Good morning. My name is Lidia and I will be your conference operator today. At this time, I would like to welcome everyone to the Befesa Investors Presentation. After the speaker's presentation, there will be a question and answer session. To enter the queue, you can press zero one on your telephone keypad at any point during the call. I would now like to turn the call over to Mr. Rafael Pérez, Director of Investor Relations and Strategy. Please go ahead. Good morning. Welcome and thank you for attending this conference call of Befesa, where we will explain the transaction announced yesterday evening about the acquisition of American Zinc Recycling in the U.S. I am Rafael Pérez Herbert, Secretary and Investor Relations of Befesa. Today, we have with us Javier Molina, CEO of Befesa, Wolf Lehmann, CFO of Befesa, and Asier Zarraonandia Ayo, Vice President of the Steel Dust Business of Befesa. Javier will provide an overview of the transaction and the strategic rationale of the acquisition. Wolf will review the value creation and the financials in more detail. Javier will close this presentation, providing some final remarks. Finally, we will open the lines for the Q&A session. Before getting started, let me remind you that this conference call is being webcast live. You can find the link to the webcast of the AZR acquisition presentation on our website, www.befesa.com. Please consider the legal disclaimer that you can find on the last page of the presentation. Now, let me turn this call over to our CEO. Javier, please. Good morning, and thank you for attending this conference call. I'm very pleased to announce that yesterday, Befesa signed the acquisition of 100% of American Zinc Recycling, the market leader in steel dust recycling in the U.S. As a result of this transaction, Befesa will become the global leader in steel dust recycling, with a strong presence in the three main markets in the world, Europe, North America, and Asia. The acquisition is very attractive for our shareholders as it will deliver high-value creation reflected in strong earnings per share accretion, higher overall margin, and greater geographic diversification. This acquisition makes a great sense from the strategic point of view, and it has also a lot of industrial logic. AZR is the U.S. market leader in recycling steel dust, electric arc furnace steel dust, with an installed capacity of around 620,000 tons, distributed in four plants located in the eastern part of the country. Electric arc furnace is the dominant steelmaking route in the U.S., representing more than 70% of the total steel produced, driven by the highest steel scrap availability. The U.S. steel dust recycling market is quite similar to European market. It has a pretty similar size, and it is a highly regulated mature market where, similarly to Europe, the steelmakers pay a collection fee for the full environmental service provided, which includes collection, transportation, and recycling of the steel dust. For Befesa, acquiring AZR means growing in our highest margin business unit, the steel dust recycling services, which today already represents around 80% of Befesa's total EBITDA, and where we are the leader in Europe and Asia, with high strong growth potential driven by China. Growing in our highest margin business will further improve the overall profitability of the company. After the acquisition, the steel dust recycling segment will represent more than 85% of the total EBITDA of our company. The technology that AZR use to recycle steel dust is the same as the one Befesa operates, based on world-scale technology. All these aspects are translated into a low-risk acquisition. With this acquisition, Befesa becomes the global leader in steel dust recycling, with around 1.7 million tons of total steel dust recycling capacity. More importantly, a geographically diversified and balanced footprint across the three main steel dust markets in the world, Europe, Asia, and North America, across 12 recycling facilities. Also it is a transaction that creates a lot of value for our shareholders. The purchase price of the 100% of AZR is $450 million, which implies an attractive acquisition multiple of around 6x EBITDA performance for post near-term synergies. This compares with Befesa trading multiple of around 13x based on 2021 figures, which is around 2x the acquisition multiple of AZR. We are acquiring the asset at a purchase price, which is similar to the replacement cost of building the same recycling capacity in the U.S. The transaction is highly accretive for Befesa shareholders, with a strong return expected to be achieved within the first three years of combination. More than EUR 300 million of value creation, near EUR 400 million, with further upside potential and double-digit EPS accretion. In addition, we expect further upside potential in the medium term, mainly coming from capacity utilization, efficiency, and profitability improvements. There are clear and evident near-term synergies in the acquisition, as can be seen from the comparison of the EBITDA per ton of AZR and Befesa. Currently, AZR's EBITDA per ton is around EUR 100 per ton of steel dust, compared to Befesa's EUR 185 per ton, based on estimated 2021 figures. We have only estimated the most evident near-term synergies of around USD 20 million. These synergies are mainly in the operational area, but also in the commercial area as well as in the overhead cost. Once these near-term synergies are captured, the AZR's EBITDA per ton will improve to around EUR 138 per ton. Still, 40% below the Befesa's level. The funding of the transaction will be done through a combination of the issuance of new equity and debt. Yesterday evening, we completed an accelerated equity offering of 5.8 million new Befesa shares under the authorized capital. All the shares were allocated to our existing as well as new shareholders in a successful offering. The capital increase was completed yesterday at the price of EUR 56 per share, which represents a discount of 3% over the closing price of yesterday. Additionally, we will include a term loan B amount of EUR 90 million, maintaining Befesa's leverage ratio at similar levels post-acquisition. With this, the acquisition will not represent a stress in our balance sheet, and it will enable our shareholders to benefit from the value creation that the deal will generate. AZR also runs a zinc smelting business with a facility in North Carolina, centrally located between AZR's steel dust recycling assets. The smelter applies new solvent extraction technology to process Waelz oxide, also known as WOx, into Special High Grade zinc, with a capacity to produce around 140,000 tons of pure zinc per year. The plant restarted operation in 2020, and it is currently ramping up. The WOx will be purchased from AZR's steel dust recycling plants at market prices. As part of this transaction, Befesa signed an acquisition of a minority stake of 6.9% in the zinc smelting plant for a purchase price of $10 million and will secure an option for the acquisition of the remaining 93%. Upon the