Nexa Resources (NEXA) 31 Oct 232023 Q3 Earnings call transcript

Good morning, and welcome to Nexa Resources Third Quarter 2023 Conference Call. [Operator Instructions] This event is being recorded and is also being broadcast via webcast and may be accessed through Nexa's Investor Relations website where the presentation is also available. [Operator Instructions]I would like now to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations, for opening remarks. Please go ahead.

welcome Resources and Earnings Quarter everyone call. Conference morning to Third Nexa XXXX Good us today. joining for Thanks

During we issued per on the you the performance follow screen earnings company's call, to webcast. release will presentation be through that with we along yesterday. the encourage the We this discussing as

disclaimer to refer I we our conditions statements to about pleasure and business, your and Slide to be number It Before we my draw will forward-looking begin, X, ask speakers. making you that just the would like statements. now those attention as we surrounding our is introduce to

Joining our us our Senior Rosado; Coelho. Ignacio and of José President our Leonardo Mining, CFO, today is Vice Valle Carlos del CEO,

Ignacio, So will now call over I the go comments. please turn his to ahead. for Ignacio

everyone and will joining let's number Rodrigo, morning. Please Slide to now we X, where you, this thanks move presentation. us to our for begin Thank

a of on by Let overview our brief start quarter third providing me you XXXX.

scenario addition downward sectors on rates Chinese about and We the continue such the external of inflation performance of pressure the driven uncertainty to economy. in metal U.S. by high in as interest of factors, negative to a key experience prices,

our to possible have our year. we of the third of positive the levels quarter have Although our committed this cash prices performed a at remain financial below to discipline, main made metals expectations, which generation in

segments mainly to Consolidated a XX% was Brazil. production in zinc lower million of the design prices. system, partially in Nexa's year-over-year, This in Total period, we second reaching mine revenues and mining decreased Compared X% this performance increased higher remain prices. year, lower volumes. grew line and sales, XX% Nonetheless, the We adjusted downwards. for to the prices and metal pumping to to year-over-year, were the quarter, of million. explained quarter unchanged. our the metal due Compared segments, Our ramp-up and LME with both higher by in in sales revised the limitations EBITDA due for sales smelters EBITDA which to of by lower quarter down X% by was which smelting the the capacity by for provided metal in Aripuanã net as result LME mainly performance was smelting $XX costs production volume offset the production range operating lower $XXX XXXX guidance adjusted we and given cash production expectations also the flotation reached revenue extension revised LME related and resulted found cost mining other downwards of the phase. mines year, estimates last

integration project expected. reduced Exploration were Pasco Cerro Our XX%. advancing expenses evaluation and by as project is other

credit revolving on key into and sustainability-linked Nexa's facility, to indicators. which go performance liquidity mines. close in million Jose will base closed details a will our However, prioritizing mineral of the I the we this are still reserve mentioning resource $XXX by carbon we would that reduction is profile later in like presentation. slide Carlos to and our expansion the linked support have successfully

Now X. to moving Slide number

production quarter decreased you by Morro byproduct increase prices the the of explained was explained year, to mainly and Aripuanã volumes. the $X.XX it in Cerro higher year-over-year, explained quarter higher respect credit second zinc Regarding decreased from related volume can cost quarter XX,XXX of X%, this With compared second performance Compared last concentrate by to this start-up production contribution Compared per and and of costs up XX% the this in year, the to to quarter X%. Mining year, up by cash to of in of of pound mine. Lindo, segment, lead to mainly pound the the Basante per volumes increased by $X.XX third the third higher mining Agudo operating mines. to see or tonnes, copper cash that the year, zinc

and Looking inflationary despite pressures, at it the cost in especially cost per Brazil. run year-over-year was in the of quarter-over-quarter, mine quarter, flat

to X. number moving Now Slide

to of the The segment, smelting sales of Regarding flat. both to in LME and was In per from quarter of raw Smelting last explained third tons in decreased of in compared last of and was reduced year which third decrease pound XXX,XXX materials. year-over-year quarter this the mainly down prices, second quarter third third per by cost the quarter $X.XX months of production second quarter per in of operating the periods, cash the to relatively the compared $X.XX X% this this year the zinc year this year. up $X.XX pound performance metal the pound quarter, performance X% totaled year. lower the X cost

production. the conversion from XX% $X.XX and down Our metal was pound year cost cost quarter was Compared due conversion this of second the per expenses to third up quarter lower to year, X%. was last higher energy and of

second capacity completion concentrate plant In the we first July, year. the third the recoveries Now driving the versus average scalable moving and to In year, to XX% steadily and strong this the pumps reducing the on next quarter. an with observed permanent is increasing plant and result, the in X. of this In of performed take replacement first the next to January quality focus plant the in XX% grades. of in ramp-up a year, pumping of have place of second quarter in protection The the performed at ramp-up plant's identified improving in the average activities of system due number quarter continued a to And downtime of Aripuanã Slide rate quarter. design. capacity rate, at an capacity of quarter year, problems XX% throughput in as some original limitations

us average in That more return the We as have rate processes include to allow consistent implemented well a treatment on plant way. improvements will high actions and additional water also a as that systems in to upgrades facilities. throughput

a the at run rate utilization through to expect quarter average XX% this fourth of year. We

