Nexa Resources Shines in Q3 Earnings Call

Nexa Resources’ recent earnings call reflected a generally positive sentiment, highlighting strong financial and operational performance in the third quarter. The company achieved record zinc production at Aripuana and demonstrated improved financial metrics. Despite these achievements, challenges remain, particularly with high workforce turnover at Aripuana and lower year-to-date EBITDA. Nonetheless, strong cash flow generation and debt reduction indicate positive progress, though workforce stability and operational costs in the smelting segment require attention. Record Zinc Production at Aripuana The Aripuana mine achieved a significant milestone with a production of 10,000 tons of zinc, marking a 70% sequential increase and its best performance since ramp-up. This record production underscores Nexa’s operational capabilities and strategic focus on enhancing output. Strong Financial Performance Nexa Resources reported net revenues of $764 million and an adjusted EBITDA of $186 million, both showing improvements across all comparable periods. The company also recorded a net income of $100 million, reflecting its robust financial health. Improved Operational Metrics The company’s mining production reached 84,000 tons of zinc, marking a year-over-year increase. Additionally, consolidated mining cash cost net of byproducts improved to minus $0.49 per pound, showcasing enhanced operational efficiency. Positive Cash Flow and Debt Reduction Nexa generated a free cash flow of $52 million, contributing to a decrease in net leverage to 2.2x. This reflects the company’s commitment to strengthening its balance sheet and reducing debt. ESG Leadership Nexa received the PERUMIN Seal of Excellence in Gender Equity and the GHG Protocol Brazil Gold Seal for reducing emissions, highlighting its leadership in environmental, social, and governance (ESG) initiatives. High Turnover at Aripuana The Aripuana mine faces a high workforce turnover rate of 18% to 20%, which poses challenges to operational stability. Addressing this issue is crucial for maintaining consistent production levels. Lower Year-to-Date EBITDA The adjusted EBITDA for the first nine months of the year was $472 million, a 9% decrease from the previous year. This decline is attributed to lower sales volumes and higher operating costs. Challenges in Smelting Segment The smelting segment experienced lower sales volumes and higher operational costs, with a cash cost of $1.32 per pound. This area requires strategic adjustments to improve profitability. Forward-Looking Guidance Nexa Resources provided strong guidance for the future, with plans to commission the fourth tailings filter at Aripuana by early 2026, which is expected to boost production capacity. The company maintained its 2025 CapEx guidance at $347 million, focusing on sustaining activities and the Cerro Pasco integration project. Nexa remains committed to deleveraging, targeting a reduction in net leverage towards one time, and emphasizing disciplined capital allocation and operational excellence. In summary, Nexa Resources’ earnings call highlighted a strong quarter with record production and improved financial metrics. While challenges such as high turnover and operational costs persist, the company’s strategic initiatives and forward-looking guidance suggest a positive trajectory. Investors and stakeholders can anticipate continued focus on operational excellence and financial stability.