fulfillment of two phases, operational and financial milestone of the smelter at any time prior to December 31, 2023. The performance milestones are defined based on a combination of two parameters, conversion cost and capacity utilization, as you can see on slide 11. Upon fulfillment of milestone one, Befesa would have a cumulative stake in the smelter of 34.5%, and after the second milestone, the stake will become 100%. With this approach, we secure the price, and we will only acquire the smelter if we have full certainty of successful operations and economics, hence limiting the downside risk. The price for the acquisition of the subsequent stake is agreed, and once complete, the total purchase price of the smelter would be $145 million, representing around seven times EBITDA acquisition multiple. With this vertical integration in North America, we don't want to change the business model nor the strategy of Befesa. We just want to capture a growth opportunity in a special geography where there is under supply of pure zinc. Now, Wolf Lehmann will explain in detail the value creation of the transaction. Wolf, please. Thank you, Javier. Let me explain the key underlying financials and the value creation. Please turn to page six. On this page, we show financial metrics for Befesa steel dust recycling business at the midpoint of our 2021 guidance range, and correspondingly, AZR steel dust recycling business pro forma for 2021. For Befesa, using the midpoint for 2021, our steel dust business runs at EUR 138 million EBITDA with an electric arc furnace dust throughput of around 740,000 tons or 90% plant capacity utilization, which is equivalent to EUR 185 EBITDA per ton of EAFD throughput. Using the last 10-day share price of about EUR 58.45 per share, as of including the closing price, our trading multiple over the EUR 191 million EBITDA Bloomberg consensus is 12.5 times. On the right-hand side of the page, we show AZR pro forma for 2021 with and without the near-term synergies. The synergies I will explain in detail on the next page. Pro forma in 2021, AZR is targeting EUR 45 million EBITDA. AZR changed their capital structure, and with it, changed to more competitive zinc hedging program closer to Befesa's hedging excellence. The underlying pro forma zinc price for the zinc hedges is $2,580 per ton, same price level as Befesa's hedges for 2021, and in line with last fiev years' average zinc price, obviously much lower compared to the recent strong $2,900-$3,000 per ton market price levels. At EUR 45 million pro forma EBITDA, AZR is running at EUR 101 EBITDA per ton of throughput, which is 45% below Befesa's run rate and leaves significant opportunity to improve and drive synergies. Near term, we target EUR 70 million synergies, which results in EUR 62 million pro forma EBITDA and EUR 138 EBITDA per ton. Post near-term synergies, AZR's run rate of EUR 138 EBITDA per ton leaves further midterm room to improve towards Befesa's EUR 185 EBITDA per ton. Looking at multiples at the bottom of the page. Befesa's total group 2021 EBITDA Bloomberg consensus is EUR 191 million. This is in line with the upper end of EUR 190 million of our guidance for 2021. Using the last 10 days trading share price of EUR 58.45 as of Tuesday, 15th of June, Befesa is trading at 12.5x 2021 multiple as explained. The acquisition of AZR, including the near-term synergies, is at 6x multiple, so at around half of Befesa's multiple. In terms of value creation, taking the multiple difference of 12.5 minus 6x, so at 6.5x, and multiplying with the EUR 62 million pro forma EBITDA post near-term synergies, this results in circa EUR 400 million value creation for our shareholders, certainly bigger than EUR 300 million. Remember that the acquisition expands our core business, our steel dust business unit, which is our highest margin business unit, which ran at 33% EBITDA on average for the last three years, including the 2020 COVID burdened year. It is an excellent opportunity and highly accretive to our shareholders. Please turn to page six for a synergy walk. The near-term synergies of EUR 20 million or EUR 17 million we target to execute across three areas, as explained by Javier: operational excellence, SG&A, commercial excellence. Over the last years at Befesa, the operational excellence project we executed achieved less than two-year payback always. We plan conservatively for EUR 10 million-EUR 15 million one-time implementation cost in the first 18 months to fund the targeted EUR 70 million synergies with the first three years post-closing. Overall, we are ready to take on the steel dust recycling operations in the U.S. and are very comfortable with the targeted near-term synergies and see sizable further mid-term synergy potential. Turning to page eight, explaining funding leverage and financial considerations. On funding, we provide an overview on the left-hand side. The acquisition price is $460 million, which is $450 million for the recycling operations and $10 million for the minority 7% stake in the zinc refining operations. We are funding this in a simple and efficient way. We're using 5.9 million shares of our authorized capital and EUR 90 million is pre-approved upsizing of our term loan B. The capital increase, as mentioned by Javier, we completed successfully with the accelerated book building overnight. We have raised 5.933293 million shares at EUR 56.0 per share, representing 3% discount versus the EUR 57.9 Friday closing price. The term loan B upsizing, we're going to the market today, Thursday, we're hosting a lender call. Sorry. The lender call we're hosting tomorrow, Friday, at 11:00 A.M., asking for commitments back in about 10 days. Furthermore, please note we completed a contingent foreign exchange hedge to mitigate any foreign exchange exposure between signing and closing. We locked in an FX rate all in of 1.21 successfully ahead of yesterday's Fed update. On the right-hand side, we show the pro forma financial profile. Befesa standalone midpoint 2021 guidance is at EUR 178 million EBITDA for the total Befesa business and targeted circa EUR 408 million net debt at 2.3x leverage. Upsizing the EUR 90 million term loan B, adding the EUR 62 million pro forma EBITDA of AZR, the combined pro forma run rate is around EUR 240 million EBITDA on approximately EUR 498 million net debt, a slight leverage reduction, or roughly we target a leverage neutral acquisition. We also mentioned EPS accretion and return on invested capital in the presentation. Befesa's weighted average cost of capital, WACC, is circa 8%. Post the near-term synergies, as explained, we expect whether on a 2022 or on a 2023 basis, a solid double-digit ROIC. Very importantly, we plan to continue our dividend policy also for the combined business and post near-term synergies. With our continued same dividend policy, we do expect at or above 15%, rather at or above 20% EPS accretion in 2021 as well as 2023. Dow Jones published already on May 5th a report that Befesa is well positioned to join the MDAX. This acquisition is expected to increase our market cap further and strengthen our potential to join the MDAX in September. Overall, we carefully prepared for this transaction and plan to continue to create significant value for our shareholders. Over to Javier for the final remarks. Javier, please. Thanks, Wolf. I would like to finish highlighting that these transactions represent a great step forward for Befesa, as it will create the global leader in the steel dust recycling industry. It is important that you understand how we are transforming Befesa in the last 15 years, as we explained on slide 12. We have moved from a pure European leader to the global leader in steel dust recycling, with presence in the three main markets in the world, Europe, North America, and Asia. This global transformation will provide Befesa market diversification and exposure to different market trends, as well as accelerate volume and earning growth. 