerro Lindo (Zn, Cu, Pb, and Ag), and Atacocha (Zn, Cu, Pb, Au, and Ag) underground mines, as well as the Cajamarquilla zinc smelter near Lima. Nexa’s development projects in Peru include Magistral, Shalipayco, Florida Canyon (JV with Solitario), Hilarión, and Pukaqaqa. In Brazil, Nexa is developing the Aripuanã Zinc Project (Zn, Pb, and Ag), which is currently under construction. The Project is owned by Mineração Dardanelos Ltda. (Dardanelos), a wholly-owned subsidiary of Nexa. To date, the focus of exploration activities on the Project has been the Arex, Link, Ambrex, and Babaçú deposits, which contain the current Mineral Resources and Mineral Reserves. A feasibility study (FS) was completed in 2018, and construction began in July 2019. Earthworks are complete, surface facilities are under construction, and underground development is |
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underway, with mechanical completion expected in 4Q21 and production scheduled to begin in 2022. CONCLUSIONS RPA offers the following conclusions for each area: GEOLOGY AND MINERAL RESOURCES The Aripuanã deposits are located within the central-southern portion of the Amazonian Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate. The Aripuanã polymetallic deposits are typical volcanogenic massive sulphide (VMS) deposits associated with felsic bimodal volcanism. Four main elongate mineralized zones, Arex, Link, Ambrex, and Babaçú, have been defined in the central portion of the Project. Two separate material types have been identified – massive sulphide stratabound Zn-Pb mineralization, and Cu-Au bearing stringer mineralization found in the footwall of the stratabound zones. The drilling, sampling, sample preparation, analysis, and data verification procedures meet or exceed industry standard, and are appropriate for the estimation of Mineral Resources. As prepared by Nexa and adopted by RPA, the Aripuanã Measured and Indicated Mineral Resources, effective as of September 30, 2020, comprise 8.1 million tonnes (Mt) at 2.1% Zn, 0.7% Pb, 0.3% Cu, 0.4 g/t Au, and 22 g/t Ag for 169 thousand tonnes (kt) of Zn, 60 kt of Pb, 25 kt of Cu, 98 thousand ounces (koz) of Au, and 5.8 million ounces (Moz) of Ag. The Mineral Resources are exclusive of Mineral Reserves. Inferred Mineral Resources comprise 39.5 Mt at 3.3% Zn, 1.2% Pb, 0.3% Cu, 0.6 g/t Au, and 34 g/t Ag for 1.3 Mt of Zn, 482 kt of Pb, 131 kt of Cu, 737 koz of Au, and 43 Moz of Ag. The Mineral Resource estimate is consistent with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves dated May 10, 2014 (CIM (2014) definitions) as incorporated by reference into NI 43-101. Based on additional drilling completed since 2018, the Babaçú deposit has been incorporated into the Project’s Mineral Resource estimate. The deposit remains open and presents exploration potential beyond the current Mineral Resources. Limited exploration has identified additional mineralized bodies including Massaranduba to the south and Arpa to the north. MINING AND MINERAL RESERVES The deposits support a production rate of 2.2 million tonnes per annum (Mtpa), producing an average of 70 kt of zinc per year (zinc equivalent of 119 kt per year, after converting other metals based on net revenue). |
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Deposit geometry and geomechanical properties are amenable to bulk longhole mining methods, in primary/secondary or longitudinal retreat sequencing, depending on thickness. As prepared by Nexa and adopted by RPA, the Aripuanã Proven and Probable Mineral Reserves, effective as of September 30, 2020, comprise 23.5 Mt at grades of 3.7% Zn, 1.4% Pb, 0.25% Cu, 0.31 g/t Au, and 34 g/t Ag, containing 859.8 kt Zn, 319.0 kt Pb, 59.7 kt Cu, 236.1 koz Au, and 25.9 Moz Ag. The Mineral Reserve estimate is consistent with the CIM (2014) definitions as incorporated by reference into NI 43-101. Dilution and extraction estimates include: Dilution – planned (captured within stope designs) and additional unplanned dilution applied as factors ranging from 5% to 15%, by mining method. RPA’s preference is to apply dilution as a hangingwall/footwall distance, rather than a global percentage (as has been done in estimating Mineral Reserves). The percentage approach applies too much dilution to larger stopes and not enough to smaller stopes. RPA reviewed the impact of this methodology and found that using percentage dilution may introduce small inaccuracies to some individual stope estimates, however, it has little impact on the overall estimate. Extraction – initial selection of resources by stope optimization and design, plus additional factors of 85% to 100%, by mining method. The stope shapes are based on optimizer output, with some editing and manual redesign. There will be opportunities to reduce planned dilution and increase extraction after infill drilling and before mining as part of the short-term planning process. The Arex, Link, and Ambrex deposits are not directly connected underground, making it difficult to share slow-moving mobile equipment efficiently. Fleet unit numbers are adequate to achieve the proposed mine production with limited sharing. MINERAL PROCESSING The results of the metallurgical test work form the basis for the current engineering design of the sequential talc, copper, lead, and zinc flotation circuit. Stringer and stratabound mineralization have been tested separately and in blends of various proportions. Different comminution results and recovery kinetics were observed during bench-scale test work for the different mineralization. The decision was initially made to process the two material types separately on a campaign basis, however, continued test work on blends indicated that acceptable recoveries and concentrate grades can be achieved when processing blended ore. Therefore, the processing strategy has been changed to one of processing blended ore as produced according to the mining schedule. Process performance is projected as: Stratabound Zinc – 89.5% recovery to Zn concentrate.Silver recovery to this concentrate will be 10%. |
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Stratabound Lead – Variable recovery in the range of 80% to 90% with a life of mine (LOM) average of 84.5% to Pb concentrate. Gold and silver recoveries to this concentrate will be 20% and 55%, respectively. Stratabound Copper – 67.6% to Cu concentrate. Gold and silver recoveries to this concentrate will be 50% and 20%, respectively. Stringer Copper – Variable recovery in the range of 85% to 95% with a LOM average of 86.9% recovery to Cu concentrate. Gold and silver recoveries to this concentrate will be 63% and 50%, respectively. Regression models have been developed from the test work to relate recovery to head grade for each of the metals and have been used to estimate recovery in the cash flow model for the LOM. Test work in late 2019 and early 2020 by SGS GEOSOL on composites representing ore to be processed in the first nine quarters of operation (based on the FEL3 LOM plan) confirmed that acceptable recoveries and concentrate grades could be achieved. While zinc and copper recoveries were within expected ranges, lead recovery was below expectations. However, since many of the locked cycle tests (LCT) using these composites did not reach equilibrium, recoveries and concentrate grades need to be verified. Pilot plant test work is being conducted by Nexa at its Vazante Mine using blended (stratabound and stringer) bulk ore samples drawn from the run of mine (ROM) stockpile at Aripuanã. Results from this test work were not available at the time of writing this Technical Report. Grinding circuit simulations were conducted to evaluate the capacity of the grinding circuit when processing different ore types. The simulations indicated that throughput would be limited to 216 tonnes per hour (tph) (4,730 tpd) for stringer ore and 289 tph (6,300 tpd) for stratabound ore, with throughput between these two cases for blends of stringer and stratabound ore. RPA estimated that throughput of stringer ore of up 5,000 tpd could be achieved for ore corresponding to the 75th percentile of hardness values determined during test work, rather than the higher hardness values used in the grinding circuit simulations. Talc (non-sulphide fines) removal by flotation is sometimes required prior to sequential flotation of Cu, Pb, and Zn. Copper losses to the talc concentrate can be recovered by reverse copper flotation from the talc concentrate, which will be implemented in the processing plant if required. Concentrates are expected to be generally clean without penalizable levels of deleterious elements. ENVIRONMENT Nexa reports that it has ISO systems in place and has committed to complying with all relevant legal requirements. Nexa has assessed the environmental impacts of the Project in the 2017 Environmental Impact Assessment (EIA) for all Project phases, taking into account the baseline conditions. Management programs and monitoring plans were included in the EIA to mitigate the identified impacts, and further detail on these programs and plans were provided in a stand-alone Environmental Control Plan in 2018. The EIA and subsequent management plans are comprehensive in the detail they provide. Some |
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aspects such as resource use efficiency are yet to be considered by the developing Project. SOCIAL •Nexa’s developing the Project contributes positively to community well-being and development.The Project has provided assistance to the local authorities and communities in responding to the current COVID-19 pandemic. Nexa has established environmental and social management programs, as well as health and safety programs for its employees. Corporate policies, procedures, and practices are implemented in a manner consistent with relevant International Finance Corporation (IFC) Performance Standards. CONSTRUCTION PROGRESS •Detailed engineering is 99% complete. •Physical construction progress has been estimated by Nexa to be 51% as of the end of August 2020. •70% of long-lead equipment has been delivered to site. •Pre-commissioning and commissioning is scheduled for the second half of 2021, with ramp-up to full production starting in 2022. •Delays from the original schedule include: oDelays in completion of detailed engineering and outcomes of detailed engineering resulting in increases in quantities including earthworks and construction materials, investment in mine development, consumables, and spare parts, among others; oAdditional infrastructure services due to issues experienced during earthworks activities; oAdditional scope such as new equipment and infrastructure items in the process plant and in the tailings dry stack piles; oIncrease in third-party services; oUpgrades at the Dardanelos power substation; oLogistics constraints on the upgrade of the Aripuanã river bridge; oThe COVID-19 pandemic. COSTS AND ECONOMICS •Pre-production capital costs remaining from 2021 onward total US$228 million. •Contingency comprises 7.6% of direct and indirect capital costs. •Operating costs average US$34.35 per tonne over the LOM, with higher unit costs at the start and end when full production is not achievable. •Long-term metal prices (from 2026 onwards) are based on Nexa’s projections. Nexa’s long term price model uses multiple variables including supply (mine and refined), demand, cost drivers, capital cost, and other key elements. The long-term prices derived are in line with the consensus forecasts from banks and independent |
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institutions and are as follows: US$1.11/lb Zn, US$0.87/lb Pb, US$3.01/lb Cu, US$1,500/oz Au, and US$16.87/oz Ag. •Smelter terms are projected by Nexa based on selling 46% of produced concentrates directly to China and 54% to Nexa’s internal smelters, and are consistent with industry benchmarks. •Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals US$370 million over the mine life of 11 years (including mining activities from 2022 to 2032), and simple payback occurs 3.0 years from start of production. The after-tax Net Present Value (NPV) at a 9% discount rate is $356 million, and the Internal Rate of Return (IRR) is 31.9%. •This NPV and IRR does not include capital expenditures to date. Capital costs up to 2Q20 amounted to US$201 million. Nexa has forecast expenditures of US$117 million in 2H20, US$227 million in 2021 and US$1 million in 2022, totalling US$547 million. An additional US$201 million of sustaining capital is estimated during the LOM, which includes US$66 million in mine development and US$20 million in mine closure cost. Considering capital expenditures to date, the Project’s after-tax NPV at a 9% discount rate is $27 million, and the IRR is 9.8%. RECOMMENDATIONS RPA offers the following recommendations for each area: GEOLOGY AND MINERAL RESOURCES •Infill areas where poorly angled drill holes are driving the geological interpretation. •Investigate the use of density weighting during compositing and interpolation. •Following up with additional step out drilling at Babaçú to increase the Mineral Resource. •Drill the Babaçú NW Exploration Target to convert the exploration target to Mineral Resources. •Continue to review minor issues with certain Certified Reference Materials (CRMs) used in analytical quality assurance procedures. MINING •Review and optimize stope shapes after infill drilling and before mining as part of the short-term planning process. •Implement a rigorous grade control program during operations, to assess the impact of the various material grades and effectiveness of blending on the process recovery. MINERAL PROCESSING •Confirm the recovery and concentrate grade values derived from earlier test work that have been used in project cash flow calculations by completing the ongoing pilot test work at Nexa’s Vazante Mine using bulk blended ore samples simulating the processing of stringer and stratabound material together. This test work may also |
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Verify the talc flotation circuit configuration to minimize copper losses through pilot test work at Vazante Mine. ENVIRONMENT Develop and implement a project-specific environmental policy. Revise the management plans on a regular basis and improve them where relevant based on feedback such as monitoring data or stakeholder comments. An action should therefore be specifically included in the management plans which describes how and when these plans will be revised and updated. Ensure that the environmental monitoring plans are being implemented according to the Environmental Control Plan. Compare monitoring results to relevant international standards, e.g., IFC standards specified in various guideline documents, in addition to local or national applicable standards. Nexa has indicated that all third-party water users were identified, and the monitoring program was developed taking these users into account. Information should be maintained on potential sensitive receptors with respect to impacts such as dust generation, noise and third-party water surface and groundwater users so that these receptors can be monitored as relevant in order to ensure that all potential Project impacts are adequately managed. The following recommendations associated with tailings disposal are proposed for the next phase of the design: Classify the tailings management facility (TMF) in terms of the Global Tailings Standard or the Canadian Dam Association. The classification may require more conservative design criteria in terms of flood management and seismic loading. Consider the stability assessment of the individual components of the double lined system and the interface between the components in the stability analyses. In particular, the interface between the smooth side of the geomembrane and the sand leakage detection layer. Complete a deformation analysis to determine if the long-term strain of the high density polyethylene geomembrane is within acceptable limits. Implement measures to control dust generation from the slopes of the TMF and internal access roads and ramps during the dry season. Implement requirements to allow the progressive rehabilitation of the slopes. Implement deposition planning for the wet season and the associated logistical requirements for the use and management of the inflatable warehouses. Investigate the extent of the colluvial layer within the foundation of the TMF to provide a more accurate estimate of the volume of material that must be removed. Carry out an initial assessment of the stability of the capping clay layer on the intermediate bench slopes to determine if slope flattening is required for closure. Determine a source of clay with suitable quality for use as a lining and capping material. |
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Complete a formal risk assessment. SOCIAL Nexa has conducted extensive stakeholder engagement with communities in the area, including Indigenous Communities. As the Project moves forward, Nexa should develop a stakeholder engagement plan going forward and update this plan regularly. A separate plan should be developed for engagement with Indigenous Communities going forward. The Engagement with Indigenous Communities plan should specifically determine if these stakeholders are satisfied with the risks, impacts, and management measures identified for the Project. All stakeholder engagement plans should consider the current COVID-19 pandemic in terms of how interaction with stakeholders can be achieved both effectively and safely for as long as the pandemic is a factor. Revise the social management plans on a regular basis and improve where relevant, based on feedback such as monitoring data or stakeholder comments. An action should therefore be specifically included in the management plans which describes how and when these plans will be revised and updated. Clearly document the socio-economic monitoring program and methods and include benchmarks. Develop and implement site-specific occupational, health, and safety plans. Develop and implement a Chance Find procedure for heritage resources. Maintain clear records on any worker grievances or ethical violations, if not done already. Consider implementing preferential hiring, training, and development of Indigenous People specifically. COSTS AND ECONOMICS Continuously monitor costs and exchange rates and lock in costs as soon as possible to eliminate economic uncertainty. ECONOMIC ANALYSIS An after-tax Cash Flow Projection has been generated from the LOM production schedule and capital and operating cost estimates and is summarized in Table 1-1. A summary of the key criteria is provided below. ECONOMIC CRITERIA REVENUE LOM processing of 23.5 Mt, grading 3.7% Zn, 1.4% Pb, 0.3% Cu, 34 g/t Ag, and 0.3 g/t Au. |
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ECONOMIC CRITERIA REVENUE •LOM processing of 23.5 Mt, grading 3.7% Zn, 1.4% Pb, 0.3% Cu, 34 g/t Ag, and 0.3 g/t Au •LOM average metallurgical recovery of 89% Zn, 83% Pb, 71% Cu, 75% Ag, and 67% Au. •LOM average metal payable of 85% Zn, 95% Pb, 96% Cu, 83% Ag, and 83% Au. •LOM payable metal of 713 kt Zn, 251 kt Pb, 41 kt Cu, 16,654 koz Ag, and 131 koz Au. •LOM metal prices derived from Nexa’s Internal Projection forecasts converging on long-term prices of US$1.11/lb Zn, US$0.87/lb Pb, US$3.01/lb Cu, US$16.87/oz Ag, and US$1,500/oz Au from 2026 onwards. •All revenues are received in US$. •Total gross revenue of US$3,028 million. •Total offsite treatment, transportation, and refining charges of US$422 million. •Total royalties of US$113 million. •Net revenue of US$2,541 million. •Average unit net revenue of US$94/t processed. •Revenue is recognized at the time of production. COSTS •Mine life: 11 years. •LOM production plan as summarized in Table 1-1. •Pre-production capital remaining totals US$228 million from 2021 onward. •Pre-production capital expected to be spent by the end of 2020 (since 2018) totals US$318 million, US$121 million of which will be spent in the second half of 2020. •Sustaining capital over the LOM totals US$201 million. •Average operating cost over the mine life is US$34.35/t processed. •Costs were estimated in Brazilian reais (R$) at an exchange rate of R$4.80:US$1.00. The cash flow has incorporated an increased exchange rate compared to the long-term forecast exchange rate of R$3.67:US$1.00 that was assumed during the design process. TAXATION AND ROYALTIES RPA has relied on a Nexa taxation model for calculation of income taxes applicable to the cash flow (Table 1-1). |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 1-10 TABLE 1-1 AFTER-TAX CASH FLOW SUMMARY Aripuanã Project Cash Flow Summary InputsUNITSTOTAL Year 2 2020 Year 3 2021 Year 4 2022 Year 5 2023 Year 6 2024 Year 7 2025 Year 8 2026 Year 9 2027 Year 10 2028 Year 11 2029 Year 12 2030 Year 13 2031 Year 14 2032 Year 15 2033 Year 16 2034 MINING |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 1-11 |
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Aripuanã ProjectCash Flow Summary Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Year 11Year 12Year 13Year 14Year 15Year 16 CAPITAL COST Initial Capital Cost InputsUNITSTOTAL202020212022202320242025202620272028202920302031203220332034 MiningUS$ '000 Plant & InfrastructureUS$ '000 Total Direct CostUS$ '000 EPCM / Owners / Indirect CostUS$ '000 Subtotal CostsUS$ '000 $ 92,264 $ $ 280,391 $ $ 372,655 $ $ 157,818 $ $ 530,473 $ 33,234 $ 110,559 $ 143,793 $ 48,723 $ 192,516 $ 29,664 $ 115,210 $ 144,874 $ 66,154 $ 211,027 $ 0 6 6 1,134 1,140 ContingencyUS$ '000 $ 16,040 $ - $ 16,040 $-(=) TOTAL Initial CapitalUS$ '000 Operating Capital Cost $ 546,513 $ 192,516 $ 227,067 $ 1,140 Mine DevelopmentUS$ '000 $ 65,772 $-$- $ 8,505 $ 10,653 $ 11,477 $ 8,229 $ 11,225 $ 5,373 $ 4,873 $ 4,337 $ 981 $ 119 $ - $-$- Sustaining infrastructureUS$ '000 $ 115,679 $-$ - $23,793 $ 13,259 $ 22,742 $ 3,747 $ 11,676 $ 12,882 $ 4,354 $ 11,440 $ 8,955 $ 2,309 $ 523 $ - $-Closure and OtherUS$ '000 $ 19,940 $-$- $ - $-$ - $-$ - $-$- $ - $3,226 $ 2,618 $ 2,727 $ 8,413 $ 2,956 Operational Working CapitalUS$ '000$ - $-$- $ 9,606 $ 3,681 $ 1 $592 $ (2,199) $ 370 $ 209 $ (1,389) $ (525) $ 829 $ (1,366) $ (9,808) $-(=) TOTAL Operating Capital CostUS$ '000 $ 201,391 $-$ - $41,903 $ 27,592 $ 34,219 $ 12,568 $ 20,701 $ 18,626 $ 9,436 $ 14,388 $ 12,636 $ 5,875 $ 1,883 $ (1,394) $ 2,956 CASH FLOWNPV (+) RevenuesUS$ '000 $ 1,593,815 $-$ - $203,663 $ 273,762 $ 274,119 $ 286,072 $ 243,093 $ 249,277 $ 253,771 $ 226,744 $ 217,168 $ 228,260 $ 198,018 $-$- ( - ) RoyaltiesUS$ '000 ( - ) Mining CostsUS$ '000 ( - ) Processing CostsUS$ '000 ( - ) G&AUS$ '000 ( - ) Selling ExpensesUS$ '000 $ 67,301 $-$ $ 219,878 $-$ $ 183,777 $-$ $ 81,756 $-$ $ 196,385 $-$ - $8,526 $ - $35,657 $ - $22,395 $ - $13,220 $ - $24,088 $ 11,278 $ 34,828 $ 28,394 $ 13,333 $ 32,901 $ 11,303 $ 34,803 $ 29,470 $ 13,548 $ 32,671 $ 12,081 $ 37,374 $ 28,704 $ 13,792 $ 30,486 $ 10,197 $ 37,346 $ 28,818 $ 13,152 $ 30,409 $ 10,442 $ 36,425 $ 29,563 $ 12,612 $ 31,003 $ 10,859 $ 31,932 $ 30,512 $ 12,781 $ 34,195 $ 9,709 $ 33,034 $ 30,465 $ 12,431 $ 31,244 $ 9,641 $ 34,322 $ 29,481 $ 12,482 $ 27,667 $ 9,969 $ 26,649 $ 29,978 $ 9,575 $ 30,577 $ 8,636 $-$- 18,278 $-$- 25,181 $-$- 6,926 $-$- 26,126 $-$- (=) EBITDAUS$ '000 $ 844,717 $ - $ (14,586) $ 99,262 $ 153,027 $ 152,326 $ 163,634 $ 123,169 $ 129,232 $ 133,491 $ 109,860 $ 103,575 $ 121,511 $ 112,870 $-$- ( - ) Initial Capital (net of taxes)US$ '000 $ 205,602 $ - $ 213,670 $ 1,073 $-$ - $-$ - $-$- $ - $-$ - $-$ - $-( - ) Sustaining Capital (net of taxes)US$ '000 $ 107,813 $-$ - $28,138 $ 20,832 $ 29,811 $ 10,433 $ 19,951 $ 15,905 $ 8,039 $ 13,745 $ 8,656 $ 2,115 $ 456 $ - $-( - ) Closure and OtherUS$ '000$ 7,283 $-$- $ - $-$ - $-$ - $-$- $ - $3,226 $ 2,618 $ 2,727 $ 8,413 $ 2,956 ( +-) Operational Working CapitalUS$ '000 $ -6,352 $-$- $ (9,606) $ (3,681) $ (1) $ (592) $ 2,199 $ (370) $ (209) $ 1,389 $ 525 $ (829) $ 1,366 $ 9,808 $-(=) Pre-Tax CashflowUS$ '000 $ 517,668 $ - $ (228,256) $ 60,446 $ 128,515 $ 122,514 $ 152,609 $ 105,418 $ 112,958 $ 125,243 $ 97,504 $ 92,218 $ 115,949 $ 111,054 $ 1,394 $ (2,956) ( - ) Income TaxUS$ '000 $ 79,452 $-$- $ 4,575 $ 13,947 $ 13,375 $ 14,893 $ 8,265 $ 12,225 $ 12,939 $ 9,590 $ 8,540 $ 11,519 $ 32,995 $ - $-( - ) PIS/COFINSUS$ '000 ( - ) ICMSUS$ '000 $ 64,583 $ $ 60,671 $ 7,475 $ 4,700 $ 9,532 $ 6,491 $ 7,449 $ 7,320 $ 7,023 $ 7,437 $ 8,020 $ 7,957 $ 6,185 $ 7,252 $ 7,161 $ 7,698 $ 6,735 $ 7,494 $ 5,659 $ 6,770 $ 6,322 $ 7,140 $ 5,827 $ 6,937 $ 4,604 $ 5,901 $ 3,415 $-$- 4,476 $-$- (+) Tax RecoveryUS$ '000 $ 57,010 $-$- $ 4,575 $ 13,947 $ 13,375 $ 14,893 $ 8,174 $ 7,053 $ 6,224 $ 6,390 $ 6,126 $ 5,218 $ 4,004 $-$- (=) After-Tax CashflowUS$ '000 $ 369,972 $ (12,175) $ (244,279) $ 45,676 $ 114,055 $ 106,538 $ 139,172 $ 90,467 $ 93,557 $ 106,099 $ 80,843 $ 77,040 $ 99,143 $ 74,173 $ 1,394 $ (2,956) 495,90850,092 $0.54 PROJECT ECONOMICSperiod-0.50.51.52.53.54.55.56.57.58.59.510.511.512.513.5 Pre-Tax Pre-tax IRR%45.0% Pre-tax NPV at 7.82% discounting8.00% US$ '000$541,689 $ Pre-tax NPV at 9.00% discounting9.00% US$ '000$503,244 $ Pre-tax NPV at 10.00% discounting10.00% US$ '000$467,658 $ - $ (219,640) $ - $ (218,630) $ - $ (217,634) $ 53,855 $ 53,116 $ 52,393 $ 106,021 $ 103,606 $ 101,268 $ 93,584 $ 90,614 $ 87,763 $ 107,938 $ 103,552 $ 99,383 $ 69,037 $ 65,625 $ 62,410 $ 68,495 $ 64,513 $ 60,794 $ 70,320 $ 65,623 $ 61,279 $ 50,690 $ 46,870 $ 43,370 $ 44,391 $ 40,669 $ 37,290 $ 51,679 $ 46,912 $ 42,623 $ 45,831 $ 41,222 $ 37,112 $ 533 $ 475 $ 424 $ (1,046) (923) (816) After-Tax After-tax IRR%31.9% Pre-tax NPV at 7.82% discounting8.00% US$ '000$387,499 Pre-tax NPV at 9.00% discounting9.00% US$ '000$355,548 Pre-tax NPV at 10.00% discounting10.00% US$ '000$325,933 $ (12,653) $ (235,057) $ $ (12,711) $ (233,977) $ $ (12,769) $ (232,911) $ 40,696 $ 40,138 $ 39,592 $ 94,092 $ 91,949 $ 89,874 $ 81,381 $ 78,797 $ 76,318 $ 98,434 $ 94,435 $ 90,633 $ 59,246 $ 56,318 $ 53,559 $ 56,731 $ 53,433 $ 50,353 $ 59,571 $ 55,592 $ 51,912 $ 42,028 $ 38,861 $ 35,959 $ 37,084 $ 33,975 $ 31,152 $ 44,189 $ 40,113 $ 36,445 $ 30,611 $ 27,532 $ 24,787 $ 533 $ 475 $ 424 $ (1,046) (923) (816) www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 1-12 Regular Payback (after start-up)years3.0--1.01.01.0----------1/1/2022 Cumulative After-Tax CashflowUS$ '000(19,597) (263,876)(218,199)(104,144)2,394141,566232,032325,590431,689512,532589,572688,714762,887764,281761,325 Discounted Payback (after start-up)years3.3--1.01.01.00.3---------Dicounted CasflowUS$ '000(12,711) (233,977)40,13891,94978,79794,43556,31853,43355,59238,86133,97540,11327,532475(923) Cumulative discounted CashflowUS$ '000(21,170) (255,146)(215,009)(123,059)(44,262)50,173106,490159,923215,515254,376288,351328,464355,996356,471355,548 |
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CASH FLOW ANALYSIS Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals US$370 million over the mine life, and simple payback occurs 3.0 years from the start of production. The Net Present Value (NPV) at a 9% discount rate is $356 million, and the Internal Rate of Return (IRR) is 31.9%, not considering capital expenditures prior to 2021. SENSITIVITY ANALYSIS Project risks can be identified in both economic and non-economic terms. Key economic risks were examined by running cash flow sensitivities: Metal price Head grade Metallurgical recovery Operating costs Capital costs IRR sensitivity over the base case has been calculated for a variety of ranges depending on the variable. The sensitivities are shown in Figure 1-1 and Table 1-2. |
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Percent Change From Base Case 1.300 1.1001.200 1.000 0.900 0.7000.800 $0 0.600 $100 Head Grade Recovery Metal Price Exchange Rate Operating Cost Capital Cost $400 $300 $200 $500 $600 $700 Sensitivity Analysis After-Tax NPV at 9% Discount Rate (US$ millions) |
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TABLE 1-2SENSITIVITY ANALYSES Nexa Resources S.A. – Aripuanã Zinc Project Case Case Case Case Case Head Grade (Zn) % Zn 2.9 3.3 3.7 4 4.4 Overall Recovery (Zn) % 80.2 84.6 89.1 90.9 92.7 Metal Prices (Zn) US$/lb Zn 1.01 1.13 1.26 1.38 1.51 Exchange Rate R$/US$ 3.63 4.27 4.77 5.27 5.78 Operating Costs US$/t 32.63 33.49 34.35 36.93 39.5 Capital Cost US$ millions 332 341 349 376 402 Adjustment Factor Head Grade (ZnEq) % 80 90 100 110 120 Overall Recovery % 90 95 100 102 104 Metal Prices (Zn) % 80 90 100 110 120 Exchange Rate % 76 90 100 111 121 Operating Costs % 95 97.5 100 107.5 115 Capital Cost % 95 97.5 100 107.5 115 Post-Tax NPV @ 9% Head Grade (ZnEq) US$ millions 84 225 356 476 595 Overall Recovery US$ millions 240 299 356 378 400 Metal Prices (Zn) US$ millions 39 206 356 498 641 Exchange Rate US$ millions 8 236 356 447 524 Operating Costs US$ millions 376 366 356 324 293 Capital Cost US$ millions 375 365 356 325 291 Mid-Low Base Mid-High High For head grade, recovery, and metal prices, factors were applied to all metals in the various categories, however, in Table 1-2, values for zinc are shown because it provides the most revenue. The Project is most sensitive to changes in metal prices, and least sensitive to capital and operating costs. TECHNICAL SUMMARY PROPERTY DESCRIPTION AND LOCATION The Project is located in the state of Mato Grosso, western Brazil, 1,200 km northwest of Brasilia, the capital city. The property is located at approximately 226,000 mE and 8,888,000 mN UTM 21L zone (South American 1969 datum). |
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LAND TENURE The Project consists of a contiguous block comprising one mining concession, two mining applications, one right to apply for mining concession, thirteen exploration authorizations, and three exploration applications covering a total area of 66,336.04 ha. The permits are wholly-owned by Dardanelos. EXISTING INFRASTRUCTURE The current infrastructure includes: Mine support: access roads to the mines, infrastructure, and pastefill plant (construction is ongoing) Processing plant: access roads, drainage systems, concrete structures, crushing circuit electrical and mechanical assembly, semi-autogenous grinding (SAG) and ball mill, thickener and tailings filter, pipe rack assembly and piping is currently under construction. Water supply and waste and tailings deposition: the raw water supply dam and overburden stockpile are expected to be completed in late 2020. Power supply: permanent 69 kV power line. Construction of the main substation and secondary substations is underway. Administrative areas: civil works for administration buildings has commenced. HISTORY Gold mineralization was discovered in the area during the 1700s by prospectors. Although no formal records exist, the area was likely prospected sporadically over the years. Anglo American Brasil Ltda (Anglo American) began exploration over the property in 1995. At the time, a small area including Expedito’s Pit, now part of the Project, was held by Madison do Brasil (now Thistle Mining Inc.) and optioned to Ambrex Mining Corporation (now Karmin). Dardanelos was created in 2000 to represent a joint venture, or “contract of association,” between Karmin and Anglo American, with the intent of exploring for base and precious metals in areas adjacent to the town of Aripuanã. Anglo American and Karmin held 70% and 28.5% of Dardanelos, respectively, with remaining interest (1.5%) owned by SGV Merchant Bank. In 2004, the initial agreement between Karmin and Anglo American was amended to allow VM Holding S.A.’s (VMH) participation. VMH subsequently acquired 100% of Anglo American’s interest in the Project. In 2007, Karmin purchased SGV Merchant Bank’s interests, raising its |
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participation to 30%. In 2016, VMH increased its share holdings in Compañía Minera - Milpo S.A.A. (Milpo) to a total of 80% of its shares. In 2017, VMH rebranded to become Nexa Resources S.A., and listed on the New York and Toronto stock exchanges. In 2019, Nexa purchased Karmin’s interests in Aripuanã and is now the sole owner of the Project. GEOLOGY AND MINERALIZATION The Aripuanã deposits are located within the central-southern portion of the Amazonian Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate. The lithological assemblage strikes northwest - southeast and dips between 35° and near vertical to the northeast. The Aripuanã polymetallic deposits are typical VMS deposits associated with felsic bimodal volcanism. Four main elongate mineralized zones, Arex, Link, Ambrex, and Babaçú have been defined in the central portion of the Project. Limited exploration has identified additional mineralized bodies including Massaranduba to the south and Arpa to the north. The individual mineralized bodies have complex shapes due to intense tectonic activity. Stratabound mineralized bodies tend to follow the local folds, however, local-scale, tight isoclinal folds are frequently observed, usually with axes parallel to major reverse faults, causing rapid variations in the dips. Massive, stratabound sulphide mineralization as well as vein and stockwork-type discordant mineralization have been described on the property. The stratabound bodies, consisting of disseminated to massive pyrite and pyrrhotite, with well-developed sphalerite and galena mineralization, are commonly associated with the contact between the middle volcanic and the upper sedimentary units. Discordant stringer bodies of pyrrhotite-pyrite-chalcopyrite mineralization are generally located in the underlying volcanic units or intersect the massive sulphide lenses and have been interpreted as representing feeder zones. |
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EXPLORATION STATUS Between 2004 and 2007, VMH, a predecessor to Nexa, carried out geological, geochemical, and geophysical surveys over the Project area to allow a more complete interpretation of the regional and local geology and identification of local exploration targets. Drilling on the property was carried out from 2004 to 2008, in 2012, and from 2014 to present. The purpose of the drill program in 2004 to 2008 was to explore and delineate mineralization on the property, and in 2012, to improve confidence and classification of the Mineral Resources of the Arex and Ambrex deposits. The Link deposit, an area of mineralization connecting the Arex and Ambrex deposits, and included in the Mineral Resource summary for Ambrex, was discovered in 2014 and delineated in 2015. Since 2018, the focus of exploration activities on the property has been the Babaçú deposit, where drilling has been successful in upgrading this exploration target to an Inferred Mineral Resource. Drilling on the Project has been conducted in phases by several companies since 1993. Total drilling at Arex, Link, Ambrex, and Babaçú consists of 718 diamond drill holes totalling 229,654 Of these, Nexa has completed 614 diamond drill holes totalling 203,553 m including 30 metallurgical drill holes totalling 5,899 m. Drilling at the other prospects on the property consists of 35 diamond drill holes totalling 13,886 m. MINERAL RESOURCES The block models were completed by Nexa personnel using Datamine Studio RM (Datamine Studio) and Seequent’s Leapfrog Geo (Leapfrog). Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to one metre lengths. Wireframes were filled with blocks measuring 5 m by 5 m by 5 m for Arex, Link, and Ambrex, and 10 m by 5 m by 5 m for Babaçú with sub-celling at wireframe boundaries. Blocks were interpolated with grade using ordinary kriging (OK) and inverse distance cubed (ID³). Blocks estimates were validated using industry standard validation techniques. Classification of blocks was based on distance based criteria. |
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TABLE 1-3 MINERAL RESOURCES – SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Zinc Project Notes: CIM (2014) definitions were followed for Mineral Resources. Mineral Resources are reported using a US$45/t cut-off value for transverse longhole mining and longitudinal longhole retreat areas and US$55/t cut-off value for cut and fill areas. The NSR is calculated based on metal prices: Zn: US$2,869/t (US$1.30/lb), Pb: US$ 2,249/t (US$1.02/lb); Cu: US$7,427/t (US$3.37/lb); Au: US$1,768/oz, and Ag: US$19.38/oz. Mineral Resources are reported exclusive of Mineral Reserves within potentially mineable shapes. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Numbers may not add due to rounding. RPA is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Resource estimate. MINERAL RESERVES The Aripuanã Mineral Reserves are based in three main orebodies, Arex, Link, and Ambrex. The main commodities produced are zinc, lead, copper, silver, and gold. The Mineral Reserve estimate for the Project as of September 30, 2020 is presented in Table 1-4. |
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TABLE 1-4MINERAL RESERVES – SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Zinc Project (000 t) (% Zn) (% Pb) (% Cu) (g/t Au) (g/t Ag) Arex Proven 4,216 2.97 1.07 0.65 0.45 33.83 Probable 1,101 1.99 0.69 0.75 0.75 23.97 Proven & Probable 5,317 2.77 0.99 0.67 0.52 31.78 Link Proven 1,370 4.63 1.73 0.13 0.27 37.78 Probable 5,342 3.95 1.32 0.22 0.32 32.31 Proven & Probable 6,713 4.09 1.40 0.20 0.31 33.42 Ambrex Proven 4,495 4.18 1.59 0.05 0.15 37.55 Probable 6,982 3.59 1.44 0.12 0.27 34.81 Proven & Probable 11,477 3.82 1.50 0.09 0.22 35.88 Total Proven 10,082 3.74 1.39 0.31 0.29 36.02 Probable 13,425 3.60 1.33 0.21 0.33 32.93 Proven & Probable 23,507 3.66 1.36 0.25 0.31 34.25 Grade Notes: CIM (2014) definitions were followed for Mineral Reserves. Mineral Reserves are estimated at a break-even cut-off value of NSR = US$45.00/t processed. Some incremental material with values between US$40/t and US$45/t was included. Mineral Reserves are estimated using an average long-term zinc price of US$1.13/lb Zn, a long-term lead price of US$0.89/lb Pb, a long-term copper price of US$2.93/lb Cu, a long-term silver price of $16.85/oz Ag, and a long-term gold price of US$1,538/oz Au. A minimum mining width of 4 m was used. Numbers may not add due to rounding. Contained metal in the Mineral Reserves consists of 859.8 kt Zn, 319.0 kt Pb, 59.7 kt Cu, 25.9 Moz Ag and 236.1 koz Au. RPA is not aware of any mining, metallurgical, infrastructure, permitting, or other relevant factors that could materially affect the Mineral Reserve estimate. MINING METHOD Currently, the Project is targeted on mining three main elongate mineralized zones, Arex, Link, and Ambrex, that have been defined in the central portion of the Project. |
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The Arex and Ambrex deposits are separate VMS deposits with differing mineral compositions in stratabound and stringer forms and complex geometric shapes. The deposit geometry is amenable to a number of underground mechanized mining techniques including cut and fill and bulk stoping methods. A nominal production target of 6,065 tpd has been used as the basis for the mine production schedule. Mining will be undertaken using conventional mechanized underground mobile mining equipment via a network of declines, access drifts, and ore drives. Access to the Arex, Link, and Ambrex deposits will be from separate portals, which will access the deposits from the most favourable topographic locations. MINERAL PROCESSING Based on the metallurgical test work program completed to date, the Aripuanã process flowsheet has been developed using conventional technologies for treatment and the recovery of copper, lead, and zinc as separate concentrates. Plant throughput is forecast to average 2.214 Mtpa of ROM ore over the LOM supplied from the Arex, Link, and Ambrex underground mines. The plant will treat blended mineralization at up to 6,300 tpd (dry basis), with the maximum achievable throughput being for ore consisting mainly of stratabound material. Key elements of the process flowsheet include primary crushing, SAG followed by ball milling and pebble crushing (SABC), talc pre-flotation, followed by sequential flotation of copper, lead, and zinc. PROJECT INFRASTRUCTURE The planned infrastructure for the Project includes: Three underground mines, accessed by three portals and three ramps Dry Stack TMF Engineered wetlands for water collection and treatment Power supply by transmission line connected to the national grid Water storage dam Access and site roads Maintenance shops Fuel storage |
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MARKET STUDIES The principal commodities that will be produced at the Project are freely traded, at prices and terms that are widely known, so that prospects for sale of any production are virtually assured. Aripuanã zinc concentrate will be processed at Nexa’s Três Marias and Juiz de Fora zinc refineries in Brazil (54%) and that not processed at Nexa’s refineries will be sold on the open market (46%). Lead and copper concentrates will be sold on the open market. Sales contracts for the lead and copper concentrates from the Project have not been negotiated yet. Market information is based on the industry scenario analysis prepared by Nexa’s Market Intelligence team in July 2020 using information sourced from different banks and independent financial institutions. ENVIRONMENTAL, PERMITTING AND SOCIAL CONSIDERATIONS The Project is located in the Amazon Biome, within the South-Amazonian Ecotone Corridor. The Project made efforts to reduce potential environmental and social impacts. The mining method and the overall footprint were optimized, and efforts were made to place infrastructure in areas already affected by anthropogenic activities. The Project EIA was finalized in 2017 and the Project holds installation and operating approvals. The 2017 EIA concludes that the most significant Project impacts are those that will directly and indirectly affect, synergistically and cumulatively, vegetation cover and soils in the Permanent Preservation Areas and water resources, as well as changes in fauna communities, both terrestrial and aquatic, highlighting the relevance of local biodiversity, with species of flora and fauna of the Amazon biome, including endangered species. The EIA developed management and monitoring plans to address and monitor key indicators for the identified impacts. A key mitigation measure with regard to encroachment on the Permanent Preservation Areas will be the implementation of a compensation plan and programs aimed at connectivity of habitat. The 2017 EIA described two Indigenous villages located approximately 10 km to 12 km from the Project: Arara do Rio Branco with an area of approximately 114,842 ha and Aripuanã with an area of approximately 750,649 ha. Consultation with Indigenous Peoples regarding Project impacts and mitigation were undertaken under the tutelage and consent of National Historical and Artistic Heritage Institute (IPHAN) with National Indian Foundation (FUNAI) during the preparation of the 2017 EIA. In 2018, Nexa commissioned a study on the Indigenous |
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Component of the Indigenous Lands Aripuanã and Arara do Rio Branco. The study methods were developed based on a Terms of Reference issued by FUNAI and through consultation with the Indigenous Communities. The report identified and assessed potential impacts on the Indigenous Communities and their lands, considered the perspectives of the Indigenous Communities on the potential impacts, and developed management plans to mitigate these impacts. The Project will produce two types of mineralized waste, tailings and waste rock, which will require disposal in dedicated facilities, a TMF and a waste rock facility (WRF). A double lined storage facility with a leak detection system is required for both the TMF and WRF due to the potential for poor quality leachate to be generated at these facilities. At closure, the TMF and WRF will be capped with a clay layer and vegetated. A Conceptual Mine Closure Plan has been developed for the Project. The main objective of the plan is to present proposals and solutions to be implemented before, during, and after mine closure in order to avoid, eliminate, or minimize long-term environmental liabilities and possible future obligations. The plan currently considers four alternatives for final land use. The first option is for the whole area to become a Conservation Unit. The other options would allow some of the area to become a Conservation Unit while the remaining areas will be used for (a) a technical school for biodiversity conservation and the development of local communities (b) industrial use and a technical school, and (c) agro-industrial use and an agricultural technical school. These alternatives are being evaluated by Nexa, however, for the time being, all of the alternatives are being considered and have been costed in the financial closure plan. Nexa adheres to international standards to provide best practices for public reporting on economic, environmental, and social impacts in order to help Nexa’s shareholders and stakeholders understand Nexa’s corporate contribution to sustainable development. Corporately, Nexa has made several commitments to improve community health and safety as well as the overall well-being of community members. CAPITAL AND OPERATING COST ESTIMATES Pre-production capital costs were estimated by Nexa using a combination of contracts already awarded (the greatest part of the commitments), quotations, and factored estimates. A new |
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baseline capital cost estimate was completed in August 2020, with an estimated accuracy of ±5% and a base date of July 2020. The new estimate did not consider costs related to the COVID-19 pandemic, and Nexa will assess these costs separately at a later date. Pre-production capital costs remaining at the start of 2021 totalling US$228 million are summarized in Table 1-5. TABLE 1-5PRE-PRODUCTION CAPITAL COST ESTIMATE Nexa Resources S.A. – Aripuanã Project Contingency comprises 7.6% of direct and indirect capital costs, which RPA considers to be reasonable for the current stage of the Project. In the second half of 2020 US$121 million will be spent for a total of $318 million spent up to the end of 2020. Sustaining capital was estimated by Nexa, with the majority of the costs consisting of mine development and mobile equipment. Sustaining capital over the life of mine totals US$181.5 million. Operating costs, averaging US$73 million per year at full production, were estimated for mining, processing, and general and administration (G&A). Operating cost inputs such as |
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labour rates, consumables, and supplies were based on Nexa operating data. A summary of operating costs is shown in Table 1-6. TABLE 1-6 OPERATING COST ESTIMATE Nexa Resources S.A. – Aripuanã Project |
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INTRODUCTION Roscoe Postle Associates Inc. (RPA), now part of SLR Consulting Ltd (SLR), was retained by Nexa Resources S.A. (Nexa) to prepare an independent Technical Report on the Aripuanã Zinc Project (Aripuanã or the Project), located in the state of Mato Grosso , Brazil. The purpose of this Technical Report is to support the disclosure of updated Mineral Resource and Mineral Reserve estimates. This Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects. Nexa is a publicly traded company on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). It is a reporting issuer in all provinces and territories of Canada and is under the jurisdiction of the Ontario Securities Commission. Nexa is a large-scale, low-cost, integrated zinc producer with over 60 years of experience developing and operating mining and smelting assets in Latin America. Nexa has a diversified portfolio of polymetallic mines (zinc, lead, copper, silver, and gold) and also greenfield projects at various stages of development in Brazil and Peru. In Brazil, Nexa owns and operates two underground mines, Vazante and Morro Agudo (Zn and Pb). It also operates two zinc smelters in Brazil (Três Marias and Juiz de Fora). In Peru, Nexa operates the El Porvenir (Zn, Pb, Cu, Ag, and Au), Cerro Lindo (Zn, Cu, Pb, and Ag), and Atacocha (Zn, Cu, Pb, Au, and Ag) underground mines, as well as the Cajamarquilla zinc smelter near Lima. Nexa’s development projects in Peru include Magistral, Shalipayco, Florida Canyon (JV with Solitario), Hilarión, and Pukaqaqa. In Brazil, Nexa is developing the Aripuanã Zinc Project (Zn, Pb, and Ag), which is currently under construction. The Project is 100% owned by Mineração Dardanelos Ltda. (Dardanelos), a wholly-owned subsidiary of Nexa. To date, the focus of exploration activities on the property has been the Arex, Link, and Ambrex deposits, which contain the current Mineral Resources and Mineral Reserves. A feasibility study (FS) was completed in 2018, and construction began in July 2019. Earthworks are complete, surface facilities are under construction, and underground development is underway, with mechanical completion expected in 4Q21 and production scheduled to begin in 2022. |
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This report is an update of a previous Technical Report prepared by RPA and filed on SEDAR on October 15, 2018 (RPA, 2018). SOURCES OF INFORMATION Mr. Jason J. Cox, P.Eng., RPA Principal Mining Engineer, visited the property between June 2 and 5, 2017 to review drill core, discuss project development plans, and review work on the Project to date. Mr. Sean Horan, RPA Principal Geologist, visited the Project site on January 30 to February 3, 2017. During the site visit, Mr. Horan reviewed logging and sampling methods, inspected core from drill holes, and held discussions with Nexa personnel. Technical documents and reports on the deposit were reviewed and obtained from Project personnel during subsequent meetings and discussions between RPA personnel and the Nexa Project Team. Discussions were held with the following people from the Nexa Project Team: Mr. Pierre Légaré, Aripuanã Project Manager Mr. Fernando Madeira Perisse, Technical Services Manager Mr. Thiago Nantes Teixeira, Mineral Resources and Mineral Reserves Committee Ms. Priscila Artioli, Mineral Resources and Mineral Reserves Committee Mr. Julio Souza Santos, Senior Geologist and Aripuanã Zinc Field Manager Mr. Jose Antonio Lopes, Resource Manager Dr. Rafael Moniz Caixeta, Geologist – Mineral Resources Ms. Vivian Tavares Kayser, Geologist – Resource Evaluation Mr. Patrick Carmo De Oliveira, Senior Mining Engineer Ms. Danielle Alves Ribeiro, Cost and Contract Management Ms. Lucia Maria Cabral De Goes, Process Engineering Manager Mr. Gustavo Farinelli Silva, Financial Planning Coordinator Mr. Tiago Alvarenga, Metallurgical Process Manager Mr. Pablo Pina, Technology Manager Ms. Gilmara Patrícia Barros Carneiro, Environmental Coordinator Ms. Aline Vilas Boas De Souza, Social Management Consultant Ms. Cristiane Holanda Moraes Paschoin, Social Management Consultant |
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This Technical Report was prepared by Jason J. Cox, P. Eng., Sean Horan, P. Geo., Brenna J.Y. Scholey, P.Eng., and Luis Vasquez, P.Eng. Mr. Cox prepared Sections 15, 16, 19, 21, and 22 to 24. Mr. Horan prepared Sections 3 to 12 and 14. Ms. Scholey prepared Sections 13 and 17 and parts of Section 18. Mr. Vasquez prepared Section 20 and parts of Section 18 (tailings). All Qualified Persons (QP) share responsibility for Sections 1, 2, 25, 26, and 27. The documentation reviewed, and other sources of information, are listed at the end of this Technical Report in Section 27 References. |
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LIST OF ABBREVIATIONS Units of measurement used in this Technical Report conform to the metric system. All currency in this Technical Report is US dollars (US$) unless otherwise noted. |