XXX,XXX production. side, this in to in activities the Based mine up the tons progress successfully quarter tons year, we XXX%. of reached the of increasing the our as On have quarter compared in quarter run been second We expected. XX,XXX mine

resource expanding We the on reserves. our mineral focused upgrading and mineral are

Our plant, priority production additional to this minimize asset a in is conclude keep stable and recovery to metal quality upgrade to improving the and achieve impacts. and grades financial concentrate in and the aiming

observed with utilization XX% averaged quarter. Starting to required planned Slide the versus increase second left in plant X. we upper X% additional limitations downtime preventive moving the third XX% noted capacity of Now number side, quarter the The the in in hours. as quarter-over-quarter an the

been However, see copper recoveries compared recovering and improvement seeing few weeks. we quarter, an last in slightly reduced previous the can in while lead the but to has recoveries

reaching to second X. compared number XXXX, quarter mainly lower and moving grades. production of production XX% XX%, to by number higher driven tons. Now silver reduced Slide X, On by increased you Slide was and respectively, by while X%, the production Copper see can zinc X,XXX X% that lead

underground the upgrade integration to Now mine shaft life. to cover to tailing as improve moving the technical to works, the studies asset Slide slide, important and engineering facilities. that the like this assessment plant scale, new of On the improvement storage studies advance through I And of as environmental advance the options extension and different unlock progress, to such provide studies of the These project demonstrates interconnection, Pasco economies to technical well for project. highlight as number design long-term and as continue for continue we X. solution the potential for cost capacity Nexa a to Furthermore, we pyramids. required studies of value of assessment would

submit to project year. this approval expect quarter during next the We of for first

present CFO, financial ahead. Valle, results. to Jose, Now please José will I the will our who over turn call del our go

Ignacio. XX. you, continue to I everyone. Thank will on morning Good Slide

the metal period year zinc to result X prices. revenue by As ago. the In total net mining consolidated you XXXX, your to down with by to months by and billion, Compared X% X% $X.X and the sales as quarter second partially lower beginning lower revenues left, a zinc by due revenues production increased see, of volumes, year, quarter reached XX% decreased net the year-over-year, on of chart same smelting mainly sales for third upper of net lower a volumes. prices the higher the can consolidated first offset compared

from million terms $XX of $XXX of quarter of XXXX was to In consolidated EBITDA mainly in zinc profitability, adjusted mainly XXXX, due third the second of compared adjusted quarter EBITDA XX% I was to and EBITDA also same the year, X the explained lower third metal to Brazil, sales costs by increased explained metal in lower FX the This quarter performance reached mentioned higher prices. Compared XX%, by months split. million XXXX. lower offset zinc in and the this mining partially lower reasons which adjusted were last period consolidated in million, moment. by In $XXX the down first prices of year, and the

move XX. let's Slide to Now next number

year. On to with $XXX of to $XX the related previous at exploration $XX activities. be improve including The reduction and mineral evaluation, now X from to the cash of total in see sustaining guidance left of mine due was million development investments, EUR which have of With for we to million, linear in $XX million. is CapEx the which we exploration and we guidance, X to a the XX in of for slide, exploration development and a million. XXXX, of In of investment the respect top to the our first can months we first months that the in XXXX, project $XXX $XXX expect we invested initiatives million flow the our million third our million support mainly invested were mine totaled XXXX, updated total year, quarter

slide, the next flow in let's move in to quarter the year. will on I cash third generation of Now our which the discuss

to adjusted in and third XXXX $XX our almost we medifund. nonoperational quarter of EBITDA, our the including paid from starting and million spent million sustaining million in net CapEx $XX operations, related of For of taxes interest $XX HSE items, and and

negative a of and the $X to against the cash of Brazilian had dollar million of investments lows during cash exchange period. net and they Additionally, real million. due and of positive U.S. driven foreign equivalents. on the the dividends also received This $X and effects depreciation then We our by impact had was this a impact

is which of in capital, $XX our optimization there million Finally, ongoing of of a of was improvement result contribution program the XXXX. measures part for an from working cash positive

the quarter of Now was million. these flow our effects, cash all third combining $XX free in XXXX