2021 is being a great milestone in the history of Befesa with the entry into major markets, China and U.S. In the U.S., a large and mature market, we are growing via M&A, which is something we have done successfully in the past. Befesa has the management capabilities, experience, and knowledge to successfully integrate AZR and at the same time execute our growth plan in China. In China, the largest steel market in the world, our first plant at Jiangsu province is complete. We are currently finalizing the commissioning of the plant and will start delivering commercial output in the next days. The construction of our second plant in the province of Henan is progressing as planned, on budget, and on time. We expect to complete the construction by the end of summer and ramp up at the end of this year. In summary, with acquisition, we are increasing our steel dust recycling capacity by about 60% to become the global leader in our industry, which will drive strong earning growth in the medium term. Thank you very much. Thank you, Javier. We will now open the lines for the Q&A session. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. The first question comes from Ingo Schachel from Commerzbank. Please go ahead. Thanks for taking the question and congratulations on finally striking this, I think, very meaningful and transformational deal. Very, very impressive that you've finally done it. My first question would be on the operational excellence synergies, and you showed that your own profitability per ton is a bit higher than AZR's. Can you explain a bit more detail when you talk about best-in-class process, best-in-class technology? What exactly, or give some examples, what the biggest levers are going to be in terms of improving the process? Is it through the energy consumption, coal inputs, or in which areas do you see most upside and most differences to your own process? Thanks, Ingo, for the congratulations. We have today with us, Asier Zarraonandia, the head of our steel recycling business that will support us in answering your more technical questions. I think this is a clear question for Asier. Please, Asier. Thanks, Javier. Thanks, Ingo, for the call, for the question. Sorry. You are focusing the question on the operational excellence, which I do think is correct one focus. The reality is that those synergy we are putting is clearly with you as a combination of the three statements that we are showing in the presentation. I mean, we are on the operational excellence. To put some examples, well, Waelz concept is basically the same across the world. In Befesa, we believe we have improvements over the traditional concept. We are applying some proprietary technologies like SDHL and as well our know-how of how we operate the plant. We think, well, it's very well demonstrated that we are better than others. As a way of specific examples, basically, the SDHL, well, means better performance in terms of coke and other reduction agents consumptions. Raw material handling, probably we are better mixing the different materials starting from the last. Basically, we save cost and as well, we get better yields of recovery of zinc. This is clearly one of the fields that we have to improve there. At the end of the day, we have seen in the past, running the plants like AZR is doing now in other countries, like when we enter in Turkey or even in the concept technology of South Korea. We are prepared to make some modifications in a very short time with a limited investment to capture this issue. The key is this. It's a mixture of many things. It's not just one, but at the end, I think we can achieve in a very well and short term. You are not specifically asking for, but the other fields of the synergies is the SG&A. Well, obviously, AZR is a full organization covering many aspects that we have already covering from our headquarters. It's logical to think that we are going to have some overlapping functions and we have to clearly update to the Befesa, and it's going to be some synergies and cost as well. Selling the same, and selling and commercial is a little bit something to understand as well, because not very negative things over nobody. They were in a different position over the last years because they were selling the production through traders, who would normally take a piece of the cake. We are going to now apply benchmarking terms to sell the works initially to the smelter. Of course, logistics and things like that are going to be easier because it's going to be focused all to sell in the U.S., while the alternative is to be focused on Europe. These are the three main aspects that we understand are the quick win points we have to achieve. We don't expect very, very big CapEx or cost to implement it. As Wolf is saying, it's in the past less than two years payback when we have done other things. On top of this, and for the future, after we evaluate, we have to evaluate, well, basically, changing or upgrading some equipment, we can capture even more synergies for a long-term run. This is basically the plan based on best technology process, because we think as well that we have things to capture for the technology or know-how from AZR, because they are running the plants for many years, so probably there are some things to learn and even synergies to capture for our current plants in other fields. Altogether, I think a very conservative and realistic figure to achieve in the next two, three years. Okay. Thank you. Can you talk a bit as well about the greenfield growth opportunities that there might be in the U.S.? It's a market that's strongly growing, electric arc furnace steel production. Would you consider also doing a greenfield in the next five years? If so, would there be a trade-off between, let’s say, the current two, but then subsequent projects in China, i.e., would you still have a vision of six plants in China, or could it also be that six plants in China is delayed because you might prefer to build two greenfield plants in the U.S.? Good point and question as well. At this point, pending to be confirmed after we give us at least 100 days to analyze everything after the closing, we think that there is space for