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RELIANCE ON OTHER EXPERTS This Technical Report has been prepared by RPA for Nexa (the Client). The information, conclusions, opinions, and estimates contained herein are based on: Information available to RPA at the time of preparation of this Technical Report. Assumptions, conditions, and qualifications as set forth in this Technical Report. For the purpose of this Technical Report, RPA has relied on ownership information provided by Nexa. RPA was provided with a legal opinion letter prepared by Nexa’s legal department describing the mineral rights, dated July 17, 2020 and a letter by ICP Brasil describing the surface rights, dated April 28, 2020. These opinions have been relied on in Section 4 and the Summary of this Technical Report. RPA has not researched property title or mineral rights for the Project and expresses no opinion as to the ownership status of the property. Except for the purposes legislated under provincial securities laws, any use of this Technical Report by any third party is at that party’s sole risk. |
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PROPERTY DESCRIPTION AND LOCATION LOCATION The Project is located in west-central Brazil, in the state of Mato Grosso, approximately 700 km northwest of the state capital Cuiabá and approximately 1,400 km northwest of the national capital Brasilia. The Project is approximately 2,529 km by rail and road to the Três Marias smelter and 2,831 km to the Juiz de Fora smelter, and 2,660 km to the port of Santos. The centre of the property is located at approximately 10°05’00”S Latitude and 59°25’00”W Longitude (Figure 4-1). The approximate Universal Transverse Mercator (UTM) co-ordinates of the centre of the currently defined mineralization are 226,000 mE and 8,888,000 mN, UTM zone 21L (South American 1969 datum), within the Aripuanã 1:250,000 topographic sheet (SC.21-Y-A). LAND TENURE The Project consists of a contiguous block comprising one mining concession, two mining applications, one right to apply for mining concession, thirteen exploration authorizations (EAs), and three exploration applications covering a total area of 66,336.04 ha (Figure 4-2). All permits are wholly-owned by Dardanelos. Table 4-1 lists all the subject concessions and relevant tenure information including concession names, tenement numbers, areas, titleholders, and phases. In 2000, a joint venture between Anglo American Brasil Ltda. (Anglo American) and Karmin Exploration Inc. (Karmin) was formed to explore for base and precious metals in the area adjacent to the town of Aripuanã. Initially, Anglo American and Karmin held interests of 70% and 28.5% in the joint venture, respectively, with the remaining 1.5% held by SGV Merchant Bank (SGV). In 2004, the joint venture agreement was amended to allow Nexa’s participation, with Nexa subsequently acquiring 100% of Anglo American’s interest in the Project. In 2007, Karmin purchased SGV’s interests, raising its participation to 30%, and in 2019, Nexa acquired Karmin and became the sole owner of the Project. |
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TABLE 4-1 EXPLORATION AUTHORIZATION PERMITS Nexa Resources S.A. – Aripuanã Zinc Project |
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www.rpacan.com Legend: International Boundary State Boundary National Capital State Capital Road Railway 10° Santa MartaMaracaibo Barquisimeto Caracas Valencia TRINIDAD AND TOBAGO Barcelona Maturin Port-of-Spain NORTH 10° CucutaCiudad Bolivar San Cristobal Georgetown ATLANTIC Bucaramango Bogota VENEZUELA Puerto Carreno Santa Elena de Uairen GUYANA New Amsterdam Paramaribo Cayenne French OCEAN COLOMBIA Boa Vista SURINAME Guiana (FRANCE) Oiapoque 0° ARIPUANÃ ZINC PROJECT Manaus AMAPA Macapa Santarem Belem Equator Sao Luis 0° Parnaiba Iquitos Leticia Benjamin Constant AMAZONAS Careiro Itaituba PARA Altamira Maraba Carajas MARANHAO CEARA Teresina Fortaleza RIO GRANDE DO NORTE Natal Joao Cruzeiro do Sul Humaita Boca do B R A Z I L Araguaina PIAUI Picos Salgueiro PARAIBA Pessoa ACRE Acre Porto Cachimbo PERNAMBUCO Recife 10° Rio Branco Assis Brasil InapariGuayaramerin PERU Quillabamba Velho Guajara-Mirim RONDONIA MATO GROSSO Palmas TOCANTINS Barreiras BAHIA Juazeiro ALAGOAS Maceio Aracaju SERGIPE 10° Cusco Lago Titacaca BOLIVIA Cuiaba Rondonopolis GOIAS Brasilia DISTRITO Vitoria da Conquista Salvador Ilheus N Arequipa Matarani Ilo La Paz Cochabamba Santa Cruz Caceres Goiania FEDERAL MINAS GERAIS Tacna Arica Oruro Sucre Puerto Suarez Corumba Campo Santa Fe Uberlandia Belo Horizonte ESPIRITO 20° Iquique Potosi Grandedo Sul MATO GROSSOPanorama SAO SANTO Vitoria 20° DO SULPAULO Pedro Juan Caballero PARAGUAY Ponta Pora PARANA Sao Paulo RIO DE JANEIRO Rio de Janeiro SOUTH ATLANTIC Antofagasta SOUTH PACIFIC Salta San Miguel de Tucuman Asuncion Ciudad del Este Curitiba Foz do Iguacu SANTA CATARINA Santos Sao Francisco do Sul Florianopolis OCEAN OCEAN CHILE Resistencia ARGENTINA RIO GRANDE DO SUL Porto Alegre 0200 400 Kilometres 30° CordobaSanta Fe URUGUAY Santa Maria0 Rio Grande 200 400 Miles 30° Valparaiso Mendoza Rosario Figure 4-1 SantiagoBuenos Aires La Plata Colonia Montevideo Nexa Resources S.A. Concepcion 70° Bahia Bianca 60° Mar del Plata 0°40°30° Aripuanã Zinc Project State of Mato Grosso, Brazil November 2020 The islands of Trinidade, Martin Vaz, Arquipelago de Fernando de Noronha, Atol das Rocas, and Penedos de Sao Pedro a Sao Paulo are not shown. Trinidade and Martin Vaz are administered by Espirito Santo; Arquipelago de Fernando de Noronha by Pernambuco. Location Map 4-3 |
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4-4 N Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Property Map Legend: Arex Deposit Link Deposit Ambrex Deposit Babaçú Deposit Mineral Rights Held by Nexa by Phase Exploration Authorization Mining Concession Right to Apply for Mining Concession Mining Concession Application Exploration Application www.rpacan.com Kilometres November 2020Source: Nexa, 2020. |
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MINERAL RIGHTS Exploration and exploitation of mineral deposits in Brazil are defined and regulated by the 1967 Mining Code and overseen by the National Mining Agency (ANM). There are two main legal regimes under the Mining Code regulating Exploration and Mining in Brazil: Exploration Authorization (“Autorização de Pesquisa”) and Mining Concession (“Concessão de Lavra”). Applications for an EA are made to the ANM and are available to any company incorporated under Brazilian law and maintaining a main office and administration in Brazil. EAs are granted following submission of required documentation by a legally qualified Geologist or Mining Engineer, including an exploration plan and evidence of funds or financing for the investment forecast in the exploration plan. An annual fee per hectare ranging from US$0.50/ha to US$ 1.00/ha, is paid by the holder of the EA to the ANM, and reports of exploration work performed must be submitted. During the period when a formal EA application has been submitted by a company for an area, but not yet granted, no exploration works are permitted. In this document, these areas are referred to as Exploration Applications. EAs are valid for a maximum of three years, with a maximum extension equal to the initial period, issued at the discretion of the ANM. Annual fees per hectare increase by 50% during the extension period. After submission of a Final Exploration Report, the EA holder may request a mining concession. Mining concessions are granted by the Brazilian Ministry of Mines and Energy, are renewable annually, and have no set expiry date. Concessions remain in good standing subject to submission of annual production reports and payments of royalties to the federal government. Areas where the maximum extension of an EA has been reached, and a positive Final Exploration Report and mining concession request have not been submitted by the company, are designated with a status of “Public Offer”. Prior to Decree nº9.406/2018, the public offer winner’s decision was made considering the best technical proposal in terms of exploration activities and previous knowledge of the specific mineral right. At present, the winner is the company which has offered the highest amount of cash in an auction procedure. SURFACE RIGHTS Surface rights can be applied for if the land is not owned by a third party. The owner of an EA is guaranteed, by law, access to perform exploration field work, provided adequate |
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compensation is paid to third party landowners and the owner accepts all environmental liabilities resulting from the exploration work. Nexa has purchased additional surface rights directly overlying the Arex, Link, Ambrex, and Babaçú deposits since 2012. Surface rights adjacent to the properties and necessary for mine development are currently being negotiated by Nexa. Table 4-2 describes the surfaces rights held while Figure 4-3 illustrates the surface rights currently held in relation to the mineral deposits. TABLE 4-2SURFACE RIGHTS Real Estate Name Property Certificate Area Mining Right DNPM Sítio Esperança 3783 94.7197 ha 866173/1992 Sítio Esperança 3784 89.1953 ha 866173/1992 Sítio Serraa Domada 85251 80.7838 ha 866173/1992 Fazenda Boa Ventura 453 166.12 ha 866173/1992 Sítio Maçaranduba 454 33.8 ha 866173/1992 Sítio Água do Sapo 1944 22.8847 ha 866173/1992 Sítio Bela Vista 1944 89.7449 ha 866173/1992 Sítio Santo Antonio 1944 49.3244 ha 866173/1992 866941/2015 Sítio Córrego Seco 2313 49.0975 ha 866173/1992 Sítio São Roque 948 200 ha 866173/1992 866173/1992 Sítio Mata Linda 1944 74.1747 ha866941/2015 866292/2015 866727/2015 |
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www.rpacan.com 8,889,000 8,889,000 225,000 226,000 227,000 228,000 N AREX LINK Not Available AMBREX BABAÇÚ 8,885,000 8,885,000 225,000 226,000 227,000 228,000 0500 100015002000 Metres Figure 4-3 8,888,000 8,887,000 8,886,000 8,886,000 8,887,000 8,888,000 Legend: Mineralization Projected to Surface Outline of Real Estate Registry Transmission Line Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Surface Rights 4-7 |
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ROYALTIES AND OTHER ENCUMBRANCES ROYALTIES Royalties applicable to the Project are detailed in Table 4-3. TABLE 4-3 ROYALTY DATA Nexa Resources S.A. – Aripuanã Project Garimpeiros Notes: 1.Anglo American royalty is owed by Nexa only. PERMITTING The QP is not aware of any environmental liabilities on the Project. Nexa has all required permits to conduct the proposed work on the property. The QP is not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform the proposed work program on the property. |
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ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ACCESSIBILITY The Project is located in the northwest corner of the state of Mato Grosso, western Brazil, and is accessible from the town of Aripuanã via a 25 km unpaved road, which is well maintained in the dry season. Aripuanã can be accessed from the state capital, Cuiabá, via a 16 hour drive (935 km) on paved and unpaved roads BR-163/BR364, MT-160, MT-220, MT-170, MT-208, MT-418, and MT-206. The final 250 km between Cuiabá and Aripuanã are on unpaved roads, which are in poor condition and require substantial upgrades to ensure road access to site. The Aripuanã town is also serviced by a paved airstrip suitable for light aircraft. There are no commercial flights travelling between Cuiabá and the town of Aripuanã and access to site is accomplished via a three-hour chartered flight. Temporary roads link drill hole site locations within the Project area, with the main access gravel road from the town of Aripuanã. CLIMATE The climate in the Project area is characterized by hot and humid weather, with distinct dry (April to September) and wet (October to March) seasons, as such it is classified as a “Tropical Savanna Climate” in the Koppen Climate Classification. The mean annual temperature is 24°C, with monthly average temperatures ranging between 20°C and 30°C. Average annual rainfall is 2,750 mm and annual average evaporation is 1,216 mm. Work can be carried out on the Project on a year round basis. LOCAL RESOURCES The economic base in the town of Aripuanã is rooted in the extractive industries, predominantly timber, agriculture, and tourism. Although located in the Amazon district, deforestation has occurred and the area is defined mostly by plantations of rubber and soy beans, as well as artisanal mining operations. No skilled mining workforce exists in the district. The town of |
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Aripuanã hosts a hospital and related medical facilities as well as primary and secondary schools. INFRASTRUCTURE Infrastructure is limited at, and adjacent to, the Project. Infrastructure includes a core handling facility located in the town of Aripuanã. Multi-purpose storage sheds are located at the facility and a nursery for drill site and road reclamation is located on site. There are 270 km of unpaved roads on site, which are difficult to traverse during the wet season (October to March). Gas prices are very elevated in the region and there is a very high cost associated with road maintenance. Services to the Project are provided by the town of Aripuanã, which includes accommodation, restaurants, and stores. The Dardanelos Hydropower dam (261 MW) was completed at the town of Aripuanã in 2011, approximately 20 km from the Project. A thermal power plant next to the town of Aripuanã airport (Guaçu Power Plant), which uses woodchips and waste as fuel, has a generation capacity of 30 MW. Numerous rivers occur close to the Project and water supply is not expected to be an issue. PHYSIOGRAPHY The Project lies between 250 metres above sea level (MASL) and 350 MASL, and comprises seven occurrences of mineralization: Arex, Link, Ambrex, Babaçú, Massaranduba, Boroca, Arpa, and Mocoto, over a 25 km strike length. The Arex, Ambrex, and Babaçú deposits are visible as three tree covered mounds on a steep ridge surrounded by flat ground. Vegetation is dense on the ridge but has been largely cleared in surrounding areas which are used primarily for agricultural purposes. |
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HISTORY HISTORY The following information is summarized from AMEC International (Chile) S.A. (AMEC, 2007). Gold mineralization was discovered in the area during the 1700s by prospectors and a small fort was constructed to protect the portage at Aripuanã’s Cachoeira de Andorinhas (Swallow Falls). No details of the extent of extraction of gold on the property during this time are available. Between 1979 and 1990, artisanal gold miners extracted gold from the district of Aripuanã, mostly through gold panning and small excavations. It is thought that at one time up to 2,000 artisanal gold miners were active in the district. One large pit, named Expedito’s pit, was excavated during this time and is approximately 200 m deep. Western Mining Corporation (WMC) held an exploration licence on the property between 1992 and 1994. No details of exploration work completed during this time are available. Anglo American began exploration on the property in 1995. At the time, a small area including Expedito’s Pit, now part of the Project, was held by Madison do Brasil (now Thistle Mining Inc.) and optioned to Ambrex Mining Corporation (now Karmin). Dardanelos was created in 2000 to represent a joint venture, or “contract of association,” between Karmin and Anglo American, with the intent of exploring for base and precious metals in areas adjacent to the town of Aripuanã. Anglo American and Karmin held 70% and 28.5% of Dardanelos, respectively, with the remaining interest (1.5%) owned by SGV. In 2004, the initial agreement between Karmin and Anglo American was amended to allow VM Holding S.A.’s (VMH) participation. VMH subsequently acquired 100% of Anglo American’s interest in the Project. In 2007, Karmin purchased SGV’s interests, raising its participation to 30%. In 2016, VMH increased its share holdings in Compañía Minera - Milpo S.A.A. (Milpo) to a total of 80% of its shares. In 2017, VMH rebranded to become Nexa Resources S.A., and listed on the New York and Toronto stock exchanges. |
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Up until 2019, Dardanelos was a joint venture between subsidiaries of Nexa (70%) and Karmin Exploration Inc. (Karmin, 30%), with Nexa acting as the operator. In 2019, Nexa purchased Karmin’s interest and became the sole owner of the Project. EXPLORATION AND DEVELOPMENT HISTORY Excluding drilling, the following exploration activities have been undertaken on the Project: A SPECTREM airborne geophysical survey Geological mapping Ground geophysics LiDAR airborne survey Soil geochemistry This work was carried out by Anglo American and Karmin between 1999 and 2002. Since 2004, exploration has been conducted by Nexa, and is described in more detail in Section 9, Exploration. HISTORICAL RESOURCE ESTIMATES Previous Mineral Resource estimates have been completed on the property by AMEC in 2007, and by RPA in 2012 and 2017 for Karmin, the latter being subsequently updated for Nexa later in 2017. These estimates are superseded by the Mineral Resource estimate presented in Section 14, Mineral Resource Estimate, of this Technical Report. These estimates are considered to be historical in nature and should not be relied upon, however, they do give an indication of mineralization on the property. PAST PRODUCTION Approximately 350,000 oz Au are thought to have been extracted by artisanal miners during the 1979 and 1990 gold rushes. There has not been any formal production to date on the property. |
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GEOLOGICAL SETTING AND MINERALIZATION REGIONAL GEOLOGY The South American Platform is mainly composed of metamorphic and igneous complexes of Archean/Proterozoic age and makes up the continental interior of South America. The Platform consolidated during the Late Proterozoic to Early Paleozoic times in the course of the Brasiliano/Pan-African orogenic cycle during which the amalgamation of different continents and micro continents with the closure of several ocean basins led to the formation of the Supercontinent Gondwana. Archean and Proterozoic rocks are exposed in three major shield areas within the framework of Neoproterozoic fold belts (Guiana, Central Brazil, and Atlantic shields). The western continental margin of the South American Plate developed from at least Neoproterozoic to Early Paleozoic times and constitutes a convergent margin, along which eastward subduction of Pacific oceanic plates beneath the South American Plate takes place. Through this process, the Andean Chain, the highest non-collisional mountain range in the world, developed. The eastern margin of the South American Plate forms a more than 10,000 km long divergent margin, which has developed as a result of the separation of the South American Plate and the African Plate since the Mesozoic era through the opening of the South Atlantic and the break-up of Gondwana. The northern and southern margins of the South American Plate developed along transform faults in transcurrent tectonic regimes due to the collision of the South American Plate with the Caribbean and Scotia plates. The South American Plate reveals a long and complex geologic history (Engler, 2009). Figure 7-1 is a simplified geological map of Brazil. The Project is underlain by Paleoproterozoic and Mesoproterozoic-aged (1.80 Ga to 1.55 Ga) lithologies belonging to the Río Negro-Juruena Province, one of six major geochronological provinces comprising the Amazonian Craton. The Río Negro-Juruena Province occupies a large portion of the western part of the Amazonian Craton (Figure 7-2) and includes volcano-sedimentary sequences, felsic plutonic-gneiss, and granitoids. Rift basins within the province are filled with continental platform molasse and marine sediments of Mesoproterozoic, Paleozoic, and Mesozoic age (Engler, 2009). It is a zone of complex granitization and migmatization. Regional metamorphism, in general, occurred in the upper amphibolite facies (Tassinari et al., 2010). |
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72° 4° 66°60°54° 48° 40°36° N 0° 0° ARIPUANÃ ZINC PROJECT 4° 4° 8°8° 12° 12° 16° 20° Sedimentary Rocks Quaternary Tertiary Cretaceous Jurassic-Cretaceous Triassic 16° 20° 24° 28° Permian Carboniferous-Permian Carboniferous Devonian Silurian Cambrian-Ordovician Paleozoic Igneous and Metamorphic Rocks Cretaceous-Tertiary Volcanics Mesozoic Volcanics Paleozoic-Mesozoic Intrusives Precambrian Undifferentiated 24° 28° 72° 66°60°54° 48° 40°36° Figure 7-1 020 406080 Kilometres 100 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Regional Geology November 2020Source: Votorantim Metais, 2017. |
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Imataca Romaima NLegend: Strutures Basement Structure Neoproterozoic Faults Geocronological Provinces Amazônia Central Province (> 2.5 Ga) 0°0'0" Maroni-Itacaiúnas Province ( 2,2 – 1,9 Ga) Iquitos Bacia do Purus ManausMonte Alegre Gupupá Venturi-Tajapós Province ( 1,99– 1,8 Ga) Rio Negro-Juruena Province (1,8 – 1,5 Ga) Amazonas Porto Velho Xingu Serra dos Carajás Rondoniana-San Ignácio Province ( 1,55– 1,3 Ga ) Sunsás Province ( 1,25– 1,0 Ga) Geological Units 10°0'0"S Aripuanã Zinc Project Phanerozoic Cover Granitoid Precambrian Sedimentary Cover Intermediate Acid Volcanic Mafic Volcanics Greenstone Belt Granulitic Complex Neoproterozoic Period 60°0'0"W50°0'0"W Figure 7-2 0200 400600800 Kilometres 1000 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Geological Map of the Amazonian Shield November 2020 Source: Karmin Exploration Inc., 2012. |
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LOCAL GEOLOGY The following is taken from Simon, Marinho and Lacroix (2007). The Project area is underlain by a meta-volcano-sedimentary sequence known as the Aripuanã Sequence or the Roosevelt Group (RG), which is interpreted as a back-arc setting of the Tapajós arc. The Aripuanã Sequence exhibits greenschist facies grade regional metamorphism and has been intruded by late-stage A-Type Granites. The Aripuanã Sequence is associated with a major intracontinental suture, which defines the margin of the Caiabís graben in the south. The Aripuanã Sequence is bounded by granites and gneisses of the Xingu Complex in the north through interrupted tectonic contacts. The Aripuanã Sequence comprises three major meta-volcano-sedimentary units: A basal unit, represented by felsic and intermediate flows with tuffaceous layers. An intermediate, transitional felsic volcanic unit. An upper sequence, represented by inter-layered meta-argillites, meta-tuffs and meta-cherts. These units form a broad semicircular shape surrounding the Rio Branco granite. The mineralized zones are located in the northeastern portion of the arc (Figure 7-3). Post-mineralization aged overthrust faults, dipping to the north and northeast, form complex imbricated sheets, which represent the most characteristic structural feature of the area. Typically, these sheets include portions of the volcanic units, and upper meta-sedimentary unit, although often the contact relationships are obscured by extreme deformation. The lithological assemblage generally strikes northwest-southeast and dips between 35° and 70° to the northeast. Stratigraphic features have been offset by younger sinistral, east-west wrench faults that are traced by mapping and magnetic interpretation. PROPERTY GEOLOGY The following has been summarized from VMH (2016). Stratigraphy over the property consists of meta-sediments, meta-volcanic and meta-pyroclastic rocks, and hydrothermally altered rocks at the interface between the meta- |
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sediments and meta-volcanics. The meta-sediments comprise meta-mudstones, meta-siltstones, and carbonaceous meta-siltstone, while the meta-volcanics and meta-pyroclastics grade from rhyolite to dacite in composition. The hydrothermal zone occurs as stratabound when related to exhalative rocks or pipe like when related to the feeder zone. The stratabound portion of the hydrothermal zone has three main types of alteration, carbonate, tremolite, and sericitic. The feeder or stringer zone has three types of alteration, sericitic, phyllic (sericite + chlorite), and chloritic (+silicification). On surface, the hydrothermal alteration zone is strongly masked by tropical weathering, usually associated with gossans. Portions of the property have Phanerozoic alluvial cover. Figure 7-3 illustrates the property geology. |
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www.rpacan.com 224,000 225,000 226,000 227,000 228,000 229,000 230,000 8,890,000 8,890,000 8,889,000 EXRP03 EXR P04 FEX29 FEX30 8,889,000 EXRP17 AREX EXRP18 F PAR049 EXRP09 EXRP10 8,888,000 8,888,000 FPA R044 F 005 AMBREX 8,887,000 8,886,000 8,887,000 F 023 8,886,000 8,885,000 8,885,000 8,884,000 8,884,000 Kilometres 8,883,000 Lithology: 225,000 226,000 227,000 228,000 229,000 Figure 7-3 8,883,000 SAAlluvial GSGossan ASSiltites, Argillites, Carbonaceous Phyllites QVQuartz Veins ZHHydrothermal Zone FVVolcanics Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Property Geology November 2020 Source: Amec, 2007 (Edited from Petrus, 2006). 7-6 |
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MINERALIZATION Three main elongate mineralized zones, Arex, Link, Ambrex, and Babaçú, have been defined in the central portion of the Project. Limited exploration has identified additional, possible mineralized bodies including Massaranduba, Boroca, and Mocoto to the south and Arpa to the north. Where outcropping, sulphide mineralization has been oxidized forming gossanous bodies which frequently mark the position of overthrust faults. These gossans are generally small and contain low levels of gold. They do not appear to be of economic interest at this time. The individual mineralized bodies have complex shapes due to intense tectonic activity. Stratabound mineralized bodies tend to follow local folds, however, local-scale, tight isoclinal folds are frequently observed, usually with fold axes that are parallel to major reverse faults, causing rapid variations in dips. The Arex, Link, Ambrex, and Babaçú deposits are the best understood and are described below. Hydrothermal alteration is commonly directly adjacent to the Arex, Link, Ambrex, and Babaçú deposits, and according to Leite et al. (2005, as cited in AMEC, 2007) presents a zonal and symmetrical standard: External zone: Sericite and muscovite in a fine-grained matrix with minor chlorite content. Where present, the low sulphide content is dominated by pyrrhotite. Intermediate zone: Transition of sericite to chlorite halo on stringer zones. Tremolite and chlorite alteration with minor carbonatization and silicification. Internal zone: Stringer zones are characterized by pervasive chlorite alteration accompanied by quartz veins. Sulphide content is dominated by chalcopyrite and pyrrhotite. Porphyroblastic magnetite and biotite locally substitutes within the sulphide matrix. The stratabound zones are dominated by tremolite, talc and carbonate alteration, accompanied by sphalerite, galena and pyrite, with minor magnetite and fluorite. The stratabound zone may be brecciated. AREX Mineralization at the Arex deposit strikes at approximately 110° azimuth, extending over a 1,400 m strike length. Upper portions of the deposit tend to be near-vertical, while lower portions dip at 60° to the northeast. The Arex deposit is characterized by well-defined stringer and stratabound zones. Discrete lenses of stratabound and stringer mineralization, ranging from less than one metre to 15 m thick, interplay within a 100 m to 150 m wide zone, separated by barren, hydrothermally altered rocks. Mineralization comes close to outcropping at surface |
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and extends to almost 500 m below surface. Discrete lenses may be continuous for up to 300 m down dip. The Arex deformation pattern is made of tight, foliation-parallel folds, and reverse faults which overthrust in the same direction. The Arex deposit presents strong dip variations that are often parallel to foliation and faults. In some areas, this may cause the stratabound and stringer mineralization to be parallel, despite its original perpendicular position. LINK The Link deposit, first discovered in 2014, is interpreted to be the westward extension of the Ambrex deposit towards the Arex deposit. It is located approximately 300 m southeast of the Arex deposit and exhibits shape, mineralization, and alteration features similar to Ambrex, the largest deposit. Link mineralization strikes at approximately azimuth 125° and has a strike extent of approximately 450 m, based on current drilling. Mineralization thicknesses typically range between 10 m and 50 m, with a maximum of 150 m. Mineralization comes close to outcropping at surface and extends to almost 700 m below surface. The degree of folding at Link is gentler than at Arex and hosts well marked overthrust faults, which are parallel to metamorphic foliation. The orientation of the stratabound mineralization is generally parallel to the original bedding, while the stringer zone is often approximately perpendicular to the stratabound zone. AMBREX The Ambrex deposit represents the largest of the known mineralized zones on the Project. The Ambrex deposit is located approximately 1,300 m southeast of the Arex deposit. Ambrex mineralization strikes at approximately azimuth 125° and has a strike extent of approximately 1,050 m, based on current drilling. The dip varies from near vertical to 70° to the northeast. Mineralization thicknesses typically ranges between 10 m and 50 m, with a maximum of 150 m. The Ambrex deposit has an upper depth of 60 m below surface, with a lower depth of approximately 700 m. The degree of folding at Ambrex is gentler than at Arex and hosts well marked overthrust faults, which are parallel to metamorphic foliation. The orientation of the stratabound mineralization is generally parallel to the original bedding, while the stringer zone is often approximately perpendicular to the stratabound zone. |
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BABAÇÚ Located southeast of the Ambrex deposit, the Babaçú deposit is 1,300 m long and also dips to the northeast. The Babaçú deposit is interpreted to be similar in shape and style of mineralization to the Ambrex deposit. |
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DEPOSIT TYPES The following is summarized from VMH (2012c). The Aripuanã polymetallic deposits are typical volcanogenic massive sulphide (VMS) deposits associated with felsic bimodal volcanism. Support for this model is based on the geometry of mineralization, host rocks, hydrothermal alteration, and sulphide paragenesis. The Aripuanã VMS deposits have been subsequently deformed and metamorphosed under greenschist facies conditions (Leyte, 2005 and Petrus, 2006, as cited in VMH, 2012c). Details observed at Aripuanã and consistent with VMS deposits are described below. Host rocks: All mineralized bodies are located on the upper levels of a felsic volcanic unit, in association with finely laminated exhalites, at or close to the contact with an overlying sedimentary unit. Mineralization zonality and predominant textures: Three types of mineralization are found at the Project, and are typical of VMS deposits elsewhere: Stringer facies: Cu-Au bearing stringers in the footwall of the stratabound mineralization, containing chalcopyrite and pyrrhotite, with stockwork and breccia textures corresponding to hydrothermal feeder zones. Proximal sulphide facies: mixed bodies of stratabound massive and disseminated Zn-Pb mineralization, overlying stringer mineralization. Geochemical zonality. The Cu/Cu+Zn ratio is higher in the proximity of the copper rich feeder zones and decreases upward from the footwall and towards the distal zinc rich stratabound mineralization. Facies associated with the feeder zones are located in the middle of the volcanic unit and are characterized by pyrrhotite and/or chalcopyrite stockworks in a zone of intense chloritic hydrothermal alteration. The sulphide association represents a feeder zone at higher temperature. There is Cu-Au association in these zones. Figure 8-1 presents a target model of the sequence (Figure 8-1). |
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www.rpacan.com Flows or volcaniclastic strata 100 m Felsic flow complex BIMODAL-FELSIC Canadian grade and tonnage Average 5.5 Mt Median 14.2 Mt 1.3% Cu 6.1% Zn 1.8% Pb 123 g/t Ag 2.2 g/t Au Sericite-quartz Chlorite-sericite Quartz-chlorite Chalcopyrite-pyrite veins Massive Pyrite-sphalerite-galena tetrahedrite-Ag-Au Pyrite-sphalerite-galena Pyrite-sphalerite-chalcopyrite Chalcopyrite-pyrrhotite-pyrite Barite (Au) Carbonate/ gypsum Figure 8-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Target Model November 2020Source: A.G. Galley et al., 2007. 8-2 |
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EXPLORATION 1999 TO 2002 EXPLORATION This section is summarized from VMH (2012a). Geochemical and geophysical surveys, including a SPECTREM airborne geophysical survey, were conducted by Anglo American and Karmin between 1999 and 2002. The exploration program targeted 13 different areas on the property. Limited details are available on the exact date and operator of the various surveys conducted, however, the following information was recovered in the Anglo American database (Table 9-1). TABLE 9-1 ANGLO AMERICAN AND KARMIN EXPLORATION – 1999 TO 2002 Nexa Resources S.A. – Aripuanã Project TargetGeological Mapping GeochemistryGround Geophysics Sediment SoilGravimetryMagneticIPVLFTDE x x x - x - - - x x x x x x x - x x x - x - x x x x - - x - - x x x x - x - x - x x x - x - x x x x x - x - - - x x x - x - - - x x - - x - - x x x x - x - x x x x x - x - - - x x x - x - - - x x x - - - - x Acampamento Velho Arex Ambrex Babaçú Bigode Cafundo Cone Joao Paulo Massaranduba Mocotό-Borόca Vaca II Valdir Vale dos Sonhos Note: IP – Induced Polarization VLF – Very Low Frequency TDEM – time-domain electromagnetics GEOPHYSICS The airborne SPECTREM geophysical survey is an electromagnetic (EM) method developed by Anglo American, where by EM, total field magnetic, and radiometric measurements are |
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simultaneously taken from sensors inside, or towed behind, an aircraft. The survey was conducted in 2001 over 1,800 km2. No specific details are available with respect to ground geophysical methods. GEOCHEMISTRY No details of sample procedures, quality assurance/quality control (QA/QC), or dates were available. Historically, 760 stream sediment samples and up to 32,000 soil samples with a wide distribution over 2,000 km2 have been collected. Geochemical analyses were conducted by Nomos and Mineração Morro Velho (MMV) laboratories. GEOLOGICAL MAPPING Geological mapping of the Project area was completed to varying levels of detail over the thirteen targets listed in Table 9-1 between 1999 and 2002. NEXA EXPLORATION The following is taken from AMEC (2007) and VMH (2012b). In 2004, Nexa became Project operator and commenced a detailed geological, geochemical, and geophysical exploration program, which included additional drilling described in Section 10. Under contract from Nexa in 2005, Geoambiente Sensoriamento Remoto prepared a topographic map based on photogrammetric restitution of two pairs of Ikonos panchromatic images with one metre spatial resolution (173214-0/173214-3 and 173214-1/173214-2), and with ground control on geodesic IBGE stations. Internal control points were surveyed using a differential global positioning system (DGPS). The topographic map has an area of 195 km2 and 1:10,000 altimetric and 1:5,000 planimetric scales as well as five metre contour lines (plus additional one metre interpolations). In 2004, Integração Geofísica compiled and integrated all previous geological, geophysical, and geochemical data to allow a more complete interpretation of the regional and local geology, and the identification of local exploration targets. A digital terrain model was prepared |
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and integrated with airborne gamma-spectrometric (K-Th-U channels), magnetometric, and electromagnetic (time domain EM) survey data, soil geochemical surveys, regional and local geological information, including most of the data previously obtained by Anglo American and Karmin. As a result of this study, five groups of targets were identified in addition to Arex and Ambrex, and additional exploration was recommended. In 2004, Nexa contracted Petrus Consultoria Geológica Limitada to conduct and/or supervise geological, geochemical, and geophysical exploration at the property. Between 2004 and 2007, additional exploration at the property included relogging of Anglo American/Karmin core, geological mapping, and geochemical surveys. In 2007, a time domain, airborne EM survey was conducted by Fugro Airborne Surveys. The survey covered approximately 1.8 km2, divided in four loops of 700 m x 500 m each, with readings on a 100 m x 20 m grid. The survey was flown over 14,290 m using a base frequency of 30 Hz. In addition, 3,860 m were surveyed at 3 Hz in order to detail the anomalies identified with the 30 Hz survey. In 2008, exploration efforts consisted of evaluating regional targets. Work included detailed geological mapping and systematic rock, soil, and stream sediment geochemistry. Mobile metal ion (MMI) soil geochemical tests were completed on the Ambrex and Babaçú targets. Core from Arex and Ambrex was re-logged. Exploration drilling at Babaçú and in-fill drilling at Arex and Ambrex took place. Extensive drilling took place on Arex and Ambrex in 2012, as well as additional metallurgical test work. In 2013, ground magnetic surveying totalling approximately 138 line-km over the Poraquê, Arpa, Ambrex, Babaçú, Massaranduba, Boroca, and Mocotό targets was completed. Subsequently, a 12 line-km ground magnetic survey was completed over the Casagrande target. An extensive program of core re-sampling was completed comprising a total of 11,067 core and pulp analyses from 159 drill holes from Arex, Ambrex, Arpa, and Babaçú. A new structural model was developed based on LiDAR topography in the Arex-Ambrex area and the 1:25,000 scale geological map was updated. In 2014, ground magnetic surveying totalling approximately 222.8 line-km over the Flanco W, Poraquê, Sombra, Mocotό Sul, Jibόia, and Casagrande targets was completed. A total of 991 |
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soil samples were taken over the Somra and Casagrande targets and 25 gold panning samples were taken at the Flanco W, Mocotό Sul, Jibόia, Sombra, and Vaca-Bigode targets. In 2015, a 1,584.2 line-km helicopter-borne, combined magnetic and electromagnetic (VTEM) survey was flown over four areas, namely Arex-Ambrex, Flanco W, Mocotό, and Casagrande Jibόia. Soil sampling at Flanco W and geological mapping and rock sampling at the Borόca and Mocotό target areas was undertaken. In-fill drilling at Arex and Ambrex was also completed. In 2016 and 2017, initial exploration activities were not conducted at the Project, as Nexa target generation program is no longer based in joint venture (Nexa/Karmin) related properties. Although intense exploration was conducted at the Project in both, 2016 and 2017, it was totally based on drilling for upside resources at open extensions (2016) and infill drilling (2017), as detailed in the following sections. The focus of exploration activities on the property has been the Babaçú deposit since 2018, where on-going drilling has been successful in upgrading this exploration target to an Inferred Mineral Resource. EXPLORATION POTENTIAL BABAÇÚ Part of the Babaçú deposit has been converted to an Inferred Mineral Resource during 2020. The Babaçú deposit is not fully tested by drilling and is still open at depth and laterally from the current Mineral Resource outline where there is good potential for further drilling to increase the Mineral Resource. Nexa has identified an area to the north west of the current Babaçú Mineral Resources and south east and down dip of the Ambrex deposit. Nexa has designated the name “Babaçú NW Exploration Target” to this area. Figure 9-1 shows the location of the Babaçú NW Exploration Target while Figure 9-2 shows a conceptual vertical cross section through the target. The cross-section is through line AB shown in Figure 9-1. The Babaçú mineralized VMS horizon has been confirmed by drilling extending further northwest below the Ambrex deposit which is open at depth. Nexa envisages a new |
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exploration target potential as given in Table 9-2. Grade ranges were defined based on Ambrex and Babaçú known resource grades. The tonnage range assumptions were based on geological continuity of the mineralized horizon, as follows: strike length ranging from 500 m to 700 m, depth continuity ranging between 350 m to 550 m, and average mineralization width of 20 m. The potential quantities and grades are conceptual in nature, there has been insufficient exploration to define a Mineral Resource, and it is uncertain if further exploration will result in the above targets being delineated as Mineral Resources. TABLE 9-2BABAÇÚ NW EXPLORATION TARGET POTENTIAL – SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Project TonnesZn PbCuAuAg (Mt)(%)(%)(%)(g/t)(g/t) RPA is of the opinion that the Babaçú NW Exploration Target exhibits good potential and recommends following up with additional step out drilling to convert the exploration target to Mineral Resources. RPA is also of the view that there is good potential to increase the Mineral Resource at the Babaçú deposit with more drilling. |
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!( !( (! (! !( !(!( (! !( !(!( !( !( !( !( (! !( !(!(!(!( !( !( !(!( !( !( !( !(!( (! !( (! !( !(!( Figure 9-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Location of Babaçú NW Exploration Target !(!( !(!( !( !( !( (! !( !( !( !( !( !( !(!( !( !(!(!( !( !( !( !( !( !( !(!(!( !( !( !(!(!( !( !( !( !(!( ( !(!(!(!( !( !(!(!( !(!( !(!( !( !( !( !(!(!(!(!(!(!(!(!( !( !(!( !(!(!(!( !( !( !( !(!( !( !(!(!(!( !(!( !( !( (!!( !(!(!(!( !((!!( !(!( !( (!(!!((! (!(!(!(! (!!( !(!(!(!( !(!(!(!(!(!(!( !( !(!(!( !(!( !( !(!(!(!(!( !( !(!(!(!( !( !( !( !( !( !( !( !( !( !( !(!(!(!(!(!(!( !( !(!( !( !(!(!(!(!( !(!(!(!( !( !(!(!( !(!( !(!( !( !( !( (! !( !( !( !(!(!(!(!(!(!( !(!( !( !( !( !(!(!(!( !(!(!(!( !( !(!( !( !(!(!(!(!(!(!(!(!(!( !( !( !( !( !( !(!( !(!(!( !(!( !(!(!(!(!(!( !(!( !(!(!(!(!(!( !( !((!(!!((!!!(!(!!((! (! (!(! (!(! !( !!((!(!(!!((!!((!(!!(!(!(!( (!!( (! !((!!!(!(!(!( !(!( !((!!( !((! !((! !((!!( !!((!!( !(!((!!((! !(!(!( !((!!(!((!!!((!!((!(!!(!(!(!(!(!(!(!(!( !(!(!(!(!(!( !((!(!!((!!(!(! (!!( !( !( (! !(!( !(!( !( !( !( !( !(!(!(!(!( !( !(!(!(!(!(!(!( !( !( !(!(!( !(!(!(!(!(!( !(!( !(!(!(!( !( !( !(!(!(!( !(!(!(!(!(!( !( !( !( !(!(!(!( !(!(!(!( !( !( !( !( !(!(!( !( !( !(!( !!(!!(!((!!(!( !( !(!(!(!((!!((! !( !( (! !( !(!( !( !( !( !(!( (!!(!(!(!(!((! !( (! !( !((! !( !( (! !(!( (! Arex (! !(!(!(!(!(!(!(!( (! (! !( !(!( !(!(!( !( !( (! !( !(!(!( !( !( !( !(!(!( !(!( !(!(!( !(!(!(!(!(!(!( !(!( !( !(!(!( !( !( !(!( !( !( !( !( !( !( !(!(!(!(!(!( !( !( !( !(!( !( !( !(!(!( !(!(!( !(!( !( !( !( !( !( (! !(!( (! !(!( !(!( !( !( !( !( !(!(!( !( (! !( !( !( !( (! !( !( (! !( !( !( !(!(!( !(!( !( !( !( !( (! !( !( !(!(!(!(!( !( !( !( !( !(!( !( !( !( !( !(!( !(!(!( !( !( !( !(!( !( !( !(!( !(!( !( !( !( !(!(!( !(!(!(!( !( !( (! (! (! ( !(!( !( !(!( !( !(!( !( (!B (! !( !( Link !( !( !( !( (!!( !( !( !(!( !( !( !( !( ( ! !( (! (! !(!( !(!( !( !( !(!(!( !(!( !( !(!( !(!( !( !( !( !( !( !( !( !( !( !( !( (! !( !( !( !(!(!(!( !(!( !( !( !( !( !( !(!(!( !( !( !( !( !( !( !( !(!(!( !( !( !( !(!(!( !( !( !( !( !(!( !( !( !(!( !(!( !( !(!( !(!( !(!( !( !( !( !( !( !( !( !( !(!( (! !( !( !( !( !( !( !(!( (! !( (! !(!( !( !( !( !( !(!( !(!( !( !( Ambrex !( (! Legend: !( !(!( (! !( (!!( !( !( !( !( !( !( !( !( !( !( !( !( Babaçú !( !( !( !( !( (! A!( !( !( !(!( !( !(!( !( !( !( ((!!!( !( !( !(!( !( !( (! (! !( !( !( (! !( !(!( !( Note: Conceptual Vertical Section A-B is Figure 9-2 (!!( (! !((! (! !( !( !( !( (! 0200 400600800 Metres 1000 (! !( !( !( !( !( !( www.rpacan.com 9-6 Source: Nexa, 2020. |
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SWLooking NorthwestNE AB Legend: Ambrex 0100 200300400 500 Babaçú NW Exploration Target Metres Figure 9-2 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Conceptual Vertical Section Showing the Babaçú NW Exploration Target www.rpacan.com 9-7 Source: Nexa, 2020. |
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DRILLING Drilling on the Project has been conducted in phases by several companies since 1993. Total drilling at the deposits with Mineral Resources, Arex, Link, Ambrex, and Babaçú, consists of 718 diamond drill holes totalling 229,654 m. Drilling at the other prospects on the property consists of 35 diamond drill holes totalling 13,886 m. A drilling summary by deposit up to and including all drilling information available at May 19, 2020, is presented in Table 10-1. TABLE 10-1DRILL HOLE DATABASE Nexa Resources S.A. – Aripuanã Project HistoricalNexa (2004 to 2020)Total Deposit No. DDH Metres (m) No. Perc. Metres (m) No. DDH Metres (m) No. Met. Metres (m) No. Holes Metres (m) Arpa095,35995,359 Arex5014,682191,32922038,085202,53630956,631 Link113,82216062,080114117266,043 Ambrex4415,74710948,87493,22216267,843 Babaçú72,2246836,9137539,137 Massaranduba82,184186,343268,527 Total12038,659191,329584197,654305,899753243,541 Notes: DDH: Diamond drill hole Perc: Percussion drill hole Met: Metallurgical drill hole PREVIOUS DRILLING This section is summarized from AMEC (2007). Limited detail on the Anglo American and Karmin drilling campaigns is available. Both reverse circulation (RC) and diamond drilling was performed on site. Results of RC drilling have not been maintained in the current Nexa database. Diamond drill core diameter was HQ (63.5 mm) size at the collar and are reduced to NQ (47.6 mm) size downhole. The DDI Reflex Fotobor method was used for downhole survey measurements. Most holes were drilled with azimuths ranging from 180° to 220° and inclinations ranging from -50° to -70°. Drill core boxes |
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are stored on site and are adequately labelled and ordered for efficiently locating and extracting the samples. Original drill reports are not available on site. RECENT DRILLING Drilling at the Project was conducted by Nexa from 2004 to 2008 and from 2012 to present. The main purpose of the 2004 to 2008 drill programs was to explore and delineate mineralization at the Project, while from 2012 to present, the objective has been to improve confidence and support and upgrade the classification of the Mineral Resources at the Arex and Ambrex deposits. Nexa drilled a total of 614 diamond drill holes totalling 203,553 m at Aripuanã from 2004 to March 2020, including 30 metallurgical drill holes totalling 5,599 m. Many drill holes were pre-collared using RC drill rigs, with diamond drill rigs used for drilling in mineralized zones. May 19, 2020 is the cut-off date of the Mineral Resource database, as such all assay results received before this date have been considered in the Mineral Resource estimate. Drill hole locations are spotted in the field using a hand-held GPS as well as measuring the distance to previous holes already surveyed using a total station. Small adjustments to the drill hole locations are made where necessary based on topographic relief and non-removable trees. The desired collar position, foresights, and backsights are marked by technicians using a Brunton compass for sighting the azimuth and a digital inclinometer for verifying the dip. Collar surveying is performed with a differential GPS upon completion of the drill hole and the departing collar azimuth is recorded using a total station (Figure 10-1). Casings are left in place. Downhole surveying is completed with Deviflex and Maxibor tools by the drilling company at three metre intervals downhole. Duplicate downhole surveys are performed on each hole. From 2014 onwards, Nexa has implemented core orientation for approximately 25% of the drilling using the Reflex ACT core orientation tool, and more recently Corefinder GTF. Drill core is currently placed in plastic boxes and labelled at the rig site prior to transport. Previously, wooden core boxes were used. Drill core is transported by pick-up truck to the Nexa logging facility by the drill company employees, Servitec Sondagem Geologica. Geotechnicians measure drill core runs and note core interval length, core loss, and check |
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core block runs. This information is then cross referenced to the driller’s notes for discrepancies and amended where necessary. Rock Quality Designation (RQD) is measured and a resistance value (R0 to R4) is assigned based on rock hammer tests. No other geotechnical logging is performed on site. The core is photographed both wet and dry prior to mark-up by geologists. All geological information is manually logged on paper logging sheets, and then hand entered into formatted Microsoft Excel sheets by the logging geologist. Lithology, rock unit, texture, alteration associated with the VMS, and regional alteration are recorded in logging sheets as text fields. The percentage of total sulphides, pyrite, pyrrhotite, chalcopyrite, sphalerite, and galena are recorded. Observations are noted where relevant. Digital logging sheets are imported into the Fusion database management program by the database manager. For oriented core, Nexa uses the vector collection method ((Tu) Top and (Bu) Base angle + distance between points (UD)). RPA is of the opinion that the drilling and logging procedures meet industry standards. |
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224,000 W225,000 W226,000 W227,000 W N Figure 10-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Drill Hole Collar Map – Arex, Link, and Ambrex 8,888,000 N 8,889,000 N 80012001600 2000 Metres Legend: Drill Hole by Phase Anglo Legend: Lithotypes 8,886,000 N Nexa 2018 2019 2020 8,887,000 N Chloritized Metatuff Chloritized Metavolanic Crystallized Metatuff Mineralization Mineralized Stratabound Stringer Votorantim Metals 2004 2005 2006 2007 2008 2012 2014 2015 2016 2017 8,885,000 N N 0255075100 125 Metres www.rpacan.com 10-4 8,885,000 N 8,886,000 N 8,887,000 N 8,888,000 N November 2020 Source: Nexa, 2020. |
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SAMPLE PREPARATION, ANALYSES, AND SECURITY SAMPLE METHOD AND APPROACH The following sampling methods and approaches are in place for the Project. Core is sampled 10 m above and below visible mineralization. Samples respect geological contacts and vary from 0.5 m to 1.5 m in length depending on core recovery, length of the lithological unit, and mineralization. Geologists mark the samples using a felt pen on the core boxes and staple a sample tag wrapped in plastic to the box at the start of the sample. Core is marked with red and blue lines to indicate where it is to be sampled and which half is to be assayed. Lines are drawn respecting the geological features such as layering to help minimize sampling bias. Prior to sampling, sample numbers are recorded in the Fusion data management system and cross-referenced with the interval depth downhole and the depth recorded in the database. Sample core is cut into two halves by technicians with a diamond saw, returning half of the split core to the core box and submitting the other half for sample preparation and analysis. The geologist responsible for logging the drill hole defines the insertion of QA/QC samples including blanks, standards, and duplicates. Each sample booklet contains four tags for each sample. One sample tag is stapled to the clear plastic sample bag and an additional sample is placed within the bag. One tag is attached to the core box while the remaining tag is left in the booklet for record keeping. Samples are separated into batches of up to 250 samples from the same drill hole. DENSITY ANALYSIS Bulk density is determined by the water displacement method for each sample of drill core. Samples are dried and then weighed using a tared Adventurer Pro scale accurate to 0.1 g. The sample is then added to a polyvinyl chloride (PVC) tube containing a fixed amount of water. The displaced water is removed from the PVC tube into a pre-weighed 1,000 mL |
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beaker. The weight and volume of displaced water is recorded by hand and then entered into a spreadsheet. Density values are auto-calculated using both volume and weight of water. The technician compares the values to ensure that they are similar. Any discrepancy results in a repeat of the test. The weighted measurement is used in the final database. Every tenth sample is also subject to an Archimedes density measurement. The Archimedes density results are kept on site and used as a QA/QC measure. The results of the Archimedes method are typically within 10% of the water displacement method. SAMPLE PREPARATION Sample preparation was performed by the ACME Laboratories (ACME) preparation facility in Goiania, Brazil, from 2004 to 2007, and from 2007 on, by ALS Global. Both laboratories followed the same preparation procedure, described below. The sample was logged in the tracking system, weighed, dried, and crushed to better than 70% passing a 2 mm screen. A split of up to 250 g was taken and pulverized to better than 85% passing a 75 µm screen. This sample preparation package was coded PUL-31 by ALS Global. Following preparation, samples were shipped to the sample analysis facility in Lima, Peru. ALS Global’s preparation facility in Goiania is accredited to the International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) 9001:2008 standards and ALS Global is accredited to ISO 9001:2008 and ISO/IEC 17025:2005, for all relevant procedures. Both laboratories are independent of Nexa and RPA. In the QP’s opinion, the sample preparation methods are acceptable for the purposes of a Mineral Resource estimate. SAMPLE ANALYSIS Assays were processed by ACME from 2004 to 2007, and from 2007 on, by ALS Global, both independent laboratories. ALS Global’s facilities in Lima are accredited to ISO 9001:2008 and ISO/IEC 17025:2005. |
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The following sample analysis was undertaken at the ACME facilities: Gold Analysis: Fire assay (50 g) standard fusion method with an atomic absorption spectrometry (AAS) finish. The lower limit of detection is 0.01 g/t Au. Multi Element Analysis: Aqua regia digestion with an AAS finish. Lower limits of detection are 0.001% for Pb, Zn, and Cu, 1 ppm Ag, and 0.01% Fe. The following sample analysis is undertaken at the ALS Global facilities in Lima, Peru. Gold Analysis: Au-AA24. A 50 g fire assay standard fusion method with an AAS finish. The lower limit of detection is 0.005 ppm Au and the upper limit of detection is 10 ppm Au. Gold Analysis: Au-AA26. Gold analyses returned from Au-AA24 with a gold value above 10 ppm Au are re-assayed using a 50 g fire assay standard fusion method with an AAS finish. Upper limit of detection is 100 ppm Au. Multi Element Analysis: ME-ICP61. 33 multi element suite using four acid digestion and inductively coupled plasma atomic emission spectroscopy (ICP-AES) finish. The upper detection limit for Pb, Zn, and Cu is 1% and 100 ppm Ag. Multi Element Analysis: ME-AA62. Samples that return values above the upper limits in ME-ICP61 are re-assayed using ME-AA62. In ME-AA62, four acid digestion with an AAS finish of a 0.4 g sample is used. Lower limits of detection are 0.001% for Pb, Zn, and Cu, and 1 ppm Ag. High Grade Zinc Analysis: Zn-VOL70. Zinc analyses returned from ME-AA62 with a zinc content over 30% are re-analyzed by dissolving in hydrochloric acid and titrated with EDTA solution with Xylenol orange as an indicator. High Grade Iron Analysis: Fe-VOL51. Iron analyses returned from ME-ICP61 with iron content over 50% are re-analyzed by dissolving in hydrochloric acid and titration. In the QP’s opinion, the sample analysis methods are acceptable for the purposes of a Mineral Resource estimate. DATABASE MANAGEMENT Database management is performed by a dedicated onsite geologist under the supervision of the Project Geologist. Digital logging sheets prepared by the geologist are uploaded to the Fusion database management system. Original drill logs, structural logs, geotechnical logs, details of chain of custody, site reclamation, and drilling are stored on site in a folder, specific to a single drill hole. Folders are clearly labelled and stored in a cabinet in the office, which is locked during out of office hours. |
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Assay certificates of exploration and mine drill holes are mailed to the site by ALS Global and emailed to Nexa employees. Certificates are reviewed by Nexa personnel prior to uploading to Fusion. SAMPLE SECURITY Samples are shipped in rice bags by truck to the independent ALS Global preparation facility in Goiania, Brazil. ALS Global purchased the facility from ACME in 2007. Prior to 2007, all work was performed by ACME. Drill core is stored at the onsite core storage facility, the grounds of which are locked at night and surrounded by a high fence. The storage facility is open at the sides and covered with a corrugated iron roof. Core storage inventory is maintained by onsite technicians. Pulp and coarse rejects are shipped back to the onsite facility by the laboratory where they are also stored with reference to individual sample locations. QUALITY ASSURANCE AND QUALITY CONTROL (QA/QC) Quality assurance (QA) consists of evidence to demonstrate that the assay data has precision and accuracy within generally accepted limits for the sampling and analytical method(s) used to provide confidence in a resource estimate or reporting assay results. Quality control (QC) consists of procedures used to ensure that an adequate level of quality is maintained in the process of collecting, preparing, and assaying the exploration drilling samples. In general, QA/QC programs are designed to prevent or detect contamination and allow assaying (analytical), precision (repeatability), and accuracy to be quantified. In addition, a QA/QC program can disclose the overall sampling-assaying variability of the sampling method itself. QA/QC PROTOCOLS Nexa has implemented an analytical QC and assurance program to ensure the reliability of exploration data. The program comprises of the insertion of certified reference material (CRMs or standards), blanks samples, and different types of duplicate samples into the sample stream. Table 11-1 lists the types of CRMs used by Nexa. From 2004 to 2008, three, commercially sourced CRMs, representing low, medium, and high grade zinc and lead were inserted at a rate of 5%. Copper, silver, and gold CRMs were not used. In 2012, two CRMs |
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sourced from Nexa’s sedimentary exhalative deposit (sedex) mine, Morro Agudo, were used on site. In June 2012, two property specific CRMs were generated and came into use on site. Standards were inserted in the overall sample stream of drill core at a rate of five standards in 100 samples. Between 2012 and 2020 Nexa utilized 18 different standards: AP series: five certified standards from Aripuanã for Zn, Pb, Cu, and Ag MA series: two CRMs sourced from Morro Agudo for Zn only and certified by SGS Geosol L1, M1, H1: Low, medium and high grade CRMs for Zn and Pb G series: three Geostats CRMs for Au GB series: one Intertek Group plc CRM for Zn, Pb, Cu and Ag BRAP series: Sourced from Centro Tecnologico de Referencia SulAmericano (CTRS) for Ag, Cu, Pb, Zn and S CTRS 900 series: sourced from CTRS for Au, Cu, S, Fe, Zn, Pb and Ag Standards were inserted in the overall sample stream of drill core at a rate of approximately one standard for every 30 drill core samples. Prior to 2012, blank material was river sand and sandstone sourced from the Aripuanã property. Subsequent to 2012, only coarsely crushed sandstone was used. Data collected from QC samples comprises approximately 10% of all assay data. For each batch of 100 samples, Nexa inserts the following QC samples: five standards, two blanks, one field duplicate, one pulp duplicate, and one reject duplicate. Blanks are inserted in the sample stream at the end of visible mineralization, standards are randomly inserted within mineralized intervals, and pulp and reject duplicates are randomly inserted in both mineralized and unmineralized intervals. Coarse rejects are requested by Nexa from material before it is shipped back from the laboratory to Nexa’s storage facility. Half core field duplicates are taken within mineralization. |
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CRM TABLE 11-1CERTIFIED REFERENCE MATERIALS Nexa Resources S. A. – Aripuanã Zinc Project CountZnSDPbSDCuSDA (%)(%)(%)(g gSDA /t)(g uSD /t) 5454.84 0.233.01 0.060.47 249 620.66 0 5509.15 0.316.15 0.091.44 0.0620761.12 0 8322.89 0.081.09 0.041.22 0.024 31-- 8337.71 0.184.04 0.070.35 0.011273-- 5291.5 090.0430.56 0.016.83 0.1258 .12.3-- 433--- ---- -5. 30.2 452--- ---- -1.02 0.1 2194.4 910.196--0.14 -23 .51.3-- 5014. 220.481.61 0.04--1.53 0.2-- 1282.91 0.110.94 0.04--1.18 0.2-- 1207.69 0.184.82 0.15--- --- 2350.75 0.010.47 0.03--- --- 2172.83 0.070.99 0.05--- --- 2192.89 0.081.09 0.041.22 0.02--- - 2187.71 0.184.04 0.070.3 460.007--- - 8--- ---- -1.04 0.04 169.34 0.264.04 0.10.3 120.009104 .012.26-- 154.27 0.11.1 650.0261.0 590.02237. 841.31-- ZnPbH1* ZnPbL1* ZnPbM1* CTRS0709 CTRS0710 G316-2 BRAPSTD001 BRAPSTD002 Notes: 1.SD = standard deviation A QA/QC report is prepared monthly by the onsite database manager and reviewed by the Project Geologist, the report is also submitted to the head office for review. Sample batches that include samples identified as having failed performance gates are re-assayed by ALS Global at the request of Nexa. The failed control sample, as well as two shoulder samples from each side, are re-assayed and supersede the failed results in the database. The QP reviewed the sample preparation, analytical, and security protocols employed by Nexa and is of the opinion that they meet or exceed industry best practices. Based on this assessment, the QP is of the opinion that assay data are sufficiently reliable for Mineral Resource estimation purposes. CERTIFIED REFERENCE MATERIAL Results of the regular submission of CRMs (standards) are used to identify problems with specific sample batches and long-term biases associated with the primary assay laboratory. RPA reviewed the results from 18 different standards used from 2004 to 2020. |
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Nexa investigated the assays for APPD0005, as this CRM consistently reported values below the expected value and often below the three standard deviation threshold. Nexa removed this standard from circulation in 2019. Figure 11-1 through Figure 11-3 chart 833 samples of CRM APPD0004 used for analyses on zinc, lead, and copper, respectively. Failure rates for the three elements are 16 (1.9%), 77 (9.2%) and 264 (31.6%) failures, respectively. Failure rates for copper were unexpected and show a significant low bias compared to the expected value. RPA recalculated the mean and standard deviation of the copper samples and found that adjusting for the sample population mean only five (0.6%) of the samples failed. RPA recommends that Nexa reevaluate other CRMs to adjust the means and standard deviations accordingly. RPA is of the opinion that the results of the CRMs support the use of the assays for a resource model. FIGURE 11-1CONTROL CHART FOR CRM AP0004: ZINC |
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FIGURE 11-2CONTROL CHART FOR CRM AP0004: LEAD FIGURE 11-3CONTROL CHART FOR CRM AP0001: COPPER |
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BLANKS RPA reviewed all analytical QC data from 2004 to 2020, these include the performance data of blanks, CRMs, as well as those of field, pulp, and coarse reject duplicates. The performance of blanks and CRMs was analyzed by charting the data on time series plots. Paired data (field duplicates, pulp duplicates, and coarse reject duplicates) were analyzed using bias charts, quantile-quantile, and relative precision plots. Normal industry practice for the assessment of the performance of blank samples is to set a failure limit to ten times the detection limit. In the case of the zinc, lead, and copper grades of interest, ten times the detection limit is insignificant. While RPA used 20 times the detection limit in the past, Nexa considers five times the practical detection limit of 0.01%, which RPA accepted as equally reasonable in this study. Prior to 2012, blank material was river sand and sandstone sourced from the property. After this date, only sandstone was used, however, Nexa does not distinguish these two materials in their database. The performance of blank samples is generally acceptable, and although zinc analyses yielded 1.4% of all assays above the limit of 0.05% Zn. The majority of these failures occurred prior to 2017. Lead and copper analyses failed in approximately 0.4% and 0.2% of samples, respectively. Figure 11-4 charts all the blank samples for zinc, lead and copper. Based on this analysis, RPA is of the opinion that no systematic contamination of samples occurred during the sample preparation or analysis stages. |
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FIGURE 11-42005 TO 2020 RESULTS OF BLANK SAMPLES (ZINC, LEAD, AND COPPER) DUPLICATES Duplicate samples help to monitor preparation and assay precision and grade variability as a function of sample homogeneity and laboratory error. The field duplicates include the natural variability of the original core sample, as well all levels of error including core splitting, sample size reduction in the preparation laboratory, sub-sampling of the pulverized sample, and the analytical error. Coarse reject and pulp duplicates provide a measure of the sample homogeneity at different stages of the preparation process (crushing and pulverizing). RPA re-analyzed the duplicate data compiled by Nexa using basic statistics, scatter, quantile-quantile, and percent relative difference plots. A total of 7,683 sample pairs were analyzed between field, coarse, and pulp duplicates with no material issues found. Figures 11-5 through Figure 11-7 are selected duplicate results. |
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FIGURE 11-5ANALYSIS OF FIELD DUPLICATE DATA (LEAD) FIGURE 11-6ANALYSIS OF COARSE REJECTDUPLICATE DATA (ZINC) |
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FIGURE 11-7ANALYSIS OF PULP REJECT DUPLICATE DATA (COPPER) Based on the analyses of available analytical QC data, the QP is of the opinion that the exploration data is sufficiently reliable for mineral resource estimation purposes. A recalculation of the means and standard deviations for CRMs with high failure rates is recommended. EXTERNAL LABORATORY CHECKS External laboratory check assays consist of submitting samples that were assayed at the primary laboratory (ALS) to a secondary laboratory CTRS and re-analyzing them by using the same analytical procedures. Figure 11-8 plots 1,042 sample pairs of zinc assays that were submitted for reanalysis. The results show a low variation in the assay values with a correlation of over 99%. |
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FIGURE 11-8ANALYSIS OF EXTERNAL LABORATORY CHECKS (ZINC) CONCLUSIONS The QP is of the opinion that the data collected by Nexa has been validated thoroughly and that the implementation of QA/QC protocols are to industry standards. The data is suitable for the estimation of Mineral Resources and Mineral Reserves. |
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DATA VERIFICATION NEXA VALIDATION OF ANGLO AMERICAN DATA From 1993 to 1997, assays from 56 FEX series drill holes from the Anglo American drilling campaigns at Arex were completed by MMV and Nomos without the insertion of QA/QC samples into the sample stream. In 1997, for verification purposes, core was quartered over mineralized intervals and re-analyzed either at the same lab or at a secondary lab (MMV, Nomos, ACME, or ALS Chemex). It was noted that for Anglo American’s Salobo Project in the Carajás mineral province, state of Pará, Brazil, Nomos was reporting significantly higher copper grades than MMV, however, MMV was comparable to ACME. Based on this information, Nexa adopted the following strategy: Nomos assays were only used if MMV assays were not completed. If the re-assay was performed at the same laboratory, the lower grade set of results was used. RPA notes that the FEX series drill holes represents approximately 5% of the composites within the mineralization wireframes and the issue mentioned only potentially impacts the stringer zone given that only the stringer zone contains copper values of interest. RPA is of the opinion that the impact of the overstated copper grades as presented above is not material to the Project. SOFTWARE VALIDATION Fusion and Seequent’s Leapfrog Geo (Leapfrog) software are used to identify potential issues in the drill hole database. Checks for the following potential issues were carried out: Long sample lengths Strange maximum and minimum values Negative values Detection limit / zero values Rapid borehole deviations Sampling gaps Sampling overlaps |
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Drill hole collars that do not match topography and underground openings No significant errors were detected that would materially impact the Mineral Resource estimate. RPA AUDIT OF DRILL HOLE DATABASE SITE VISIT Pursuant to requirements of NI 43-101, RPA conducted site visits to the Project on several occasions. Ms. Valerie Wilson, P.Geo., RPA Senior Geologist, visited the Project between October 16 and 19, 2012. During this site visit, RPA verified the geology and assay results from holes FPAR339, FPAR273, and FPAR343 to information in Nexa’s database. Drill hole contacts agreed with the logging results, and grades of zinc, lead, and copper were observed to correlate to sulphide content. Alteration was noted where present. Mr. Sean Horan, P.Geo., RPA Principal Geologist, visited the Project site between January 30 to February 3, 2017. During the site visit, Mr. Horan reviewed logging and sampling methods, inspected core from drill holes, and held discussions with Nexa personnel. Subsequent to Mr. Horan’s site visit, Mr. Jason J. Cox, P.Eng., RPA Principal Mining Engineer, visited the property between June 2 and 5, 2017. The purpose of Mr. Cox’s site visit was to review drill core, discuss project development plans, and review work on the Project to date. DATABASE REVIEW RPA has reviewed the drill hole database on various occasions. A summary of the data verification steps is given in Table 12-2. |
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TABLE 12-2SUMMARY OF RPA AUDITS OF THE RESOURCE DATABASE Nexa Resources S.A. – Aripuanã Zinc Project YearTaskComments 20125% (20 holes) comparison between original logs and digital logs. Compared holes FPAR2339, FPAR273 and FPAR343 to assay and litho logs. Two holes were identified as having errors and were corrected in the database. Contacts agreed with logging and sulphide content correlated with assays results. 5% check of assay certificates from ALS.No major discrepancies found, accidental exclusion of 35% of silver values due to error in database script. 201518% check of assay certificates between 2012 and 2015 from ALS. No major discrepancies found, silver scripting issue fixed. 2016Examined density population for outliers.Little variance within rock types and density values as expected. Some hydrothermal zone samples report high density values. Compared holes BRAPDD0055, BRAPDD0137 and BRAPDD0087 to assay and litho logs. 2017>6% check of assay certificates between 2015 and 2016 from ALS. 2018Reviewed an error report provided by Nexa and generated by Datamine Studio RM (Datamine Studio) from the database text files Aggregated all assay certificates and compared finalized copper, lead, zinc, and silver values against the database using a routine in Microsoft Excel. 2020A spot check on 3% of assay certificates between 2019 and 2020 from ALS. Contacts agreed with logging and sulphide content correlated with assays results. No major discrepancies found. No major discrepancies found. No significant errors found. No significant errors found. DENSITY RPA compared measured density values by rock units at Arex and Ambrex. Density values less than 2 t/m3 (excluding oxide material) and greater than 5 t/m3 were considered outliers based on cumulative distributions and removed from the database. Basic statistics of density data are displayed in the sequence. Samples designated as stratabound mineralization by logging geologists were found to have the highest density at both Arex and Ambrex, followed by stringer mineralization (Figures 12-1 and 12-2). Little variance exists in any of the other rock units, however, some mineralized hydrothermal zone samples reported high density values. The QP is of the opinion that the drill hole database has been maintained to a high standard and is suitable to support Mineral Resource and Mineral Reserve estimation. |
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FIGURE 12-1DENSITY MEASUREMENTS AT AMBREX BY ROCK UNIT |
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FIGURE 12-2DENSITY MEASUREMENTS AT AREX BY ROCK UNIT |
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MINERAL PROCESSING AND METALLURGICAL TESTING INTRODUCTION Numerous metallurgical studies on the Project were carried out from 2005 to 2013 to identify the best processing option. The evolution of the key studies and the process technologies under consideration were documented by VM Holding S.A. (VMH, 2015) and previously reported by RPA (RPA, 2017 and RPA, 2018). It was determined through metallurgical test work that sequential flotation (Cu-Pb-Zn), rather than bulk flotation into a single concentrate, presented better economics due to higher recoveries and concentrate grades. Additional test work on drill core from the Project was conducted by SGS GEOSOL from May 2016 to January 2017 to provide experimental data to support engineering studies. Information on sample validation and additional metallurgical testing has largely been provided by Validaçao das Amostras Selecionadas para Teste Metalurgico (LCASSIS Consultoria em Recursos Minerais (LCASSIS), 2017), the SGS GEOSOL 2017 Report (SGS GEOSOL, 2017), and the Metallurgical Test work Report (Worley Parsons, 2017a). Locked cycle test (LCT) work was also conducted in November 2017 by SGS GEOSOL to provide experimental data on the treatment of various types of mineralization, including, Link Stringer, Stringer Global, Link Stratabound, Ambrex Stringer, Ambrex Stratabound, and Strata Global. To the best of RPA’s knowledge, this test work program and the results were not compiled in a final report for review. The final results of this test work were used to define the process route selection. Pilot studies were undertaken by SGS GEOSOL on Project mineralization and the results were reported in the 2018 Pilot Study (SGS GEOSOL, 2018). Metallurgical data obtained from testing was integrated into the FEL3 process design by SNC-Lavalin Group Inc. (SNC-Lavalin) (SNC-Lavalin, 2018a and 2018b). Subsequent to RPA’s 2018 Technical Report (RPA, 2018), pilot plant flotation test work commenced in 2020 using bulk samples at Nexa’s Vazante Mine pilot facility located in Mina |
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Gerais State, Brazil. In addition, grinding and flotation test work was completed by SGS GEOSOL in 2020 (SGS GEOSOL, 2020)) on composites representing the first 11 quarters of processing plant feed. The 2020 test work utilized samples of blended ore (stringer and stratabound) based on a revised strategy of processing combined ore types rather than campaigning stratabound and stringer ores through the plant separately as had been previously planned. Independently, an evaluation of the grinding circuit included in the process design was completed by Mineral Processing Solutions (MinPro) in April 2020 (MinPro, 2020). METALLURGICAL SAMPLING Three master composite samples representing the Arex Stratabound, Arex Stringer, and Ambrex Stratabound deposits were prepared from original drill core. These samples were subjected to comminution, flotation, rheology, settling, and filtration bench scale tests, as well as chemical and mineralogical characterization (SGS GEOSOL, 2017). Shipments of samples for testing included: First shipment (May 2016) – 100 kg sample from the Arex body, material was combined to form a composite sample (75% Arex Stratabound, 25% Arex Stringer) for preliminary flotation test work in Phase 1 testing. Second shipment (July 2016) – 550 kg sample, core samples were combined to form three master composites: Arex Stringer, Arex Stratabound, and Ambrex Stratabound, which were used for optimization and definitive flotation tests. Variability Samples (July 2016) – 500 kg sample, core samples were combined to form ten Arex Stringer variability samples, ten Arex Stratabound variability samples, and eight Ambrex variability samples. Detailed sample preparation for comminution was conducted by SGS GEOSOL to generate representative aliquots of material in specific size intervals for different types of tests. The material for comminution testing was sent to SGS Chile, while Bond Ball Mill Grindability testing was conducted at SGS GEOSOL in Brazil. Material crushed to 2.0 mm was homogenized and separated into one kilogram sub-samples, which were placed in plastic bags, sealed, and stored in a freezer for flotation test work. Figures 13-1 and 13-2 illustrate the location of the metallurgical samples selected relative to the Life of Mine (LOM) stopes and the representativeness of sampling in each deposit. |
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Looking North ArexLink Not to Scale Arex LOM stopes (grey wireframe) and samples selected (pink dots). Figure 13-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Location of 2017 Arex Metallurgical Samples www.rpacan.com 13-3 Source: Votorantim Metais, 2017. |
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www.rpacan.com Not to Scale Ambrex LOM stopes (grey wireframe) and samples selected (pink dots). Figure 13-2 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Location of 2017 Ambrex Metallurgical Samples November 2020 Source: Votorantim Metais, 2017. 13-4 |
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Samples for the 2018 SGS GEOSOL Pilot Study consisted of Arex and Ambrex Stratabound materials, and Arex Stringer materials, as well as dilution material. These samples were prepared individually and then composites were prepared of stringer and stratabound material totalling approximately 11 t. The samples were chosen from NQ core to be representative of the global grades of the Aripuanã deposit, as well as spatially representative and representative of the proportions of the different ore types. Dilution material from Ambrex STB and Arex STB was added to help achieve the target grades and deposit proportional representation. METALLURGICAL TESTING 2016 PHASE 1 The 2016 SGS GEOSOL metallurgical test program was carried out in two phases. In Phase 1, a single bulk master composite sample of Arex Stringer and Stratabound mineralization representing both deposits at a ratio of 75% stratabound to 25% stringer mineralization was tested. A total of 24 open circuit bench scale flotation tests and two LCTs were conducted using the blended composite sample. The purpose of the testing was to verify the primary grind size (as this has implications for the downstream backfill plant) and to confirm if treating a blended mineralization would result in good metallurgical performance when compared to treating the materials separately. Information on preliminary flotation test work is presented in detail in Appendix G of the SGS GEOSOL 2017 Report. Preliminary test results indicated that a sequential flotation circuit with a short talc pre-flotation step followed by talc depression at a coarse primary grind size of 80% passing (P80) 150 µm produced acceptable results (Table 13-1). The results were as follows: Final Cu concentrate: 30.3% Cu, 80.4% recovery. Final Pb concentrate: 45.4% Pb, 91.5% recovery (although zinc contamination of the lead concentrate was high). Final Zn concentrate: 56.3% Zn, 83.9% recovery. Although parameters were not optimized, circuit conditions were identified for use in Phase 2. The overall results from LCTs were consistent with previous LCT results and the zinc and lead concentrate quality was found to be better than in previous tests. The blended composite of the Arex mineralization resulted in acceptable metallurgical performance in Phase 1 testing. |
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TABLE 13-1 PHASE 1 - LCT 2 RESULTS Nexa Resources S.A. – Aripuanã Zinc Project Product Grade (%) Recovery (%) www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 13-6 |
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2016 PHASE 2 Phase 2 testing was comprised of a more comprehensive testing program undertaken on both blended and individual Arex and Ambrex materials, with variability testing conducted on the different lithologies (SGS GEOSOL, 2017). Test work consisted of comminution, flotation, mineralogy, thickening, filtration, and rheology testing. Bench scale flotation tests were conducted to establish circuit parameters for various mineralization blends prior to conducting LCTs. A series of LCTs were carried out on each master composite sample and various blends to optimize circuit performance and to evaluate the flowsheet configuration. Information on optimization flotation test work is presented in detail in Appendix H of the SGS GEOSOL 2017 Report. Optimum conditions from development test work were applied to testing various variability samples. COMMINUTION A variety of comminution test work was completed, including: Crushing Work Index (CWi) Semi-Autogenous Grinding (SAG) Mill Comminution (SMC) SAG Power Index (SPI) Bond Work Index (BWi) Bond Abrasion Index (Ai) Information on comminution test work is presented in detail in Appendix E of the SGS GEOSOL 2017 Report. A brief description of these tests and the results are summarized below. CWi The Bond Impact Work Index can be determined from the CWi test and used to calculate net power requirements for sizing crushers. Additionally, the CWi can be used to determine the required open side settings for jaw and gyratory crushers, or closed side settings for cone crushers to achieve a given product size. Table 13-2 summarizes the results of CWi testing. Arex Stringer mineralization is considered to be moderately hard, while Ambrex mineralization is classified as soft. |
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TABLE 13-2CWI RESULTS Nexa Resources S.A. – Aripuanã Zinc Project Sample Maximum Impact Work Index (kWh/t) Minimum Impact Work Index (kWh/t) Average Impact Work Index (kWh/t) Specific Gravity Arex STB18.474.399.133.31 Arex STR18.814.839.322.93 Ambrex10.913.876.353.67 Notes: STB – Stratabound STR – Stringer SMC SMC results are used to determine the drop weight index (DWi), which is a measure of the strength of the rock when broken under impact conditions. The DWi is directly related to the JK rock breakage parameters A and b, which can be used to estimate these parameters. The JKTech Abrasion Test determines the parameter, Ta, which characterizes the resistance of the particles to fracture by abrasion. If the value of Ta is low, then there is a higher resistance to abrasion. The results of the SMC testing are summarized in Table 13-3. TABLE 13-3SMC RESULTS Nexa Resources S.A. – Aripuanã Zinc Project SPI SPI is a measure of the hardness of an ore from a SAG or autogenous grinding (AG) perspective. The SPI test measures the energy required to perform a standard size reduction. SPI tests are aimed at determining SAG and ball mill power requirements. SPI determinations were conducted for all master composite and variability samples (total of 30 samples) and the results are presented in Table 13-4. SGS Chile did not convert SPI minutes into power, therefore SPI values were not used in any comminution simulations. The results did not demonstrate a wide variation in hardness within the deposit. Samples were characterized as soft to moderate and the average SPI value for variability samples was minutes. |
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TABLE 13-4SPI RESULTS Nexa Resources S.A. – Aripuanã Zinc Project Sample NumberSample SPI (minutes) Arex Stratabound (STB) Master Composite47 Arex Stringer (STR) Master Composite88 Ambrex Stratabound (STB) Master Composite48 Arex STB Variability – High Sulphur44 Arex STB Variability – Tremolite55 Arex STB Variability – Pyrrhotite80 Arex STB Variability – High Zinc68 Arex STB Variability – Low Iron47 Arex STB Variability – Low Zinc52 Arex STB Variability – Pyrite63 Arex STB Variability – Talc39 Arex STB Variability – Chlorites78 Arex STB Variability – Carbonates44 Arex STR Variability – Low Iron66 Arex STR Variability –Sulphur81 Arex STR Variability – High Pyrrhotite71 Arex STR Variability – High Gold79 Arex STR Variability – High Pyrite67 Arex STR Variability – High Copper78 Arex STR Variability – Talc53 Arex STR Variability – High Iron81 Arex STR Variability – Low Copper69 Ambrex STB Variability – Low Zinc46 Ambrex STB Variability – Carbonates40 Ambrex STB Variability – Pyrrhotite62 Ambrex STB Variability – Talc50 Ambrex STB Variability – High Zinc54 Ambrex STB Variability – Sulphides55 Ambrex STB Variability – Pyrite47 Ambrex STB Variability – Tremolite40 BWi BWi determinations were performed on master composites and all variability samples. A total of 31 BWi determinations were carried out using a closing screen size of 150 µm. Table 13-5 lists the BWi results. No major difference was noted between the master composites and the variability samples. The material was classified as moderate to soft based on the BWi results. |
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TABLE 13-5BWI RESULTS Nexa Resources S.A. – Aripuanã Zinc Project Sample NumberSample BWi (kWh/t) Arex STB Master Composite10.6 Arex STRMaster Composite12.4 Arex Mix12.1 Ambrex STB Master Composite10.8 / 10.3 Arex STB Variability – High Sulphur8.6 Arex STB Variability – Tremolite9.9 Arex STB Variability – Pyrrhotite12.1 Arex STB Variability – High Zinc10.6 Arex STB Variability – Low Iron8.9 Arex STB Variability – Low Zinc11.8 Arex STB Variability – Pyrite10.8 Arex STB Variability – Talc9.9 Arex STB Variability – Chlorites11.2 Arex STB Variability – Carbonates11.8 Arex STR Variability – Low Iron11.9 Arex STR Variability –Sulphur12.4 Arex STR Variability – High Pyrrhotite13.6 Arex STR Variability – High Gold12.7 Arex STR Variability – High Pyrite12.9 Arex STR Variability – High Copper14.2 Arex STR Variability – Talc14.1 Arex STR Variability – High Iron14.6 Arex STR Variability – Low Copper12.9 Ambrex STB Variability – Low Zinc9.5 Ambrex STB Variability – Carbonates9.9 Ambrex STB Variability – Pyrrhotite11.1 Ambrex STB Variability – Talc10.2 Ambrex STB Variability – High Zinc10.3 Ambrex STB Variability – Sulphides10.4 Ambrex STB Variability – Pyrite9.1 Ambrex STB Variability – Tremolite9.6 Ai Ai can be used to determine steel media and liner wear in crushers, rod mills, and ball mills. The Ai test results are summarized in Table 13-6. The mineralization tested was classified as moderately abrasive. |
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TABLE 13-6AI RESULTS Nexa Resources S.A. – Aripuanã Zinc Project SampleAi (g) Arex Stratabound Master Composite0.086 Arex Stringer Master Composite0.1425 Ambrex Master Composite0.1448 RWi Bond rod mill work index (RWi) can be used to calculate net power requirements of the mill circuit, where the mill operates in closed circuit with a classifier. The RWi results are listed in Table 13-7. TABLE 13-7RWI RESULTS Nexa Resources S.A. – Aripuanã Zinc Project SampleRWi (kWh/t) FLOTATION Phase 2 flotation testing was conducted using master composite samples of the Arex Stratabound, Arex Stringer, and Ambrex Stratabound mineralization, as well as three Arex blended mineralization with varying ratios of stratabound to stringer material (75%:25%, 50%:50%, and 25%:75%). The main objective of the Phase 2 flotation testing was to determine the highest grade and recovery achievable for each sample under different reagent dosages and flotation times under a sequential flotation scheme (Cu-Pb-Zn). The Phase 2 flotation test program and results were documented in detail by SGS GEOSOL (SGS GEOSOL, 2017). A simplified diagram of the sequential flotation process developed is illustrated in Figure 13-3. The optimization test work determined that the best LCT results in terms of concentrate grades and recoveries achieved were as follows (SGS GEOSOL, 2017): Arex Stratabound Master Composite: LCT 028 Arex Stringer Master Composite: LCT 011 and LCT 025 (Cu flotation only) Arex Mixed (75% Stratabound, 25% Stringer): LCT 030 |
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Ambrex Stratabound Master Composite: LCT 029 The results from these LCTs are summarized in Tables 13-8 to 13-14 and SGS GEOSOL’s key findings were as follows: Master composites of Arex Stratabound and Ambrex Stratabound mineralization were similar in zinc and lead feed assays and flotation recovery, however, the Ambrex sample exhibited low copper concentrate grade and recovery. The Arex Stringer master composite sample was high in copper feed assay and the resulting copper concentrate was also high in grade and recovery. Zinc and lead concentrate grades and recovery were low as a result of their feed grades being low. The Arex Blended sample (75% Stratabound, 25% Stringer) exhibited the best flotation results: oCu concentrate: 31.3% Cu, 76.9% recovery oPb concentrate: 51.7% Pb, 82.4% recovery oZn concentrate: 52.4% Zn, 83.9% recovery Cycles on the majority of LCTs were not stabilized, thus confirmation of the results would require additional testing. Separate water systems were recommended for the flotation circuits to help future LCTs achieve equilibrium. While flotation columns are preferred and widely accepted in industry for use in the final cleaning stage, column flotation testing was not carried out at the bench scale. |
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FEEDROUGHER ROUGHER 2nd CLEANER TALC PRE-FLOATCOPPER FLOTATION COPPER FINAL CONC CLEANER TALC TAIL 1st CLEANER FINAL TAIL ZINC RGH TAIL ROUGHER ROUGHER 2nd CLEANER ZINC FLOTATION 2nd CLEANER LEAD FLOTATION ZINC FINAL CONC LEAD FINAL CONC 1st CLEANER 1st CLEANER Figure 13-3 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Simplified Sequential Flotation Circuit www.rpacan.com 13-13 Source: Votorantim Metais, 2017. |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 13-14 TABLE 13-8 SUMMARY OF KEY OPTIMIZATION LCT RESULTS Nexa Resources S.A. – Aripuanã Zinc Project LCT 011 – Arex Stringer Master Composite LCT 025 – Arex Stringer Master Composite (Copper Flotation Only) |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 13-15 LCT 009 – Ambrex Stratabound Master Composite LCT 029 – Ambrex Stratabound Master Composite |
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TABLE 13-9LCT 028 CONDITIONS AND RESULTS– AREX STRATABOUND MASTER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-10LCT 011 CONDITIONS AND RESULTS– AREX STRINGER MASTER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-11LCT 025 CONDITIONS AND RESULTS– AREX STRINGER MASTER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-12LCT 030 CONDITIONS AND RESULTS– AREX BLENDED (75% STRATABOUND, 25% STRINGER) Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-13LCT 009 CONDITIONS AND RESULTS– AMBREX STRATABOUND MASTER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-14LCT 029 CONDITIONS AND RESULTS– AMBREX STRATABOUND MASTER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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The metallurgical recoveries referenced by SNC-Lavalin in the process design criteria (SNC-Lavalin 2018b) for the feasibility study (FS) appear to be consistent with those calculated based on SGS GEOSOL 2017 test work: Copper recovery (Stringer) = 86.9% Copper recovery (Stratabound) = 67.5% Lead recovery (Stratabound) = 85.9% Zinc recovery (Stratabound) = 89.4% The LOM economics were developed using relationships between head grade, concentrate grade, and recovery that were established based on the LCTs. The relationship between concentrate grade divided by the head grade is known as the enrichment ratio (Er), which is a function of the mass pull to the concentrate. In general, the recovery is stated as a relationship to head grade. RPA notes that not all of the LCTs achieved equilibrium. Due to the low correlations between head grade and recovery in the LCTs, it was determined that the Er ratio would be used where applicable for recovery, and the 2018 pilot plant results would be used in other cases. Nexa determined that the pilot plant results better reflected recovery of stratabound zinc. If concentrates with grades lower than those achieved during testing can be marketed, the metallurgical recoveries used in the cash flow model are: Copper Recovery (Stringer) = 102.2014 – (0.4471 x Er), based on LCTs and with LOM Er of 34. Copper Recovery (Stratabound) = 67.5% based on test work. •Lead Recovery (Stratabound) = 𝑒𝑒𝑒𝑒𝑒��0.0608 ∗ ln �1 − 𝐸𝐸𝑟𝑟 79.31 � + 4.4801� + 0.1, based on LCTs and LOM Er of 29.3 Zinc Recovery (Stratabound) = 89.4% based the 2018 pilot plant test work. Based on a review of available metallurgical data, elevated levels of fluorine have been found in some of the concentrates. RPA is of the opinion that concentrate blending will result in final concentrates which contain acceptable levels of deleterious elements. Optimum conditions from development test work were applied to flotation testing of different variability samples. Each variability sample was subjected to copper, lead, and zinc flotation via an open cleaner circuit (same configuration used for LCT, except that there was no |
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recirculation of cleaner and recleaner tailings). Talc flotation was only performed on samples from Arex Stratabound or Ambrex Stratabound mineralization. The results from variability flotation testing are presented in detail in Appendix I of the SGS GEOSOL 2017 Report. Figures 13-4 and 13-5 illustrate the variation of metal assays in the flotation products. There are large variations in metal assay and metal distribution to the talc tail and recleaner concentrates. In the cases where the variation was negative, the results for the variability sample were below the result obtained for the respective master composite with the exception of zinc reported in the zinc recleaner concentrate. SETTLING, RHEOLOGY, AND FILTRATION Settling and rheology test work on feed samples from master composites of the Arex and Ambrex individual materials and the Arex Mixed material was conducted at SGS Chile. Details of the test work program are presented in Appendix J of the SGS GEOSOL 2017 Report. The best settling results were obtained using 3 g/t of the BASF SE (BASF) Magnafloc 10 flocculant (Table 13-15). Rheology test work on the products from settling tests was also conducted using a Hake 550 viscometer (Figures 13-6 and 13-7). TABLE 13-15SUMMARY OF SETTLING TESTS USING MAGNAFLOC 10 FLOCCULANT (3 G/T) Nexa Resources S.A. – Aripuanã Zinc Project ParameterArex Stratabound Arex Stringer Arex Mixed (75% Stratabound, 25% Stringer) Ambrex Stratabound Initial % Solids18181818 % Solids After Sedimentation65666667 Settling Velocity (mm/s)1.5222 Unit Area (m2/tph)0.70.50.50.6 Yield Point No Shear (PA)52294241 Yield Point Full Shear (PA)1.70.62.32.3 |
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FIGURE 13-4VARIATION OF METAL ASSAYS IN FLOTATION PRODUCTS Source: SGS GEOSOL, 2017 |
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FIGURE 13-5VARIATION OF METAL ASSAYS IN FLOTATION PRODUCTS Source: SGS GEOSOL, 2017 |
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FIGURE 13-6YIELD STRESS VERSUS SOLIDS PERCENTAGE Source: SGS GEOSOL, 2017 FIGURE 13-7VISCOSITY VERSUS SOLIDS PERCENTAGE Source: SGS GEOSOL, 2017 |
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Settling test work on flotation tailings from Arex Stratabound, Arex Stringer, and Arex Blended (75% Stratabound, 25% Stringer) mineralization was conducted by Andritz AG (Andritz). Details of the Andritz test work program are presented in Appendix K of the SGS GEOSOL 2017 Report. Filtration testing of the Ambrex Stratabound flotation tailings was also performed. The best settling results were obtained using the BASF Magnafloc 10 flocculant, resulting in 60% to 75% solids in the products. A summary of the filtration test work is presented in Table 13-16. TABLE 13-16SUMMARY OF FILTRATION TEST WORK CONDUCTED BY ANDRITZ Nexa Resources S.A. – Aripuanã Zinc Project Operating Parameter Arex Stratabound Arex Stringer Arex Mixed (75% Stratabound, Ambrex Stratabound 25% Stringer) In its FEL 3 study SNC-Lavalin relied on the FEL 2 data for estimation and sizing of equipment in the following areas: Concentrate filtration and thickening. Filtration and thickening reject talc. Thickening and filtration of final flotation tails. |
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PHASE 2 (FEL 3) LCT test work was also conducted in November 2017 to provide experimental data on the treatment of various types of mineralization, including: Link Stringer, Stringer Global, Link Stratabound, Ambrex Stringer, Ambrex Stratabound, and Stratabound Global. The results were evaluated based on stratabound and stringer material. To the best of RPA’s knowledge, this test work program and the results have not been compiled in a final report for review, however, the data for LCT 004F2 (Stringer Global) has been considered in the FEL 3 process design for copper flotation (SNC-Lavalin, 2018a). The results from this series of LCTs are summarized in Tables 13-17 to 13-22. |
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TABLE 13-17LCT 003F2 CONDITIONS AND RESULTS – LINK STRINGER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-18LCT 004F2 CONDITIONS AND RESULTS – STRINGER GLOBAL COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-19LCT 005F2 CONDITIONS AND RESULTS – LINK STRATABOUND COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-20LCT 006F2 CONDITIONS AND RESULTS – AMBREX STRINGER COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-21LCT 007F2 CONDITIONS AND RESULTS – AMBREX STRATABOUND COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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TABLE 13-22LCT 008F2 CONDITIONS AND RESULTS – STRATA GLOBAL COMPOSITE Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2017 |
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SGS PILOT STUDIES Pilot plant studies were undertaken by SGS GEOSOL in 2018 on samples of Arex and Ambrex mineralization to define the conditions and circuits for grinding and flotation of stringer and stratabound materials. The objective of the pilot plant studies was to produce chalcopyrite concentrate with a copper content of 27% to 28% and to produce lead and zinc concentrates containing approximately 55% Pb and 55% Zn. Table 13-23 lists the average head grades of the two composite samples tested. TABLE 13-232018 PILOT PLANT SAMPLES Nexa Resources S.A. – Aripuanã Zinc Project SampleWeightCuPb ZnAgAu (t)(%)(%)(%)(ppm)(ppm) The key findings from pilot testing were as follows: Stringer sample. A final copper concentrate was produced from a circuit consisting of rougher, cleaner, and recleaner flotation, following by cleaner scavenger column flotation. The copper concentrate contained approximately 24.1% Cu and copper recovery was 85.8%, however, high levels of Zn, MgO, and SiO2 (4.65%, 4.66% and 10.65, respectively) were reported as contaminants. Based on these results, additional metallurgical testing was required to improve the quality of the copper concentrate. Stratabound sample. Talc was rejected to a talc concentrate containing 27.2% MgO, and MgO recovery was 17.8%. Copper flotation consisted of a rougher-scavenger circuit, which produced a rougher concentrate of 3.63% Cu at 69.0% Cu recovery. The levels of Pb, Zn, and MgO in the rougher concentrate were 1.91%, 3.67% and 14.3%, respectively, however, the low copper content in the feed made it difficult to carry out the copper cleaner and recleaning stages. For lead and zinc flotation, rougher and scavenger flotation was carried out in mechanical cells followed by cleaner and recleaner flotation in column cells. A final lead concentrate was produced containing 62.1% Pb and a lead recovery of 80.3%, while a final zinc concentrate was produced containing 60.8% Zn and a zinc recovery of 87.5%. The Stratabound sample was found to be more friable than the stringer sample. Information from pilot plant comminution and flotation testing was used by SNC-Lavalin in the estimation and sizing of process equipment in the FEL 3 study (SNC-Lavalin, 2018a), however due to the low copper content in stratabound material, data related to stratabound copper flotation and concentration needed further validation. |
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SGS TEST WORK ON QUARTERLY COMPOSITES From September 2019 to May 2020, SGS GEOSOL completed test work on quarterly composites (based on the FEL3 LOM plan) with the objective of optimizing flotation conditions and predicting the performance of the Aripuanã plant over the first two years of operation when processing ore consisting of both stratabound and stringer ore. Test work included chemical analysis, BWi and Ai determinations, open circuit flotation tests to confirm operating conditions using 22 variability samples including rougher and cleaner kinetics tests, and LCTs on nine quarterly samples. Key observations and conclusions drawn from the test work included: The head assay of the quarterly samples dropped from Q4 2020 to Q3 2021 and then stabilized at approximately 0.3% Cu, 1.2% Pb, and 2.9% Zn. Gold assays ranged from 0.1 ppm Au to 0.9 ppm Au, and silver assays ranged from 14 ppm Ag to 83 ppm Ag. While BWi values ranged from 14.2 kWh/t to 16.4 kWh/t, higher than the range previously observed (10.0 kWh/t to 12.0 kWh/t), chemical analysis of the samples used for the BWi and Ai determinations indicated that the samples were waste material. Ai values ranged from 0.033 g to 0.140 g. Flotation of the variability and quarterly samples was more difficult than experienced previously, with higher losses of copper to the talc concentrate, high levels of iron sulphides in the final concentrates, and lower metal recoveries. The main variables determining flotation selectivity were identified as being the methyl isobutyl carbinol (MIBC) and sodium metabisulphite (SMBS) dosages, as well as rougher and cleaner residence times. Due to high copper losses to the talc concentrate when using a talc flotation circuit, as was similarly noted in the FEL3 design (rougher, scavenger, and cleaner stages), the circuit adopted for the LCTs on the quarterly samples incorporated reverse copper flotation from the talc concentrate. This was subsequently also adopted in the Aripuanã processing plant design of the talc circuit. Coarser regrinds of the rougher concentrates for copper, lead, and zinc (45 µm for copper and 75 µm for lead and zinc) resulted in improved recoveries with little effect on concentrate grades for copper and zinc, but a severe decrease in lead rougher concentrate grade. The LCTs indicated an accumulation of iron sulphides in the circulating loads that affected both copper and lead flotation performance. Head assays of the quarterly composites are shown in Table 13-24. |