both. Obviously, we have the growing idea in China, this is on track and not going to change because financials, as Wolf Tiedemann and Javier Molina Montes have explained, well, we are not changing, we have this opportunity, whatever you have in mind previously, we are going to do in China for sure. In the U.S., yes, we agree with you, it's not a secret that the electric arc furnace production capacity is growing, it's growing a lot. There are a lot of projects to come there, it's going to be more of that. Yes, we have to evaluate what is better to do greenfields, which is always a possibility, or brownfields, improving or increasing capacity at the current plant. It's clear that we are now entering into a market which is under growth. As always, explain Javier and Wolf and Rafael, normally European, it was a market which we saw limited growing, which can change with the current focus of the steel business because they are changing to some more mini mills. In any case, it's less or it's more medium-term. In the U.S., it's clear that they are increasing capacity. Yes, we have to capture in one way or another, this role. Finally, yes, we do think that we are going to have the powerful, the high power in terms of financing, even with the cash generated by the property of U.S. to capture this increase. Maybe just a quick follow-up on the zinc refining asset, just to understand your message here. You were saying on a full certainty on the economics and the returns. With full certainty on the returns, you would probably mean that the EUR 20 million-EUR 25 million that you're mentioning, you have full visibility on that, or is the hurdle rate lower, i.e., you would do the deals that's certainly around EUR 15 million EBITDA, and then the base case is EUR 20 million-EUR 25 million? Maybe also comment a bit on the, I'd say, management expertise. I mean, that's a very different asset from what you're doing and had issues in the past. Do you think there's enough management capacity within Befesa or within the asset to successfully run it? Or would you try to keep a minority shareholder like Glencore invested to get a bit more management expertise? How do you think about that? Okay. Thanks, Ingo. The first thing I would like to remark is that we are going to acquire the facility once the facility will be running properly. We are not assuming any risk in that sense. Second is that since the entry of Glencore as a shareholder of AZR, there has been a big change in the performance of the plant. We are pretty sure that the plant will be running successfully in the next month because Glencore has a great expertise in that sense. They run a plant very similar to this one in Europe, we don't have any doubt that they are going to achieve the profitability and the performance. Regarding the economics, we think that $20 million-$25 million, more in the range of $25 million, will be the normal EBITDA of the plant in normal conditions, no matter the zinc price, because as you know, this is a business that buy and sell zinc, or the plant has a natural hedge. Let's say that around $25 million is a comfortable figure for us. Glencore will be supporting the plant until our full acquisition, and later on, probably we will maintain a technical contract with them to support us in the managing of the plant. This is the summary. Okay. Thanks for the working answer, and congratulations again on this idea. Thanks. Thank you, Ingo. Thank you. The next question comes from Oscar Val Mas from JP Morgan. Please go ahead. Yes, good morning, everyone. Again, congratulations on the transaction. I had three questions. You've touched on this a bit, could you provide some background on the acquisition in terms of, was this a competitive process, how long have you been under discussion? That's the first question. The second question is more of a technical one. You referred to $300 million, close to $400 million of value creation. Can you just explain how you calculate that number? Finally, another technical question. How many years out is American Zinc hedged? That's the third question. Thank you. Okay. Thank you, Oscar, and thank you again for the congratulations. I will answer the first question, and Wolf will answer the second and third. Well, we have been following AZR, I would say, for the last 10 years, and for sure during the last year and a half, we have been involved in conversation with the AZR shareholders and management. I think that this has not been a competitive process. At least we don't know that it has been a competitive process, but has been a direct negotiation between two companies present and involved in the steel dust recycling business. As you know, we are market leader in Europe and now market leader in Asia, and AZR is a company that we know very well from many years ago. We have been having permanent contact with the management team, shareholders, et cetera. It has been a natural process that has finished in this successful acquisition. Wolf, you can answer the other question, please. Absolutely. Thank you, Javier. Oscar, for the first question around value creation, please turn to page six. I covered already earlier, let's just go through the numbers one more time. Go to page siz, look at the multiples at the bottom of the page. Looking at Befesa's total group 2021 EBITDA, Bloomberg consensus. If you pull up your Bloomberg terminal, you're going to see EUR 191 million EBITDA for 2021 consensus. I mentioned this is more or less in line with the upper end of our guidance. We had pointed towards upper end as EUR 190 million EBITDA for 2021 for this year. Using the last 10 days trading share price of EUR 58.45, you come to that Befesa is trading on a 2021 basis at 12.5x, 12.5x 2021 multiple. Looking on the AZR side, the acquisition of AZR, including the near-term synergies, sits at a 6x multiple. Value creation, we calculated. We're taking the multiple difference between 12x and 5x our overall EBITDA multiple, minus the 6x multiple for the acquisition. That leaves a 6.5x differential. If you multiply that with the EUR 62 million pro forma EBITDA for the acquisition post near-term synergies, this results in about EUR 400 million value creation. In conservative, we were saying more than EUR 300 million value creation. The side note here is, again, that the acquisition expands our core business, so to say, the jewel of our portfolio, which is steel dust recycling business unit. This is our highest margin business unit which we ran at, again, at 33% EBITDA on average for the last three years, and that is 2018, 2019, and 2020, given the COVID burden 2020. Really, again, I think we are calculating the value creation here in the appropriate way, and it's an excellent opportunity. Yeah, okay. Oscar, on hedging, forward hedging. The acquisition, AZR, changed their capital structure beginning of this year, and with that improved capital structure came the obligation for 24-month rolling hedges. AZR has 24 months hedges on the books. For example, in the second year, next year, they have in 2021, roughly, the hedges on the books for $2,767 per ton. Really that new capital structure, including collateral and then the obligation to put 24 months rolling hedges on the books, was a great change. As such, it's not yet as long as our hedges. As you know, Oscar, we currently have hedges up to and including July 2024 on the books. Yeah. That's for more than three years. After closing, obviously, we will integrate the hedging approaches and apply our standard hedging approach that you know. Okay. Yeah, perfect. That covers everything. Just a quick follow-up. Will Befesa be recording pro forma going forward with the synergies? I think we're going to tackle that when we get there. Okay. Also, we're not providing any new revised guidance for this year yet. This is all after closing, we're going to talk about then. All right, Oscar? Okay, great. Thank you very much. Thank you. Thank you. The next question comes from Olivier Calvet from Kepler Cheuvreux. Please go ahead. Yeah, thanks. Hi, everyone. Hi, Javier, Rafael, and Asier. I'm sure you've been waiting for this for a while now, so I can only also say congrats on my end. A few questions. I will take them one by one, if possible. Could you come back on the business first? Is American Zinc Recycling still active in what I think Hans said was doing recycling and production of nickel alloys? Is this business part of the acquisition? That would be the first one. Okay. Thanks, Olivier, for the congrats again. Yes, American Zinc Recycling has an operation of the stainless steel business, but this has not been part of the deal. It's called Inmetco, and it was totally out of the deal. We don't have nothing to any relation with this company. Okay. Fair enough. Can you talk a bit about the four EAF dust recycling mills? I see that they are slightly bigger. Is there any other difference that we need to be aware of versus your typical plants? I'm thinking notably also if you could clarify, from the slides, I understand that in the past, there's been some talk of the prior Mooresboro plant in North Carolina. That doesn't seem to be in there. That seems to be a plant that is not existing anymore. Could you just confirm this aspect on the technology side and on the differences between the plants that you have right now and the plants that American Zinc Recycling is operating? Okay. Thanks, Olivier, for the question. Yes, I think it's the typical design of the four plant in AZR are the same. We can say that it's the way of the Waelz kilns operating in America, North America, the other players are doing there. Yes, there are differences on our standard design that we are as an example, developed in China. Again, Waelz technology is a proprietary rotary kiln and is very well known. The difference is basically length of the kiln and other things, and the gas heat chamber differences and gas treatment part as well. Conceptually is the same, but yes, we do it in a different way. In the particular case of those normally are Lower capacity kilns that we are currently designing, and they can be settling chambers and so on, but at the end of the day, conceptually is the same. As I said before, that doesn't mean that we cannot operate it on the way. What we have to understand is really how they are operating, speed and raw material or whatever, and determine what is better with our proper knowledge. We have the experience to deal with those kind of contact, and we really strong think that with minor changes and with a very limited investment, we can become better. Not entirely up to our standard, because in that case, you need to change everything. Yes, I think that we can get a very quick improvement over the current operations. Obviously, they are operating well. They have a lot of expertise. Again, it's nothing coming from scratch. It's something that is running, and we have to improve. This is one thing. If I understand well, you were talking about the Mooresboro technology as well, too. Yeah. Well, in this case, it's something that because the fail or the issue of Horsehead going to Chapter 11 in 2016, coming with this technology, there is a sensation that is a brand-new technology. Well, it's not entirely like that. solvent extraction has been used for many, many years in other metal fields, like copper, nickel, and so on. I expect it to be used in Skorpion in Namibia for the mining ore concentrates, right? Used in the smelter because it's a kind of particular concentrate, which is now more normal, acidic steel sulfur. The normal route of treating the ores changes. What was new is to try to use this solvent extraction in the treatment of electric furnace dust and other material. That was really new, and in the year 2011, Horsehead started to do like that based on some proprietary technology of, in particular, technical leaders. They will try to apply this to this. They fight with something that in other smelters they were doing similar things, and they were doing the same trials. In a big, massive way that Horsehead tried to do with all the raw material feeding coming from this route was the first time. As a complement to the other feeding stage in the smelter was very well-known. A combination of the first time and a massive investment and massive extra cost that were coming, the Horsehead bankruptcy. In the meantime, many years happened, and Mr. Drenkow and others developed the technology, and now it's basically a proven one, and that's why they have made some modifications from when they come up from the Chapter 11, and now with the modification and with the assistance of them, together with a very big and stable management there at the plant, they are getting the normal ramp-up with this kind of technology is taking time. As Javier said before, I think they're going to get it, and we are sure that they're going to get it, and in any case, if they don't get it, we are not going to enter in. The risk is very little. Okay. That makes sense. I was just wondering, I think if I'm not mistaken, there was at some point an issue of environmental liability. I think it was the Pennsylvania plant. I'm assuming there's going to be an audit in terms of the handling of the hazardous waste that they handle, right? Well, as you can imagine, we have run a very deep due diligence process. Okay. Not only departmental side, legal, financial, taxes, et cetera, and this is perfectly covered and perfectly known. Javier can give you more color about it. Yeah, it's a good point. It means that most of you have made your homework. They have made some problems in the Waelz kiln, and they are having some particular problems in the Mooresboro plant as well currently, and they have some news release and so about that. I will differ in that. Our particular view is that the problems with the Waelz kilns in the past were coming basically for the financial situation of the plant, that they were doing no current CapEx maintenance or current maintenance because all the money and all the efforts were going to the plant. As a consequence of that, they were having problems to meet the environmental limits and so on. They enter