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TABLE 13-24HEAD ASSAYS – QUARTERLY COMPOSITES Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2020 Eleven LCTs were completed, nine on the composites representing the first nine quarters of production, and two on a composite made up of the nine quarterly composites. While the majority of LCTs did not achieve steady state, they did show that high recoveries of copper, lead, and zinc to concentrates with acceptable grades could be achieved when processing ore consisting of blends of stratabound and stringer ores. Results for the LCT using the blend of quarterly composites are shown in Table 13-25. |
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TABLE 13-25HEAD ASSAYS AND TEST RESULTS – QUARTERLY COMPOSITE BLEND Nexa Resources S.A. – Aripuanã Zinc Project Source: SGS GEOSOL, 2020 |
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GRINDING CIRCUIT SIMULATIONS MinPro conducted grinding circuit simulations in 2020 to evaluate the capacity of the FEL3 grinding circuit for stringer and stratabound ores. The simulations included base cases for stratabound and stringer ores separately, followed by scenarios consisting of ore blends in the following proportions: 85% Stratabound and 15% Stringer 70% Stratabound and 30% Stringer 50% Stratabound and 50% Stringer 30% Stratabound and 70% Stringer 15% Stratabound and 85% Stringer MinPro used comminution data generated from earlier test work. This data is summarized in Table 13-26. TABLE 13-26COMMINUTION DATA USED FOR GRINDING CIRCUIT SIMULATIONS Nexa Resources S.A. – Aripuanã Zinc Project Source: MinPro, 2020 The BWi values used for the different ore types correspond to the highest results measured for the variability samples in the 2017 SGS GEOSOL test work, while the Axb values used were those measured for the Arex Stratabound and Arex Stringer master composites in the 2017 SGS GEOSOL test work. The MinPro 2020 simulations indicated that the base case throughput would be limited to 289 tph (6,300 tpd) for stratabound ore and 216 tph (4,730 tpd) for stringer ore. For blends of stratabound and stringer ore the circuit would have throughput capacities that fell between the base case capacities. In addition, MinPro concluded that the stratabound ore throughput was ball mill limited, while the stringer ore throughput was SAG |
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mill limited. MinPro also noted that the grinding circuit throughput would be reduced in circumstances where the pebble crusher is not in use and that this would be more marked for ore blends with greater proportions of stringer ore. RPA calculated grinding circuit throughput using 75th percentile values for ore hardness / competency and estimates that throughput for stringer ore of up to 5,000 tpd can be achieved, which agrees with the project design criteria. SUMMARY To process Aripuanã zinc mineralization, separate material types were identified during characterization. Due to different recovery kinetics during bench testing, and lower zinc and lead grades, it was initially decided to process stringer and stratabound ores separately and to by-pass lead and zinc flotation circuits during the processing of stringer mineralization. Blending of stratabound and stringer ore however demonstrated that acceptable recoveries of copper, lead, and zinc to concentrates with saleable grades could be achieved while processing these blends. As this would eliminate the need to campaign the different ore types through the plant separately, it was subsequently decided that processing of blended mineralization could occur based on the mine production schedule. For the FEL3 study, SNC-Lavalin referenced supporting SGS GEOSOL data from LCT 004F2 (Stringer Global) and pilot test FT-03 (Stratabound Global) to develop the process design criteria and flowcharts. Historical FEL2 data was used for estimation and sizing of equipment for concentrate, reject talc, and final flotation tailings filtration and thickening. Copper concentrate grades and recoveries for stringer materials in pilot scale testing were below targets and required further study. Pilot plant testing of stratabound mineralization successfully demonstrated that lead and zinc concentrates could be produced at saleable metal grades. LCTs conducted by SGS GEOSOL in 2019/2020 on composites representing quarterly mine production of stratabound and stringer ores combined demonstrated that saleable copper, lead, and zinc concentrates could be produced. Although recoveries were generally acceptable, these, as well as concentrate grades, require confirmation since many of these LCTs did not reach steady state. Pilot plant studies using bulk blended samples (stratabound and stringer ore) drawn from the ROM stockpile at Aripuanã were continuing at |
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the time of writing this Technical Report and RPA has not had the opportunity to review results from this testing. During the 2019/2020 open cycle flotation tests leading up to the LCTs on quarterly samples based on the FEL3 LOM plan, difficulties were experienced with copper losses to the talc concentrate while using a talc circuit similar to that in the FEL3 design. Further test work indicated that reverse flotation of copper from the talc concentrate could recover copper initially reporting to the talc concentrate, and this configuration was used for the LCTs and is suggested for the processing plant. This configuration would require only redirection of certain streams and the addition of reagents already in use, while using the equipment already included in the design. Most of the LCTs did not reach equilibrium, and recovery and concentrate grade values derived from earlier test work that have been used in project cash flow calculations need to be confirmed by completing the ongoing pilot test work at Nexa’s Vazante Mine using bulk blended ore samples simulating the processing of stringer and stratabound material together. Grinding circuit simulations indicated that throughput would be limited to 289 tph (6,300 tpd) for stratabound ore and 216 tph (4,730 tpd) for stringer ore. For blends of stratabound and stringer ore the circuit would have throughput capacities in between the base case capacities. Grinding circuit throughput will be reduced in circumstances where the pebble crusher is not in use, with these reductions being more marked for ore blends with greater proportions of stringer ore. RPA estimates that stringer ore throughput of up to 5,000 tpd can be achieved for ore corresponding to the 75th percentile ore hardness values determined in test work. |
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14 MINERAL RESOURCE ESTIMATE SUMMARY The block models were completed by Nexa personnel using Datamine Studio, and Leapfrog. Wireframes for geology and mineralization were constructed in Leapfrog based on geology sections, assay results, lithological information, and structural data. Assays were capped to various levels based on exploratory data analysis and then composited to one-metre lengths. Wireframes were filled with blocks measuring 5 m by 5 m by 5 m for Arex, Link, and Ambrex, and 10 m by 5 m by 5 m for Babaçú with sub-celling at wireframe boundaries. Blocks were interpolated with grade using ordinary kriging (OK) and inverse distance cubed (ID³). Blocks estimates were validated using industry standard validation techniques. Classification of blocks was based on distance based criteria. The Mineral Resource estimate for the Project was completed by Nexa in two separate block models: Arex, Link, and Ambrex – dated May 19, 2020 Babaçú – dated January 10, 2020 The Arex, Link and Ambrex estimate represents an update to the existing block model, incorporating the additional drill holes completed in each area. An initial Inferred Mineral Resource estimate for Babaçú was disclosed in early 2020 with an effective date of December 31, 2019. Additional assay results were received in December 2019 and were used to update the block model in January 2020. The classification was also revised in the updated block model. Underground Mineral Resources are reported exclusive of Mineral Reserves within potentially mineable shapes generated using the Deswik Stope Optimizer (DSO), envisaging bulk longhole stoping and cut and fill mining methods (Figure 14-1). A summary of the Aripuanã Mineral Resources, effective September 30, 2020, is provided in Table 14-1 and a summary of Mineral Resources by type and area in Table 14-2. Nexa used a long-term forecast of the R$/US$ exchange rate of $3.67 in conversion of costs and metal prices between Brazilian Reais and US dollars |
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TABLE 14-1SUMMARY OF MINERAL RESOURCES – SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Zinc Project Grade Metal Content Zn Pb Cu Au Ag Zn PbCuAu Ag (Mt) (%)(%)(%)(g/t)(g/t)(kt)(kt)(kt)(koz)(Moz) Stratabound Notes: CIM (2014) definitions were followed for Mineral Resources. Mineral Resources are reported using a US$45/t NSR cut-off value for transverse longhole mining and longitudinal longhole retreat areas and US$55/t NSR cut-off value for cut and fill areas. The NSR is calculated based on metal prices: Zn: US$2,869/t (US$1.30/lb), Pb: US$ 2,249/t (US$1.02/lb); Cu: US$7,427/t (US$3.37/lb); Au: US$1,768/oz, and Ag: US$19.38/oz. Mineral Resources are reported exclusive of Mineral Reserves within potentially mineable shapes. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Numbers may not add due to rounding. The QP has performed a detailed review of the Mineral Resource estimate completed by Nexa, including the support data. The QP is of the opinion that the Mineral Resource estimate has been completed to a high standard and is suitable to support the estimation of Mineral Reserves. The QP is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Resource estimate. |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-3 TABLE 14-2 MINERAL RESOURCES BY TYPE AND AREA - SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Zinc Project Stratabound |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-4 Stringer Notes: CIM (2014) definitions were followed for Mineral Resources. Mineral Resources are reported using a US$45/t cut-off value for transverse longhole mining and longitudinal longhole retreat areas and US$55/t cut-off value for cut and fill areas. The NSR is calculated based on metal prices: Zn: US$2,869/t (US$1.30/lb), Pb: US$ 2,249/t (US$1.02/lb); Cu: US$7,427/t (US$3.37/lb); Au: US$1,768/oz, and Ag: US $19.38/oz. Mineral Resources are reported exclusive of Mineral Reserves withing potentially mineable shapes. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Numbers may not add due to rounding. |
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Looking Northeast 0250 5007501000 1250 Metres www.rpacan.com 14-5 Legend: November 2020 Source: RPA, 2020. Figure 14-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Isometric View Showing the Potentially Mineable Shapes Used For Reporting |
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www.rpacan.com COMPARISON WITH PREVIOUS ESTIMATE The previous estimate for Arex, Link, and Ambrex was effective as of December 31, 2019 but was based on the December 31, 2018 block model, which had remained unchanged between year-ends 2018 and 2019. The previous estimate for Babaçú is dated December 31, 2019. Differences between the previous and the current estimates can be attributed to the following: A 2.7 Mt decrease in the Mineral Reserves from the previous estimate. This item had the most significant impact on the exclusive Mineral Resource report. Revisiting of the classification at Babaçú as well as inclusion of a small amount of additional assays received during December 2019, which resulted in a 9% increase to the Inferred stratabound tonnes at Babaçú. The use of DSO potentially mineable shapes for resource reporting which had the impact of increasing tonnes. Changes in NSR calculations and cut-off values. Changes to prices and metallurgical recoveries adopted. Additional drilling and an update to the Arex and Link wireframes (only a minor impact). RPA notes that there is only a minor difference between the previous and current Arex, Link, and Ambrex block models due to the small amount of additional drilling at the Project. Table 14-3 presents the comparison with previous Mineral Resources estimates. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 14-6 |
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TABLE 14-3 COMPARISON WITH PREVIOUS MINERAL RESOURCE ESTIMATE Nexa Resources S.A. – Aripuanã Zinc Project 30-Sep-2031-Dec-19 StrataboundStratabound GradeMetal ContentGradeMetal Content ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) LinkTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)LinkTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Inferred14.33.501.520.210.1340500.5 216.429.960.40.0Inferred15.83.641.460.140.0941575.5 230.221.847.80.0 StringerStringer GradeMetal ContentGradeMetal Content ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) 2.5 1.1 9.5 28.1 0.30 M+I 1.1 0.17 0.080.97 1.21 111.8 0.9 10.5 42.3 0.0 0.4 0.5 7.0 133.2 0.40 Inferred 1.5 0.04 0.050.68 4.11 100.6 0.7 10.0 195.4 0.0 Inferred1.60.020.030.452.677 M+I 0.7 0.06 0.070.921.3510 0.4 0.4 6.1 29.1 0.20 M+I 0.6 0.05 0.050.73 1.14 90.3 0.3 4.7 23.4 0.0 Inferred 2.7 0.06 0.030.951.0911 1.5 0.9 25.7 94.8 0.90 Inferred 2.7 0.05 0.030.93 1.15 111.4 0.9 25.6 101.6 0.0 M+I 0.6 0.04 0.020.560.88 7 0.2 0.1 3.115.8 0.10 M+I 0.3 0.43 0.090.75 0.90 101.2 0.3 2.2 8.4 0.0 Inferred 5.5 0.03 0.020.651.54 6 1.5 1.2 35.7269.3 1.10 Inferred 4.8 0.07 0.051.11 1.55 113.5 2.3 52.8 237.5 0.0 Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz)Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Inferred0.70.140.121.020.62250.90.86.713.00.0Inferred0.00.000.000.000.0000.00.00.00.00.0 Difference (2020/2019) Stratabound GradeMetal Content ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) M+I78%-16%-6%8%-10%25%46%65%89%63%116% Inferred-1%-30% -34%91%-36%-10%-29%-33%91%-34%-8% LinkTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) M+I76%-17% -12%13%-7%7%48%56%100%70%86% Inferred9%-25% -29% -23% -23%-23%-19%-23%-17%-17%-17% Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) M+I30%-14%-5%-17%-2%1%13%25%10%31%34% Inferred5%-8%-24%24%14%-14%-4%-20%37%18%-10% Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Inferred-9%-4%4%52%38%-1%-13%-6%37%26%-11% Stringer GradeMetal Content ArexTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) M+I1%33%22%-13% -36%-11%39%23%-10%-34%-24% Inferred8%-47% -40% -33% -35%-29%-29%-33%-30%-32%-15% LinkTonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) 11% 18% 27% 30% 24% 8% 0% 4% -2% 1% -7% -7% Inferred-1%14%-11%2%-6% Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) M+I106% -91% -79% -26%-2% -27%-84% -64%42%88%11% Inferred16% -59% -59% -41%-1% -44%-57%-48%-32%13%-32% www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-7 Babaçú Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (kt) Pb (kt) Cu (kt) Au (koz) Ag (Moz) Inferred- |
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NET SMELTER RETURN CUT-OFF VALUE An NSR value was assigned to blocks for the purposes of validation of the geological interpretation and resource reporting. NSR is the estimated dollar value per tonne of mineralized material after allowance for metallurgical recovery and consideration of smelter terms, including revenue from payable metals, treatment charges, refining charges, price participation, penalties, smelter losses, transportation, and sales charges. Input parameters used to develop the NSR calculation have been derived from metallurgical test work on the Project, smelter terms from comparable projects, and information provided by Nexa. These assumptions are dependent on the processing scenario and will be sensitive to changes in inputs from further metallurgical test work. Key assumptions are listed below. Metal prices and exchange rate: •US$2,868/t Zn •US$2,249/t Pb •US$7,427/t Cu •US$1,768/oz Au •US$19.38/oz Ag •R$3.67:US$1.00 Metal prices are based on Nexa’s projections. Nexa’s long term price model uses multiple variables including supply (mine and refined), demand, cost drivers, capital cost, and other key elements. The long-term prices derived are in line with the consensus forecasts from banks and independent institutions. Metallurgical recoveries are based on preliminary metallurgical testing and are summarized by mineralization type: STRATABOUND Copper Concentrate: •20% Ag recovery to copper concentrate •50% Au recovery to copper concentrate •67.5% Cu recovery to copper concentrate grading 27% Cu |
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50% Ag recovery to lead concentrate 84.8% Pb recovery to lead concentrate grading 61% Pb Zinc Concentrate 89.4% Zn recovery to zinc concentrate grading 49% Zn STRINGER Copper Concentrate: 63% Au recovery to copper concentrate 50% Ag recovery to copper concentrate 87.4% Cu recovery to copper concentrate grading 27% Cu Standard smelting and refining charges were applied to the various concentrates. It has been assumed that the concentrates would be marketed internationally. For the purposes of developing an NSR cut-off value, a total unit operating cost of US$45.00/t of mineralization for longhole stoping and longitudinal longhole retreat areas, and US$55.00/t for cut and fill was estimated, which included mining, processing, and general and administration (G&A) expenses. It should be noted that there are no cut and fill reserves in the mine plan, the method has been included on a conceptual basis for reporting of shallow dipping resources not captured due to the limitations of the longhole stoping parameters. A small part of the resources are related to cut and fill DSO shapes. TOPOGRAPHY A LiDAR topographic survey was completed over the Project in 2008. The resulting digital terrain surface (DTM) was made available in AutoCAD Drawing Exchange (DXF) and Datamine. The surface has been validated using survey control points and drill hole collars. At Nexa’s request, the coordinate system was changed from SAD69 to SIRGAS2000, which is the official DATUM of Brazil. For drill holes that were already in the database, the original coordinates were stored, and new columns were created for the transformed coordinates. Survey pickups for new drill holes are measured in the SIRGAS2000 coordinate system. |
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AREX, LINK, AND AMBREX RESOURCE DATABASE The resource database contains drilling information and analytical results up to March 30, 2020. Information received after this date was not used in the Mineral Resource estimate. The database comprises 643 drill holes for a total of 194,262.54 meters of drilling. A total of 124 drill holes were completed by Karmin/Anglo American prior to Nexa’s involvement in the Project (pre-2004). These 124 drill holes were internally reviewed and found to be acceptable to support Mineral Resource estimation. Nexa maintains the resource database in Datamine Fusion. Data were amalgamated, parsed as required, and imported into Datamine Studio and Leapfrog. For the purpose of the Mineral Resource Estimate, a total of 56 drill holes were excluded from the database. The drill holes excluded either lacked information, were historic RC drilling or were drilled for the purpose of metallurgical testing. RPA is of the opinion that the drill hole database is valid and suitable to estimate Mineral Resources for the Project. GEOLOGICAL INTERPRETATION Wireframes of the stratabound and stringer mineralization for Arex, Link, and Ambrex were constructed within the lithology at a cut-off grade of 0.6% Zn for stratabound zones and 0.5% Cu in the stringer zones (Figure 14-2). Wireframe construction was completed using Leapfrog. Nexa also prepared a litho-structural model to support the mineralized wireframes. This model incorporated local lithology, hydrothermal alteration, weathering profile and cross-cutting faults that influence the geometry of the mineralization. A zone of discontinuous remobilized stratabound mineralization within a fault zone in the upper sector of Ambrex was also modelled and assigned to stratabound mineralization. In zones where stratabound and stringer mineralization intersected, samples that satisfied the cut-off grade criteria for both ore types were included as stratabound. Some drill hole intercepts below the cut-off grade were included to maintain geological continuity. Mineralization at Arex strikes at approximately 110° azimuth, extending over a 1,400 m strike length. Thin lenses of intermingling stratabound and stringer mineralization within two principal |
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limbs dip from ten degrees to 60° to the northeast are modelled to join in some areas near surface. The main Arex mineralized zone comes close to outcropping at surface and is characterized by tightly folded, well defined stringer and stratabound zones. Individual lenses range from less than one metre to 15 m in thickness and are generally from two metres to seven metres thick. The Arex mineralization zone has an overall thickness of approximately 125 m, and individual lenses are separated by barren, hydrothermally altered rock from one metre to tens of metres thick. The main mineralization is delineated between two steeply dipping faults. The Link deposit is located southeast along strike from Arex over a strike length of approximately 850 m, with an approximate overlap with Arex of 100 m occurring to the northwest. Link mineralization bears a close similarity to Ambrex in that the stringer zone occurs at a high angle to the stratabound zone. The Link stratabound mineralization comes close to surface and extends to a depth of 500 m below surface while the Link stringer zone mineralization begins approximately 200 m below surface and extends to a depth of approximately 400 m below surface. The Ambrex deposit is located a further 100 m southeast of Link. Mineralization strikes at approximately 125° and has a known strike extent of approximately 1.05 m based on current drilling. Ambrex is dominated by stratabound mineralization, with smaller, less well defined stringer mineralization found perpendicular on the east side. Ambrex stratabound mineralization above the Gossan Fault Zone dips at approximately 40º to the southeast. At depth, the Ambrex mineralization is folded and dips from near vertical to 70° to the southwest. Ambrex has an upper depth of 60 m below surface, but generally is 100 m below surface. The deepest mineralization intersection within the Ambrex model is over 700 m below surface and the deposit remains open at depth. Ambrex stratabound mineralization is well defined and follows stratigraphy. Ambrex stringer mineralization crosses stratigraphy following structural features and is less well defined due to unfavourable drilling angles. The stratabound mineralization lenses range from one metre to 30 m thick, with an average thickness of approximately nine metres while the stringer zone thickness ranges from one metre to 20 m with an average of approximately five metre thickness. RPA’s review of the mineralized wireframes included a comparison of the geological model cross sections and level plans prepared by on-site geologists, drill hole information, and a NSR |
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value calculated from drill hole assays. Assumptions used in the NSR calculation are described under Net Smelter Return Cut-Off Value in this section. RPA is of the opinion that the wireframes have been completed to a high standard and are suitable for Mineral Resource and Mineral Reserve estimation. RPA did note that in minor areas at Ambrex poorly angled holes with respect to the mineralization contacts were driving the interpretation and possibly inflating the volumes. RPA recommends infilling areas where poorly angled drill holes are driving the geological interpretation. Stratabound and stringer mineralization were modelled individually at the three zones and were named according to the nomenclature set out in Table 14-4. TABLE 14-4 MINERALIZATION ZONES BY AREA - AREX, LINK, AND AMBREX Nexa Resources S.A. – Aripuanã Zinc Project Figures 14-3 to 14-5 present the Arex, Link, and Ambrex geological models, respectively. |
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Looking North ArexLinkAmbrex Not to Scale www.rpacan.com 14-13 Legend: November 2020 Source: RPA, 2020. Figure 14-2 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil 3D Isometric View of the Arex, Link and Ambrex Wireframes |
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Looking West Northwest 100 m100 m N Legend: 200 m Legend: 100 m Figure 14-3 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Arex Geological Model www.rpacan.com 14-14 Source: RPA, 2020. |
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Looking West Northwest www.rpacan.com 100 m 100 m Legend: 100 m N Legend: Figure 14-4 200 m Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Link Geological Model November 2020 Source: RPA, 2020. 14-15 |
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Looking Northwest Figure 14-5 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Ambrex Geological Model N Legend: Legend: 200 m 200 m 200 m 200 m www.rpacan.com 14-16 Source: RPA, 2020. |
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www.rpacan.com TREATMENT OF HIGH GRADE ASSAYS Nexa applied high grade capping to zinc, lead, copper, gold, and silver assays in order to limit the influence of a small amount of extreme values located in the upper tail of the metal distributions. Log probability plots were inspected for each domain in isolation and a high grade cap was applied where significant inflections or population breaks occurred. Examples of these can be seen in Figures 14-6 and 14-7. No capping was performed in the hydrothermal zone and for the variables iron, sulphur, magnesium, and density. Raw assays were capped prior to compositing. High grade capping was not required for all elements and some domains did not require capping for any element. The capping grades applied to each domain is shown in Table 14-5. The basic statistics of capped and uncapped sample populations is summarized by area and ore type in Table 14-6. RPA has reviewed the capped and uncapped sample distributions for all elements and all domains and concludes that the values used are appropriate for this deposit. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 14-17 |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-18 TABLE 14-5 AREX, LINK, AND AMBREX GRADE CAPPING LEVELS Nexa Resources S.A – Aripuanã Zinc Project ArexLinkAmbrex |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-19 Stringer Stratabound Stringer Stratabound Stringer TABLE 14-6 AREX, LINK, AND AMBREX UNCAPPED VERSUS CAPPED ASSAY STATISTICS Stratabound |
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FIGURE 14-6CAPPING ANALYSIS FOR BODY=117 (AREX) |
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FIGURE 14-7 CU CAPPING ANALYSIS FOR BODY=606 (AMBREX STRINGER) COMPOSITING Nexa composited the capped assays to one metre, which corresponds to the dominant sampling length for the deposit. Composites were weighted by length and unsampled core intervals were ignored. Gold was sampled to a lesser extent than other economic variables. The basic statistics for the composites is provided in Table 14-7 and a comparison between raw assay and composite lengths is shown in Figure 14-8. RPA recommends investigating the impact of weighting the composites by density. |
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TABLE 14-7AREX, LINK, AND AMBREX COMPOSITE STATISTICS Nexa Resources S.A. – Aripuanã Zinc Project Zn (%) 2428 2377 0.0028 44.42 5.01 6.29 39.62 1.26 Pb (%) 2428 2377 0.0001 28.3 1.79 2.75 7.56 1.54 Cu (%) 2428 2377 0.0001 12.35 0.36 1.03 1.05 2.88 Au (g/t) 2428 2167 0.0025 8 0.24 0.55 0.3 2.29 Zn (%) 1962 1909 0.0001 17.89 0.24 1.08 1.18 4.5 Pb (%) 1962 1909 0.0001 11.27 0.09 0.53 0.28 5.64 Cu (%) 1962 1909 0.0001 20.44 1.34 2.19 4.81 1.63 Au (g/t) 1962 1892 0.0025 124.73 1.28 3.58 12.85 2.81 Arex Stratabound Zn (%) 4064 4043 0.0041 42.63 4.5 6.61 43.71 1.47 Pb (%) 4064 4043 0.0003 21 1.6 2.7 7.28 1.68 Cu (%) 4064 4043 0.0001 11 0.15 0.7 0.49 4.56 Au (g/t) 4064 3926 0.0025 12.5 0.26 0.69 0.47 2.67 Stringer Zn (%) 1288 1284 0.0001 2.18 0.06 0.17 0.03 3.06 Pb (%) 1288 1284 0.0001 4.79 0.05 0.26 0.07 5.2 Cu (%) 1288 1284 0.0002 16 0.77 1.48 2.2 1.94 Au (g/t) 1288 1284 0.0025 18 0.98 1.66 2.74 1.68 Link Stratabound Zn (%) 5030 4963 0.0022 46.78 4.81 5.81 33.8 1.21 Pb (%) 5030 4963 0.0004 29.53 1.79 2.81 7.91 1.57 Cu (%) 5030 4963 0.0001 1.2 0.05 0.08 0.01 1.45 Au (g/t) 5030 3919 0.0025 3.55 0.19 0.29 0.08 1.55 Stringer Ambrex Stringer Stratabound |
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FIGURE 14-8COMPARISON OF HISTOGRAMS FOR ASSAY AND COMPOSITE LENGTH - AREX, LINK, AND AMBREX EXPLORATORY DATA ANALYSIS Nexa performed exploratory statistical analysis including boundary, bivariate and univariate statistical analysis. Given the large quantity of individual wireframes, Nexa divided the wireframe domains into groups based on the geological continuity: stratabound and stringer for Arex, Link, and Ambrex. The bivariate analysis results show strong correlations between stratabound Pb-Zn, Pb-Ag and Cu-Au, while for stringer mineralization, good correlations between Cu-Ag and Fe-S exist. In general, stratabound and stringer mineralization iron and sulphur show strong correlations. The results are consistent with the deposit type. Figure 14-9 presents the correlation matrices by type and area. |
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FIGURE 14-9CORRELATION MATRICES BY TYPE AND AREA - AREX, LINK, AND AMBREX |
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Link Stratabound String Stringer VARIOGRAPHY Experimental correlograms (plotted as variograms) were fit for zinc, lead, copper, gold, silver, and density to each group – stratabound and stringer for Arex, Link, and Ambrex. Nexa correlograms are shown in in Figures 14-10 and 14-11. Table 14-8 shows the parameters used. The correlograms were completed using an open-source Python program developed by Nexa personnel which collects sample pairs as a function of the variable orientation. The major, semi-major, and minor directions are defined prior to experimental variography by local anisotropy angles. Each sample pair has a unique rotation depending on the local anisotropy defined. RPA is of the opinion that this methodology is suitable for the style of mineralization. It should be noted that the major and semi-major directions are expressed as a 90° tolerance angle within the plane resulting in identical variograms for the two directions. TABLE 14-8AREX, LINK, AND AMBREX CORRELOGRAM PARAMETERS Nexa Resources S.A. – Aripuanã Zinc Project Arex Stratabound |
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Ambrex Stringer Stratabound |
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FIGURE 14-10AREX STRATABOUND CORRELOGRAMS (PLOTTED AS VARIOGRAMS) ZnPb CuAu AgDensity |
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FIGURE 14-11AMBREX STRINGER CORRELOGRAMS (PLOTTED AS VARIOGRAMS) ZnPb CuAu AgDensity |
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BLOCK MODEL Arex, Link, and Ambrex wireframes were filled with blocks in Datamine Studio. The final block model covers the three areas. The block model was sub-celled at wireframes boundaries with parent cells measuring 5.0 m by 5.0 m by 5.0 m and minimum sub-cell sizes of 1.0 m by 1.0 m by 1.0 m. The block model setup is given in Table 14-9. The block size is appropriate for the drill spacing and proposed mining method and is suitable to support the estimation of Mineral Resources and Mineral Reserves. Comparisons between wireframe and block model volumes are reasonable. TABLE 14-9AREX, LINK, AND AMBREX BLOCK MODEL SETUP Nexa Resources S.A. – Aripuanã Zinc Project INTERPOLATION STRATEGY Grades were interpolated into blocks on a parent cell basis using OK. ID³ was used for groups that did not yield interpretable variograms. Variables zinc, lead, copper, gold, silver, iron, sulphur, magnesium, and density are interpolated and estimates are not density weighted. Search ellipsoids were oriented based on dynamic anisotropy angles extracted from the mineralization wireframes. The interpolation strategy is based on Quantitative Kriging Neighbourhood Analysis (QKNA) of previous updates and is designed to avoid oversmoothing of block grades as a result of the OK runs with low relative nugget effects of 5% or 10%. The search strategy is given in Table 14-10. |
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TABLE 14-10AREX, LINK, AND AMBREX SAMPLE SELECTION STRATEGY Nexa Resources S.A. – Aripuanã Zinc Project Search RangesOctant SearchPass 2Pass 2Pass 3 X Y Z Used Minimum Octants Min per Octant Max per Octant Minimum Samples Maximum Samples Search Expansion Minimum Samples Maximum Samples Search Expansion Minimum Samples Maximum Samples Max per hole 100, 101, 102, 103, 104, 105 106, 107, 108 109, 110, 111 112, 113, 114 115, 116, 117 200, 205, 206 208, 211, 214 215, 216, 217 218 210, 212 207 209 30 30 10 No 2 1 10 6 15 2 6 15 15 4 15 5 30 30 10 No 2 1 10 3 15 2 2 15 25 2 15 5 30 30 10 No 2 1 10 6 15 2 6 15 25 6 25 5 20 20 5 No 2 1 10 3 15 2 6 15 10 6 15 5 30308No21106152615102255 203, 213303010No21106152615154155 300, 301, 302 303, 304, 305 306, 307, 308 309, 310, 311 312, 313, 314 315, 500, 501 502, 503, 504 505, 506, 507 508, 509, 510 511, 512, 513 514, 515, 516 517, 518 400, 401, 402 403, 404, 405 406, 407, 408 409, 410, 411 412, 413, 414 600, 601, 602 603, 604, 605 606, 607, 608 609, 610, 611 612, 613 30308Yes2144102410101103 30308No2144102410101108 1000 20 20 10 No 1 1 4 1 5 2 1 5 2 1 5 - CLASSIFICATION Definitions for resource categories used in this Technical Report are consistent with those defined by CIM (2014) and adopted by NI 43-101. In the CIM classification, a Mineral Resource is defined as “a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction”. Mineral Resources are classified into Measured, |
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Indicated, and Inferred categories. A Mineral Reserve is defined as the “economically mineable part of a Measured and/or Indicated Mineral Resource” demonstrated by studies at Pre-Feasibility or Feasibility level as appropriate. Mineral Reserves are classified into Proven and Probable categories. Blocks were classified as Measured, Indicated, and Inferred based on drill hole spacing requirements determined from global variograms for the stratabound and stringer domains for each deposit. Figure 14-12 provides examples for Arex and Ambrex. Flagging of the blocks by drill hole spacing was done by using a search pass with dimensions as described in Table 14-11 and capturing at least three drill holes. The first pass involved a numerical classification as described of blocks followed by a post processing of the classification to remove isolated blocks classified as Measured or Indicated. The classification criteria for each area are listed in the Table 14-11 and the global variograms for Arex and Ambrex, used as a basis for the classification scheme, are shown in Figure 14-Figure 14-13 shows a 3D perspective with the final classification designation. TABLE 14-11NEXA SEARCH ELLIPSE RANGES FOR CLASSIFICATION CRITERIA - AREX, LINK, AND AMBREX Nexa Resources S.A. – Aripuanã Zinc Project Minimum DDH in ellipse1All33-Note: Minimum DDH in ellipse refers to the isotropic search ellipsoid used to flag the distances in the blocks |
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FIGURE 14-12GLOBAL VARIOGRAMS USED FOR CLASSIFICATION CRITERIA - AREX AND AMBREX |
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Looking Northeast Not to Scale Legend: Measured Indicated Inferred Figure 14-13 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Arex, Link, and Ambrex Final Classification Designation www.rpacan.com 14-33 November 2020 Source: RPA, 2020. |
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Validation NEXA A number of validation steps were performed by Nexa and RPA including: Comparison between OK and NN mean grades (Figures 14-14 and 14-15). Swath plots (Figures 14-16 and 14-17). Visual inspection of composites versus block grades (Figures 14-18 to 14-20) For many of the variables, areas and mineralization types, there is good agreement between the NN and OK means. Similar trends are observed on the swath plots. Some significant discrepancies are observed for OK versus NN for zinc, lead, and silver for zones 108 and 313. In RPA’s opinion, the validation performed by Nexa and RPA are typical industry standard validation techniques and in general, the results presented suggest the that the block model has been completed to a high standard, in line with industry best practices. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 14-34 |
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www.rpacan.com FIGURE 14-14COMPARISON BETWEEN OK AND NN MEANS (STRATABOUND) - AREX, LINK, AND AMBREX Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-35 200.00 150.00 100.00 50.00 0.00 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 300 301 302 303 304 AG_est 306 307 308 AG_NN 310 311 312 313 314 315 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 100 1.00 0.80 0.60 0.40 0.20 1.00 0.80 0.60 0.40 0.20 0.00 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 300 301 302 303 304 AU_est 306 307 308 309 AU_NN 311 312 313 314 315 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 100 0.00 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 300 301 302 303 304 CU_est 306 307 308 309 CU_NN 311 312 313 314 315 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 100 6.00 5.00 4.00 3.00 2.00 1.00 0.00 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 300 301 302 303 304 PB_est 306 307 308 309 PB_NN 311 312 313 314 315 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 300 301 302 303 304 ZN_est 306 307 308 309 ZN_NN 311 312 313 314 315 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 |
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200 200 201 201 202 202 203 203 205 205 206 206 207 207 208 208 209 209 210 210 211 211 212 212 213 213 214 214 215 215 216 216 217 217 218 218 400 400 401 401 402 402 403 403 404 404 405 405 406 406 407 407 408 408 409 409 410 410 411 411 412 412 413 413 414 414 600 600 601 601 602 602 603 603 604 604 605 605 606 606 607 607 608 608 609 609 610 610 611 611 612 612 613 613 www.rpacan.com FIGURE 14-15 COMPARISON BETWEEN OK AND NN MEANS (STRINGER) - AREX, LINK, AND AMBREX 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 3.00 2.50 2.00 1.50 1.00 0.50 0.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-36 201 202 203 205 206 207 208 209 210 211 212 213 214 215 216 217 218 400 401 CU_est AU_est AG_est 403 404 405 CU_NN AU_NN AG_NN 407 408 409 410 411 412 413 414 600 601 602 603 604 605 606 607 608 609 610 611 612 613 200 201 202 203 205 206 207 208 209 210 211 212 213 214 215 216 217 218 400 401 PB_est 403 404 405 PB_NN 407 408 409 410 411 412 413 414 600 601 602 603 604 605 606 607 608 609 610 611 612 613 200 201 202 203 205 206 207 208 209 210 211 212 213 214 215 216 217 218 400 401 ZN_est 403 404 405 ZN_NN 407 408 409 410 411 412 413 414 600 601 602 603 604 605 606 607 608 609 610 611 612 613 |
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FIGURE 14-16 SWATH PLOT – STRATABOUND – EASTING |
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FIGURE 14-17SWATH PLOT – STRINGER – EASTING |
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Looking West Northwest Legend: Zn% 1m comp Zn% 5m comp 100 m 100 m Cu% 1m compCu% 5m comp Legend: 100 m 100 m N Legend: Figure 14-18 November 2020 Source: RPA, 2020. Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Arex Vertical Section Showing Zn and Cu Block versus Composite Grades 14-39 |
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Zn% 1m comp Looking West Northwest Cu% 1m comp Legend: Legend: 100 m 100 m N www.rpacan.com 14-40 November 2020 Legend: 500 m Source: RPA, 2020. Figure 14-19 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Link Vertical Section Showing Zn and Cu Block versus Composite Grades |
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Looking West Northwest Zn% 1m compZn% 5m comp Legend: 100 m 100 m Cu% 1m compCu% 5m comp Legend: 100 m 100 m N Legend: Figure 14-20 November 2020 500 m Source: RPA, 2020. Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Ambrex Vertical Section Showing Zn and Cu Block versus Composite Grades 14-41 |
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www.rpacan.com BABAÇÚ RESOURCE DATABASE The resource database contains drilling information and analytical results up to December 31, 2019. Information received after this date was not used in the Mineral Resource estimate. The database used comprises Babaçú and Ambrex drilling. There is a total of 44 drill holes intersecting the Babaçú mineralization (26,889 m). Nexa maintains the resource database in Datamine Fusion. Data were amalgamated and parsed as required and imported into Datamine Studio and Leapfrog. Despite the changes of the database coordinates datum during 2019 (from SAD69 to SIRGAS2000 - zone 21S), the Babaçú model was still made using the SAD69 datum. Section 12 describes the resource database verification steps carried out by Nexa and RPA. RPA is of the opinion that the drill hole database is valid and suitable to estimate Mineral Resources for the Project. GEOLOGICAL INTERPRETATION Wireframes of the stratabound and stringer mineralization at Babaçú were constructed considering geology at a cut-off grade of 0.6% Zn (or Pb) in the stratabound zones and 0.5% Cu in the stringer zones in Leapfrog (Figure 14-21). Samples with both zinc and copper grades above cut-off grades were considered to be stratabound type mineralization. Some drill hole intercepts with grades below cut-off grade were included to maintain geological continuity. The mineralization wireframes follow a similar interpretation to the Ambrex deposit. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 14-42 |
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www.rpacan.com Ambrex Figure 14-21 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Plan View of of Ambrex and Babaçú Mineralization Wireframes N Babaçú Not to Scale Updated Drillholes Legend: November 2020 Source: Nexa, 2020. 14-43 |
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CAPPING OF HIGH GRADES Nexa applied high grade capping to Zn, Pb, Cu, Au, and Ag assays in order to limit the influence of a small amount of extreme values located in the upper tail of the metal distributions. Log probability plots were inspected for stratabound and stringer wireframes and capping grades were selected according to inflections on log probability plots (Figure 14-22). A summary of capping grades used and capped versus uncapped statistics are provided in Tables 14-12 and 14-13. RPA reviewed the capping levels utilized by Nexa and is of the opinion that, in general, the capping grades are reasonable. TABLE 14-12BABAÇÚ GRADE CAPPING LEVELS Nexa Resources S.A. – Aripuanã Zinc Project DomainCapping values – Mineralized Domains Zn (%)Pb (%)Cu (%)Au (g/t)Ag (g/t) Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 14-44 |
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TABLE 14-13 BABAÇÚ UNCAPPED VERSUS CAPPED ASSAY STATISTICS Nexa Resources S.A. – Aripuanã Zinc Projects UncappedCapped TypeGradeCount Sampled Minimum Maximum Mean Stdev VarianceCVMaximum Mean Stdev VarianceCVMetal Loss Zn (%)222722270.001342.042.965.1926.981.76302.935.0625.641.73-1% Pb (%)222722270.000251.831.162.868.212.48131.082.154.622-7% www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-45 Stringer Cu (%)222722270.000113.850.140.530.283.6820.120.330.112.69-16% Au (g/t)222720730.00256.870.110.320.13.0210.090.180.031.96-16% Ag (g/t)222722270115031.8371.215070.52.2430029.453.022811.11.8-8% Zn (%)5505500.00099.030.20.70.493.4530.170.420.172.43-15% Pb (%)5505500.000123.480.211.111.245.3530.160.420.182.7-25% Cu (%)5505500.000418.651.021.72.881.6690.991.452.121.47-3% Au (g/t)5505500.002534.10.621.773.122.8460.550.960.931.76-12% Ag (g/t)5505500.0360725.0748.812382.51.9525023.9940.8316671.7-4% |
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FIGURE 14-22BABAÇÚ CAPPING ANALYSIS FOR STRINGER |
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COMPOSITING Nexa composited the capped assays to one metre, which corresponds to the dominant sampling length for the deposit. Composites were weighted by length (Figure 14-23). FIGURE 14-23HISTOGRAMS FOR ASSAY (LEFT) AND COMPOSITE (RIGHT) LENGTHS - BABAÇÚ EXPLORATORY DATA ANALYSIS Nexa performed exploratory statistical analysis including bivariate and univariate statistical analysis. The univariate statistics for the composites is provided in Table 14-14. The bivariate analysis results show strong correlations for stratabound Pb-Zn, Pb-Ag, and Cu-Au mineralization and good correlations for stringer Cu-Ag mineralization. Figure 14-24 presents the correlation matrices by type and area. |
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TABLE 14-14 BABAÇÚ COMPOSITE STATISTICS Nexa Resources S.A. – Aripuanã Zinc Projects UncappedCapped TypeGradeCount Sampled Minimum Maximum Mean Stdev VarianceCVMaximum Mean Stdev VarianceCVMetal Loss Zn (%)179217920.001340.162.964.7322.381.6302.934.621.191.57-1% Pb (%)179217920.000240.791.162.476.12.14131.081.923.671.78-7% www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 14-48 Stringer Cu (%)179217920.00019.170.140.470.223.2720.120.30.092.5-16% Au (g/t)179216460.00254.580.110.280.082.610.090.160.031.81-16% Ag (g/t)179217920.020273031.8362.1438611.9530029.447.262233.141.61-8% Zn (%)4394390.0018.630.20.640.413.1430.170.390.152.26-15% Pb (%)4394390.000118.330.210.980.964.72.740.160.370.142.4-25% Cu (%)4394390.000417.231.021.552.391.5190.991.321.751.34-3% Au (g/t)4394390.002522.270.621.442.062.314.970.550.840.711.53-12% Ag (g/t)4394390.04425.9525.0744.912017.111.7925023.9937.961440.791.58-4% |
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FIGURE 14-24CORRELATION MATRICES BY MINERALIZATION TYPE - BABAÇÚ BLOCK MODEL Babaçú wireframes were filled with blocks in Datamine Studio RM. The final block model covers both zones. The block model was sub-celled at wireframes boundaries with parent cells measuring 10 m by 5 m by 5 m and minimum sub-cell sizes of 1.25 m by 1.00 m by m. The block model setup and a description of the block model attributes are given in the sequence (Table 14-15). The block size is appropriate for the drill spacing and proposed mining method and is suitable to support the estimation of Mineral Resources and Mineral Reserves. Comparisons between wireframe and block model volumes are good. TABLE 14-15BABAÇÚ BLOCK MODEL SETUP Nexa Resources S.A. – Aripuanã Zinc Projects |
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INTERPOLATION STRATEGY Grades were interpolated into blocks on a parent cell basis using ID³. Variables Zn, Pb, Cu, Au, Ag, and density are interpolated and estimates are not density weighted. Search ellipsoids were oriented based on dynamic anisotropy angles extracted for the mineralization wireframes. The estimation strategy is summarized in Table 14-16. TABLE 14-16BABAÇÚ SAMPLE SELECTION STRATEGY Nexa Resources S.A. – Aripuanã Zinc Projects Pass Number Search Ranges (m)Selection Criteria XYZMinimum Samples Maximum SamplesMax per hole 12020106155 25050256155 3100100506155 4250250100112-CLASSIFICATION Definitions for resource categories used for Babaçú are consistent with those defined by CIM (2014) and adopted by NI 43-101. Babaçú blocks were classified as Inferred only due to large drill hole spacing in the area. The Inferred classification criteria are based on a drilling grid of 100 m. A large proportion of blocks were left unclassified due to the large drill spacing and complex structural context. Figure 14-25 presents the final classification designation. |
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www.rpacan.com Looking Northeast 0250 Legend: 5007501000 Metres 1250 Figure 14-25 Nexa Resources S.A. Aripuanã Zinc Project h Inferred Unclassified State of Mato Grosso, Brazil Babaçú Final Classification Designation November 2020 Source: Nexa, 2020. 14-51 |
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VALIDATION A number of validation steps were performed by Nexa including: Comparison between ID³ and NN mean grades (Table 14-17). Swath plots (Figures 14-26 to 14-30). Visual inspection of composites versus block grades (Figures 14-31 and 14-32). In RPA’s opinion, the validation was performed using typical industry standard validation techniques and in general, the results presented are suitable for an Inferred Mineral Resource. TABLE 14-17COMPARISON BETWEEN ID³ AND NN MEANS - BABAÇÚ Nexa Resources S.A. – Aripuanã Zinc Projects |
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FIGURE 14-26BABAÇÚ ZN STRATABOUND SWATH PLOT – EASTING FIGURE 14-27BABAÇÚ PB STRATABOUND SWATH PLOT – EASTING |
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FIGURE 14-28BABAÇÚ AG STRATABOUND SWATH PLOT – EASTING FIGURE 14-29BABAÇÚ CU STRINGER SWATH PLOT – EASTING |
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FIGURE 14-30BABAÇÚ AU STRINGER SWATH PLOT – EASTING |
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Looking West Northwest ABCD Legend: 025 5075100 125 025 5075100 125 Metres Metres AN C B Legend: D 400 m Figure 14-31 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Babaçú Vertical Section Showing Zn Block versus Composite Grades www.rpacan.com 14-56 Source: RPA, 2020. |
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Looking West Northwest ABCD Legend: 025 5075100 125 025 5075100 125 Metres Metres AN C B Legend: D 400 m Figure 14-32 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Babaçú Vertical Section showing Cu Block Versus Composite Grades www.rpacan.com 14-57 Source: RPA, 2020. |
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15 MINERAL RESERVE ESTIMATE SUMMARY The Mineral Reserves were estimated by Nexa and reviewed by RPA. The Aripuanã Mineral Reserves are based in three main orebodies, Arex, Link, and Ambrex. The main commodities produced are zinc, lead, copper, silver, and gold. The Mineral Reserve estimate for the Project as of September 30, 2020 is presented in Table 15-1. TABLE 15-1MINERAL RESERVES – SEPTEMBER 30, 2020 Nexa Resources S.A. – Aripuanã Project Tonnes (000 t) (% Zn) (% Pb) Grade (% Cu) (g/t Au) (g/t Ag) 4,216 2.97 1.07 0.65 0.45 33.83 1,101 1.99 0.69 0.75 0.75 23.97 5,317 2.77 0.99 0.67 0.52 31.78 1,370 4.63 1.73 0.13 0.27 37.78 5,342 3.95 1.32 0.22 0.32 32.31 6,713 4.09 1.40 0.20 0.31 33.42 4,495 4.18 1.59 0.05 0.15 37.55 6,982 3.59 1.44 0.12 0.27 34.81 11,477 3.82 1.50 0.09 0.22 35.88 10,082 3.74 1.39 0.31 0.29 36.02 13,425 3.60 1.33 0.21 0.33 32.93 23,507 3.66 1.36 0.25 0.31 34.25 Arex Proven Probable Proven & Probable Link Proven Probable Proven & Probable Ambrex Proven Probable Proven & Probable Total Proven Probable Proven & Probable Notes: CIM (2014) definitions were followed for Mineral Reserves. Mineral Reserves are estimated at a break-even cut-off value of NSR = US$45.00/t processed. Some incremental material with values between US$40/t and US$45/t was included. Mineral Reserves are estimated using an average long-term zinc price of US$1.13/lb Zn, a long-term lead price of US$0.89/lb Pb, a long-term copper price of US$2.93/lb Cu, a long-term silver price of $16.85/oz Ag, and a long-term gold price of US$1,538/oz Au. A minimum mining width of 4 m was used. Numbers may not add due to rounding. |