into some problems, in particular in Pennsylvania, in Palmerton one, some others as well. At the end of the day, one of the things the new owners they have made is to fix those problems and fix the CapEx to show them. After the review of that, we see that the CapEx is already done. The last one is coming in 2021, probably, for the closing is finished. As I explained, up to the level of the operation, they have done this, not expected. We understand that the rest of the things, starting from the local line, they will be refixed. We will see at the moment of the acquisition for the status of that. As Asier said, very deep environmental due diligence done, and we don't see as a big risk, very high-risk issue here. Okay. Then two last ones. The first one is just to clarify the Rutherford County plant you are listing. This is the former Mooresboro plant, or is it a different one? Sorry, no, it's the same. Okay. The county is Mooresboro, the area. Yeah. Then just on the hedges, just to be clear, what kind of volumes are they hedging going forward? Yeah. Yes. Sorry, I was still on mute. I think we have about 78,000, 77,000 tons. Okay. All right. Already, Olivier, similar to what we do, we like to hedge between 60% and 75%. I think this is rather at the upper end, so it's easy to combine the two hedging approaches. Yeah. Is it fair to assume you will keep that level, or should we expect something higher considering potential for increased capacity utilization of the kilns? Look, as we always do, we hedge the current run rate for multiple years, et cetera. We apply our standard hedging approach, no change. Okay. Thanks for that, Tim. Thank you, Olivier. Thank you. The next question comes from Benjamin Pfannes from Berenberg. Please go ahead. Yes. Hi, good morning, everyone. Just a couple of follow-ups, please. Firstly, on the American Zinc R ecycling plants, why have they been running at such low utilization currently compared to Befesa's average? What gives you the confidence that you can bring it up to the group average? Is there some easy wins here that you can already take from the U.S., or does that mean importing dust from outside the U.S., having seen the utilization increase there? Thank you, Benjamin. I go directly. Well, one of the things coming from those penalties and problems they have had in the past is that there are some kilns under doing again or whatever, changing some grading and kilns, and I said the big bag of baghouse filter dust and so on. They were operating not all the kilns in the last years because of those problems mainly. Well, probably they have or they are needing more maintenance time, so basically altogether means that they are doing a lower capacity rate than Befesa. We see that now after fixing all those issues and after finishing the CapEx to come back with the kilns to the normal level, they will be close to our capacity utilization, or we will try to fill the gap doing this better maintenance or doing those shorter maintenance or to applying the benchmark. In terms of that, I think there is available and they have some stocks. Yes, we do think that we can reach this very closer capacity rate to Befesa. I don't know if in one year or in two years, I think that's close to the 80, very up, 80% should be there very soon. Maybe, Ben, additionally, please go to page four. If you look at as Javier and Asier described, the growing U.S. market for electric arc furnace steel. Just like the rest of the world is looking for decarbonization of steel production, the view on the U.S. is also positive, so that will also help the utilization. Thanks, Ben. Okay. Thank you. My next question is on more of the midterm assumption that you've given, so EUR 185 per ton on EBITDA. How do you get there? Could you maybe break down the assumptions in there? Also for the zinc plants that you're assuming in there and utilization and also the mix of synergies. Well, I think it's a self-explanation during the presentation as well from Javier's side. Yeah, this is basically coming from the pro forma EBITDA and divide by the current tons they are treating. This is the gap that we have to fulfill with all the action together. Increasing the capacity utilization for sure, and as well increasing those or decreasing the cost and improving the way they operate. Basically, the synergies, and this will bring to closer than Befesa has. Probably we don't feel it really because depending on the zinc content of the material. Well, I think that we have to, and the goal is to be very, very close to Befesa in the short term and the medium approach, as it is explained in the presentation. Long term, to be closer. This is the goal that we have there, that's for sure. The end price and that assumption, is that the same as this year, or can you give us that specific answer? Yeah, Ben. Thanks for the question. Just to clarify again, if you go to page six, Ben. Whether you look at the EUR 45 million pre-Neotron synergies or the EUR 62 million EBITDA post-Neotron synergies, both are stated on the last five years average zinc price or our current hedge price, which is $2,580 per ton. As you know, it's far below current market price levels. Secondly, what we have not put in is the fact that next year, that our hedges are on the books at about EUR 50 higher than mid-year, plus the AZR has hedges on the books for 2022 that are on average around $2,767 per ton. That's on the AZR side, about on an $80 per ton higher hedges, and on our end, about EUR 50 per ton higher hedges. That alone provides another EUR 70 million year-over-year increase in EBITDA or potential for increase, but that's not in the number. Again, both EUR 45 or EUR 62 million, pre-near-term synergies, post-near-term synergies. We're stating here pro forma on $2,580 per ton lead price. Okay. That's very clear. Thanks. The last one for me, just on the Mooresboro smelter, did I understand correctly that all of the AZR output will go to that smelter now, it's 100%? Would you be able to share the current operating metrics of the smelting facility in terms of either EBITDA or net profit? You mean what is the current situation of the Mooresboro plant in terms of EBITDA or whatever? Yeah, exactly, in terms of the standalone smelting plant in terms of. Currently, I don't think it's something which is worth for nothing. It's under the ramp-up. They are probably below the 85%. I don't know, probably now because it's changing every day, but it's going 60%-70%. The fixed cost is affecting totally to the operations. Well, I don't know exactly what is the EBITDA level because it's something that we are not concerned. I think that the most important thing then is that the ramp-up is going as they are planning. They are doing a substantial number of tons of zinc metal with the necessary specification, most special and indeed. Yes, they are going on the plan and ramping up. The EBITDA at the current, we don't know, and really, we don't think it's a matter today to analyze like this. Any case, and then, which I think is important to be understood is that we are not going