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Contained metal in the Mineral Reserves consists of 859.8 kt Zn, 319.0 kt Pb, 59.7 kt Cu, 25.9 Moz Ag and 236.1 koz Au. RPA is not aware of any mining, metallurgical, infrastructure, permitting, or other relevant factors that could materially affect the Mineral Reserve estimate. DILUTION The dilution that has been applied is related to the selected mining method. The two main mining methods used at Aripuanã are longitudinal longhole retreat (bench stoping) and transverse longhole mining (vertical retreat mining or VRM) with primary and secondary stope extraction. Dilution is applied on a percentage basis, with no grade applied to the diluting material. The dilution for each method is summarized in Table 15-2. TABLE 15-2DILUTION Nexa Resources S.A. – Aripuanã Zinc Project ItemPercent Dilution (%) In RPA’s opinion, it is better to apply dilution as a hanging wall/footwall distance, rather than a global percentage (as has been done here). The percentage approach applies too much dilution to larger stopes and not enough to smaller stopes. RPA reviewed the impact of applying this method to the Mineral Reserves, and observed the following: The application of this method has little impact on VRM stopes – the stope size is fairly constant. To check the impact on Bench Stopes, a dilution of 1.25 m was applied to each side (which results in the global percentage of 15% dilution at the average width of eight metres). Bench Stopes range from four metres wide to 15 m wide. Applied to narrower stopes (four metres to six metres wide, or the bottom 18% of the range), this gives 31.6% to 20.8% dilution (higher than average, as expected). Applied to wider stopes (13 m to 15 m wide, or the top 18% of the range), this gives 8.3% to 9.7% dilution (lower than average, as expected). |
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•The groups are fairly well balanced – 20% of stopes are narrow, 24% are wide. There is no significant skew here to introduce a bias to the total. •The higher dilution would cause 14 narrow stopes to drop below an NSR of $40/t, however, they remain within the range of the incremental cut-off. •RPA did not observe any instances where wider stopes were rejected because they have too much dilution at 15%, but may meet cut-off criteria at 8% to 10% dilution. Based on the above, RPA concludes that using percentage dilution may introduce small inaccuracies to some individual stope estimates, however, it has little impact on the overall estimate. EXTRACTION The extraction ratio is related to the mining method and is applied on a percentage basis. The amount of extraction for each method is presented in Table 15-3. TABLE 15-3EXTRACTION PERCENTAGE Nexa Resources S.A. – Aripuanã Zinc Project ItemExtraction (%) CUT-OFF GRADE The NSR cut-off value was determined using the Mineral Reserve metal prices, metal recoveries, transport, treatment, and refining costs, as well as mine operating cost. Metal prices are based on Nexa’s projections. Nexa’s long term price model uses multiple variables including supply (mine and refined), demand, cost drivers, capital cost, and other key elements. The long-term prices derived are in line with the consensus forecasts from banks and independent institutions. |
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The cut-off value used for the Mineral Reserves is based on an NSR value. The NSR formula is: 𝑁𝑆𝑅 = 𝑇𝑜𝑡𝑎𝑙 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 𝑇𝑜𝑛��𝑒𝑠 ��𝑟𝑜𝑐𝑒𝑠𝑠𝑒𝑑 The two main types of mineralization in the deposit are stratabound and stringer. These two types of mineralization have different processing characteristics, and as a result, different parameters are used to calculate their respective NSR value. Cut-off and NSR parameters used to calculate the NSR value are summarized in Table 15-4. The break even NSR cut-off value is approximately US$34.35/t. First-pass mine design used a cut-off value of $US45/t, to allow for uncertainty around exchange rates (break-even cut-off NSR plus a US$10/t margin). Upon review of the results, a limited number of stopes with NSR values down to US$40.00/t were included for continuity. NSR factors are applied directly to the design based on the Net Revenue by Metal as presented in Table 15-4. |
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TABLE 15-4NSR DATA Item Units Stratabound Stringer Net Metallurgical Recovery Zn % 89.4 0 Pb % 83.3 0 Cu % 59.3 87.8 Au % 70 63 Ag % 76 50 Cu Concentrate Payable % Cu % 96.7 Au % 90 Ag % 90 Pb Concentrate Payable % Pb % 95 Au % 95 Ag % 95 Zn Concentrate Payable % Zn % 85 Au % 0 Ag % 70 Zn Concentrate US$/t conc $363 Pb Concentrate US$/t conc $340 Cu Concentrate US$/t conc $334 Integrated Zn Conversion Cost US$/t Zn prod $414 Premium US$/t Zn Prod $233 Refining Cost Au in Pb conc US$/oz $10.00 Au in Cu conc US$/oz $8.00 Ag in Pb conc US$/oz $1.00 Ag in Cu conc US$/oz $0.50 Royalty NSR |
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16 MINING METHODS Currently, Aripuanã is focused on mining three main elongated mineralized zones, Arex, Link, and Ambrex, that have been defined in the central portion of the Project. The Arex, Link, and Ambrex deposits are separate VMS deposits with differing mineral compositions in stratabound and stringer forms and complex geometric shapes. The deposit geometry is amenable to a number of underground mechanized mining techniques including cut and fill and bulk stoping methods. A nominal production target of 6,065 tpd has been used as the basis for the mine production schedule. Mining will be undertaken using conventional mechanized underground mobile mining equipment via a network of declines, access drifts, and ore drives. Access to the Arex, Link, and Ambrex deposits will be via separate portals, which will access the deposits from the most favourable topographic locations. MINE DESIGN The mine design has been based on using modern mobile trackless equipment with independent decline accesses into the Arex, Link, and Ambrex deposits. The three deposits will be accessed from three independent surface cut and cover portals and ramps designed at a gradient of 14% to be driven with an arched profile and cross-sectional area (CSA) of 27 m2 to accommodate the selected major equipment. The main loading and hauling equipment will be 12.5 t class load haul dump units (LHD) combined with 35.5 t class haul trucks. Main mining sublevels will be spaced 75 m apart, with stope sublevels placed at 25 m spacing. The upper sublevel in each level will contain a five metre sill pillar. The two mining methods will be longitudinal retreat longhole mining, and VRM with primary and secondary sequencing. Backfilling of stopes will be completed using pastefill, cemented rockfill, and rockfill. Figure 16-1 shows the mine design for the entire Project, while Figures 16-2 to 16-4 show the mine design for each separate deposit. |
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Looking Northeast Arex Portal Link Portal Ambrex Portal Figure 16-1 0100 200300400 Metres 500 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Aripuanã Long Section www.rpacan.com 16-2 Source: Nexa, 2020. |
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Looking Northeast Portal Figure 16-2 050 100150200 Metres Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Arex Long Section www.rpacan.com 16-3 Source: Nexa, 2020. |
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Looking Northeast Portal Figure 16-3 050 100150200 Metres Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Link Long Section www.rpacan.com 16-4 Source: Nexa, 2020. |
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Looking Northeast Figure 16-4 050 100150200 Metres Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Ambrex Long Section www.rpacan.com 16-5 Source: Nexa, 2020. |
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www.rpacan.com Material movement at Aripuanã will be completed via ramps using haulage trucks. Primary development consists of ramps and raises. Secondary development consists of cross cuts, level access, footwall drives, ore drives, and all infrastructure development (sumps, remucks, etc.). Table 16-1 presents the development dimensions used in the current mine design. TABLE 16-1DEVELOPMENT DIMENSIONS Nexa Resources S.A. – Aripuanã Zinc Project ActivityTypeDimensions (m) Primary DevelopmentRaisebore Ramps Sublevels Cross Cuts 3.1 diameter 5.0 x 5.5 Secondary Lateral Development Footwall Drives Ore Drives Sumps, pumps, elec. 5.0 x 5.5 MINING METHOD A nominal production target of 6,065 tpd (2.2 Mtpa) has been used as the basis for the Aripuanã production schedule. Nexa has undertaken a number of mining method option studies, which have selected a combination of longitudinal longhole retreat stoping (bench stoping) for narrow zones and VRM for thicker zones of the deposits. To increase the extraction ratio, a primary and secondary stoping sequence will be used in the VRM areas with cemented pastefill used to backfill stopes. Finished longhole retreat stopes will be backfilled with rockfill. The primary mining method selected for the Arex deposit is longitudinal retreat mining. The majority of the Link and Ambrex deposits will be mined using VRM, with longitudinal longhole retreat mining utilized in minor areas. The tonnage split between VRM and bench stoping is approximately 60:40. An estimate of the potentially mineable tonnage has been generated based upon the estimated Mineral Resources. The estimate includes both Measured and Indicated Mineral Resources. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 16-6 |
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DSO was used to generate stope shapes to a minimum dip of 50°. A Minimum Mining Width (MMW) of four metres has been applied. No hanging wall or footwall dilution was added in the DSO analysis, however, it was accounted for in the mine scheduling. UNDERGROUND MINING FLEET The main underground mining fleet is listed below in Table 16-2. The fleet will be mainly sourced from Sandvik AB, Normet Group Oy, and Volvo Group. |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 16-8 TABLE 16-2 MAIN UNDERGROUND MINING FLEET Nexa Resources S.A. – Aripuanã Zinc Project |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 16-9 |
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GEOTECHNICAL CONSIDERATIONS The studies related to the Project’s geomechanical context were initially developed by the consulting firm BVP Engineering, having been detailed, at a later stage, by the consulting firm Walm Engineering (Walm), during the conceptual design stage. The available geomechanical data prepared by Walm indicates that, in general, good ground conditions are anticipated in the Aripuanã underground. Nevertheless, geomechanical information is continuously updated by means of mapping of underground exposures during development and geotechnical core logging. The geomechanical characterization of the three targets Arex, Link and Ambrex is based upon the tridimensional geomechanical model developed by Walm and is summarized below. AREX Geomechanical characterization was performed using the Bieniawski (1989) Rock Mass Rating (RMR) classification system and indicated good (Class II) to very good (Class I) geomechanical domains, consisting of strong to very strong intact rock, slightly weathered to unweathered rock walls and slightly to moderately jointed rock masses. Good rock masses are located far from the influence of superficial weathering. They are composed of strong intact rock and show a low degree of jointing, exhibiting some or no degree of weathering. The top of the unweathered rock layer is normally at a depth of 50 m to 70 m, usually below the weathered rock mass (Class III). The thickness of rock mass Class II varies from 80 m to 300 m. Rock mass Class I consists of strong rock material and shows unweathered discontinuities and low degree of jointing, and is situated immediately below rock mass Class II. The fair rock mass (Class III), which consists of moderately strong rock material and exhibits moderately weathered discontinuities and a moderate degree of jointing, occurs predominantly at shallow depths, however, it may occur as discontinuous thin lenses within rock masses of higher geomechanical quality (Classes I and II). These small lenses are related to the degree of jointing of the rock mass and/or to lower intact rock strength and may also be associated with faults and shear zones of brittle behavior. In general, its thickness varies from 5 m to 17 m, in the form of continuous layers. |
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The poor and very poor rock masses (Classes IV and V) and the soil/saprolite layer are situated at shallow depths, close to the surface, and represent the weathering profile over the rock masses of better geomechanical quality. Classes IV and V are in the form of 10 m to 15 m thick lenses. The soil/saprolite layer is 35 m thick on average, and becomes thicker within flat topography regions. In general, the geomechanical classification, obtained from the developed model, indicates that this region of the Project consists, mostly, of rock masses Class II (RMR ≈ 70) and Class III (RMR ≈ 54), prevailing Class II. Data from laboratory tests revealed that the uniaxial compressive strength of the intact rock is approximately 100 MPa to 250 MPa and therefore is classified as R5 (very strong) according to the International Society for Rock Mechanics (ISRM). As a result of this work, a 3D geomechanical model was developed by Walm using Micromine software to present the 3D distribution of the rock mass classes within the Arex target region. This 3D geomechanical model was prepared by linking vertical geomechanical sections, generating solids and surfaces. Figure 16-5 presents a view of the geomechanical model for the Arex orebody. Similar models were also generated for Link and Ambrex. |
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www.rpacan.com Not to Scale Legend: Class III Class II Class I November 2020 Source: Nexa, 2020. Figure 16-5 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Perspective 3D Solid Geomechanical Schematic 16-12 |
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LINK Geomechanical characterization was performed using the RMR classification system and indicated good (Class II) to very good (Class I) geomechanical domains, consisting of strong to very strong intact rock, slightly weathered to unweathered rock walls and slightly to moderately jointed rock masses. They are composed of strong intact rock and show a low degree of jointing, exhibiting some or no degree of weathering. The top of the unweathered rock layer is normally at a depth of 40 m to 90 m, and usually below the weathered rock mass (Class III). The thickness of rock mass Class II varies from 125 m to 480 m. Class I is situated immediately below the Class II rock mass and their interface usually occur at z = -225 m. Rock mass Class III is found at shallow depths, normally below rock masses Class IV, and at medium to large depths. Initially, it is characterized as a transition from weathering to fresh/unweathering rock and consist of moderately weathered rock material, exhibiting moderate to high strength and moderate degree of jointing. In general, its thickness varies from two metres to 34 m, in the form of continuous layers. The poor and very poor rock masses (Classes IV and V) and the soil/saprolite layer are situated at shallow depths, close to the surface, and represent the weathering profile over the rock masses of better geomechanical quality. The soil/saprolite layer covers the entire studied region and are 30 m thick on average, becoming thicker within flat topography regions. Class V is two metres to 30 m thick and may be up to 52 m thick locally. Class IV is in the form of thinner layers, normally 10 m thick, as discontinuous lenses of restrict occurrence within the studied region. AMBREX Geomechanical characterization was performed using the classification system RMR and indicated good (Class II) to very good (Class I) geomechanical domains, consisting of strong to very strong intact rock, slightly weathered to unweathered rock walls and slightly to moderately jointed rock masses. The top of the unweathered rock layer is normally at a depth of 37 m to 80 m, usually below the weathered rock mass (Class III). The thickness of rock mass Class II varies from 150 m to 600 m. Class I is situated immediately below the Class II rock mass and their interface usually occur at z = -200 m. Class III constitutes the main transition level to fresh/unweathered rock. It is found at shallow depths, normally below rock masses Class IV, and at medium to large depths. As a transition |
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layer from weathering to fresh/unweathered rock, it consists of moderately weathered rock material, exhibiting moderate to high strength and moderate degree of jointing. In general, its thickness varies from five metres to 45 m, in the form of continuous layers, within the entire body extent. The poor and very poor rock masses (Classes IV and V) and the soil/saprolite layer are situated at shallow depths, close to the surface, and represent the weathering profile over the rock masses of better geomechanical quality. The soil/saprolite layer covers the entire studied region and are 30 m thick on average, becoming thicker within flat topography regions. Class V occurs in the form of five metre to 40 m thick continuous layers and is situated within the transition zone from soil/saprolite to rock masses Classes IV and III. Class IV is in the form of approximately regular thin layers, approximately 10 m thick within the central region of the body, or, more rarely, as isolated/negligible lenses below Class V layers. In general, the geomechanical classification, obtained from the developed model, indicates that this region of the Project consists, mostly, of rock masses Class II (RMR ≈ 71) and Class III (RMR ≈ 54), prevailing Class II. Data from laboratory tests revealed that the uniaxial compressive strength of the intact rock is around 100 MPa to 250 MPa and therefore is classified as R5 (very strong) according to the ISRM. ASSUMPTIONS FOR MINING To ensure stability, there will be no stopes designed within Class III or poorer rock masses, thereby leaving these portions as an integral part of the crown pillar. Currently, numerical modelling, using the Finite Element Method (FEM), is being applied to optimize ore recovery. The studies also comprise an update of the tridimensional geotechnical model with focus on providing accurate data for the numerical model. The firm REDE Engenharia e Sondagem S/A carried out in-situ stress measurement, applying the Fracture Pressurization Method (FPM), in order to investigate the stress state prior to excavation. From the results, it was possible to conclude that the initial stress state is defined as it follows: βH = 123° (major horizontal stress direction) KH = 1.92 (major horizontal/vertical stress ratio) |
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Kh = 1.44 (minor horizontal/vertical stress ratio) This information will be used as input data in numerical models for underground stability analysis. As stoping progresses, this data will be calibrated. SEQUENCING For the geotechnical stability analysis of the Arex, Link, and Ambrex stopes, assumptions were made pertaining to the selected mining methods, longhole retreat mining (Bench Stoping) and primary/secondary sublevel stoping (VRM), excavation design, and data from geotechnical core logging, which was used as the basis of the underground mine tridimensional geomechanical model. The VRM extraction sequence will be bottom up in both primary and secondary stopes. On each level, the primary stopes will be mined upwards from the bottom sublevel. The optimization of stoping sequences will be evaluated by numerical modelling and the success of pastefill operations will ensure flexibility regarding primary and secondary stopes extraction. There is potential to optimize the extraction sequence as part of the detailed mine design and scheduling, and as more data is acquired. In bench stoping areas, stopes are to be retreat mined and backfilled with rockfill after completion of extraction. AREX For the Arex mining method selection process , five metre to 20 m wide mineralized zones at depths from zero metres to 700 m have been considered. The average dip of the orebody is virtually uniform for the entire mineralization, being usually vertical or subvertical, with a minimum dip of approximately 60°. Therefore, bench stoping was selected for the majority of this target, with few portions to be mined using the VRM method where the orebody becomes wider. Sill and rib pillars have been designed for a number of scenarios, which involve mining panels of 75 m between levels and 25 m between sublevels by bench stoping. The results obtained from the studies demonstrated very good ore recovery, varying from 80% to 96%, considering rib pillar recovery. |
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The applied empirical methods and numerical modelling suggest that stopes will be geotechnically stable and, therefore, there will be no need for systematic cable bolt reinforcement of the excavation wall. Localized cable bolting may be required to address specific situations. LINK For the Link mining method selection process, five metre to 80 m wide mineralized zones at depths from 100 m to 600 m have been considered, thereby putting the mineralization at shallow to intermediate depths. The average dip of the orebody is relatively steep, with a minimum dip of approximately 73°. Given the wider thickness of the orebody, VRM was selected as the primary mining method for this target. The success of production operations using VRM is related to the pastefill system, which will enable stope backfilling and, therefore, full ore recovery. Sill and rib pillars have been designed for a number of scenarios, which involve mining panels of 75 m between levels and 25 m between sublevels by bench stoping, and panels of 25 m between levels, with no sublevels, by VRM. The results obtained from the studies demonstrated very good ore recovery, varying from 86% to 95%, considering mining of primary and secondary stopes. The applied empirical methods and numerical modelling suggest that stopes will be geotechnically stable and, therefore, there will be no need for systematic cable bolt reinforcement of the excavation wall. Localized cable bolting may be required to address specific situations. AMBREX For the Ambrex mining method selection process, five metre to 100 m wide mineralized zones at depths from 100 m to 750 m have been considered, thereby putting the mineralization at shallow to intermediate depths. The average dip of the orebody is relatively steep, with a minimum dip of approximately 73°. Given the wider thickness of the orebody, VRM was selected as the primary mining method for this target. The success of production operations using VRM is related to the pastefill system, which will enable stope backfilling and, therefore, full ore recovery. |
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Sill and rib pillars have been designed for a number of scenarios, which involve mining panels of 75 m between levels and 25 m between sublevels by bench stoping, and panels of 25 m between levels, with no sublevels, by VRM. The results obtained from the studies demonstrated a very good ore recovery, varying from 86% to 95%, considering mining of primary and secondary stopes. The applied empirical methods and numerical modelling suggest that stopes will be geotechnically stable and, therefore, there will be no need for systematic cable bolt reinforcement of the excavation wall. Localized cable bolting may be required to address specific situations. VENTILATION The ventilation system for the Arex, Link, and Ambrex orebodies is a pull system which uses a combination of axial and centrifugal fans which can be modified for future growth. Fresh air and exhaust raises are located in the level access in each orebody. As a result, mining on the levels is ventilated using auxiliary fans and ventilation ducting. Regulators will control the air flow on each level for the fresh air and exhaust access. The design of the ventilation system complies with the Brazilian mining regulations which require the calculation of fresh air flow based on the following: The maximum number of personnel and underground equipment. Consumption of explosives used. Monthly tonnages produced. The three criteria are shown in Figure 16-6. |
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FIGURE 16-6VENTILATION REQUIREMENTS The auxiliary fans selected for the Project will provide 37 m3/s of ventilation over up to 165 m using 1.4 m diameter ducting and 1.2 m diameter, 150 hp fans. Fans can be stacked together to allow the ventilation to be projected. In order to provide sufficient air for a truck and LHD, two sets of ducting and fans will be required in the areas which do not have flow through ventilation. BACKFILL The process plant will produce tailings quantities of approximately 90% of the plant feed. Tailings will be dry stacked on surface or used as backfill for underground voids. It is planned that backfill be placed as consolidated pastefill with the specifications as outlined in Table 16-The strengths achieved by consolidated pastefill meet the geomechanical requirements for primary and bench stopes. |
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TABLE 16 3BACKFILL SPECIFICATION Nexa Resources S.A. – Aripuanã Zinc Project DescriptionUnitsConsolidated Pastefill Solids% solid76% Water% solid24% Cement% solid4% Densityg / cm³2.1 In general, waste rock will be used as backfill for bench stoping areas and the remaining waste generated will be hauled to the surface and placed in waste dumps. PRODUCTION SCHEDULE The production schedule for the Project is summarized in Table 16-4. A nominal target of 6,065 tpd was used in preparing the mining schedule, with feed to the plant consisting of campaigns of stratabound and stringer material types, managed via stockpiling. The deposits support a production rate of 2.2 Mtpa, with average annual metal production of: Zinc: 72.7 kt; Lead: 25.2 kt; Copper: 3.6 kt; Silver: 1.85 Moz (contained in copper and lead concentrates); and Gold: 14.3 koz (contained in copper and lead concentrates). This average annual production is equivalent to 122 kt zinc per year, after converting other metals based on net revenue. |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 16-20 TABLE 16-4 PRODUCTION SCHEDULE |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 16-21 |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 16-22 |
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17 RECOVERY METHODS PROCESS DESCRIPTION The Aripuanã process flowsheet has been developed through metallurgical test work and the use of conventional technologies for the treatment and recovery of copper, lead, and zinc as separate concentrates. Plant throughput is planned to be 2.214 Mtpa of run of mine (ROM) ore from the Arex, Link, and Ambrex underground mines. Two main ore types are present at Aripuanã, stratabound and stringer, that have different hardnesses and therefore different throughput rates. Stratabound material, however, will make up the majority of the ore to be processed (approximately 89%) and the feed blend to the plant is expected to peak at 21% stringer material during Year 5. Estimated processing rates for the two ore types individually based on hardness are approximately 5,000 tpd (dry basis) for stringer material and 6,300 tpd (dry basis) for stratabound material. Throughput for the blended ore is estimated as a weighted average of the throughputs of the two ore types. A simplified process flowsheet is presented in Figure 17-1. Key elements of the process flowsheet include primary crushing, a SAG mill followed by a ball milling and pebble crushing (SABC) circuit, talc pre-flotation, and sequential flotation of copper, lead, and zinc for stratabound mineralization, and copper flotation for stringer mineralization. TABLE 17-1KEY PROCESS DESIGN CRITERIA Nexa Resources S.A. – Aripuanã Zinc Project Throughput UnitsDesign Value Operating Scheduled/a365 AnnualMt2.26 Daily – Stratabound Oret6,300 Primary Crusher % 75 Grinding and Flotation % 91 Ore Characteristics |
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Comminution UnitsDesign Value % Zn0.31 CWi (Stringer)kWh/t9.32 SMC Axb (Stringer)30.9 BWi (Stringer)kWh/t12.4 Ai (Stratabound)g1.5 Crusher Max Feed Size mm 600 Product Size (P100) mm 140 Product Size (P80) mm 118 SAG Mill Ball Fill % 14 to 18 Transfer Size (T80) mm 1.7 to 2.0 Pebbles Generated % 19 to 28 Ball Mill Mill Fill % 35 to 40 Circulating Load % 250 to 300 Product Size (P80) µm 149 Flotation |
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Tailings UnitsDesign Value Tailings Disposal TypeDry stack Tailings Thickener Underflow Density% solids65 Tailings Filter Cake Moisture Content%10 Paste Backfill Density% solids76 Cement Addition%4 to 6 Source: SNC-Lavalin, 2019 COMMINUTION ROM material will be trucked from the underground mine to the ROM stockpiles near the primary crushing area. ROM material will be directly discharged into the 80 t capacity (two truckloads) primary crusher dump hopper or held temporarily in four stockpiles based on mineralization type and grade (approx. 7,000 t each, one stringer stockpile and three mixed stockpiles of different grades) and recovered later by front end loader. A static grizzly on top of the dump hopper with 600 mm by 600 mm openings will prevent oversize material from reaching the discharge of the hopper. Discharge of ROM material from the dump hopper will be via apron feeder, which will discharge to a vibrating grizzly with an aperture of 130 mm. Oversize material from the grizzly will feed the primary (jaw) crusher while undersize will bypass the crusher. |
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ROM Screening Primary Crushing Crushed Ore Storage Pebble Crusher Talc FlotationTalc Concentrate to Tails Thickener RG CL FLO Cu Recovered Water RG SCV Thickener Ball Mill Lead Flotation Recovered Water Tailings SAG Mill Cominution Circuit Copper Flotation RG SCV CL Regrind RCL CL Mill RCL Lead Concentrate Zinc Flotation RG SCV CL Zinc Concentrate ill ill Regrind M Figure 17-1 Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Simplified Process Flowsheet www.rpacan.com 17-4 Source: Votorantim Metais, 2017. |
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The crusher product, with a top size of 140 mm, will be collected on a conveyor belt together with the fines from the apron feeder and grizzly undersize. A metal detector will remove scrap metal from the crushed ore that could damage downstream conveyors and equipment. The conveyor will feed the crushed ore bin with a capacity of 2,500 t. Two additional crushed ore bins may be added at a later stage if required that would bring the combined capacity to 9,100 t. Two variable speed apron feeders per bin will withdraw the crushed product from the bins and deliver it to the grinding circuit via conveyor belt. A belt scale on the conveyor will control the speed of the apron feeders, and as a result the feed rate to the grinding circuit. The grinding circuit will consist of a conventional SAG mill, ball mill, and pebble crusher (SABC configuration). Both grinding mills will have variable speed drives to allow for process optimization over a range of ore competencies and hardnesses. A double-deck vibrating screen at the discharge of the SAG mill will separate SAG mill discharge into screen oversize (scats and pebbles) and screen undersize. Scats will be separated from the pebbles by belt magnets, leaving the pebbles to be recycled to the SAG mill feed conveyor via the pebble crusher, or directly to the SAG mill feed conveyor when the pebble crusher is undergoing maintenance. Screen undersize will discharge to the grinding circuit pump sump together with the ball mill discharge. SAG mill discharge screen undersize material and ball mill discharge will be pumped to a set of hydrocyclones that will classify the material into oversize and undersize. The hydrocyclone underflow (oversize) material will return to the ball mill while the hydrocyclone overflow (undersize) with P80 150 µm will be transferred to the flotation feed pump box. An online particle size analyzer will provide periodic measurement of the hydrocyclone overflow stream. A trommel screen on the ball mill discharge will remove scats and the slurry will be combined with the SAG mill discharge screen undersize and recirculated as feed to the hydrocyclones. FLOTATION Flotation will be conducted sequentially, i.e., the production from the comminution circuit will pass through four independent circuits in sequence. The first flotation circuit is for talc and light mineral flotation (mainly minerals containing magnesium) to remove naturally hydrophobic minerals and prevent them from contaminating the sulphide concentrates or interfering with sulphide flotation. Due to the high content of light minerals in stratabound mineralization, these minerals must be removed prior to sulphide flotation, however, since stringer mineralization contains only minor amounts of these minerals, processing of stringer ore only would generally |
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by-pass the talc flotation step as the minor talc content can be depressed with carboxymethyl cellulose (CMC). The flotation circuits for the recovery of copper, lead, and zinc follow talc flotation. Hydrocyclone overflow slurry will be conditioned prior to being fed to the talc flotation circuit, which consists of three column flotation stages: rougher, cleaner, and reverse copper flotation. Reagents added to the conditioning tank for talc flotation include MIBC as a frother and SMBS as a depressant of iron sulphides (pyrite and pyrrhotite). The talc rougher concentrate will be cleaned in the second column, with the cleaned concentrate reporting to the reverse copper flotation column where talc will be depressed with CMC while copper in the talc concentrate is recovered and reports to downstream sulphide flotation. The final talc concentrate will be combined with the sulphide flotation tailings for disposal. The talc flotation tailings containing copper, lead, and zinc minerals (including copper recovered from the talc concentrate during reverse copper flotation), will proceed to the copper flotation circuit. Prior to copper rougher flotation, talc flotation tailings will be conditioned in two tanks in series where reagents will be added, including: A3894 (dialkyl thionocarbamate, copper collector) Zinc sulphate (sphalerite depressant) SMBS (iron sulphide depressant) MIBC (frother) CMC (talc depressant) Lime (pH control) Prior to conditioning and cleaner flotation, copper rougher flotation concentrate will be reground in a vertical stirred mill to P80 45 µm to increase sulphide liberation and promote cleaner stage recovery. Two stages of cleaning in column cells will produce the final copper concentrate. Copper rougher-scavenger concentrate will be recycled to the rougher flotation feed, while copper rougher-scavenger flotation tailings will feed the lead flotation circuit (stratabound or blended ore). If processing stringer ore, however, the rougher-scavenger flotation tailings can be pumped directly to tailings dewatering . Cleaner circuit tailings are recycled to the copper rougher feed. Copper rougher-scavenger flotation tailings will be thickened prior to being pumped to the lead flotation circuit. Lead and zinc flotation are only necessary for stratabound mineralization as |
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the stringer ore contains only very low concentrations of lead and zinc minerals. The lead flotation circuit is similar to the copper flotation circuit, however, the quantity of flotation cells and the collector used are different. The reagents used for lead flotation include: Aerophine 3418A (dialkyl dithiophosphinate collector for lead) Zinc sulphate (sphalerite depressant) SMBS (iron sulphide depressant) Lime (pH control) CMC (talc depressant) MIBC (frother). Prior to lead rougher flotation, the feed slurry will be conditioned with the aforementioned reagents in two tanks in series. The lead circuit consists of rougher flotation, rougher concentrate regrinding to P80 75 µm, rougher-scavenger flotation, and two-stage cleaner flotation. The product from the lead cleaner flotation circuit will be the final lead concentrate. The lead rougher-scavenger flotation tailings will be pumped to feed the zinc flotation circuit. The zinc flotation circuit is similar to the copper and lead flotation circuits, however, the quantity of flotation cells and some of the reagents used are different. Lead rougher-scavenger flotation tailings will be thickened prior to being pumped to the zinc flotation circuit. The reagents used for zinc flotation include: AERO 208 or A208 (dialkyl dithiophosphate collector for zinc) Copper sulphate (sphalerite activator) Lime (pH regulator) MIBC (frother) Prior to zinc rougher flotation, the feed slurry will be conditioned with the aforementioned reagents in two tanks in series. The zinc circuit consists of rougher flotation, rougher concentrate regrinding to P80 75 µm, rougher-scavenger flotation, and two-stage cleaner flotation. The product from the zinc cleaner flotation circuit will be the final zinc concentrate. Zinc rougher-scavenger flotation tailings will be pumped to tailings dewatering for disposal. THICKENING AND FILTRATION Thickening and filtration will be performed on flotation concentrates and tailings. Three concentrates (copper, lead, and zinc) will be produced, with each thickened and filtered |
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separately. Tailings generated from flotation will consist of talc concentrate and sulphide flotation tailings, which are also thickened separately, then combined and filtered.. The copper, lead, and zinc concentrate slurries will be pumped to storage tanks feeding pressure filters dedicated to each concentrate, which will reduce the moisture to approximately 10%. The filtered copper and zinc concentrates will fall by gravity onto belt conveyors that will deliver the material to segregated covered storage areas. These concentrates will be reclaimed by front end loader and loaded into trucks for shipping. Lead concentrate will be bagged in lined supersacs and loaded into containers for shipping. All filtrates will be recovered for re-use in their respective flotation circuits. Excess filtrate and concentrate thickener overflow will be discharged to an engineered wetland treatment system and can then be recycled to the processing plant as make-up water as required or discharged. Sulphide flotation tailings will be thickened and filtered in three pressure filters and combined with filtered talc concentrate prior to disposal. The sulphide flotation tailings thickener underflow will be filtered to produce a filter cake with approximately 10% moisture that is suitable for dry stacking in two stockpiles (capacity of approximately 5,200 t each). This stockpiled material will be recovered by front end loader and loaded into trucks for transport to the dry stack tailings dump or the paste backfill plant. Filtrates from the pressure filters will be pumped to a recovered water pond and reclaimed for return to the process. BACKFILL The backfill plant of the Project will serve the Arex, Link, and Ambrex mines. Talc concentrate will be combined with flotation tailings and mixed with cement to produce a paste backfill with approximately 76% solids by mass. Backfill will be provided to the underground mines as required. RECOVERED AND MAKE-UP WATER SYSTEMS The water system is designed to maximize water recovery and recirculation. Water from tailings thickener overflow and tailings filtration will be pumped to a recovered water pond with a two-day retention capacity. After treatment with hydrogen peroxide, the water is pumped to a 600 m3 recovered water tank, which will receive make-up water as required. |
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Make-up water will be collected from a storage pond close to the processing facilities and will be pumped to a 400 m3 make-up water tank. This water will be used as make-up for recovered water and for specific uses including feed for the water treatment station, pump seal water, fire suppression, vacuum pump seal water, reagent preparation, potable water, and feed to various points in the plant circuit. REAGENT PREPARATION AERO 3894 AERO 3894 will be supplied as a liquid product at 100% concentration in sealed 200 L drums. The solution from the drums will be transferred to a storage tank and distributed without dilution in copper flotation. AEROPHINE 3418A AND AERO 208 AEROPHINE 3418A and AERO 20 will be supplied as liquid products at 100% concentration in sealed 200 L drums and will have identical preparation systems. Solutions will be transferred to mixing tanks and mixed with water at the desired concentrations and transferred to head tanks. The collector will be pumped at required dosage rates and delivered to several flotation stages for the various flotation circuits. SODIUM METABISULPHITE SMBS will be supplied in one metric tonne bags and delivered to a storage hopper. A screw feeder will transfer the material from the storage hopper to an agitated mix tank where the SMBS will be dissolved in water to reach a concentration of 5% w/w. The solution will be transferred to a storage tank and pumped at required dosages to copper and lead flotation. COPPER SULPHATE Copper sulphate will be supplied in one metric tonne bags and delivered to a storage hopper. A screw feeder will transfer copper sulphate from the storage hopper to an agitated mix tank where the copper sulphate will be dissolved in water to reach a concentration of 5% w/w. The solution will be transferred to a storage tank and pumped at required dosages to zinc flotation. ZINC SULPHATE Zinc sulphate will be supplied in one metric tonne bags and delivered to a storage hopper. A screw feeder will transfer the material from the storage hopper to an agitated mix tank, where the copper sulphate will be dissolved in water to reach a concentration of 10%. The solution |
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will be transferred to a storage tank and pumped at required dosages to copper and lead flotation. METHYL ISOBUTYL CARBINOL MIBC will be supplied in liquid form at 100% concentration in sealed 200 L drums. The frothing agent will be transferred by pump to storage and then distribution tanks. The frother will be added in separate lines to various flotation stages. MIBC will be added to maintain froth stability as required in all flotation stages. CARBOXYMETHYL CELLULOSE CMC will be supplied in 500 kg bags and delivered to a storage hopper. A screw feeder will transfer the material from the storage hopper to an agitated mix tank where it will be dissolved in water to reach a concentration of 2% w/w. The solution will be transferred to a storage tank and pumped at required dosages to copper, lead, and zinc flotation. HYDRATED LIME Hydrated lime will be supplied in bulk by truck and pneumatically transferred to storage silo. The silo will be vented through a de-dusting system comprised of exhaust fan and bag filter that will capture dust generated during the transfer process. Lime will be transferred to a covered mixing tank using a rotary valve and screw feeder, then mixed with water to prepare a concentrated slurry containing 5% w/w. Lime slurry will be pumped to a lime loop and delivered to various process stages at required dosages to control circuit pH. CEMENT Cement will be supplied in bulk by truck and pneumatically transferred to storage silos. The silos will be vented through de-dusting systems comprised of exhaust fans and bag filters that will capture dust generated during the transfer process. Cement will be transferred using a rotary valve and screw feeder to a backfill re-slurrying tank and delivered to an agitated slurry mix tank. Backfill slurry will be pumped to the mine via a pipeline along the access road from the plant to the mine. FLOCCULANT (BASF MAGNAFLOC 10) Flocculant will be supplied as a solid and delivered in 25 kg sealed bags and transferred to a storage hopper. Material will be transferred from the storage hopper by screw feeder to an agitated tank and a 0.25% w/w suspension will be prepared. The prepared solution will be pumped to a storage tank and distributed to the thickeners. |
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COMPRESSED AIR SYSTEMS A dedicated compressed air system will be provided for the pressure filters for each type of concentrate. One or more compressors, with a stand-by unit, will be available for each filtration system. These compressors will be screw type, air cooled, oil free, and at a pressure of kg/cm2. An exclusive small-size compressor will be installed, without a standby unit, to generate dry, oil free air for the laboratory. Screw compressors will be installed, with one standby unit, to generate dry oil free air for the beneficiation plant and workshop service and instrumentation air. Dedicated blowers will be installed, with one standby unit, to generate low pressure, oil free air (approximately 0.4 kg/cm2) for flotation (tank cells). DUST SUPPRESSION SYSTEM The dust suppression system for primary crushing and the crushed ore storage silos will consist of a central unit with air extraction and filtration systems, as well as piping and spray nozzles for water suppression of dust at conveyor transfer points. DRAINAGE A drainage system has been devised throughout the operational area, to capture and contain the following: Process area spillage – restricted to process facility buildings. The aim is to contain discharges and overflows that may occur during processing. The effluent will be contained by bunded containment areas, collected in sumps, and returned to the production process. Industrial spillage – restricted to areas within the industrial unit and entrance gate areas, which may result from pipe failures or accidental discharges and other spillage. This collection system will be routed to the emergency drainage and/or effluent treatment station. A water, oil, and grease separation system will be installed in the workshop and in areas with industrial effluents. Rain – aimed at collecting rainwater in areas without risk of contamination, which can be disposed of in the hydrographic network without treatment. Emergency drainage – aimed at controlling emergency situations related to liquid effluents and industrial spillage and installed in appropriate locations so as to prevent pollution of the local drainage network. |
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EFFLUENT TREATMENT All effluent (process, stockpile drainage, and precipitation) will be directed to engineered wetlands for passive treatment prior to discharging the water to the receiving environment. |
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PROJECT INFRASTRUCTURE The planned infrastructure at the Project includes: Dry stack tailings storage facility (TSF) Power supply Water storage dam Access and site road Maintenance shops Fuel storage WASTE MANAGEMENT The overall waste management strategy for the Project is largely taken from reports by SNC Lavalin (2020a and 2020b). This follows previous work by Worley Parsons (2017a and 2017b). The current waste management strategy includes the following aspects: Production of tailings generated by the processing of zinc, lead, and copper from underground mining at the Project. Adoption of dry stack (filtered) tailings for surface disposal and cemented paste backfill for underground disposal. Tailings production for surface disposal over 13 years is estimated at a total of 6.34 cubic metres (Mm3) with 4.49 Mm3 in the dry season and 1.87 Mm3 in the wet season. Waste rock production for surface disposal of 1.33 Mm3 over 13 years. A double lined tailings management facility (TMF) with associated surface runoff collection ponds and access roads. A double lined waste rock storage facility and associated surface runoff collection ponds and access roads. WASTE PRODUCTION TAILINGS PRODUCTION Approximately 6.3 Mm3 of tailings will require secure surface disposal over a period of 13 years. In accordance with a regulatory commitment, a minimum of 50% of the tailings must be disposed of in underground mine workings and plans for tailings disposal as cemented paste backfill have been considered. The tailings to be stored on surface will be in accordance with the filtered dry stack method of disposal. If properly filtered, tailings can be spread and |
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compacted in lifts similar to typical earth embankment construction. A basic level design and management of the initial dry stack facility has been considered. TAILINGS PROPERTIES The tailings are prone to acid drainage and were classified as Class I according to the Brazilian waste classification standard NBR ABNT 10.004/2004. The technical standards that govern the disposal of Class 1 waste, specify the provision of a double liner system and the use of a leakage detection system. The design has therefore followed the guidelines of NBR 13,028 (ABNT, 2017) and NBR 10,157 (ABNT, 1987) which are for hazardous landfill projects. A laboratory test program to determine the geotechnical properties of the tailings was also completed by Pattrol Investigacoes Geotecnicas Ltda. (2018). The specific gravity of the tailings samples was 2.9 g/cm3 to 3.2 g/cm3. TAILINGS MANAGEMENT FACILITY DESIGN Twelve sites were considered by the proponent for above ground tailings deposition in a trade-off study. Option 10A, to the west of the proposed processing plant, is the preferred site for an initial TMF as shown in the site layout in Figure 18-1 (Stack 1 – “PDR 1”). Future tailings storage will be provided by Stack 4 which is to the southeast of the plant. The processing plant site would be centrally located with the Arex deposit to the north and the Ambrex deposit to the east. The water supply dam is located at the south end of the lease area. Excess waste rock will be disposed of to the southwest of the plant at Stack 2.1. Topsoil, excess waste rock, and waste soil will be stockpiled to the southwest of the water supply reservoir. A plan view of the TMF is shown in Figure 18-2. |
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Figure 18-1 NNexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil General Site Plan 0 100 200 300 400 Metres 500 www.rpacan.com 18-3 Source: Nexa, 2020. |
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N Wetland 1.1 Stack 1 Phase 3 025 5075100 Metres 125 Figure 18-2 www.rpacan.com 18-4 November 2020 Wetland 1.2 Source: Nexa, 2020. Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil TMF Stack 1 Plan View (End of Phase 3) |