to assume any risk. We will buy only the following stakes of the smelting plant. The plant runs properly. Well, we are, in that sense, pretty quiet about it. On the other hand, we are totally sure, pretty sure that they are going to achieve, with the support of Glencore, the performance we expect. Okay, thanks. The other part of my question was just will AZR sell all of its output to the smelting facility now, so it will all be internal then? I couldn't understand very well your question. Don't you mind to repeat again? Yeah, sure. All of the outputs now from AZR, so will that be sold to the Mooresboro smelting facility 100%? Yes. All the Wox we produce will be sold to a smelting facility, yes. At market price. Sounds good. Okay, thanks for the call. Thank you. The next question comes from Michael Hoffman from Stifel. Please go ahead. Thank you very much. Well done, everybody. Wolf, remind me never to play poker with you. Last week at our conference, we talked about future M&A, and this was well guarded, so well done on your part. You also, though, last week, suggested that given the current operating environment, that you were very likely to do better than the upper end of your guidance. There's no change in that sentiment, although you're not changing guidance. Is that correct? Yeah. We are not going to change the guidance. Regarding AZR, we will wait until the closing to see when we close the deal and then how many months we have in front of us. Regarding the Befesa standalone guidance, well, what we can say today that if the metal price stays in place, especially at the current level, we will be clearly in the upper end of our guidance or even slightly above that. Okay. Could we walk through the economics of the plant, the AZR itself? You're positing $180 million of revenues. You did say there's a collection fee, so can we frame approximately what the collection fee is? You often talk about your 240,000 tons of waste, and then there's 68% of that is the zinc content, and walking all the way through the math to get to the how many tons you actually sell on a free metal discount and all that. Can you share similar modeling assumptions about the U.S. so we can start thinking about how we're going to build our model? Yes, we think that the U.S. market will be very similar to Europe. We expect to have collection fee. Perhaps the zinc content will be lower than in Europe. It's something that we need to confirm once we will be in the company. That will be, in our opinion, the main difference in the zinc content. The rest of the things will be very stable and very similar to Europe. Because you're selling 100% of the zinc to smelter, do you have to take a discount like you do? Not at all. We will sell. No. Not at all. We will sell at market conditions, clearly. No doubt about it. No free metal discount then? Yeah. No. The normal discount, 85%. Okay. Normal conditions, Michael. Okay. All right. Just to be clear about current to the 2020, I get the EUR 45 million, what you're doing. The actual reported EBITDA in 2021 on a full year basis is about EUR 13 million less because of the difference in the uncompetitive hedge. When you report, if this were to close on October 1st, this would be reflecting the uncompetitive hedge for that quarter? Yes, it is. Michael, please. Yes. That is correct. Okay. On the other hand, the change of the hedging program has already been done by the business, by the acquisition target, by AZ already in the first quarter, Michael, right? You're just leading off basically this year's uncompetitive hedges. Yeah. Next year, which has been put on the books majority under the new capital structure of the acquisition target, yeah. That's why those hedges are now much more competitive, and that's why on a run rate basis, really, you have to take those very uncompetitive hedges of this year's out. That wouldn't reflect the run rate of the company properly. Fair enough. Just want to, again, when the numbers are reported, if you actually did close October 1, then we've got to account for that there is one quarter left. There was an allusion to collateral in an answer to a previous question on the hedges. You don't use collateral. As the future owner, will you be able to hedge the same way you do where today, without having to provide any collateral? Yes, that is correct. The capital structure of AZR currently, that again, has gotten much better in the first quarter and provided the collateral for hedges that these are now more, but that would be entirely taken out and replaced. Yes. We will provide our usual hedging approach. Absolutely. Okay. I forgot to ask one other question, and I think Javier probably already assumed this, but you have a treatment charge in Europe. I'm assuming a treatment charge exists in the U.S. All of the same parameters I use in modeling Befesa of Europe, I can apply to the U.S. when I'm trying to build up to the $180 million of revenues. Yes, the treatment charge is in place and the benchmark. The only thing you should consider in the model is that in the U.S., we are going to sell unwashed material. There is a washing fee because we don't have the cost of washing. They do in the smelting. This is something to consider. The rest, you can use the same. Okay, perfect. Is this an asset purchase or an equity purchase? Just trying to understand what's going to be the impact of the balance sheet and when this closes. It's an equity method. Okay. Did you get a step-up in valuation, or is it this is going to come in as more goodwill than intangibles? Yes, we have to do the PPA at the end of the allocation of all the price to be paid, and this is on profits as soon as the closing is done. We have to do the allocation of the payment over the accountancy, but it's not yet finished. Okay. How is this going to be staffed? Is there a U.S. management team that you're going to be able to retain, or are you going to have to think about relocating operators from your current businesses? We will do as in the same way we have done in the other geographies. As we have explained, always, we prefer to have local teams. We have in China, Chinese people, in Turkey, Turkish people, et cetera. That will be our approach in U.S. We will have local teams, especially at plant levels, that will be managed and supported by our headquarters, that will support them in the financial, commercial, legal, everything. We will have in North America, American people. Got it. Then lastly, on the smelter, ultimately the North Carolina facilities, which pretty much tripped up formerly Horseheads and propelled it into bankruptcy. You all have talked about often that it's not the best thing to be vertically integrated. Why contemplate that for $25 million or EUR 20 million of EBITDA? Why add that risk? Michael, I think we are not assuming any special risk. As we have explained during the presentation, we will buy only once the plant will be running properly. That will be a fact. We are not going before to be totally sure that the plant is being running properly. On the other hand, there is a great