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Stack 1 is designed for a total capacity of approximately 4.4 Mm3. The TMF will have a footprint of 25.5 hectares and a maximum height of 59 m. An average external slope of 3 (horizontal) to 1 (vertical) will be maintained with the facility constructed in 10 m high lifts, 7 m wide benches, and 2.3 (horizontal) to 1 (vertical) intermediate slopes. Access roads and ramps will have a minimum width of 10 m. Stack 1 is located on local high ground with no upstream catchment area and therefore does not have diversion channels. A perimeter rectangular concrete channel will collect and drain runoff to two effluent management ponds (wetlands). The monitoring and instrumentation plan for Stack 1 will consist of the installation of water level meters, piezometers, survey monuments, and monitoring wells. Monitoring wells are mandatory for this type of landfill, according to NBR 10.157 (ABNT, 1987) and must be installed around the pile to check for possible contamination of groundwater in the region, especially in the event of a liner failure. The foundation preparation and installation of the double lining system (as shown in Figure 18-3) will require the following activities: Foundation clearing and grubbing Removal of a minimum of 0.6 m of the foundation, this includes topsoil and colluvial layers. A 0.3 m thick compacted clay layer with a minimum permeability of 1x10-9 m/s. A 0.3 m thick sand leak detection layer with 0.1 m diameter perforated corrugated geotubes wrapped in a geotextile. A single side textured high density polyethylene (HDPE) 1.5 mm geomembrane (textured side up) covered with a 400 g/m2 protection geotextile. A 0.9 m thick soil protection layer. Provision of an internal drainage system to prevent a water table within the stack. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020Page 18-5 |
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Geomembrane protection layer with compacted soil (e = 0.9 m) Non-woven Geotextile 400 g/m2 Textured Geomembrane e = 1.5 mm Corrugated Geotube=100 mm diameter Non-woven Geotextile 250 g/m2 wrapped around Geotube Geomembrane protection layer (compacted soil) Second layer of low permeability system - Leak detection layer (sand) First layer of low permeability system (compacted soil) Compacted clay layer Figure 18-3 www.rpacan.com 18-6 01 November 2020 234 Metres 5 Source: Nexa, 2020. Nexa Resources S.A. Aripuanã Zinc Project State of Mato Grosso, Brazil Double Lining and Leak Detection System for TMF (Stack 1) and Waste Rock Facility (Stack 2) |
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Stack 1 will be developed in three phases. Tailings will be placed in layers of maximum thickness of 0.3 m loose, compacted to 95% of the standard Proctor density. The tailings compaction criteria are to ensure dilating behaviour (i.e., not susceptible to liquefaction). To place and compact the tailings during the wet season (six months), it is proposed to use temporary inflatable warehouses. This system has been used previously in Brazil for several engineering works. Tailings will be transported via trucks and the buckets will be covered in wet season to ensure no moisture is gained. Geological-geotechnical investigations in the area of Stack 1 have been completed and included drilling, augering, Standard Penetration Tests, and percussive and trench surveys (GeoMaster 2016 and 2018). Laboratory testing of foundation soils have also been completed (GeoMaster 2016) and data used in the stability analyses of Stack 1 which has included both static and pseudo static analyses. Closing of Stack 1 will include placement of a one metre thick clay soil cover layer, a 0.1 m thick organic soil layer, and hydroseeding to allow revegetation of the area at the end of mining. WASTE ROCK STORAGE FACILITY DESIGN Waste rock production that requires surface disposal is approximately 1.32 Mm3. A dedicated waste rock facility (WRF) at Stack 2 will receive mining waste rock which is classified as Class IIA waste, by NBR 10.004 (ABNT, 2004). However, due to the uncertainties inherent to the tests carried out for the classification of the material, the waste rock was classified as Class I. Class I waste is required to meet the guidelines proposed by NBR 10.157 (ABNT, 1987), which establishes the criteria for the design, construction, and operation of hazardous waste landfills. The waste rock stack design is therefore similar to the TMF and includes: A double lining system with leak detection. Perimeter surface canals that collect and drain runoff to an effluent management pond (wetland). Hydrogeological monitoring and groundwater and surface monitoring wells around Stack 2. Closing the facility with a clay soil cover layer and surface drainage system to allow revegetation of the area at the end of mining. |
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WATER COLLECTION AND TREATMENT Due to the high flow rates and expected low concentrations of dissolved metals, water collection and treatment will be carried out using engineered wetlands. Separate facilities will be developed for process water recovered from the plant and for runoff from stockpiles (ore, waste, and dry stacked tailings) and access roads. The wetlands will treat and discharge water in a controlled manner. The engineered wetlands consist of a solids sedimentation pond, with aerobic and anaerobic passive systems for organic/metals removal and pH adjustment (Figure 18-4). FIGURE 18-4ENGINEERED WETLANDS CONCEPT Figure 18-5 shows a general arrangement of the Aripuanã Wetlands, with the TMF in the foreground, the WRF on the right, and the processing plant area in the background. |
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FIGURE 18-5ARIPUANÃ WETLAND WATER TREATMENT POWER SUPPLY Electrical power will be provided by SE Juina (National Energy System) through private installations of UHE Dardanelos, where the connection to the Nexa bay will be at 230kV. A 20km long transmission line will connect the Dardanelos substation to the Project’s main substation at the mine site. Nexa obtained authorization for the connection from the Ministry of Mines and Energy, and in 2019 obtained the access permit provided by Operador Nacional do Sistema Elétrico (ONS), and subsequently obtained authorization to connect to the national grid from the Agência Nacional de Energia Elétrica (ANEEL). Nexa is in the process of signing the Transmission System Connection Agreement (Contrato de Conexão ao Sistema de Transmissão, or CCT) with Empresa Brasileira de Transmissão de Energia S.A. (EBTE), which is responsible for SE Juina.. WATER SUPPLY The Project water balance requires a top-up of fresh water supply of approximately 150 m3/h. |
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Nexa has undertaken a water supply engineering study based on the construction of a water dam and creation of a fresh water lake in a valley adjacent to the Project site (see Figure 18-1). Nexa has obtained authorization from the regional authority to construct the dam and to draw up to 378 m3/h of fresh water from the dam to supply the Project. SITE ACCESS The Project is located 25 km from the city of Aripuanã (population 17,000) and can be accessed by 935 km of paved roads from Cuiaba, the capital city of the state of Mato Grosso. The city of Aripuanã has an airport with a paved runway, which supports small aircraft. Aripuanã is connected to the national highway system by dirt roads of average quality. Vegetation to the sides of the access roads is dense, but has been cleared in nearby areas which are mainly used for agriculture. |
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MARKET STUDIES AND CONTRACTS MARKETS The principal commodities that will be produced at the Aripuanã Project – zinc, lead, copper, silver, and gold – are freely traded at prices and terms that are widely known so that prospects for sale of any production are virtually assured. Approximately 54% of Aripuanã zinc concentrate will be processed at Nexa’s Três Marias and Juiz de Fora zinc refineries in Brazil, and the remainder will be sold on the open market. Lead and copper concentrates will also be sold on the open market. Sales contracts for the concentrates from the Project have not been negotiated yet, however, RPA has reviewed the concentrate terms provided by Nexa (based on its other polymetallic operations in South America) and found them to be consistent with current industry norms. Market information for this section comes from the industry scenario analysis prepared by Nexa’s Market Intelligence team in July 2020 based on information sourced from different banks and independent financial institutions, economy and politics research groups, and metals consultants. Nexa’s Market Intelligence team notes that the industry has progressed from volatile markets in 2019 due to US/China trade wars, Brexit, and developing economies slowing down, to more uncertainty in 2020 due to the COVID-19 pandemic, a plunging global economy, the oil crisis, and the US elections. All these factors have affected the market fundamentals. The QP has reviewed the market studies and analyses and the results support the assumptions in the Technical Report. ZINC DEMAND The major market drivers for zinc demand are construction and infrastructure, transportation and vehicles production, industrial machinery production, batteries, and renewable energy. All these industries have been affected by the COVID-19 pandemic which has caused the global economy to slow down. As a result, zinc metal demand has also decreased in 2020, by approximately 10% year over year. |
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Nexa’s Market Intelligence team examined several scenarios for demand recovery and future growth, and settled on a base case that forecasts pre-COVID-19 levels of demand in the second half of 2022, with a demand compound annual growth rate (CAGR) of approximately 1.3% from 2023 to 2025. In 2019, they had forecasted a CAGR of approximately 1.7% between 2019 and 2024. SUPPLY Nexa’s Market Intelligence team’s supply forecast analysis was based on the following industry information: zinc mine start-up and closure, mine production guidance, disruption allowance evaluation, project pipeline, and cost evaluation for 2020 onwards. Nexa’s forecast analysis results are summarized as follows: •Mine disruption factor: Based on independent data, Nexa has forecast a mine disruption factor of 4% for China and 4% until 2023 and 2% to 3% for 2024 and 2025 for the rest of the world (ROW). •Project Pipeline: The analysis considered greenfield projects forecast to begin production between 2020 and 2025. •Zinc concentrate production evolution - Global: Recent market conditions due to the COVID-19 pandemic have affected mines worldwide, reducing investments and causing mine closures. As a result, zinc supply might be limited in the long term. •China concentrate evolution: China concentrate supply is expected to increase by 3% through the 2020 to 2025 cycle, but significantly depends on the ability of China’s small mines to survive amid lower price levels and volatile market conditions. •Zinc Global Market Balance: Based on the above considerations, Nexa’s forecast is for a significant zinc supply surplus in 2020 and 2021, with an increase in demand starting in the second half of 2022. From 2024 onwards, the global demand will exceed zinc supply. ZINC PRICE OUTLOOK Zinc prices depend on variations in supply, demand, and the perceived supply/demand balance. The most commonly referenced currency for zinc transactions is US dollars. Based on the above analysis of zinc supply, demand, global balance, and zinc prices, Nexa forecasts stressed zinc prices in 2021 and 2022 (between $2,000/t and $2,300/t), with a potential price increase to greater than $2,700/t starting in 2024-2025, and a long term price of $2,449/t. Figure 19-1 shows the results of Nexa’s analysis. |
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FIGURE 19-1ZINC PRICE OUTLOOK (2020-2025) Source: Market Intelligence Analysis July 2020 COPPER DEMAND The major market drivers for copper demand are power generation and transmission, construction, factory equipment, and the electronics industry. The COVID-19 pandemic affected copper demand in 2020 and, in the opinion of Nexa’s Market Intelligence team, will also impact it in the years ahead (2021 and 2022). In the long term, the team predicts a lower demand growth, mainly reflecting China’s economic transition, despite the positive contribution of global trends such as electric vehicles, renewable energy, and urbanization. Nexa analyzed multiple demand scenarios, with a Base Case forecasting a reduction in copper demand by 9.0% between 2019 and 2020, and starting in the second half of 2020, a slower-paced recovery with a demand CAGR of 3.2% between 2020 and 2025. Copper demand is predicted to grow from 26.9 Mt in 2020 to 31.5 Mt by 2025. SUPPLY Nexa’s Market Intelligence team’s supply forecast analysis was based on the following industry information: copper mine start-up and closure, mine production guidance, project pipeline, and cost evaluation for 2020 onwards. Nexa’s forecast analysis results are summarized as follows: |
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•Project Pipeline: The pipeline is short, mainly because there are fewer opportunities in mining-friendly jurisdictions. •Copper concentrate (sulphide) production evolution: Nexa considers that the majority of the production will come from sulphide mines. Nexa forecasts a concentrate production CAGR increase of 4.2% between 2020 and 2025. The increase in supply results from the ramp-up of brownfield projects. •Copper SXEW (oxide) production evolution: Nexa forecasts a downward trend for SXEW production. Based on Nexa’s analysis, a concentrate production CAGR will decrease by 2.7% between 2020 and 2025, as a result of by mine closures and reductions in production. •Refined Copper Market Balance: the copper market has been in deficit for the last three years, leading to lower stocks, despite lower prices since mid-2018 mainly due to the trade war between the USA and China, and the COVID-19 pandemic outbreak in 2020. Based on the above production assumptions, Nexa provided a forecast for Copper Market Balance between 2020 and 2025, showing a significant copper supply surplus in year 2020 and a slightly positive surplus in 2021 and 2022. From 2023 onwards, the global copper demand will create a deficit in copper supply (Figure 19-2). FIGURE 19-2REFINED COPPER MARKET BALANCE (2020-2025) Source: Market Intelligence Analysis July 2020 COPPER PRICE OUTLOOK Copper prices depend on variations in supply, demand, and the perceived supply/demand balance. Based on their analysis of copper supply, demand, global balance, and copper prices, Nexa forecasts stressed copper prices between 2021 and 2024 (between $6,040/t and $6,351/t), with a potential price increase to higher than $6,500/t after 2024, and a long term price of $6,627/t. Figure 19-3 show the results of Nexa’s analysis. |
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FIGURE 19-3COPPER PRICE OUTLOOK (2020-2025) Source: Market Intelligence Analysis July 2020 CONTRACTS No contracts for operations have been negotiated yet. |
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ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ENVIRONMENTAL SETTING The surface components of the Aripuanã Project are located approximately 25 km northwest of the municipality of Aripuanã, in the northwestern corner of the Mato Grosso State, Brazil, approximately 1,200 km northwest from Brasília, the federal capital. Nexa commenced construction of the Project in July 2019 and has progressed with the development of surface infrastructure, with the completion of the surface ramp to underground workings completed in 2019. This allowed for the construction of the ventilation raise, continued development of the exploration drift in the mineralized zone, and the commissioning of the plan to supply provisional power, as reported in the 2019 Nexa annual report. Nexa has further indicated in email communication that underground pastefill is in progress, construction of administrative buildings has started, and progress has been made on the ore processing plant construction. In addition, completion of the water supply dam development is planned for 2020. Key aspects of the environmental setting include (GeoMinAs 2017, RPA 2017 & SETE 2018): Topography: The Project area is located within an area called Depressão Amazonica Meridional (RADAM Brasil 1982) and the Depressão Norte do Mato Grosso (Seplan 1999). This depression includes the drainage network of the Aripuanã River and Tenente Marques River. The area is hilly with elevations from 129 MASL to 361 MASL and a general northwest-southeast direction. Climate: According to the Köppen-Geiger climate classification, the climate in Aripuanã is AM – a Monsoon tropical, megathermal with temperatures in the coolest months above 18°C, with no winter season. Annual precipitation is above 2,000 mm, concentrated in the warmer months, and averages below 600 mm in the driest months. In the Aripuanã River basin regimen follows the precipitation pattern, with the wet season spanning from November until May. Low flows start in June and end in October. The minimum flows are observed in September and October. Air quality:Baseline dust monitoring results were below the national standards. Potential sensitive receptors who could be impacted by Project activities were not specifically identified in the Environmental Impact Assessment (EIA) baseline discussion, although the Project’s direct and indirect areas of influence were mapped. Geology and potential for acid generation: The polymetallic deposit of Aripuanã lies in the south-central part of the Amazonian Cráton. The lithological units are represented |
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by the rocks of the Roosevelt Group, the Serra da Providência Granites, in addition to the Caiabís Group. Laboratory tests have been conducted at several stages of the Project development to determine if there is potential for the mine to generate acid leachate. These tests included static and kinetic testing on ore samples, waste rock or sterile rock samples and tailings. The results show that some waste rock lithologies have the potential to generate acidity due to the oxidation of sulphides and the low presence of neutralizing components. The tailings samples showed a low to zero acidification potential. The pastefill material will not generate acid and is expected to act as a neutralizing material. Leachate testing showed that the main components above regulatory values (Regulation 357/05, Class II, for materials classified as solid waste according to the Brazilian standard NBR 10004) were aluminum, lead, copper, iron, manganese, and zinc. Solubilized metals were determined to be of natural origin and, like copper and lead, associated with local mineralization, and consistent with the background values of water quality. In tailings, lead was also a component in metal solubilization. Surface water: The Project area has two creeks, Arrainha Creek and Maranhão Creek, both of which are tributaries of Guaribal Creek, which is a tributary of the Aripuanã River, which drains part of the extreme northwest of the state of Mato Grosso and belongs to the Amazon River basin. Regarding the surface water quality, due to the geological conditions in the region, metals which presented concentrations above the detection limit are: aluminum, dissolved iron, manganese, barium, and zinc. These are part of the rock composition in the area and do not indicate contamination or pollution. The 2017 EIA reported August and April 2008 and December 2011 monitoring data. The monitoring data reported in the 2017 EIA was classified according to a Water Quality Index in accordance with the methodology of the National Sanitation Foundation of the United States. The water quality ranged from average in the wetter months to good in the drier months. This was assigned to high volume precipitation events in the wet season causing sediment loading. In August 2008, the parameters which did not meet the limits established by the Ministry of Environment (CONAMA) Resolution No. 357/05 for Class II water bodies were: phosphorus (all sampling locations, except one), dissolved iron (two locations) and manganese (one location). In April, the parameters were: turbidity (one location), dissolved oxygen (one location), phosphorus (all), dissolved iron (all), dissolved aluminum (two locations), manganese (five locations) and Escherichia coli (three locations). In December 2011, the parameters were: Biological Oxygen Demand (one location), total phosphorus (four locations), dissolved iron (one location), manganese (two locations), and E. coli. Third-party water users were not specifically identified in the EIA baseline discussion, although the Project’s direct and indirect areas of influence were mapped. Groundwater: The Project area is underlain by poor aquifer zones and non-aquifer zones (geology offers very low conditions of storability and transmissivity of groundwater). The EIA did not include information on the depth of groundwater, any hydrocensus exercises to identify third-party groundwater users, nor does it appear that any boreholes were sampled or monitoring boreholes drilled; however one spring was monitored as part of the surface water quality study. Water quality in this spring showed E. coli levels above national standards and it was noted that the spring is used by wildlife. All other water quality parameters were reported to be within the applicable |
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national standards (CONAMA Resolution 396/2008). As previously mentioned, third-party water users were not specifically identified in the EIA baseline discussion, although the Project’s direct and indirect areas of influence were mapped. Biodiversity: The Project is located in the Amazon Biome, within the South-Amazonian Ecotone Corridor. In terms of habitat, the planned infrastructure will be located mainly in Open Mbrófila Forest with Palm Trees. Other habitats to be impacted to a lesser degree include Open Mbrófila Forest with Justaconta, secondary forest previously impacted by anthropogenic activities, planted pasture, degraded pastureland and areas degraded by artisanal mining activities. Infrastructure will be placed within 76 ha of Permanent Preservation Areas protected by federal law (No. 12,651/2012). This Permanent Preservation Area is a protected area, which may not necessarily have native vegetation, with the environmental function of preserving water resources, landscape, geological stability and biodiversity, soils and ensure the well-being of human populations. A specific resolution does, however, allow development in exceptional cases for low environmental impact activities in the Permanent Preservation Area. The floristic surveys showed the occurrence of eight species falling into some category of vulnerability to extinction, four of which were vulnerable, two threatened and two considered deficient in data. These include Euterpe edulis (jussara palm tree), Cordia goeldiana (Freijo tree), Hymenaea courbaril (a common hardwood tree), Aniba rosaeodora (pau-rosa tree in the Magnolia family), Bertholletia excelsa (Brazilian nut tree), Virola bicuhyba (known as the epená, patricá, or cumala tree), Manilkara cavalcantei and Manilkara elata (no common names provided). It was also noted that the Brazilian nut tree species and rubber tree are protected by local law. The Amazon biome is an important area of endemism for fauna, with a wide variety of food resources and diversity of habitats available in the study area. Fauna surveys identified four bird species that fall into some degree of threat of extinction, they are: Tinamus Tao (Azulone), Harpyja (hawk) and Hypocnemis ochrogyna (ocriceous singer) classified as Vulnerable (VU) at national level and Cherrie's Synallaxis (puruchém) classified as Near Threatened (QA) at the global level (International Union for Conservation of Nature (IUCN), 2017 as cited in GeoMinAs, 2017). Records of some species considered by CITES for the area were also obtained, including the aforementioned Harpya harpyja (hawk) and Ara macao (Red Macaw). The Project area has a high diversity of mammal species. Fourteen species are endemic (specific) to the Amazon biome, such as Mazama nemorivaga (deer-fuboca), Dasyprocta fuliginosa (black agoutis), and the eight primates, Alouatta puruensis (guariba), Ateles chamek (spider monkey), Aotus infulatus (night monkey), Lagothrix cane (pot-bellied monkey), Sapajus apella (capuchin monkey), Chiropotes albinasus (cuxiú), Cebus unicolor (cairara) and Mico intermedius (sagui-do-rio-Aripuanã). Eight species fall into some national or IUCN category: pot-bellied monkey, spider monkey, cuxiú, Priodontes maximus (tatu-canastra), Tapirus terrestris (tapir), Puma concolor (jaguar), Tayassu pecari (pecari), Otter longicaudis (otter). When considering herpetofauna, the yellow tortoise Chelonoidis denticulatus is a species classified as Vulnerable by the IUCN. Further afield, there are two conservation areas in the municipality located 100 km to 200 km to the north from the Project: Estação Ecológica Rio Flor do Prado, with an area of 9 ha, and Reserva Extrativista Guariba Roosevelt, with an area of approximately 165 ha. Land use: The Project area is located on the left banks of Rio Guaribal Creek and right banks of the Roosevelt River. This area is dedicated to farming of Rubber Trees |
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(Hevea Brasiliensis), Nuts (Bertholletia excelsa), and Copaíba Oil (Copaífera landsdorfii). Noise: Baseline noise monitoring results were below the national standards. Potential sensitive receptors who could be impacted by Project activities were not specifically identified in the EIA baseline discussion, although the Project’s direct and indirect areas of influence were mapped. CORPORATE POLICY AND COMMITMENTS Nexa does not have an Environmental Policy for the Project. According to Nexa’s website and the 2019 Nexa annual report, the company identifies and manages the main risks from both an operational and a strategic point of view, reducing and mitigating impacts to maintain business sustainability. The company has an integrated management system that establishes the guidelines that govern the conduct of the businesses, with a focus on quality management of environmental, health and workplace safety and social responsibility issues. In addition, the company follows applicable environmental laws and regulations pertaining to its business in each country where it operates (Nexa, 2019). Nexa has stated the following environmental goals in its 2020 annual report: 75% of recirculation and lower specific use of water. Reduce the specific emission of greenhouse gases by 5 %. Decrease the disposal of tailings in dams and reduction by 50 % in the specific generation of mining and smelting waste. Ensure that 100 % of the units have a pre-prepared future-use alternative study and an updated decommissioning plan, in line with the sector’s benchmark standards. ENVIRONMENTAL STUDIES PROJECT ENVIRONMENTAL IMPACT ASSESSMENT AND APPROVAL The environmental licensing process for the Project started in 2008 following the Terms of Reference (ToR) (Ofício nº 20084/CM/SUIMIS/2008) issued by Mato Grosso environmental agency (SEMA/MT). For strategic reasons, the process was put on hold and the field activities performed in 2008 were consolidated into a document in the format of a “Diagnosis of an EIA – Environmental Impact Assessment of the Project” (EIA). In 2012, a new ToR was requested (Ofício nº 85522/CM/SUIMIS/2012), and many of the studies performed as a result were consolidated into a comprehensive EIA. The EIA was completed in 2012, however, it was not |
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filed with the authorities due to low commodity prices at that time. In 2014, with zinc prices increasing, the EIA was filed. Taking into account further exploration on the property, increased production levels were presented in 2015 with productions increasing from 1.2 Mtpa to 1.8 Mtpa. The Mato Grosso environmental agency performed many inspections and the Public Hearing was held on August 26, 2015. During 2015 and 2016, the permitting process was analyzed by the agency, however, due to changes in the engineering process, the analyses were put on hold until all changes were performed. There were also updates in the biotic media campaigns and the inclusion of the noise and vibration studies. The Project EIA was finalized in 2017 by Geologica Mineração e Assessoria Ltda (GeoMinAs). This is the most recent EIA and the environmental review has been based mainly on this EIA. IDENTIFICATION OF PROJECT-SPECIFIC ENVIRONMENTAL BASELINE CONDITIONS, RISKS, AND IMPACTS Key baseline information is summarized in the Environmental Setting section at the beginning of this section. Comprehensive baseline studies were conducted by specialists in their field as part of the 2017 EIA, which included desktop data collection and review and fieldwork sampling. Sampling results were compared to national standards as relevant, for example air quality results were compared to the national dust concentration standards. The EIA described the methods of data and sample collection, data analysis and references used. Project impacts were identified in the 2017 EIA by analyzing the planned Project activities and tasks, taking into account location and the environmental setting, for the Project stages, i.e., planning, implementation, operation, and deactivation. Each potential impact was evaluated considering nature (positive or negative), reversibility, incidence (direct versus indirect impacts), spatial scale, magnitude, and duration. Cumulative impacts were considered. Table 20-1 lists the identified environmental impacts and associated management measures or plans to mitigate the impact. Social impacts are discussed separately in the Social or Community Requirements section. |
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TABLE 20-1ENVIRONMENTAL IMPACTS AND MANAGEMENT MEASURES (GEOMINAS, 2017) Nexa Resources S.A. – Aripuanã Zinc Project Impact identifiedManagement measures/programs Air quality impact due to particulate material generation and combustion gases Program of Control and Monitoring of Atmospheric Emissions. Monitoring Program of Air Quality and Meteorology Noise generation•Preventive maintenance of vehicles, machinery and equipment. Noise Control and Monitoring Program. Vibration generated by blasting activities•Vibration Control and Monitoring Program Soil structure and erosion processes•Recovery Plan for Degraded Areas Control and Monitoring of Erosive Processes. Silting of water bodies•Surface and Groundwater Management Program Recovery Plan for Degraded Areas Control and Monitoring of Erosive Processes. Impacts on the Arrainha and Maranhão Creeks due to the construction of the dam, the waste pile and recovered water pond Erosive Process Control and Monitoring Program Surface and Groundwater Management Program. Changes in the terrain and landscape•Degraded Areas Recovery Plan Decommissioning Program of Site Structures. Changes in the surface water and soil quality•Solid Waste Management Program Liquid Effluent Management Program Erosive Process Control and Monitoring Program Surface and Groundwater Management Program Degraded Areas Recovery Plan Decommissioning Program of Site Structures Mining Mine Closure Plan. Changes in the aquifer recharge rate•Groundwater and Surface Water Dynamics Interference in springs flow Changes in groundwater flow Monitoring Program. Changes in groundwater quality•Surface and Groundwater Management Program Liquid Effluent Management Program. Reduction of the open forest cover, with losses of flora and threatened flora Direct disturbance of 75.85 ha of Permanent Preservation Areas, designated protected areas (due to the establishment of the dam and drainage systems). Flora Rescue Program Degraded Areas Recovery Plan Program of Monitoring of Plant species and Wildlife Rescue Environmental Education Program. |
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Impact identifiedManagement measures/programs Reduction in the connectivity between native vegetation Loses in vegetation cover in areas already impacted by human activities (pastures with some remnants of original vegetation) Fauna displacement due to machines, vehicles and people movement and noise generation. Risk to fauna due to vehicles and hunting activities Losses of fauna specimens due to loss of vegetation Loss in mammals due to habitat loss, including endangered species Changes in the fish populations due to changes in the surface water flow Compensatory measures: forest replacement in the Permanent Preservation Areas to be implemented under the Forest Connectivity Program, in addition to the Environmental Compensation Program. Terrestrial Fauna Monitoring Program Program of Monitoring of Plant species and Wildlife Rescue Environmental Education Program. Erosive Process Control and Monitoring Program Surface and Groundwater Management Program Ichthyofauna Monitoring Subprogram. Changes in the freshwater biota due water bodies silting Erosive Process Control and Monitoring Program Surface and Groundwater Management Program Degraded Areas Recovery Plan Herpetofauna Monitoring Subprogram Ichthyofauna Monitoring Subprogram Hydrobiological Communities Monitoring Subprogram Changes in vectors such as insect populations•Fauna Monitoring Program - Subprogram of Monitoring Entomofauna (Vectors) Health Support and Epidemiological Surveillance Program. Malaria Control Action Plan. Change in hydrobiological communities resulting from water quality changes due to backfill activities underground and effluent generation in the sterile deposit, waste and minerals (Acidic drainage) Water and Effluent Management Plan Surface and Groundwater Management Program Monitoring of Hydrobiological Communities Monitoring Subprogram Nexa commissioned a Forest Management Plan which was completed in June 2018. This management plan was developed following the guidelines set out in the relevant legislation of the state of Mato Grosso and was required to allow the Project to proceed. Nexa also commissioned an Environmental Control Plan which was compiled by Solucoes E Tecnologia Ambiental (SETE) in July 2018. This plan provides a detailed account of: The Project description The management plans as mentioned in Table 20-1, originating from the 2017 EIA |
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Decommissioning plan Emergency response plan Monitoring plans This plan provides detail in terms of aims and objectives, timing and responsibilities including any needed training and institutions to be involved. The objective of this plan was to meet regulatory requirements through submission to SEMA to obtain the Project Installation Licence. The 2017 EIA concludes that the most significant Project impacts are those that will directly and indirectly affect, synergistically and cumulatively, vegetation cover and soils in the Permanent Preservation Areas and water resources, as well as changes in fauna communities, both terrestrial and aquatic, highlighting the relevance of local biodiversity, with species of flora and fauna of the Amazon biome, including endangered species (GeoMinAs, 2017). A key mitigation measures with regard to the Permanent Preservation Areas will be the implementation of a compensation plan and programs aimed at connectivity of habitat. Updating of management relevant plans and programs is not specifically mentioned. MONITORING PLANS The 2017 EIA provides some detail on monitoring plans. The 2018 Environmental Control Plan provides detail on the monitoring programs. This plan provides a list of specialists responsible for implementing the plan such as a biologist, agronomist, geologist and community and environmental educator. The monitoring plan covers: Air quality and meteorology Noise Vibration Geotechnical monitoring Water quality and effluent Erosion Groundwater and surface water (including linkages between surface and groundwater) Terrestrial flora Terrestrial fauna (birds, insects, amphibians and reptiles, mammals, bats) Aquatic biota (hydrobiological communities i.e. phytoplankton, zooplankton; and fish, including monitoring of trace metals in fish tissues) |
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In RPA’s opinion, the monitoring plans are comprehensive and include goals of the monitoring, legal requirements, methods used for sample or data collection and data analysis, scheduling, technical team, areas and indicators to be monitored and references. Each monitoring program also describes links to other management and monitoring plans and programs. EMERGENCY PREPAREDNESS AND RESPONSE A detailed risk assessment was conducted for the Project and included in the 2017 EIA. Ninety-one scenarios were identified which could result in accidents or events for which recommendations were made to mitigate or mitigate the risk. The environmental scenarios identified included spills or oil and grease and emission of combustion gases and inhalable particulates. These were assessed as having a low risk. The most significant health and safety risks identified were a potential failure of the water dam, fire or explosions in utility and reagent storage areas, general occurrence of accidents, and underground mine collapse or incidents. The 2017 EIA included a Risk Management Program and the Emergency Response Plan. The Risk Management Plan aims to prevent the occurrence of accidents and, if they occur, minimize the impacts that may jeopardize the physical integrity of employees and/or the company's assets, as well as the safety of employees and the environment as a whole. The Emergency Response Plan defines the responsibilities, guidelines, and information aimed at the adoption of structured technical and administrative procedures, in order to provide the necessary conditions for the triggering of quick and efficient actions to be adopted when a risk scenario materializes, aiming to minimize possible damage to people, the environment, and property. MINE WASTE MANAGEMENT TAILINGS AND WASTE ROCK MANAGEMENT Approximately 6.3 Mm3 of tailings will be produced and will require surface disposal over a period of 13 years with the remaining tailings applied as cemented paste backfill. In addition, approximately 1.3 Mm3 of waste rock will also be disposed of at surface. The tailings are prone to acid drainage and are classified as Class I according to the Brazilian waste classification standard NBR ABNT 10.004/2004. The waste rock is classified as Class IIA waste, however, due to the uncertainties inherent to the tests, a classification of Class I has also been adopted. |
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Class I waste disposal must meet the guidelines proposed by NBR 10.157 (ABNT, 1987), which establishes the criteria for the design, construction, and operation of hazardous waste landfills. A double lined storage facility with a leak detection system is therefore required for both the tailings and waste rock disposal. The provisional design of a dedicated TMF has been completed. The tailings will be filtered to a relatively low moisture content for transport by truck and placed and compacted in thin lifts, similar to typical earth embankment construction. The tailings compaction criteria are to ensure dilating behaviour (i.e., not susceptible to liquefaction). The TMF is located to the west of the plant on local high ground with no upstream catchment. There is no surface tailings pond required with the use of filtered tailings. Surface runoff will be collected by a perimeter concrete channel and directed to two effluent storage ponds. Implementation of inflatable warehouses is proposed for use in the wet season to allow for the placement and compaction in dry conditions. Groundwater and surface water monitoring is required for the operating and closure phases of the Project. At closure, the TMF and WRF will be capped with a clay layer and vegetated. Runoff from the TMF will be directed to a wetland treatment system. The following recommendations are proposed for the next phase of the design: Classify the TMF in terms of the Global Tailings Standard or the Canadian Dam Association. The classification may require more conservative design criteria in terms of flood management and seismic loading. Consider the stability assessment of the individual components of the double lined system and the interface between the components in the stability analyses. In particular, the interface between the smooth side of the geomembrane and the sand leakage detection layer. Complete a deformation analysis to determine if the long-term strain of the high density polyethylene geomembrane is within acceptable limits. Implement measures to control dust generation from the slopes of the TMF and internal access roads and ramps during the dry season. Implement requirements to allow the progressive rehabilitation of the slopes. Implement deposition planning for the wet season and the associated logistical requirements for the use and management of the inflatable warehouses. Investigate the extent of the colluvial layer within the foundation of the TMF to provide a more accurate estimate of the volume of material that must be removed. Complete an initial assessment of the stability of the capping clay layer on the intermediate bench slopes to determine if slope flattening is required for closure. Determine a source of clay with suitable quality for use as a lining and capping material. Complete a formal risk assessment. |
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WATER MANAGEMENT Preliminary characterization studies of acid rock drainage included collection of samples and laboratory static and kinetic testing of waste rock and tailings. The results of the tests indicate low acid generating potential. The pastefill material will not generate acid and is expected to act as a neutralizing material (GeoMinAs, 2017). The water management strategy for the Project includes the implementation of the following main water management facilities: Freshwater supply dam Water recovery pond Wetlands The freshwater dam (Figure 18-1) will be the source of make-up water for ore processing. The dam will be equipped with an emergency spillway to prevent dam overtopping. The water dam reservoir was designed to meet a demand for 150 m3/hr for the processing of ore in the industrial processing plant of the Project. The water recovery pond located south of the processing plant area collects the underground mine dewatering and the surface water runoff collected in the processing plant area, the administration area and the ore stockpile. Water from all these Project components is conveyed first to a wetland, and from the wetland to the water recovery pond. The TMF and WRF are designed with a double lining system with leak detection that will minimize infiltration of water to the groundwater environment. The water management system has been conceptualized and designed to ensure that the surface drainage water and infiltration to the TMF and WRF will be directed to engineered wetlands (Figure 18-4) for passive treatment prior to discharging the water to the receiving environment. Two wetlands are proposed for the TMF and one wetland for the WRF. Surface runoff from the TMF and WRF is directed to a network of interception and conveyance channels that convey the flows to the wetlands. Rainfall that infiltrates the TMF and WRF footprints gets collected through an internal drain system to prevent accumulation inside the facilities and formation of saturated areas. The internal drains convey the flows to the wetlands. |
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The NBR 10.157 guidelines developed by the Brazilian Association of Technical Norms for hazardous waste were considered for design and environmental monitoring of the TMF and WRF. These guidelines recommend the installation of monitoring wells in sufficient number to monitor the water surrounding the structure. Surface water and groundwater quality monitoring will be implemented for receiving water bodies to identify potential water contamination and implement corrective actions if needed. Compliance with water quality standards will be carried out according to CONAMA Resolution No. 357/2005 for surface water and CONAMA Resolution No. 396/2008 for groundwater. Environmental water quality compliance for the receiving environment will be tracked during the stages of construction, operation and closure of the Project. The program proposed quarterly sampling at eleven surface water quality sampling locations, and six groundwater quality sampling locations. Quarterly and annual reports will be prepared documenting the results of the monitoring campaigns. The quarterly frequency and the suite of water quality parameters sampled will be reviewed after the initial year of monitoring (GeoMinAs, 2017). Monitoring will allow the identification of possible deviations or lack of performance of the proposed treatment systems for operation and the implementation of adaptive management in order to correct potential issues identified and maintain environmental water quality compliance. According to the Project Description in the EIA (GeoMinAs, 2017), there are no natural sources of water used for collection of water for human consumption in the surroundings of the Project area. PROJECT PERMITTING Nexa maintains a list of permits for the Project along with any relevant expiry dates which was provided to RPA. These include installation and operating licences. Examples include installation of electricity distribution infrastructure and the mineral beneficiation plant, implementing a malaria control plan and roadworks. Nexa reports regularly to the environmental regulatory agency (SEMA) on compliance with conditions of Installation Licence No. 69614/2018 for the Project. |
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Nexa indicated that required permits are in place. The permitting list can be used to track the Projects legal obligations. SOCIAL OR COMMUNITY REQUIREMENTS This section is guided by the NI 43-101 content requirements as well as the following IFS PS: PS1: Social and Environmental Assessment and Management Systems requires that companies identify, assess and mitigate the social impacts and risks they generate throughout the lifecycle of their projects and operations. From a social perspective, the requirement includes: a comprehensive social assessment; identification of critical social impacts and risks; community consultation and engagement; information disclosure; mitigation plans to address impacts and risks; and development of an organizational structure with qualified staff and budgets to manage the overall social management system. PS2: Labor and Working Conditions incorporates the International Labor Organization conventions that seek to protect basic worker rights and promote effective worker/management relations. PS4: Community Health and Safety declares the project`s duty to avoid or minimize risks and impacts to community health and safety and addresses priorities and measures to avoid and mitigate project related impacts and risks that might generate community exposure to risks of accidents and diseases. PS5: Land Acquisition & Involuntary Resettlement considers the need for land acquisition or involuntary resettlement of any individual, family or group; including the potential for economic displacement. PS7: Indigenous Peoples considers the presence of Indigenous groups, communities or lands in the area that may be directly or indirectly affected by projects or operations. PS8: Cultural Heritage. This standard is based on the Convention on the Protection of the World Cultural and Natural Heritage. The objectives are to preserve and protect irreplaceable cultural heritage during a project's operations, whether or not it is legally protected or previously disturbed and promote the equitable sharing of benefits from the use of cultural heritage in business activities. SOCIAL SETTING The developing mining Project is located approximately 20 km northwest from Aripuanã in the municipality of Aripuanã. This municipality was founded in 1943 and has a total area of approximately 25,048,965 km² with a population of 18,656 people and a population density of inhabitants per square kilometre, according to the 2010 Census (Comexto consulting, 2018). The Brazilian Institute of Geography and Statistics (IBGE) website currently indicates that the population is approximately 22,714 people. The population is distributed in a greater proportion in the urban areas (62.6%). Within the municipal territory lies the Aripuanã and Arara Indigenous Lands of Rio Branco. The municipality includes the urban district of |
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Conselvan, and four rural areas. The municipality is away from the main economical centres of the state (i.e., Cuiaba, Sinop, and Lucas do Rio Verde). Until 1995, there were gold and diamond artisanal mining activities in the area (RPA, 2017). Nexa has progressed with the development of infrastructure at the developing mine, with the completion of the surface ramp to underground workings completed in 2019. Illegal mining or artisanal mining activities were detected by Nexa in October 2018 close to some of the mining rights and in the surrounding areas of the Project. According to a legal opinion dated 17 July 2020 provided by Nexa, the company reported these activities promptly to the relevant authorities. In 2019 one of these artisanal mining activities persisted in the areas surrounding the Project and Nexa again reported it to the relevant authorities. In October 2019, a joint operation was carried out between state agencies to curb such illegal mining activities. Arrests, searches and seizures were carried out and the artisanal miners were temporarily removed, with the destruction of part of the equipment used for illegal mining. However, once the police authorities left the area, illegal mining activities resumed again. In January 2020, Nexa was invited by the National Mining Agency’s (ANM) Conflict Resolution Advisory to participate in a meeting with representatives of the artisanal miners organized in a cooperative. As a result of these negotiations an agreement was executed between Nexa, the cooperative of artisanal miners, and ANM, with the participation of the State of Mato Grosso represented by Companhia Matogrossense de Mineração (METAMAT), whereby Nexa assigned an area for the artisanal miners to exercise their activities for a period of two and a half years after obtaining the necessary licenses. The validity of this agreement was challenged by a judicial decision and is currently being discussed among the parties before the Court. Nexa is taking all legal measures to ensure no impacts on Project implementation due to illegal mining activities. SOCIAL AND ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS CORPORATE GUIDELINES AND STANDARDS At a corporate level, Nexa has adopted the guidelines of the International Integrated Reporting Council (IIRC) and the standards for the Global Reporting Index (GRI). The IIRC guidelines promote a cohesive and integrated approach to reporting on organizational activities. The GRI standards provide best practices for public reporting on economic, environmental, and social impacts in order to help Nexa and its shareholders and stakeholders understand their corporate contribution to sustainable development. These standards were reported on in the most recent (2019) Nexa Resources Annual Report. With respect to social issues, the 2019 |
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Annual Report provided details of corporate activities aligning with the following GRI Standards: Employment Occupational Health and Safety Non-discrimination Training and education Diversity and equal opportunities Freedom of association and collective bargaining Child labor Forced or compulsory labor Human rights assessment Local communities Social assessment of suppliers Socio-economic compliance Nexa’s 2019 Annual Report also includes reporting on corporate progress towards several sustainable development goals. With respect to social environment issues, these include: Gender equality Decent work and economic growth Good health and well-being Peace, justice, and strong institutions Quality education Reduced Inequalities Sustainable cities and communities Responsible consumption and production Nexa has a corporate compliance policy (PC-RCC-CCI-005-EN) meant to guide Nexa representatives and third parties. The compliance policy includes the following policies and procedures: Code of Conduct Anti-Corruption Policy Money Laundering and Financing Terrorism Prevention Policy Antitrust/Competition Policy Insider Trading Policy Disclosure Policy |
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Compliance Program Manual Money Laundering and Financing Terrorism Prevention Manual Gifts and Hospitality Procedure Relationships with Government Representatives Procedure Travel and Entertainment Procedure Integrity Due Diligence Procedure Conflict of Interests Procedure IDENTIFICATION OF PROJECT-SPECIFIC SOCIAL BASELINE CONDITIONS, RISKS, AND IMPACTS The most recent EIA for the Project is the 2017 EIA compiled by GeoMinAs. This EIA includes a social baseline description, assessment of socio-economic impacts, and management plans detailing measures to prevent, minimize, or mitigate the identified socio-economic impacts. These components are generally consistent with social impact assessment practices. The socio-economic baseline description includes: The social areas of influence The social, economic, and cultural characteristics of the population of the areas of influence of the project including: information on the Indigenous People within the area of influence information on historical, cultural and archeological resources Socio-economic variables that might be affected by the project Potential indicators to assess impacts of the project Identification of the main socio-economic and environmental issues of relevance to the population The foundation for a social impact management plan to mitigate potential negative impacts and maximize potential positive benefits The baseline characterization was developed using a variety of methods including both primary and secondary data collection. Primary data collection included field investigations such as surveys and interviews, which were conducted prior to the EIA. Secondary data collection included reviews of available data from the Brazilian Institute of Geography and Statistics, as well as other government departments. |
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The analysis of the Areas of Indirect and Direct Influence was based on the Technical "Socioeconomic Diagnosis of Aripuanã, Mato Grosso, August 2016", developed by the consulting firm Diagonal for the Project. The potential socio-economic impacts were assessed for the various stages of the Project and included an assessment of potential negative and positive impacts of the mine on the social environment. The social impacts assessed in the 2017 EIA are summarized in Table 20-2. TABLE 20-2SOCIO-ECONOMIC IMPACTS AND MANAGEMENT MEASURES (GEOMINAS, 2017) Nexa Resources S.A. – Aripuanã Zinc Project Impact identifiedManagement measures/programs Potential increase in prostitution indexes, violence and drugs consumption and social cultural conflicts due to outside workers arrival in Aripuanã Municipality Labor Training and Qualification Program Health Support and Epidemiological Surveillance Program Social Communications Program Environmental Education Program Program for Monitoring Socioeconomic Indicators Migrant Support Program. Increase in the demand for housing and basic services Program of Actions with the Community and the Local Government Health Support and Epidemiological Surveillance Program Migrant Support Program. Potential positive impacts such as employment and wage generation, new business opportunities generation, increase in tax collection. Labor Training and Qualification Program Development Program for Entrepreneurs and Local Rural Producers. Potential increase in endemic diseases due to the arrival of immigrants Health Support and Epidemiological Surveillance Program Environmental Education Program Program for Monitoring Socioeconomic Indicators Entomofauna Monitoring Subprogram - Vectors. An increase in traffic impacts with associated safety risks Road Signaling and Standardization Program Social Communications Program Migrant Support Program. Negative impacts at the end of the life of the project such as a decrease in employment opportunities, decrease in tax collection. None identified. |
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Impact identifiedManagement measures/programs Community expectations and worries regarding potential environmental and social impacts Social Communication Program. MANAGEMENT OF IDENTIFIED SOCIAL RISKS AND IMPACTS In 2019, Nexa created a General Social Management Department, which is responsible for evaluating all social programs developed in Brazil and Peru, delving more broadly into these activities within the sustainability pillar. The Project has developed and utilizes a number of social management programs and tools aimed at managing identified risks and impacts. These include: Identification of social and economic risks Integrated Socio-economic Plan Indigenous Population management plan Stakeholder tracking and stakeholder issues and concerns matrix Tracking social initiative implementation The Project’s Integrated Socio-economic Plan is aligned with the company sustainable development goals (January 2019). Key objectives of this plan include: Development of local suppliers and entrepreneurs; Personal development of local workforce; Implementing strategies to promote the hiring and strengthening the employability of women and people with disabilities; Strengthening of the health care system through strategies such as raising funds, upgrading existing basic health units to meet the standards of the Ministry of Health etc.; Assisting with improving solid waste management in urban and rural areas through strategies such as the establishment of partnerships to support public management in training for project development and fundraising aimed at the regularization of landfill and the implementation of an incinerator for the proper disposal of hospital and health waste, etc.; Supporting projects for the proper management of sewage. Providing health, safety and environmental education for different audiences (community, school, etc.); Assisting with management of an influx of people to the area through actions such as managing employment expectations, mapping potentially vulnerable locations in advance for conflicts, holding workshops with children, adolescents and young people on conflict mediation and nonviolent communication etc.; |
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Assisting with managing access routes used by Nexa for the flow of traffic and standardization of the movement of light and heavy vehicles; Ensuring better teaching conditions for the population of Aripuanã, through the training of human resources and improvement of teaching equipment and methods; Reducing and preventing the occurrence of human rights violations with respect to children, adolescents, women, the elderly and people with disabilities. This plan includes a description of each action, along with strategies, objectives, relevant stakeholders and expected results, including indicators. There is, however, no mention of revising or updating this plan based on the monitoring data collected or any other relevant feedback. Since the EIA (2017), Nexa has continued to monitor socio-economic indicators. This monitoring program is focused on the potential impacts for the various phases of the Project. Specific information was not provided on the methods used to collect this monitoring data, however, Nexa has reported some key results of this monitoring: Schooling: an increased demand for school enrollment and an increase in the average class size at all stages of education (except high school). Health care: increased outpatient care, a reduction in hospitalizations, an increase in the number of physicians, increased care of women victims of intrafamily violence, relative increase of adolescent women (up to 19 years) in hospitalizations for pregnancy and childbirth. Crime: an increase in crime, notably an increase in the homicide rate. Basic services: an extension of the water supply and sanitation networks, increase in household waste collected. Income levels: an increase in the assets of formal workers, increase in the average salary of workers. Municipal income and taxes: projected increase in municipal GDP, projected increase in the number of formal establishments and increase in tax revenues. STAKEHOLDER ENGAGEMENT AND PARTICIPATION Stakeholder engagement was conducted during and prior to the preparation of the EIA. Most recently, in 2019, Nexa contracted a specialized service for the management and execution of environmental programs related to "Economic Development and Social Participation" in compliance with the Environmental Control Plan commitments to develop: A program for the development of entrepreneurs and local suppliers, including rural producers A socio-economic indicator monitoring program An environmental education program |
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The specialized service was additionally tasked with actions defined in the strategic planning of the area and social projects, such as the development of a social agenda through a community participation group. This included participatory workshops and one-on-one interviews. No specific information was available on stakeholder engagement planning going forward at the time of writing this Technical Report. COMMUNITY ISSUES AND CONCERNS SYSTEM In order to better understand community-specific issues and address concerns that arise at Aripuanã, Nexa implements a complaint register guided by Nexa’s Order and Complaint Procedure, which details roles, responsibilities, and commitments to gather and respond to complaints from the public in a fair and equitable way. All communications and complaints are recorded, investigated, evaluated, and resolved according to the Order and Complaint Procedure. The process is meant to provide Nexa with a better understanding of the local population and related issues. Nexa also maintains a compliance matrix, which is a database of relevant stakeholders and a matrix/listing of interactions with each stakeholder. Nexa provided a matrix of recent stakeholder issues and concerns. The majority of issues focused on requests for assistance in dealing with the COVID-19 pandemic and the Project responded as follows: Donations of personal protective equipment to the civil defense and health organizations, such as police and health departments and a hospital in the local area. The Project loaned a truck used for disinfecting the city centre. Donations of rapid test kits and thermometers. Donations of 1,680 basic food baskets for vulnerable and Indigenous communities. Donations of uniforms to volunteer organizations carrying out prevention actions for COVID-19. LABOUR AND WORKING CONDITIONS COLLECTIVE BARGAINING AND FREEDOM OF ASSOCIATION Corporately, Nexa reports that 100% of its workers in Brazil are covered by collective bargaining units. Nexa also reports corporately on the freedom of association and collective bargaining. At Aripuanã, Nexa employees are covered by a collective bargaining agreement for 2019/2021 (registration number MT000081/2020). |
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WORKING CONDITIONS According to the 2020 shift rotation schedule provided by Nexa, workers involved in the current development activities are on shift for six days, then off for one day for one week, then six days on shift followed by three days off the following week. This provides staff with sufficient opportunity to rest in between scheduled work activities. Once operational, the mine plans to operate 360 days per year with three 8-hour shifts per day for a total of 18 operating hours per day (RPA, 2017). Employees have access to a number of benefits including life insurance, health and dental plans, private pensions, paid vacations and holidays, financial bonuses, living allowance, paid vacation flights for five years, and assistance for moving or buying real estate. These benefits vary according to the position of the employee. Services to the Project property are provided by the town of Aripuanã, which includes accommodation, restaurants, and other retail services (RPA, 2017). LOCAL HIRING, DISABILITY AND DIVERSITY CONSIDERATIONS Corporately, some of the Sustainable Development Targets Nexa has identified include (but are not limited to): By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular migrant women, and persons in precarious employment. The 2019 Nexa annual report indicates that at the Project, the company followed the strategic plan for hiring employees, seeking and qualifying local labor, with short and medium-term courses, offered in partnership with Senai/MT. Nexa reported that there were 515 vacancies in 2019 and that 54% of these jobs were filled by women. Nexa intends to fill the staff contingent with 65% of local employees, primarily students graduated from the Senai-MT Professional Qualification Program, with the remaining 35% from other parts of the country, filling positions that require specific technical knowledge (Nexa, 2019). Nexa provided a planned employment graph for the various phases of the Project from construction, commissioning, ramp-up of operations, and then stabilized operations. This graph confirms plans to employ mostly local people, averaging at approximately 65% local employees. |
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The annual report further indicates that Nexa is working on identifying local infrastructure needs, such as building homes, expanding hospitals, improving or building schools, in order to attract employees hired from outside the region and contribute to local development. A key objective of Integrated Socio-economic Plan is to implement strategies to promote the hiring and strengthening the employability of women and people with disabilities. As described under the PS1 section above, Nexa reports corporate activities aligned with the GRI Standards regarding non-discrimination, diversity and equal opportunities. HEALTH AND SAFETY Nexa has adopted occupational health and safety (OHS) policies to ensure the protection and promotion of the safety, human health, and welfare of employees. Nexa implements 12 “Golden Rules”, to ensure the safety of company and outsourced employees. These are based on critical risk standards and other safety management tools Nexa has implemented, such as the use of seat belts, restrictions on the use of cell phones and a ban on working under the influence of alcohol or drugs. Failure to comply with any rule may lead to a warning, suspension, or even termination. The identification of non-compliance with a rule goes through a structured process, with evidence gathering, evaluation and, if deemed applicable, a penalty (Nexa, 2019). Nexa has a Health and Safety Master Plan which is used to identify occupational risks and apply early diagnosis protocol for occupational diseases. This is part of the shared management model for Occupational Hygiene and Health, a program that aims to mitigate risks, share knowledge and responsibilities with preventive methods and practices with all employees. The program is managed by the Corporate Quality of Life Committee, composed of representatives of Health and Safety, Head of Department and Corporate Communication, as well as representatives of the units, defined by each local committee. The corporate committee defines the guidelines and actions that must be implemented in all units while the local Quality of Life Committees are responsible for implementing corporate and local actions pursuant to the demands of each unit (Nexa, 2019). Corporately, Nexa reports on its health and safety performance and safety is a prioritized topic on the agenda in weekly Board of Executive Officers meetings and in the scheduled meetings of managers with their teams. Safety is also part of the Board of Directors’ meetings, with |
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quarterly assessment of the indicators and planning for the following quarter (Nexa, 2019). For 2020, Nexa’s Sustainability Master Plan foresees health and safety initiatives for the transformation of culture and behavior, to improve company infrastructure for routine activities and for the management of the area. These are divided into Crucially Important Goals, for which 18 projects will be developed over the next five years (Nexa, 2019). According to the 2019 annual report, Nexa maintains Daily Safety Dialogues to assist employees in their perception of the risks in their workplace environment, as well as managerial inspections in operational areas, along with other safety management tools. The risks of the activities are surveyed, and control measures are implemented. These may include engineering (such as the need to install physical barriers), procedures (written standards, work rules that guarantee safety) or be related to personal or collective protection equipment. For outsourced employees, the survey is conducted in conjunction with the leadership and the outsourced company’s safety team (Nexa, 2019). Site-specific information for occupational health and safety plans were unavailable for review at the time of writing this Technical Report. The annual report indicates that the total recorded injuries 2017 was 200, 174 in 2018 and 161 in 2019. There were seven fatalities in 2017, none in 2018 and one in 2019 (Nexa, 2019). Nexa established an internal indicator in 2017 called the “Nexa Internal Rate” to measure safety effectiveness (Nexa, 2019). In the case of fatalities, sanctions are applied to the executives (Nexa, 2019). Nexa provided data on health and safety incidents at Aripuanã in a presentation dated July 2020. There were nine recorded near-misses, no fatalities, six personal injuries and nine incidents where assets were damaged reported for 2020 until the end of July. In 2019, Nexa implemented a health and well-being challenge to encourage behavioral change and the practice of physical activities, called “Go Nexa”. Some 1,900 people enrolled in the program. At the end of the year, during the awards event, the three winning teams were recognized for their efforts. Nexa’s overall health index rose by 14% in three months, from 6.4 to 7.4 (Nexa, 2019). In 2019 Nexa also continued the Live Better Program that had been established in 2017, which 100% of Nexa’s units, with corporate actions and initiatives from each unit, according to the local situation and the risks related to the lifestyles of employees and their families. In 2019, 88% of Nexa units implemented actions related to health and well-being in local communities (Nexa, 2019). |
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At a Project level, construction activities had not yet been affected by the COVID-19 pandemic at the time the 2019 annual report was published. Nexa reported that additional safety measures and procedures were being discussed with contractors to mitigate any potential impact of the global COVID-19 outbreak, including a revision to the construction schedule. HUMAN RIGHTS COMPLIANCE AND MONITORING Nexa is signatory to the Global Compact United Nations Initiative since 2017, which aims to mobilize the business community around the world to adopt ten principles that represent fundamental values of human rights, labor relations, the environment and the fight against corruption. Corporately, Nexa has stated its commitment to internationally recognized human rights and prohibits any violation of human rights in its operations and suppliers. Suppliers are asked to provide information regarding both social responsibility and human rights preservation. The 2019 annual report states a target of maintaining the evaluation cycles of suppliers in Brazil and Peru and inclusion of new categories in the supplier monitoring process (Nexa, 2019). Nexa reported that in 2019, there were no complaints of non-compliance with any requirements related to human rights impacts, across its operations. Furthermore, Nexa is also seeking to review all outside suppliers for their conformity with human rights ethics. As of 2019, approximately half of its suppliers had been reviewed, with no known records of any human rights violations. GRIEVANCE SYSTEM There are procedures in place for employees and contractors to report grievances and ethical violations, including directly to management, via telephone and online. At the time of writing this Technical Report, there were no specific reports on the number of grievances or ethical violations relevant to Aripuanã. The 2019 annual report states that Nexa did not register any strikes that lasted for more than seven days during the year, which the company believes demonstrates their ability to establish an open dialogue with employees and labor unions (Nexa, 2019). COMMUNITY HEALTH AND SAFETY CORPORATE COMMITMENTS AND PROGRESS Corporately, Nexa has made several commitments to improve community health and safety, as well as the overall well-being of community members. The Nexa 2019 annual report |
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indicates that during 2019, the company made progress with regard to community health and safety as described below (Nexa, 2019): Health support and epidemiological surveillance – through training for the management of health services; expansion of health coverage in the Conselvan district; budgets and partnerships under negotiation for the renovation and acquisition of equipment in the Basic Health Units and emergency rooms; accreditation and training of local medical teams; improvement in specialized care; preparation of the epidemiological surveillance plan; and donation of vehicles for use by the teams (one panel truck, one pickup, eight motorcycles, six bicycles, and two boats). The company made a voluntary transfer of R$1,149 million to municipality through a cooperation agreement. The amount is intended for the maintenance of four doctors and the purchase of supplies, such as medicines and items for hospital use. Strengthening the health and prevention system – Nexa is involved in the diagnosis of the current situation and monitoring of long-term improvements, strengthening of public health policies and the search for shared solutions, in addition to improving primary care quality. Housing – Nexa is building 200 new houses for employees hired outside Aripuanã, as an item in the worker benefits package offered. The construction of new residences aims to mitigate local real estate speculation. Migrants, vulnerable communities and public management –the company continued to implement a program to strengthen the network for the protection of the rights of children and adolescents and to train community agents to act in the prevention of violations of the rights of youths and women. The company reports that it promoted a project in Conselvan, one of the districts with the greatest social vulnerability, to disseminate restorative practices in education, in which the company certified 32 education professionals (72% of the program’s target audience). The company also inaugurated two Migrants Support Centers which will offer guidance and assistance to migrants, in addition to serving as a channel for dialogue with the social assistance network and other public policies in the municipality. Entrepreneurship and local suppliers – The company now requires that suppliers for social projects must commit to conduct their activities in accordance with the Nexa social responsibility requirements. These include guarantees about human rights, support for local development, promotion of safety and a healthy workplace, compliance with the Social Golden Rules and the 15 Community Relationship Protocol rules. In 2019, the second edition of the Opportunities Meeting was held in Cuiabá (the state capital city located approximately 938 km from the Project), which brought together 70 entrepreneurs, public managers, consultants, self-employed professionals and commercial representatives to learn about the project, the future demands for goods and services and our supplier management policy. Nexa initiated the Local Entrepreneurs and Suppliers Development Program, designed to support the sustainable and integrated growth of existing production activities and new businesses. Indigenous People – The company aims to develop local production chains, expand the opportunities for coexistence and participation of the Indigenous community and safeguard their territories and culture, avoiding the emptying of villages and loss of identity. |
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PROJECT LEVEL COMMITMENTS AND SOCIAL INITIATIVES At the Project level, the EIA identified several positive and negative impacts on the community as described in the PS1 section above. The Project has developed an Integrated Socio-economic Plan and an Indigenous Population management plan. These two plans are aimed at managing and mitigating the social risks and impacts identified in the EIA. Key objectives of Integrated Socio-economic Plan which are aimed at managing potential community health impacts include: Strengthening of the health care system. Assisting with improving solid waste management in urban and rural areas. Supporting projects for the proper management of sewage. Providing health, safety and environmental education for different audiences (community, school, etc.). Assisting with management of an influx of people to the area. Assisting with managing the access routes used by Nexa for the flow of traffic and manage the movement of light and heavy vehicles. Contributing towards better teaching conditions for the population of Aripuanã. Reducing and preventing the occurrence of human rights violations with respect to children, adolescents, women, the elderly and people with disabilities. The proponent has provided a lengthy list of social initiatives implemented for the Project during 2019 and 2020. These focus on the following areas: Community awareness training on prevention of sexually transmitted disease, teenage pregnancy, women’s health. Upgrades to the emergency room of the municipal hospital. Training of teachers. Promotion of leisure, culture and sport activities aimed at the care of children, adolescents and young people. Implementation of two Migrant Care Centers (CAM) and Database. This includes monitoring the influx of migrants. Supporting the economic development of the municipality of Aripuanã, with the creation of incentives for the expansion, diversification and training of local productive activities. Installation and maintenance of information and warning signs on roads. Promotion and expansion of the culture of road safety throughout the municipality of Aripuanã. Identification and empowering of the main community and project leaders, in topics related to citizenship, human rights, social participation among others. Promotion of a campaign on sexual rights violations. |
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Contributing to improved performance of the municipality of Aripuanã regarding safety of the community, through training in public security and the developing an integrated action plan that community safety with relevant stakeholders. Preparation of training courses in planning and management for public servants. Response to sponsorship requests, donations and related demands. Integration workshops, dissemination of information in newspapers and magazines and in programs or spots on radios of local and regional scope. Specific initiatives or programs directed at Indigenous Communities and are discussed below. LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT No resettlement will be required to implement the Project. INDIGENOUS PEOPLES GENERAL CONTEXT According to the 2019 annual report, Nexa operations are not located on Indigenous or immediately adjacent lands. This developing Project is also not located on Indigenous lands, but it is located adjacent to such lands as described below. The annual report also states that Nexa aims to develop local production chains, expand the opportunities for coexistence and participation of the Indigenous community, and safeguard their territories and culture, avoiding the emptying of villages and loss of identity (Nexa, 2019). The 2017 EIA described two Indigenous villages located approximately 10 km to 12 km from the Project: Arara do Rio Branco with an area of approximately 114,842 ha and Povo Cinta Larga with an area or approximately 750,649 ha. The total population was stated as being 512, 74 of whom live in areas outside of the villages. ENGAGEMENT WITH INDIGENOUS COMMUNITIES Consultation with Indigenous Peoples regarding Project impacts and mitigation were undertaken under the tutelage and consent of National Historical and Artistic Heritage Institute (IPHAN) with National Indian Foundation (FUNAI) during the preparation of the 2017 EIA. In 2018, Nexa commissioned a study on the Indigenous Component of the Indigenous Lands Aripuanã and Arara do Rio Branco, within the framework of the Environmental Licensing Process of the Aripuanã Mining Project (Comtexto, September 2018). The study methods |
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were developed based on a ToR issued by FUNAI and through consultation with the Indigenous Communities of Arara and Cinta Larga. Indigenous researchers were trained and conducted surveys in the villages of the Aripuanã and Arara Indigenous Lands of Rio Branco. A series of participatory workshops were also held to gather information, for example Ethno-mapping workshops. The study findings were shared through workshops with Indigenous Communities before the report was finalized. As previously mentioned, Nexa implements a complaint register guided by Nexa’s Order and Complaint Procedure. When asked if there were any complaints, issues or concerns raised specifically by Indigenous People or Communities, Nexa responded that at the time of writing this report, there were no records of such complaints. No specific information was available on recent engagement in 2019 or 2020 with Indigenous Communities at the time of writing this report, however, Nexa has indicated that progress has been made with regard to agreements with Indigenous People and the mitigation of environmental impacts on these communities. IMPACT AVOIDANCE AND MINIMIZATION The Project made efforts to reduce potential environmental and social impacts. Various adjustments were made to the Project such as the use of underground mining methods as opposed to open pit mining which was initially considered and using some of the tailings for backfill underground instead of depositing all of the tailings on surface. The overall footprint was optimized and efforts were made to place infrastructure in areas already affected by anthropogenic activities. IDENTIFICATION AND ASSESSMENT OF POTENTIAL IMPACTS ON INDIGENOUS LANDS AND COMMUNITIES As mentioned above, in 2018 Nexa commissioned a study on the Indigenous Component of the Indigenous Lands Aripuanã and Arara do Rio Branco, within the framework of the Environmental Licensing Process of the Aripuanã Mining Project (Comtexto, September 2018). The objective of the study was to assess the environmental and socio-cultural impacts arising from the Project on the communities of the Arara and Cinta Larga Indigenous People who inhabit the Arara Indigenous Lands of Rio Branco and Aripuanã. The resultant report describes: Study methodology and activities Environmental characterization of Indigenous Lands and Communities |
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Socio-cultural characterization of Indigenous Lands and Communities Social, political, and economic organization of the Indigenous Communities Characterization of the environmental and social impacts Alternatives assessment Monitoring, control, mitigation, and compensation measures The study methods were developed based on a ToR issued by National Indian Foundation (FUNAI) and through consultation with the Indigenous Communities of Arara and Cinta Larga. Desktop research was followed with primary data collection in the field. Indigenous researchers were trained and conducted surveys in the villages of the Aripuanã and Arara Indigenous Lands of Rio Branco. A series of participatory workshops were also held to gather information, for example Ethno-mapping workshops. The study findings were shared through workshops with Indigenous Communities before the report was finalized. The perceptions of the Indigenous Communities on the potential impacts were specifically investigated through personal interviews, questionnaire, Ethno-mapping workshops and collective conversations. The potential impacts were identified taking into account the location of Indigenous Communities, territories and how these communities use the land for fishing, hunting, harvesting and feedback from Indigenous communities. For example, potential surface water impacts included a change in the availability of quality of water available to Indigenous Communities. The Aripuanã River is very important for the Arara because its banks are areas of traditional use for collection, fishing and harvesting. There was therefore concern among the Arara People regarding these potential impacts. The report described the river systems and concluded that the Project is situated a significant distance upstream of these communities that no surface water impacts should occur upon Ingenious territories, especially when implementing the management measures outlined in the EIA. However, management measures over and above the measures stated in the 2017 EIA were still developed. For example a “sub-program” was developed for Environmental Monitoring Control, with emphasis on water resources. There is a range of “subprograms” developed to specifically address potential Impacts on Indigenous Communities and their territories as described in Table 20-3. Detailed workplans were developed for each of the subprograms identified. Impacts on Indigenous Communities, as well as the management plans, are identified in Table 20-3. |
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TABLE 20-3IMPACTS ON INDIGENOUS COMMUNITIES AND IDENTIFIED MANAGEMENT MEASURES (COMTEXTO CONSULTING, 2018) Nexa Resources S.A. – Aripuanã Zinc Project Impact IdentifiedManagement Measures Change in the availability and quality of surface water resources Indigenous Subprogram for Environmental Monitoring and Control, focusing on surface water. Water Effluent Management Plan Recovery Degraded Area Recovery Plan. Vibration generated by blasting activities Indigenous Subprogram for Environmental Monitoring and Control Indigenous Subprogram for Communication Vibration Control and Monitoring. Increased pressure on indigenous fauna due to hunting and harvesting. Indigenous Subprogram of Environmental Monitoring and Control, focusing on wildlife. Indigenous Subprogram of Management and Territorial Protection. Indigenous Subprogram to Support Productive Activities and Indigenous Ethnic development. Fauna Connectivity Program: Creation of Conservation Units, Environmental Education, Vibration Control and Monitoring Program. Impacts on the quality of fish in Indigenous Lands due to the potential pollution of surface water. Indigenous Subprogram of Environmental Monitoring and Control, including actions for evaluation of heavy metals in fish tissues in the Branco River Indigenous Subprogram to Support Productive Activities and Indigenous Ethno-development Indigenous Subprogram of Management and Territorial Protection Water Effluent Management Plan. An increase in traffic on local roads generating nuisance and safety risks. Indigenous Subprogram for Communication. Road signaling and standardization for Project vehicles. Social ills such as an increase in prostitution, drug abuse, unwanted pregnancies, sexually transmitted disease etc. Indigenous Subprogram for Communication Indigenous Subprogram for Complementary Support to Indigenous Schools Socio-economic indicator monitoring Provide health support and epidemiological surveillance. Increased pressure on public services used by Indigenous Communities Indigenous Subprogram for Institutional Strengthening Indigenous Subprogram for Complementary Support to Indigenous Schools Socio-economic indicator monitoring Provide health support and epidemiological surveillance. Generation of expectations in Indigenous families and communities regarding jobs, and concerns regarding environmental impacts. Indigenous Subprogram for Communication. |
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Impact IdentifiedManagement Measures Intensifying pressure on cultural heritage Indigenous Subprogram for Institutional Strengthening Indigenous Subprogram for Complementary Support to Indigenous Schools Indigenous Subprogram for the protection of Indigenous Cultural Resources. Pressure on the organization and socio-political representativeness of Indigenous People Indigenous Subprogram for Institutional Strengthening. Economic “slowdown” of Indigenous families and communities upon mine closure Indigenous Subprogram for Communication Indigenous Subprogram for the protection of Indigenous Cultural Resources. Intensification of territorial pressure on Indigenous Lands and their natural resources Indigenous Subprogram for Communication Indigenous Subprogram for Institutional Strengthening Indigenous Subprogram for Territorial Protection and Management. Concern regarding the fate of archeological resources in the Project area. Program of Management of Archaeological, Historical, Cultural and Ethno-archaeological Heritage. Indigenous Subprogram for the monitoring of archaeological prospecting. There are general programs for training and development of entrepreneurs which the 2018 report indicates will apply to Indigenous Communities, however, there does not seem to be preferential hiring, training and development of Indigenous People specifically. As previously mentioned, Nexa has provided a lengthy list of social initiatives implemented for the Project during 2019 and 2020. Specific initiatives or programs directed at Indigenous Communities follow on from the 2018 study which identified management actions. This shows progress in implementing the management measures identified. The relevant social initiatives include: Supporting productive activities and Indigenous Ethno-development Institutional strengthening program Indigenous cultural protection program Indigenous school education program Indigenous health program Protection of cultural resources Management and territorial protection Indigenous communications program |
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When considering the United Nations Declaration of the Rights of Indigenous People, the Project is not expected to infringe on these rights according to the documentation reviewed. It should, however, be noted that SLR does not have information on potential historical claims on the Project area by Indigenous People. CULTURAL HERITAGE Archaeological studies performed in the direct and indirect area of influence of the Project showed no archaeological remains. This included site surveys in the direct and indirect areas of influence as reported in the 2017 EIA. It was noted that, additional studies would be performed to confirm these findings. In February 2019 Nexa documented the steps taken to obtain the First Installation Licence with respect to Archeological, historical and cultural heritage. When asked specifically about heritage resources, Nexa responded that all the existing archaeological sites in the Project area have been mapped, demarcated for protection, and registered under guardianship with the responsible national agency (IPHAN). It is noted, however, that there is no record of a Chance Find Procedure developed or implemented on site. The Project is not expected to make use of cultural resources. MINE CLOSURE REQUIREMENTS A Conceptual Mine Closure Plan was developed in October 2018. The main objective of the plan is to present proposals and solutions to be implemented before, during and after mine closure in order to avoid, eliminate or minimize long-term environmental liabilities and possible future obligations. The plan was submitted to SEMA for approval both in the EIA phase and in the application for the Implementation Licence. Update plans with greater level of detail will have to be prepared in the future to meet requirements of the Operation Licence and environmental licences. No specific frequency for submission and review of updated plans is defined in the Brazilian legislation. However, Nexa has developed an internal standard for mine closure that defines stages for preparation of the Mine Closure Plan updates (standard PG-SUS-GMA-003-PT). |
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The current plan provides the minimum requirements for the effective planning of mine closure activities, including the necessary provisioning of resources. The plan identifies three key phases: Pre-closure Phase:period of two years before the start of decommissioning and execution of works and rehabilitation work, when execution plans should be prepared. Closure Phase: decommissioning period and execution of works. Post-closure Phase: period of environmental stabilization, monitoring and verification of physical, biological and socioeconomic stability, including continuous maintenance activities. For this phase, an initial period of five years after the end of the previous phase is adopted for the structures to be decommissioned, and this period may be prolonged if necessary. It is emphasized that the water dam will have a longer monitoring period, estimated at 10 years after closure. The plan provides a detailed outline of the legal framework for closure planning within mining law and environmental law. Municipal legislation was also considered. The plan includes: Closure objectives Applicable legal requirements Socio-economic aspects Alternatives considered and the selection of future land use Current environmental and social conditions Identification of environmental and social impacts at closure Conceptual plan for closure Actions and monitoring programs for post-closure Closure cost estimate Some of these aspects are discussed in more detail below. CLOSURE ALTERNATIVES CONSIDERED Four alternatives of future use of the area were evaluated (SETE, 2018): Alternative A - Integral Protection Conservation Unit: Most infrastructure will be removed; contaminated soils will be treated where required and the area will be rehabilitated and re-vegetated with native plant species. Minimal infrastructure remaining for use of safety and maintenance personnel for the required post-closure activities. The area will become a Conservation Unit and an agreement will be put in place with a public institution for the management of the Conservation Unit. |
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Alternative B - Sustainable Use Conservation Unit + Technical School for Biodiversity Conservation and Development of Amazonian Communities: As with alternative A, most infrastructure will be removed; contaminated soils will be treated where required and the area will be rehabilitated and re-vegetated with native plant species and a Conservation Unit established and maintained by a public institution. However, some infrastructure will be retained for the development of a technical school for the local communities. This includes the administrative offices and some electrical infrastructure. Alternative C - Industrial District + Industrial Technical School: Most infrastructure will be removed and rehabilitated, but some infrastructure will be retained for the development of an industrial technical school and an industrial district. The administrative offices and some electrical infrastructure will remain, part of the processing plant (without crushers and equipment), support sheds and workshops as well as the sewage treatment plant and water supply dam will continue to operate to support these activities. Alternative D - Agro-industrial District + Agricultural Technical: Similar to alternative C but the infrastructure will be used for developing an agricultural technical school and an agro-industrial district. The administrative offices and some electrical infrastructure will remain, part of the processing plant (without crushers and equipment), support sheds, and workshops as well as the sewage treatment plant and water supply dam will continue to operate to support these activities. These alternatives are being evaluated by Nexa, however, for the time being, all of the alternatives are being considered and have been costed for in the financial closure costing. The costing is provided later in this section. CONCEPTUAL PLAN FOR CLOSURE A summary of pre-closure, closure and post-closure activities for all of the closure alternatives is provided in Table 20-4. |
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TABLE 20-4 SUMMARY OF PRE-CLOSURE, CLOSURE AND POST-CLOSURE ACTIVITIES (SETE, 2018) Nexa Resources S.A. – Aripuanã Zinc Project Infrastructure/ComponentPre-closure (preparation for decommissioning) ClosurePost-closure Underground mine (planned to stop production in 2044) Reassessment of specific environmental impacts resulting from the closure of the underground mine. Plan for removal of ventilation structures, pumping and recirculation/ treatment of water and electrical system. Securing the access openings and the ventilation wells. Disassembly of surface support structures Removal of ventilation structures, pumping and recirculation/ treatment of water and electrical system. Geochemical monitoring Hydrogeological monitoring Solid waste management. Support facilities on surface e.g. offices, maintenance workshops, fuel station etc. Investigate soil contamination in the workshop and fuel station areas. Plan for disassembly, demolition and disposal of structures. Execution of electrical, hydraulic and mechanical disassembly and pipe networks Transport and storage of materials and equipment Partial demolition of concrete structures Soil decontamination, if necessary Topographic regularization of the area i.e. sloping of the area Geochemical monitoring Monitoring of revegetation Monitoring of air quality Monitoring of soil erosion Solid waste management. Water dam Two alternatives for future uses for water dam were evaluated: Maintenance of the dam for use of the Agro-industrial District Removal and recovery of the reservoir area. Study for the rehabilitation and revegetation of the area. For alternative 2: Emptying of the reservoir and removal of retaining structures Removal of hydraulic system and spillway Surface sloping and rehabilitation and revegetation of the area with grass species and native tree and shrub. Monitoring of revegetation Monitoring of soil erosion www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 20-35 |
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Infrastructure/ComponentPre-closure (preparation for decommissioning) ClosurePost-closure Processing plant Investigate soil contamination Plan for the disassembly, demolition and disposal of structures, with quantitative survey of structures and equipment for the establishment of reuse and commercialization actions. Execution of electrical, hydraulic and mechanical disassembly and pipe networks Transportation and storage of materials and equipment Partial demolition of the concrete structures of the plant Soil decontamination if necessary. Floors, drainage systems and building facilities and some sheds for use in the industrial district should be maintained. The water treatment plant, the power substation, the solid waste storage shed and the laboratory should also be maintained for use in the industrial district. Geochemical monitoring Monitoring of soil erosion Solid waste management. Administrative facilities, consisting of offices, restaurant, medical service and warehouse, sanitary effluent treatment plant. Planned for use after closure by the district. None. Maintenance of facilities for use of the industrial district. Topsoil stockpile Evaluate the topsoil conditions for its use in rehabilitation. The stored material will be removed for the rehabilitation of other areas After the removal of the material, the area will be rehabilitated and revegetated with the implantation of grasses and native tree and shrub species Monitoring of revegetation Waste rock dump or pile Studies and geotechnical evaluation considering the potential for acid drainage generation. Surface drainage and sediment containment design for final dump configuration Cover with a layer of waterproof compacted clay with a thickness of 0.4 meters. Implement surface drainage devices Implement a sediment containment system, if necessary Implement a passive water treatment system, if necessary Revegetation. Geochemical monitoring www.rpacan.com Monitoring of revegetation Monitoring of erosion. Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 20-36 |
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Infrastructure/ComponentPre-closure (preparation forClosurePost-closure decommissioning) Tailings dam Studies and geotechnical evaluation considering the potential for acid drainage generation. Surface drainage and sediment containment design for final dump configuration Cover with a layer of waterproof compacted clay with a thickness of 0.9 meters. Implement surface drainage devices Implement a sediment containment system, if necessary Implement a passive water treatment system, if necessary Revegetation. Geochemical monitoring Geotechnical monitoring Monitoring of revegetation Monitoring of erosion. Access roads Planned for use after closure by the district. Assess the adequacy of surface drainage and sediment containment systems. The main access routes should be maintained for the activities of the district Unused roads must be cleared and rehabilitated. Monitoring of revegetation. Previously mined areas on the banks of the Maranhão stream in the Area of the Aripuanã Project (legacy liability) A confirmatory research program will be drawn up on the potential for soil and water contamination. www.rpacan.com To be determinedTo be determined Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 20-37 |