opportunity in the same market in North America, where there is a lack of supply. Being able to be the owner of the plant, we will get very good synergy selling the WOx in the U.S. instead to transport the WOx to other geographies like Europe, Asia, or whatever. At the end, the summary is, we think we are not assuming any risk, and we are doing a vertical integration that in the North American market has a lot of sense. Okay. Thank you very much. Thank you, Michael. Thank you. The next question comes from Antonio Montano from Alantra Asset Management. Please go ahead. Hello. Good morning. Thank you for taking my question, and thank you very much for the great job in creating value for shareholders. Actually, most of my questions have been answered, but maybe just a small clarification. Wolf, apologies, but can you please explain again the conditions for the EUR 90 million add on the term loan B? Is it also your IBOR plus 200 basis points? I think I missed that. Yes. The terms and conditions of our existing term loan B and covenant structure are not changing at all. In the covenant structure, we have the right to upsize by EUR 90 million, there's no changes on the terms and conditions. Great. Understood. Very simple. Thank you very much. Thank you. Thank you. The next question comes from Jaime Escribano from Banco Santander. Please go ahead. Hello. Good morning. Congratulations for the transaction. A few questions from my side. The first one regarding synergies. Short-term synergies, EUR 17 million. If I go to the synergies slide, and I calculate the midterm synergies with the current production, I get EUR 23 million, so around EUR 40 million, but I have the impression that it could be more, if we assume the utilization goes up to 85% or 90%. My question basically would be if you could give us at least a range of how much could be the overall potential synergies, because I think it would be interesting to understand the further upside. I have a quick question on CapEx, if there is any CapEx required in order to upgrade the plants or to achieve these synergies on top of the implementation costs. A question on the financing. You are raising EUR 330 million, plus EUR 90 million term loan, EUR 430 million. The overall transaction is EUR 383 million. This EUR 50 million gap, I'm just asking because the leverage to me is lower than what you say, just to reconcile that. Just a final question on the zinc smelting. How does this change your ESG profile? Is this a very pollutant asset or not? What is your view on this? Thank you very much. Okay, Jaime. Thank you very much. I will answer the first two questions, Wolf will answer the financing, and let's see the last one. Regarding the synergies. Well, I would say let's go step by step. As Javier said before, we are pretty confident that we will achieve the first EUR 20 million soon and without new CapEx investment. It's something that is a mix of operational excellence in the sense that, as Javier has explained before, commercial conditions and overhead cost that will be reduced. That will put us in a cost per ton initially in between EUR 135-EUR 140 per ton, compared with the EUR 185 that we have on average on Befesa. We are sure that we will capture part of these synergies, but it's too soon to say how much, and how much CapEx we need to invest to achieve that. I would recommend you can use clearly the first EUR 20 million that we are talking about, and then let's see. For us, today it's difficult to set up a range that we can achieve and to say how much will be the CapEx we make in this. Probably in the next presentations, in the next earning calls that we will do during the year, we will have a better visibility about it. Okay? Okay. Wolf, do you want to answer the finance question, please? Absolutely, yes. Jaime, what you're referring to is sources and uses, and please also join us tomorrow on Friday at 11. We'll give a lender's call. I'll have you there. In terms of sources, rightfully so, you're saying the shares that were issued provide EUR 332 million of sources. The EUR 90 million term loan B upsizing on top. You're talking roughly EUR 420 million of sources. If you look at the acquisition of $460 million that we locked in through a contingent FX hedge already prior to the Fed update last night at 121, you're talking somewhere around EUR 380 million acquisition price. Okay. As you described, there's about EUR 40 million between sources and uses. That we do need for general corporate purposes, the likes as transaction costs, somewhere up to EUR 15 million. We had mentioned on the synergies slide that we need somewhere around EUR 10 million-EUR 15 million one-time cost to fund the synergies. Take the upper end, EUR 15 million, for these purposes conservatively. Please note that the new shares that we issued, the 5.9 million shares, they will also participate in the dividend distribution in mid-July. We have proposed EUR 1.17 dividend per share, and we have our AGM on June 30. Assuming that is accepted, that will mean that also the new shares that we just issued are entitled to roughly EUR 7 million of dividends. If you take transaction cost of roughly EUR 15 million, let's say conservatively, and up to EUR 15 million conservative synergy one-time cost, EUR 7 million dividend, I'm laying already out for you the general corporate use of this EUR 40 million that we were trying to bridge. Thank you. Okay. Yeah, that's very clear. Thank you. The last final question on the ESG profile of the zinc smelting plant. You can tell us a little bit about that. Okay. Asier will answer. Jaime. Basically, it's a different animal. At the end of the day, the law and the EPA requirement are the normal ones for industrial. They have to have the wastewater treatment plan limits. They have to have the emissions and take care of the byproducts and residues. Nothing strange. They are having some claims, some problems, which are appearing in the news. I think it's more coming from the ramp-up, coming from the previous trial they did, and they failed before the Chapter 11. Now is looking under control, and those other things are going to be fixed. Our policy is not going to change. At the end of the day, we have to accommodate to the legal in each country, legal requirements from the environmental and health and everything. We are going to put on our standards. In the case of the smelting, if we take the 100%, in the case of the smelting, as soon as we stay, but always complying the law in the country. Okay. Very good. Thank you, Javier. Thank you, Jaime. Thank you. Ladies and gentlemen, there are no further questions. I will now give back the floor to Mr. Rafael Pérez. Thank you. Thank you very much for your questions. You can also contact the investor relations team of Befesa for any further clarification. We will now conclude the conference call and the Q&A session. Let me remind you that you can find the webcast and the dialing details to access the recording of this conference call on our website, www.befesa.com. Thank you very much to all of you, and have a good day.