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ACTIONS AND MONITORING PROGRAMS The identified management actions and programs are as follows (SETE, 2018): Geochemical Monitoring Actions and Programs Geotechnical Monitoring Program Monitoring of Water and Liquid Effluent Quality Program for the Control of Atmospheric Emissions and Environmental Noise (during decommissioning) Solid Waste and Hazardous Products Management (during decommissioning) Erosive Processes and Silting Process Control Program Degraded Areas Recovery Plan Program of Monitoring of Flora and Fauna in Areas under Rehabilitation Stakeholder engagement program Socio-economics Monitoring Program Local Manpower Qualification Program Involvement Program for Interested Communities (Community Strengthening) Stakeholder Engagement Programme including Indigenous Programs Closure Socio-Environmental Performance Monitoring Program Monitoring aspects relevant to the decommissioning of the water supply dam CLOSURE COST ESTIMATE Detailed cost sheets are provided in the Conceptual Closure Report which assumed that the mine will operate from 2020 to 2044 and that some post-closure activities will be carried out by the year 2054. The costs were estimated for the various future land use alternatives evaluated as follows (SETE, 2018): Alternative A - Integral Protection Conservation Unit: US$123,793.52 Alternative B - Sustainable Use Conservation Unit + Technical School for Biodiversity Conservation and Development of Amazonian Communities: US$109,141.27 Alternatives C and D Industrial District + Industrial Technical School / Agro-industrial District + Agricultural Technical: US$102,263.04. A financial assurance was provided by Nexa consistent with the internal Corporate Policy PC-COP-GCT-022-EN that establishes general guidelines for decommissioning considering the Asset Retirement Obligation (ARO) procedure and Environmental Liabilities. The ARO is an accounting procedure that requires companies to recognize the fair value of future obligations for the dismantling and removal of long-lived assets, in order to ensure their balance sheets are more accurate. From an environmental perspective, they refer to future obligations to |
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restore/recover the environment to ecological conditions that are similar to those existing before the start of the project or activity. In cases where it is impossible to return to the pre-existing conditions, there is an obligation to carry out compensatory measures to be agreed with the relevant entities. |
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21 CAPITAL AND OPERATING COSTS CAPITAL COSTS PRE-PRODUCTION CAPITAL Pre-production capital costs were estimated by Nexa using a combination of contracts already awarded (the greater part of the commitments), quotations, and factored estimates. A new baseline capital cost estimate was completed in August 2020, with an estimated accuracy of ±5% and a base date of July 2020. The breakdown of sources for the cost estimate is: •Project commitments – 75% of direct capital costs •Costs provided by Nexa – 17% of direct capital costs •Contingency – 3% of direct capital costs •Quotes provided by Nexa – 3% of direct capital costs •Allowances – 2% of direct capital costs Costs were estimated in Brazilian reais, with 96% of the estimate originating in this currency, and 4% of costs originating in US$, a conversion rate of R$5.16:US$1.00 was used. Upon completion of the capital cost re-baseline in Q3 2020, total capital costs in Brazilian reais were converted to US$ for economic evaluation using an exchange rate of R$5.25: US$1.00. Pre-production capital costs remaining totalling US$228.2 million are summarized in Table 21-1. |
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TABLE 21-1PRE-PRODUCTION CAPITAL COST ESTIMATE Nexa Resources S.A. – Aripuanã Zinc Project Contingency comprises 7.6% of direct and indirect capital costs, which RPA considers to be reasonable for the current stage of the Project. In the second half of 2020 US$121 million will have been spent for a total of $318 million spent up to the end of 2020. SUSTAINING CAPITAL Sustaining capital was estimated by Nexa, with the majority of the costs consisting of mine development and mobile equipment. Sustaining capital is summarized in Table 21-2. TABLE 21-2SUSTAINING CAPITAL COST ESTIMATE Nexa Resources S.A. – Aripuanã Zinc Project AreaCategoryUnitsSustaining Costs Closure costs are estimated at an additional US$19.94 million. |
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CONSTRUCTION PROGRESS The Project schedule has been impacted by internal and external factors leading to the estimated capital costs of the Project increasing to US$547 million compared to US$392 million estimated in the feasibility study. Cost increases and schedule delays resulted primarily from, among other factors: Delays in detailed engineering and outcomes of detailed engineering resulting in increases in quantities including earthworks and construction materials, investment in mine development, consumables, and spare parts, among others; Additional infrastructure services due to issues experienced during earthworks activities; Additional scope such as new equipment and infrastructure items in the process plant and in the tailings dry stack piles; Increase in third-party services; Upgrades at the Dardanelos electrical substation; Logistics constraints on the upgrade of the Aripuanã river bridge; The COVID-19 pandemic. Capital costs up to 2Q20 amounted to US$201 million. Nexa forecasts that an additional US$117 million will be incurred in 2H20, US$227 million in 2021, and US$1 million in 2022, totalling US$547 million. An additional US$201 million of sustaining capital is estimated over the LOM, which includes US$66 million in mine development and US$20 million in mine closure costs. The remaining capital will be provided by Nexa’s current cash position, future cash generation, and a long-term loan agreement with BNDES of approximately US$140 million that matures in 2040. Actions undertaken by Nexa to address capital cost and schedule issues and mitigate further risk include: Reorganization of the project management team and added resources Revisions to the scope of key contractors Replacement of the Engineering, Procurement and Construction Management (EPCM) team by an Integrated Owners Team (IOT) to improve communication with all stakeholders and ensure better control of the Project. Current status: The scope definition has been revised and fixed. 99% of detailed engineering has been completed. |
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All of the long-lead items and critical packages were awarded in 2019/2020 (80% of procurement has been completed). 70% of long-lead equipment has been delivered to site (including the SAG mill, vertical mills and ball mill, crushers, flotation columns, flotation cells, and thickeners). 100% of construction packages have been awarded and renegotiated, taking into consideration new quantities and scope changes. All permits have been obtained and all the environmental programs are in place. Overall Project physical progress reached 51.4% at the end of August 2020 and is advancing according to the updated plan. The Project schedule and capital costs are subject to the successful execution of the updated project plan. COVID-19 impacts have been incorporated into the updated schedule and the revised capital cost estimate based on current conditions. Potential additional impact on the Project’s current schedule and estimated capital costs will continue to be evaluated. OPERATING COSTS Operating costs, averaging US$73 million per year at full production, were estimated for mining, processing, and G&A. Operating cost inputs such as labour rates, consumables, and supplies were based on Nexa operating data. A summary of operating costs is shown in Table 21-3. TABLE 21-3 OPERATING COST ESTIMATE Nexa Resources S.A. – Aripuanã Zinc Project |
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22 ECONOMIC ANALYSIS An after-tax Cash Flow Projection has been generated from the LOM production schedule and capital and operating cost estimates, and is summarized in Table 22-1. A summary of the key criteria is provided below. ECONOMIC CRITERIA REVENUE • LOM processing of 23.5 Mt, grading 3.7% Zn, 1.4% Pb, 0.3% Cu, 34 g/t Ag and 0.3 g/t Au. • LOM average metallurgical recovery of 89% Zn, 83% Pb, 71% Cu, 75% Ag and 67% Au. • LOM average metal payable of 85% Zn, 95% Pb, 96% Cu, 83% Ag and 83% Au. • LOM payable metal of 713 kt Zn, 251 kt Pb, 41 kt Cu, 16,654 koz Ag and 131 koz Au. • LOM metal prices derived from Nexa’s Internal Projection forecasts converging on long-term prices of US$1.11/lb Zn, US$0.87/lb Pb, US$3.01/lb Cu, US$16.87/oz Ag, and US$1,500/oz Au from 2026 onwards. • All revenues are received in US$. • Total gross revenue of US$3,028 million. • Total offsite treatment, transportation, and refining charges of US$422 million. • Total royalties of US$113 million. • Net revenue of US$2,541 million. • Average unit net revenue of US$94/t processed. • Revenue is recognized at the time of production. COSTS • Mine life: 11 years. • LOM production plan as summarized in Table 16-4. • Pre-production capital remaining totals US$228 million from 2021 onward. • Pre-production capital expected to be spent by the end of 2020 (since 2018) totals US$318 million, US$121 million of which will be spent in the second half of 2020. • Sustaining capital over the LOM totals US$201 million. • Average operating cost over the mine life is US$34.35/t processed.Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 22-1 |
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Costs were estimated in Brazilian reais (R$) at an exchange rate of R$4.80:US$1.00. The cash flow has incorporated an increased exchange rate compared to the long-term forecast exchange rate of R$3.67:US$1.00 that was assumed during the design process. TAXATION AND ROYALTIES RPA has relied on a Nexa taxation model for calculation of income taxes applicable to the cash flow. |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 22-3 TABLE 22-1 AFTER-TAX CASH FLOW SUMMARY Aripuanã Project Cash Flow Summary InputsUNITSTOTAL Year 2 2020 Year 3 2021 Year 4 2022 Year 5 2023 Year 6 2024 Year 7 2025 Year 8 2026 Year 9 2027 Year 10 2028 Year 11 2029 Year 12 2030 Year 13 2031 Year 14 2032 Year 15 2033 Year 16 2034 MINING |
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www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 22-4 |
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Aripuanã ProjectCash Flow Summary Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Year 11Year 12Year 13Year 14Year 15Year 16 CAPITAL COST Initial Capital Cost InputsUNITSTOTAL202020212022202320242025202620272028202920302031203220332034 MiningUS$ '000 Plant & InfrastructureUS$ '000 Total Direct CostUS$ '000 EPCM / Owners / Indirect CostUS$ '000 Subtotal CostsUS$ '000 $ 92,264 $ $ 280,391 $ $ 372,655 $ $ 157,818 $ $ 530,473 $ 33,234 $ 110,559 $ 143,793 $ 48,723 $ 192,516 $ 29,664 $ 115,210 $ 144,874 $ 66,154 $ 211,027 $ 0 6 6 1,134 1,140 ContingencyUS$ '000 $ 16,040 $ - $ 16,040 $-(=) TOTAL Initial CapitalUS$ '000 Operating Capital Cost $ 546,513 $ 192,516 $ 227,067 $ 1,140 Mine DevelopmentUS$ '000 $ 65,772 $-$- $ 8,505 $ 10,653 $ 11,477 $ 8,229 $ 11,225 $ 5,373 $ 4,873 $ 4,337 $ 981 $ 119 $ - $-$- Sustaining infrastructureUS$ '000 $ 115,679 $-$ - $23,793 $ 13,259 $ 22,742 $ 3,747 $ 11,676 $ 12,882 $ 4,354 $ 11,440 $ 8,955 $ 2,309 $ 523 $ - $-Closure and OtherUS$ '000 $ 19,940 $-$- $ - $-$ - $-$ - $-$- $ - $3,226 $ 2,618 $ 2,727 $ 8,413 $ 2,956 Operational Working CapitalUS$ '000$ - $-$- $ 9,606 $ 3,681 $ 1 $592 $ (2,199) $ 370 $ 209 $ (1,389) $ (525) $ 829 $ (1,366) $ (9,808) $-(=) TOTAL Operating Capital CostUS$ '000 $ 201,391 $-$ - $41,903 $ 27,592 $ 34,219 $ 12,568 $ 20,701 $ 18,626 $ 9,436 $ 14,388 $ 12,636 $ 5,875 $ 1,883 $ (1,394) $ 2,956 CASH FLOWNPV (+) RevenuesUS$ '000 $ 1,593,815 $-$ - $203,663 $ 273,762 $ 274,119 $ 286,072 $ 243,093 $ 249,277 $ 253,771 $ 226,744 $ 217,168 $ 228,260 $ 198,018 $-$- ( - ) RoyaltiesUS$ '000 ( - ) Mining CostsUS$ '000 ( - ) Processing CostsUS$ '000 ( - ) G&AUS$ '000 ( - ) Selling ExpensesUS$ '000 $ 67,301 $-$ $ 219,878 $-$ $ 183,777 $-$ $ 81,756 $-$ $ 196,385 $-$ - $8,526 $ - $35,657 $ - $22,395 $ - $13,220 $ - $24,088 $ 11,278 $ 34,828 $ 28,394 $ 13,333 $ 32,901 $ 11,303 $ 34,803 $ 29,470 $ 13,548 $ 32,671 $ 12,081 $ 37,374 $ 28,704 $ 13,792 $ 30,486 $ 10,197 $ 37,346 $ 28,818 $ 13,152 $ 30,409 $ 10,442 $ 36,425 $ 29,563 $ 12,612 $ 31,003 $ 10,859 $ 31,932 $ 30,512 $ 12,781 $ 34,195 $ 9,709 $ 33,034 $ 30,465 $ 12,431 $ 31,244 $ 9,641 $ 34,322 $ 29,481 $ 12,482 $ 27,667 $ 9,969 $ 26,649 $ 29,978 $ 9,575 $ 30,577 $ 8,636 $-$- 18,278 $-$- 25,181 $-$- 6,926 $-$- 26,126 $-$- (=) EBITDAUS$ '000 $ 844,717 $ - $ (14,586) $ 99,262 $ 153,027 $ 152,326 $ 163,634 $ 123,169 $ 129,232 $ 133,491 $ 109,860 $ 103,575 $ 121,511 $ 112,870 $-$- ( - ) Initial Capital (net of taxes)US$ '000 $ 205,602 $ - $ 213,670 $ 1,073 $-$ - $-$ - $-$- $ - $-$ - $-$ - $-( - ) Sustaining Capital (net of taxes)US$ '000 $ 107,813 $-$ - $28,138 $ 20,832 $ 29,811 $ 10,433 $ 19,951 $ 15,905 $ 8,039 $ 13,745 $ 8,656 $ 2,115 $ 456 $ - $-( - ) Closure and OtherUS$ '000$ 7,283 $-$- $ - $-$ - $-$ - $-$- $ - $3,226 $ 2,618 $ 2,727 $ 8,413 $ 2,956 ( +-) Operational Working CapitalUS$ '000 $ -6,352 $-$- $ (9,606) $ (3,681) $ (1) $ (592) $ 2,199 $ (370) $ (209) $ 1,389 $ 525 $ (829) $ 1,366 $ 9,808 $-(=) Pre-Tax CashflowUS$ '000 $ 517,668 $ - $ (228,256) $ 60,446 $ 128,515 $ 122,514 $ 152,609 $ 105,418 $ 112,958 $ 125,243 $ 97,504 $ 92,218 $ 115,949 $ 111,054 $ 1,394 $ (2,956) ( - ) Income TaxUS$ '000 $ 79,452 $-$- $ 4,575 $ 13,947 $ 13,375 $ 14,893 $ 8,265 $ 12,225 $ 12,939 $ 9,590 $ 8,540 $ 11,519 $ 32,995 $ - $-( - ) PIS/COFINSUS$ '000 ( - ) ICMSUS$ '000 $ 64,583 $ $ 60,671 $ 7,475 $ 4,700 $ 9,532 $ 6,491 $ 7,449 $ 7,320 $ 7,023 $ 7,437 $ 8,020 $ 7,957 $ 6,185 $ 7,252 $ 7,161 $ 7,698 $ 6,735 $ 7,494 $ 5,659 $ 6,770 $ 6,322 $ 7,140 $ 5,827 $ 6,937 $ 4,604 $ 5,901 $ 3,415 $-$- 4,476 $-$- (+) Tax RecoveryUS$ '000 $ 57,010 $-$- $ 4,575 $ 13,947 $ 13,375 $ 14,893 $ 8,174 $ 7,053 $ 6,224 $ 6,390 $ 6,126 $ 5,218 $ 4,004 $-$- (=) After-Tax CashflowUS$ '000 $ 369,972 $ (12,175) $ (244,279) $ 45,676 $ 114,055 $ 106,538 $ 139,172 $ 90,467 $ 93,557 $ 106,099 $ 80,843 $ 77,040 $ 99,143 $ 74,173 $ 1,394 $ (2,956) 495,90850,092 $0.54 PROJECT ECONOMICSperiod-0.50.51.52.53.54.55.56.57.58.59.510.511.512.513.5 Pre-Tax Pre-tax IRR%45.0% Pre-tax NPV at 7.82% discounting8.00% US$ '000$541,689 $ Pre-tax NPV at 9.00% discounting9.00% US$ '000$503,244 $ Pre-tax NPV at 10.00% discounting10.00% US$ '000$467,658 $ - $ (219,640) $ - $ (218,630) $ - $ (217,634) $ 53,855 $ 53,116 $ 52,393 $ 106,021 $ 103,606 $ 101,268 $ 93,584 $ 90,614 $ 87,763 $ 107,938 $ 103,552 $ 99,383 $ 69,037 $ 65,625 $ 62,410 $ 68,495 $ 64,513 $ 60,794 $ 70,320 $ 65,623 $ 61,279 $ 50,690 $ 46,870 $ 43,370 $ 44,391 $ 40,669 $ 37,290 $ 51,679 $ 46,912 $ 42,623 $ 45,831 $ 41,222 $ 37,112 $ 533 $ 475 $ 424 $ (1,046) (923) (816) After-Tax After-tax IRR%31.9% Pre-tax NPV at 7.82% discounting8.00% US$ '000$387,499 Pre-tax NPV at 9.00% discounting9.00% US$ '000$355,548 Pre-tax NPV at 10.00% discounting10.00% US$ '000$325,933 $ (12,653) $ (235,057) $ $ (12,711) $ (233,977) $ $ (12,769) $ (232,911) $ 40,696 $ 40,138 $ 39,592 $ 94,092 $ 91,949 $ 89,874 $ 81,381 $ 78,797 $ 76,318 $ 98,434 $ 94,435 $ 90,633 $ 59,246 $ 56,318 $ 53,559 $ 56,731 $ 53,433 $ 50,353 $ 59,571 $ 55,592 $ 51,912 $ 42,028 $ 38,861 $ 35,959 $ 37,084 $ 33,975 $ 31,152 $ 44,189 $ 40,113 $ 36,445 $ 30,611 $ 27,532 $ 24,787 $ 533 $ 475 $ 424 $ (1,046) (923) (816) www.rpacan.com Nexa Resources S.A. – Aripuanã Zinc Project, Project #3252 Technical Report NI 43-101 – November 17, 2020 Page 22-5 Regular Payback (after start-up)years3.0--1.01.01.0----------1/1/2022 Cumulative After-Tax CashflowUS$ '000(19,597) (263,876)(218,199)(104,144)2,394141,566232,032325,590431,689512,532589,572688,714762,887764,281761,325 Discounted Payback (after start-up)years3.3--1.01.01.00.3---------Dicounted CasflowUS$ '000(12,711) (233,977)40,13891,94978,79794,43556,31853,43355,59238,86133,97540,11327,532475(923) Cumulative discounted CashflowUS$ '000(21,170) (255,146)(215,009)(123,059)(44,262)50,173106,490159,923215,515254,376288,351328,464355,996356,471355,548 |
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CASH FLOW ANALYSIS Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals US$370 million over the mine life, and simple payback occurs 3.0 years from the start of production. The Net Present Value (NPV) at a 9% discount rate is $356 million, and the Internal Rate of Return (IRR) is 31.9%, not considering capital expenditures prior to 2021. SENSITIVITY ANALYSIS Project risks can be identified in both economic and non-economic terms. Key economic risks were examined by running cash flow sensitivities: Metal price Head grade Metallurgical recovery Operating costs Capital costs IRR sensitivity over the base case has been calculated for a variety of ranges depending on the variable. The sensitivities are shown in Figure 22-1 and Table 22-2. |
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FIGURE 22-1PRE-TAX SENSITIVITY ANALYSIS EXAMPLE $700 After-Tax NPV at 9% Discount Rate (US$ millions) $500 $400 $300 $200 $100 Head Grade Recovery Metal Price Exchange Rate Operating Cost Capital Cost $0 0.6000.7000.8000.9001.0001.1001.2001.300 Percent Change From Base Case |
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TABLE 22-2SENSITIVITY ANALYSES Nexa Resources S.A. – Aripuanã Zinc Project Case Case Head Grade (Zn) % Zn 2.9 3.3 3.7 4 4.4 Overall Recovery (Zn) % 80.2 84.6 89.1 90.9 92.7 Metal Prices (Zn) US$ / lb Zn 1.01 1.13 1.26 1.38 1.51 Exchange Rate R$/US$ 3.63 4.27 4.77 5.27 5.78 Operating Costs US$/t 32.63 33.49 34.35 36.93 39.5 Capital Cost US$ millions 332 341 349 376 402 Adjustment Factor Head Grade (ZnEq) % 80 90 100 110 120 Overall Recovery % 90 95 100 102 104 Metal Prices (Zn) % 80 90 100 110 120 Exchange Rate % 76 90 100 111 121 Operating Costs % 95 97.5 100 107.5 115 Capital Cost % 95 97.5 100 107.5 115 Post-Tax NPV @ 9% Head Grade (ZnEq) US$ millions 84 225 356 476 595 Overall Recovery US$ millions 240 299 356 378 400 Metal Prices (Zn) US$ millions 39 206 356 498 641 Exchange Rate US$ millions 8 236 356 447 524 Operating Costs US$ millions 376 366 356 324 293 Capital Cost US$ millions 375 365 356 325 291 Low Case Mid-Low Base Case Mid-High High Case For head grade, recovery, and metal prices, factors were applied to all metals in the various categories, however, in Table 22-2, values for zinc are shown because it provides the most revenue. The Project is most sensitive to changes in metal prices, and least sensitive to capital and operating costs. |
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ADJACENT PROPERTIES RPA is not aware of any significant deposits or properties adjacent to the Aripuanã Project. |
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OTHER RELEVANT DATA AND INFORMATION No additional information or explanation is necessary to make this Technical Report understandable and not misleading. |
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INTERPRETATION AND CONCLUSIONS RPA offers the following conclusions for each area: GEOLOGY AND MINERAL RESOURCES The Aripuanã deposits are located within the central-southern portion of the Amazonian Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate. The Aripuanã polymetallic deposits are typical VMS deposits associated with felsic bimodal volcanism. Four main elongate mineralized zones, Arex, Link, Ambrex, and Babaçú, have been defined in the central portion of the Project. Two separate material types have been identified – massive sulphide stratabound Zn-Pb mineralization, and Cu-Au bearing stringer mineralization found in the footwall of the stratabound zones. The drilling, sampling, sample preparation, analysis, and data verification procedures meet or exceed industry standard, and are appropriate for the estimation of Mineral Resources. As prepared by Nexa and adopted by RPA, the Aripuanã Measured and Indicated Mineral Resources, effective as of September 30, 2020, comprise 8.1 Mt at 2.1% Zn, 0.7% Pb, 0.3% Cu, 0.4 g/t Au, and 22 g/t Ag for 169 kt of Zn, 60 kt of Pb, 25 kt of Cu, 98 koz of Au, and 5.8 Moz of Ag. The Mineral Resources are exclusive of Mineral Reserves. Inferred Mineral Resources comprise 39.5 Mt at 3.3% Zn, 1.2% Pb, 0.3% Cu, 0.6 g/t Au, and 34 g/t Ag for 1.3 Mt of Zn, 482 kt of Pb, 131 kt of Cu, 737 koz of Au, and 43 Moz of Ag. The Mineral Resource estimate is consistent with CIM (2014) definitions as incorporated by reference into NI 43-101. Based on additional drilling completed since 2018, the Babaçú deposit has been incorporated into the Project’s Mineral Resource estimate. The deposit remains open and presents exploration potential beyond the current Mineral Resources. Limited exploration has identified additional mineralized bodies including Massaranduba to the south and Arpa to the north. MINING AND MINERAL RESERVES The deposits support a production rate of 2.2 Mtpa, producing an average of 70 kt of zinc per year (zinc equivalent of 119 kt per year, after converting other metals based on net revenue). Deposit geometry and geomechanical properties are amenable to bulk longhole mining methods, in primary/secondary or longitudinal retreat sequencing, depending on thickness. |
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As prepared by Nexa and adopted by RPA, the Aripuanã Proven and Probable Mineral Reserves, effective as of September 30, 2020, comprise 23.5 Mt at grades of 3.7% Zn, 1.4% Pb, 0.25% Cu, 0.31 g/t Au, and 34 g/t Ag, containing 859.8 kt Zn, 319.0 kt Pb, 59.7 kt Cu, 236.1 koz Au, and 25.9 Moz Ag. The Mineral Reserve estimate is consistent with the CIM (2014) definitions as incorporated by reference into NI 43-101. Dilution and extraction estimates include: Dilution – planned (captured within stope designs) and additional unplanned dilution applied as factors ranging from 5% to 15%, by mining method. RPA’s preference is to apply dilution as a hangingwall/footwall distance, rather than a global percentage (as has been done in estimating Mineral Reserves). The percentage approach applies too much dilution to larger stopes and not enough to smaller stopes. RPA reviewed the impact of this methodology and found that using percentage dilution may introduce small inaccuracies to some individual stope estimates, however, it has little impact on the overall estimate. Extraction – initial selection of resources by stope optimization and design, plus additional factors of 85% to 100%, by mining method. The stope shapes are based on optimizer output, with some editing and manual redesign. There will be opportunities to reduce planned dilution and increase extraction after infill drilling and before mining as part of the short-term planning process. The Arex, Link, and Ambrex deposits are not directly connected underground, making it difficult to share slow-moving mobile equipment efficiently. Fleet unit numbers are adequate to achieve the proposed mine production with limited sharing. MINERAL PROCESSING The results of the metallurgical test work form the basis for the current engineering design of the sequential talc, copper, lead, and zinc flotation circuit. Stringer and stratabound mineralization have been tested separately and in blends of various proportions. Different comminution results and recovery kinetics were observed during bench-scale test work for the different mineralization. The decision was initially made to process the two material types separately on a campaign basis, however, continued test work on blends indicated that acceptable recoveries and concentrate grades can be achieved when processing blended ore. Therefore, the processing strategy has been changed to one of processing blended ore as produced according to the mining schedule. Process performance is projected as: Stratabound Zinc – 89.5% recovery to Zn concentrate. Silver recovery to this concentrate will be 10%. Stratabound Lead – Variable recovery in the range of 80% to 90% with a LOM average of 84.5% to Pb concentrate. Gold and silver recoveries to this concentrate will be 20% and 55%, respectively. |
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Stratabound Copper – 67.6% to Cu concentrate. Gold and silver recoveries to this concentrate will be 50% and 20%, respectively. Stringer Copper – Variable recovery in the range of 85% to 95% with a LOM average of 86.9% recovery to Cu concentrate. Gold and silver recoveries to this concentrate will be 63% and 50%, respectively. Regression models have been developed from the test work to relate recovery to head grade for each of the metals and have been used to estimate recovery in the cash flow model for the LOM. Test work in late 2019 and early 2020 by SGS GEOSOL on composites representing ore to be processed in the first nine quarters of operation (based on the FEL3 LOM plan) confirmed that acceptable recoveries and concentrate grades could be achieved. While zinc and copper recoveries were within expected ranges, lead recovery was below expectations. However, since many of the LCT using these composites did not reach equilibrium, recoveries and concentrate grades need to be verified. Pilot plant test work is being conducted by Nexa at its Vazante Mine using blended (stratabound and stringer) bulk ore samples drawn from the ROM stockpile at Aripuanã. Results from this test work were not available at the time of writing this Technical Report. Grinding circuit simulations were conducted to evaluate the capacity of the grinding circuit when processing different ore types. The simulations indicated that throughput would be limited to 216 tph (4,730 tpd) for stringer ore and 289 tph (6,300 tpd) for stratabound ore, with throughput between these two cases for blends of stringer and stratabound ore. RPA estimated that throughput of stringer ore of up 5,000 tpd could be achieved for ore corresponding to the 75th percentile of hardness values determined during test work, rather than the higher hardness values used in the grinding circuit simulations. Talc (non-sulphide fines) removal by flotation is sometimes required prior to sequential flotation of Cu, Pb, and Zn. Copper losses to the talc concentrate can be recovered by reverse copper flotation from the talc concentrate, which will be implemented in the processing plant if required. Concentrates are expected to be generally clean without penalizable levels of deleterious elements. ENVIRONMENT Nexa reports that it has ISO systems in place and has committed to complying with all relevant legal requirements. Nexa has assessed the environmental impacts of the Project in the 2017 EIA for all Project phases, taking into account the baseline conditions. Management programs and monitoring plans were included in the EIA to mitigate the identified impacts, and further detail on these programs and plans were provided in a stand-alone Environmental Control Plan in 2018. The EIA and subsequent management plans are comprehensive in the detail they provide. Some aspects such as resource use efficiency are yet to be considered by the developing Project. |
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SOCIAL •Nexa’s developing the Project contributes positively to community well-being and development.The Project has provided assistance to the local authorities and communities in responding to the current COVID-19 pandemic. Nexa has established environmental and social management programs, as well as health and safety programs for its employees. Corporate policies, procedures, and practices are implemented in a manner consistent with relevant IFC Performance Standards. CONSTRUCTION PROGRESS •Detailed engineering is 99% complete. •Physical construction progress has been estimated by Nexa to be 51% as of the end of August 2020. •70% of long-lead equipment has been delivered to site. •Pre-commissioning and commissioning is scheduled for the second half of 2021, with ramp-up to full production starting in 2022. •Delays from the original schedule include: oDelays in completion of detailed engineering and outcomes of detailed engineering resulting in increases in quantities including earthworks and construction materials, investment in mine development, consumables, and spare parts, among others; oAdditional infrastructure services due to issues experienced during earthworks activities; oAdditional scope such as new equipment and infrastructure items in the process plant and in the tailings dry stack piles; oIncrease in third-party services; oUpgrades at the Dardanelos power substation; oLogistics constraints on the upgrade of the Aripuanã river bridge; oThe COVID-19 pandemic. COSTS AND ECONOMICS •Pre-production capital costs remaining from 2021 onward total US$228 million. •Contingency comprises 7.6% of direct and indirect capital costs. •Operating costs average US$34.35 per tonne over the LOM, with higher unit costs at the start and end when full production is not achievable. •Long-term metal prices (from 2026 onwards) are based on Nexa’s projections. Nexa’s long term price model uses multiple variables including supply (mine and refined), demand, cost drivers, capital cost, and other key elements. The long-term prices derived are in line with the consensus forecasts from banks and independent institutions and are as follows: US$1.11/lb Zn, US$0.87/lb Pb, US$3.01/lb Cu, US$1,500/oz Au, and US$16.87/oz Ag. |
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Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals US$370 million over the mine life of 11 years (including mining activities from 2022 to 2032), and simple payback occurs 3.0 years from start of production. The after-tax NPV at a 9% discount rate is $356 million, and the IRR is 31.9%. This NPV and IRR does not include capital expenditures to date. Capital costs up to 2Q20 amounted to US$201 million. Nexa has forecast expenditures of US$117 million in 2H20, US$227 million in 2021 and US$1 million in 2022, totalling US$547 million. An additional US$201 million of sustaining capital is estimated during the LOM, which includes US$66 million in mine development and US$20 million in mine closure cost. Considering capital expenditures to date, the Project’s after-tax NPV at a 9% discount rate is $27 million, and the IRR is 9.8%. |
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RECOMMENDATIONS RPA offers the following recommendations for each area: GEOLOGY AND MINERAL RESOURCES Infill areas where poorly angled drill holes are driving the geological interpretation. Investigate the use of density weighting during compositing and interpolation. Following up with additional step out drilling at Babaçú to increase the Mineral Resource. Drill the Babaçú NW Exploration Target to convert the exploration target to Mineral Resources. Continue to review minor issues with certain CRMs used in analytical quality assurance procedures. MINING Review and optimize stope shapes after infill drilling and before mining as part of the short-term planning process. Implement a rigorous grade control program during operations, to assess the impact of the various material grades and effectiveness of blending on the process recovery. MINERAL PROCESSING Confirm the recovery and concentrate grade values derived from earlier test work that have been used in project cash flow calculations by completing the ongoing pilot test work at Nexa’s Vazante Mine using bulk blended ore samples simulating the processing of stringer and stratabound material together. This test work may also provide opportunities to optimize flotation conditions to maximize recovery and concentrate quality. Verify the talc flotation circuit configuration to minimize copper losses through pilot test work at Vazante Mine. ENVIRONMENT Develop and implement a project-specific environmental policy. Revise the management plans on a regular basis and improve them where relevant based on feedback such as monitoring data or stakeholder comments. An action should therefore be specifically included in the management plans which describes how and when these plans will be revised and updated. Ensure that the environmental monitoring plans are being implemented according to the Environmental Control Plan. |
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Compare monitoring results to relevant international standards, e.g., IFC standards specified in various guideline documents, in addition to local or national applicable standards. Nexa has indicated that all third-party water users were identified, and the monitoring program was developed taking these users into account. Information should be maintained on potential sensitive receptors with respect to impacts such as dust generation, noise and third-party water surface and groundwater users so that these receptors can be monitored as relevant in order to ensure that all potential Project impacts are adequately managed. The following recommendations associated with tailings disposal are proposed for the next phase of the design: Classify the TMF in terms of the Global Tailings Standard or the Canadian Dam Association. The classification may require more conservative design criteria in terms of flood management and seismic loading. Consider the stability assessment of the individual components of the double lined system and the interface between the components in the stability analyses. In particular, the interface between the smooth side of the geomembrane and the sand leakage detection layer. Complete a deformation analysis to determine if the long-term strain of the high density polyethylene geomembrane is within acceptable limits. Implement measures to control dust generation from the slopes of the TMF and internal access roads and ramps during the dry season. Implement requirements to allow the progressive rehabilitation of the slopes. Implement deposition planning for the wet season and the associated logistical requirements for the use and management of the inflatable warehouses. Investigate the extent of the colluvial layer within the foundation of the TMF to provide a more accurate estimate of the volume of material that must be removed. Carry out an initial assessment of the stability of the capping clay layer on the intermediate bench slopes to determine if slope flattening is required for closure. Determine a source of clay with suitable quality for use as a lining and capping material. Complete a formal risk assessment. SOCIAL Nexa has conducted extensive stakeholder engagement with communities in the area, including Indigenous Communities. As the Project moves forward, Nexa should develop a stakeholder engagement plan going forward and update this plan regularly. A separate plan should be developed for engagement with Indigenous Communities going forward. The Engagement with Indigenous Communities plan should specifically determine if these stakeholders are satisfied with the risks, impacts, and management measures identified for the Project. All stakeholder engagement plans should consider the current COVID-19 pandemic in terms of how interaction with stakeholders can be achieved both effectively and safely for as long as the pandemic is a factor. |
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Revise the social management plans on a regular basis and improve where relevant, based on feedback such as monitoring data or stakeholder comments. An action should therefore be specifically included in the management plans which describes how and when these plans will be revised and updated. Clearly document the socio-economic monitoring program and methods and include benchmarks. Develop and implement site-specific occupational, health, and safety plans. Develop and implement a Chance Find procedure for heritage resources. Maintain clear records on any worker grievances or ethical violations, if not done already. Consider implementing preferential hiring, training, and development of Indigenous People specifically. COSTS AND ECONOMICS Continuously monitor costs and exchange rates and lock in costs as soon as possible to eliminate economic uncertainty. |
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REFERENCES AMEC International (Chile) S.A., 2007, Aripuanã Property NI 43-101 Technical Report Mato Grosso State. Brazil. prepared for Karmin Exploration Inc., filed on SEDAR/available at www.sedar.com (October 31, 2007). Azevedo Sette Advogados, 2017, Title Opinion – Projects Aripuanã and Caçapava do Sul. Belo Horizonte (June 14. 2017). Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2014, CIM Definition Standards for Mineral Resources and Mineral Reserves, adopted by the CIM Council on May 10, 2014. Comtexto Consultoria, 2018: Study of the Indigenous Component of the Arara Indigenous Lands Rio Branco and Aripuanã – Project Dardanelles Mining Aripuanã - Votorantim Metals / Nexa Resources. Comtexto Consultoria, 2020: Basic Environmental Plan Indigenous Component of the Indigenous Lands Arara Do Branco e Aripuanã – Aripuanã Nexa Resources/Votorantim Metals Project. Diagonal Transmormacao de Territorios 2019: Integrated Socioeconomics Plan Aripuanã Project. Engler. A., 2009, The Geology of South America. GEOLOGY Vol. IV. pp. 374-405. Galley, A.G., Hannington, M.D., and Jonasson, I.R., 2007, Volcanogenic Massive Sulphide Deposits in Goodfelloiw, W.D., ed., Mineral Deposits of Canada, A Synthesis of Major Deposit Types, District Metallogeny, the Evolution of Geological Provinces and Exploration Methods. Geological Association of Canada Mineral Deposits Division, Special Publication No. 5, pp. 141-161. Geologica Mineração e Assessoria Ltda (GeoMinAs), 2017, Estudo de Impacto Ambiental, Projecto Aripuana/MT: Mina Subterranea de Polimetalicos (Environmental Impact Study Aripuanã Project), July 2017. LCASSIS Consultoria em Recursos Minerais, 2017, Relatório de Validação das Amostras Selecionadas para Teste Metalúrgico. Projecto Aripuanã – MT, prepared for Votorantim Metais (March 2017). Mineral Processing Solutions, 2020, ESTUDO DE VARIABILIDADE DA CAPACIDADE DO CIRCUITO DE COMINUIÇÃO ARIPUANÃ PARA OS MINÉRIOS STRINGER E STRATABOUND, prepared for Nexa Resources (April, 2020). Nexa Resources S.A., 2019: Annual Report 2019. Nexa Resources S.A., 2019 Corporate Policies. RPA, 2017, Technical Report on the Aripuanã Zinc Project. Mato Grosso State. Brazil. prepared for Karmin Exploration Inc. (March 1, 2017). |
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RPA, 2017, Technical Report on the Aripuanã Zinc Project. Mato Grosso State. Brazil. prepared for VM Holding S.A. (July 31, 2017). RPA, 2018, Technical Report on the Feasibility Study on the Aripuanã Project, State of Mato Grosso, Brazil, prepared for Nexa Resources S.A., available at www.sedar.com (October, 15, 2018). SGS GEOSOL, 2017, Bench Scale Metallurgical Testwork on Drill Core Samples from the Aripuanã Project. Final Report. prepared for Votorantim Metais (February 15, 2017). SGS GEOSOL, 2018, Estudo Piloto de Flotação com Minério sulfetado de Aripuanã, prepared for Nexa Resources (February 2018) SGS GEOSOL, 2020, Geometallurgical Testwork on Quarterly Composites from the Aripuanã Project, prepared for Nexa Resources (August 2020). Simon. A., Marinho. R., and Lacroix. P., 2007: Aripuanã Property NI43-101 Technical Report. Mato Grosso. Brazil. A technical report prepared by AMEC Americas Limited for Karmin Exploration Inc. SNC-Lavalin, 2018a, Projeto Aripuanã, FEL 3, Critérios de Projeto, Dados Básicos e Critérios de Projeto Processo, CP-I721515002-0000PCD0001, Rev. 2, prepared for Votorantim Metais (May 11, 2018). SNC-Lavalin, 2018b, Projeto Aripuanã, FEL 3, Memorial Descritivo Processo, MD-I721515002-0000PCD0001, Rev. 1, prepared for Votorantim Metais (May 15, 2018). SNC-Lavalin, 2019, Projeto Detalhado – E&C, Criterios de Projeto, Dados Basicos e Criterios de Projeto Processo, prepared for Nexa Resources, 19 June 2019. SNC-Lavalin, 2019, Projeto Detalhado – E&C, Lista de Equipamentos, Equipamentos Mecanicos Rev 4, prepared for Nexa Resources, 23 January 2020 SNC-Lavalin, 2020a, Deposicao de Rejeitos – Pilha de Rejeitos 1 (Dry Tailings Stack Design), report No. 0856-001-0301-41EB-1202 Rev 1, prepared for Votorantim Metais, 9 April 2020. SNC-Lavalin, 2020b, Engenharia Detalhada Pilha de Esteril 2 – Fase 1 (Waste Rock Stockpile Design), report No. 0856-001-0303-41EB-1202 Rev 2, prepared for Nexa Resources, 3 August 2020. Soluções e Tecnologia Ambiental (SETE), 2018, Plano Conceitual de Fechamento de Mina – PFM, Aripuana MT, prepared for Nexa Resources, October 2018. Tassinari. C.C.G., Cordani. U.G., Nutman. A.P., Van Schmus. W.R., Bettencourt. J.S., and Taylor. P.N., 2010: Geochronological systematics on basement rocks from the Rio Negro-Juruena Province (Amazonian Craton) and tectonic implications. International Geology Review. Vl. 38. Issue 2. Votorantim Metais Ltda., 2015, Technical Report. FEL 2 Study. Location: Aripuanã. MT. Commodity: Zn. Pb. Cu. Rev. 00, internal report. |
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Votorantim Metais Ltda., 2016, Relatório De Recursos Minerais Projeto Aripuanã by Talita C. de O. Ferreira and Rafael Moniz Caixeta (30 December 2016). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground Excavation – Aripuanã Project – Level 1 Target Ambrex, prepared for Votorantim Metais (May 17, 2017). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground Excavation – Aripuanã Project – Sizing of Underground Excavation – Phase 1 – Target Ambrex, prepared for Votorantim Metais (June 23, 2017). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground Excavation – Aripuanã Project - Description of the Survey of News – Phase 3 – Target Ambrex, prepared for Votorantim Metais, (February 4, 2018). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground Excavation – Aripuanã Project – Phase 3 – Target Ambrex, prepared for Votorantim Metais (May 25, 2018). Walm Engineering, 2017, Geomechanical Model and Sizing of Digging Underground – Aripuanã Project – Phase 1 – Target Arex, prepared for Votorantim Metais (June 26, 2017). Walm Engineering, 2017, Geomechanical Model and Sizing of Digging Underground – Aripuanã Project – Phase 1 – Target Arex, prepared for Votorantim Metais, (June 26, 2017). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground – Aripuanã Project – Description of the Survey of News – Phase 3 – Target Arex, prepared for Votorantim Metais (February 6, 2018). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground – Aripuanã Project – Geomechanical Model – Level 3 Target Arex, prepared for Votorantim Metais (March 23, 2018). Walm Engineering, 2017, Geomechanical Model and Sizing of Underground – Aripuanã Project – Phase 3 – Target Arex, prepared for Votorantim Metais (May 28, 2018). Worley Parsons, 2017a, Projeto Aripuanã. Fase V1. Metallurgical Testwork. 7MI-0401-RL-0200PCD0804. Rev. 1. prepared for Votorantim Metais (April 26, 2017). Worley Parsons, 2017b, Projeto Aripuanã. FEL2. Basis of Design. 7MI-0401-RL-0000COR1021R01. Rev. 1. prepared for Votorantim Metais (January 19, 2017). Worley Parsons, 2017c, Projeto Aripuanã. Fase V1. Waste Management Strategy. Technical Report. 7MI-0401-RL-0300PRO0801. Rev. 5. prepared for Votorantim Metais (May 16, 2017). |
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DATE AND SIGNATURE PAGE This report titled “Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil” with an effective date of September 30, 2020 was prepared and signed by the following authors: (Signed and Sealed) Jason J. Cox Dated at Toronto, ON November 17, 2020Jason J. Cox, P.Eng. Technical Director – Canada Mining Advisory (Signed and Sealed) Sean Horan Dated at Toronto, ON November 17, 2020Sean Horan, P.Geo. Principal Geologist (Signed and Sealed) Brenna J.Y. Scholey Dated at Toronto, ON November 17, 2020Brenna J.Y. Scholey, P.Eng. Principal Metallurgist (Signed and Sealed) Luis Vasquez Dated at Toronto, ON November 17, 2020Luis Vasquez, M.Sc., P.Eng. Senior Hydrological Engineer |
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CERTIFICATE OF QUALIFIED PERSON JASON J. COX I, Jason J. Cox, P.Eng., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil” with an effective date of September 30, 2020 prepared for Nexa Resources S.A., do hereby certify that: I am Technical Director – Canada Mining Advisory, with Roscoe Postle Associates Inc., now part of SLR Consulting Ltd, of Suite 501, 55 University Ave., Toronto, ON M5J 2H7. I am a graduate of the Queen’s University, Kingston, Ontario, Canada, in 1996 with a Bachelor of Science degree in Mining Engineering. I am registered as a Professional Engineer in the Province of Ontario (Reg. #90487158). I have worked as a mining engineer for 23 years since my graduation. My relevant experience for the purpose of the Technical Report is: Review and reporting as a consultant on many mining operations and projects around the world for due diligence and regulatory requirements Engineering study work (PEA, PFS, and FS) on many mining projects around the world, including commodities such as precious metals, base metals, bulk commodities, industrial minerals, and rare earths Operational experience as Planning Engineer and Senior Mine Engineer at three North American mines Contract Co-ordinator for underground construction at an American mine I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I visited the Aripuanã Zinc Project on June 2 to 5, 2017. I am responsible for Sections 15, 16, 19, 21, and 22 to 24 and related disclosure in Sections 1, 2, 25, 26, and 27 of the Technical Report. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. I have prepared a previous Technical Report dated October 15, 2018 on the property that is the subject of the Technical Report. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1. |
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At the effective date of the Technical Report, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 17th day of November, 2020 (Signed and Sealed) Jason J. Cox Jason J. Cox, P.Eng. |
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SEAN HORAN I, Sean Horan, P.Geo., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil” with an effective date of September 30, 2020 prepared for Nexa Resources S.A., do hereby certify that: I am Technical Manager - Geology with Roscoe Postle Associates Inc., now part of SL Consulting Ltd, of Suite 501, 55 University Ave., Toronto, ON M5J 2H7. I am a graduate of Rhodes University, South Africa, in 2003 with a B.Sc. (Hons.) degree in Environmental Studies, and in 2004 with a B.Sc. (Hons.) degree in Geology. I also have a post-graduate certificate in Geostatistics from the University of Alberta, Canada. I am registered as a Professional Geologist in the Province of Ontario (Reg. #2090). I have worked as a geologist for a total of 13 years since my graduation. My relevant experience for the purpose of the Technical Report is: Geological consulting to the mining and exploration industry in Canada and worldwide, including resource estimation and reporting, due diligence, geostatistical studies, QA/QC, and database management. Geologist responsible for all geological aspects of underground mine development, underground exploration, resource definition drilling planning, and resource estimation at a gold mine in Ontario, Canada. Grade control and prospecting geologist for an alluvial diamond mining company in Angola. Experienced user of AutoCAD, Datamine Studio 3. SQL Database Administration, Visual Basic, Javascript (Datamine Studio 3), Century Systems (Fusion SQL drill hole database tools), Snowden Supervisor, X10, python, and GSLIB. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I visited the Aripuanã Zinc Project on January 30 to February 3, 2017. I am responsible for Sections 3 to 12 and 14 and related disclosure in Sections 1, 25, 26, and 27 of the Technical Report. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. I have prepared a previous Technical Report dated October 15, 2018 on the property that is the subject of the Technical Report. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1. |
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At the effective date of the Technical Report, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 17th day of November, 2020 (Signed and Sealed) Sean Horan Sean Horan, P.Geo. |
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BRENNA J.Y. SCHOLEY I, Brenna J.Y. Scholey, P.Eng., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil” with an effective date of September 30, 2020 prepared for Nexa Resources S.A., do hereby certify that: I am Principal Metallurgist with Roscoe Postle Associates Inc., now part of SLR Consulting Ltd, of Suite 501, 55 University Ave., Toronto, ON M5J 2H7. I am a graduate of The University of British Columbia in 1988 with a B.A.Sc. degree in Metals and Materials Engineering. I am registered as a Professional Engineer in the Province of Ontario (Reg. #90503137) and British Columbia (Reg. #122080). I have worked as a metallurgist for a total of 32 years since my graduation. My relevant experience for the purpose of the Technical Report is: Reviews and reports as a metallurgical consultant on numerous mining operations and projects for due diligence and regulatory requirements. Senior Metallurgist/Project Manager on numerous base metals and precious metals studies for an international mining company. Management and operational experience at several Canadian and U.S. milling, smelting and refining operations treating various metals, including copper, nickel, and precious metals. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I did not visit the Aripuanã Zinc Project. I am responsible for Sections 13 and 17, parts of Section 18 and related disclosure in Sections 1, 25, 26, and 27 of the Technical Report. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. I have had no prior involvement with the property that is the subject of the Technical Report. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1. At the effective date of the Technical Report, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 17th day of November, 2020 (Signed and Sealed) Brenna J.Y. Scholey Brenna J.Y. Scholey, P.Eng. |
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LUIS VASQUEZ I, Luis Vasquez, M.Sc., P.Eng., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, State of Mato Grosso, Brazil” with an effective date of September 30, 2020 prepared for Nexa Resources S.A., do hereby certify that: I am a Senior Hydrotechnical Engineer with SLR Consulting (Canada) Ltd. at Suite 501, 55 University Ave., Toronto, ON M5J 2H7.. I am a graduate of Universidad de Los Andes, Bogotá, Colombia, in 1998 with a B.Sc. degree in Civil Engineering. I am registered as a Professional Engineer in the Province of Ontario (Reg. #100210789). I have worked as a civil engineer on mining related projects for a total of 15 years since my graduation. My relevant experience for the purpose of the Technical Report is: Preparation of numerous environmental impact assessments for mining projects located in Canada, and Perú for regulatory approval. Preparation of multiple mine closure plans for mining projects in Canada and Perú. Preparation of several scoping, prefeasibility, feasibility and detailed design level studies for projects located in North America, South America, the Caribbean and Asia with a focus on planning, design and safe operation of water management systems and waste disposal facilities. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I did not visit the Aripuanã Zinc Project. I am responsible for Section 20 and related disclosure in Sections 1, 25, 26, and 27 of the Technical Report. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. I have had no prior involvement with the property that is the subject of the Technical Report. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1. At the effective date of the Technical Report, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 17th day of November, 2020 (Signed and Sealed) Luis Vasquez Luis Vasquez, M.Sc., P.Eng. |