solid declined slide, XXXX net in as remains Now balance sheet the you a and this increased a Slide maturity the that On moving liquidity period. our to during that present generation we Cash balance result with can of cash flow debt of profile. quarter and XX. to continue see extended third an healthy positive

the sustainability-linked of to credit of carbon to credit I quarter of set This amounts end X-year XXXX. As $XXX announced Nexa's initial million facility reflecting XXXX new to a mature facility a $XXX we XXXX to approximately soldier. third rate of replaces are the applicable footprint. unwavering result, reduction on was plus in subject current highlight available our that RCF revolving October subject a term an October including million, reducing to revolving a $XXX interest closing is of million compliance that like successful with revolving facility, was Nexa's its KPIs, undrawn drawn The became commitment X.X% margin liquidity The which effective credit XXXX. at $XXX recently million. XX, would

ambition. these are our conviction and you can see, As consistent efforts with ESG

years. of debt, XX, maturing allegations cost. as it important our years is average mention that our payment currently sufficient of September to and all cash average of maturity to total the the Regarding in taller is an a has It X X.X next X.X%

our in XX increased last because $XX debt the balance is in adjusted Finally, months, again million EBITDA EBITDA lower cash from leverage, measured X.X% X.XXx the adjusted of quarter-over-quarter, by of driven despite the ratio prevailing by trend to increase prices. net which to lower mainly the

Slide to moving XX. Now

down by the XX% copper averaged second the rates goal interest that per of such to Regarding speculation the XXXX. of cetera. is LME by main third market price to property X% it high-end for At from LME new and from not the has economic responded were that potential zinc the second the $X,XXX LME from quarter U.S., $X,XXX down by ton, of quarter noting fundamentals, X% per slower sector. in and quarter as averaged third by economic same Chinese growth, time, X% the prices The the of reason expected the third up the XXXX, XXXX. in XXXX stimulus, the worth the XXXX price ton, from also zinc economy, quarter But et particularly of in related in quarter as economy decline acknowledgment

monetary XXXX Metal production as still the some rest a months, to zinc in that copper negatively In such a variables seeing the the environment. and result prices term, for the mining Europe impacted the following as policy about U.S., be both prevailing uncertain short-term current to well ahead despite already steel by prices Chinese positive. as fundamental by and long in economy. outlook the of we're mid- remains fact are and challenging the Looking zinc to of as cuts price expected the

investment the Additionally, from metals. in demand automotive base infrastructure for a continue impact to construction, and will sector expectations positive have

the online. will to see copper continue to we for new anticipate On that both and supply side, we production significant in, challenges bring

the will hand to back over I Ignacio Now his remarks. for presentation final

this by and would our the ramp-up replacing The year. is at flotation our while last On The completion mentioning like focus circuit of of close presentation our priority. rest to and the to Carlos. is improve you, the capacity. to quality recoveries Thank pumps slide, top concentrates increase Aripuanã of Jose for priorities I a

advancing sheet. We optimize remain to related expense forward approve to first Cerro to addition the to looking balance and are to studies We quarter this the next our look corporate We committed project of Pasco for project. integration in year. strengthening in on alternatives costs, CapEx the

continue will the our prioritizing station We accelerate exploration program, of life assets. our to

safety, to ESG continue commitments. productivity public will We focus and on

we you will our long-term for to presentation. we our take this that, the are of business. happy in forward, With Thank questions. industry Looking be confident attending fundamentals and your all

will question-and-answer begin session. the We Instructions] [Operator now

address the audience, going audience. got questions Now the some on we that to are we from online

Company. interest rate from this is start & Alexandra with What will We a Alexandra question from Symeonidi, in sustainability-linked the RCF? Blair new William

This that of with with established sulfur, clarify, the sustainability-linked ESG is this In X.X% is relation the this for overnight Jose points the interest possibility financing to plus question, facility. been rate is to just targets depending the secured Carlos del rate, another compliance which on Valle. have

We from Simon have Alexandre another audience question the from well. as

that plan has does this? the it leverage of Is for seems the a increased there company? to terms the leverage, this address How In leverage quarter. in target company

we has about And as this EBITDA This of leverage debt and because can are are right we towards is the continuously. changed the Currently, Xx, year. our efforts that we Xx something our talk you end much. because above doing reduced imagine, mainly below net increased of hasn't bring the the that all to

in However, Xx. we more the will sustainable. be around long term, mid in would have more to we something definitely, leverage believe don't We feel comfortable facilities. But with going around that any our Xx levels

to continue to on initiatives we a this number bring work So of down.

to bring it trying on and we Obviously, and maximize all debt. currently below in we're and to to top try is the that month years debt priority but reduce prices, a the leverage is. our part good customer control net Our next to net will depend reduce that consequently factors generation to of the influence can levels

Bradesco What 'XX QX free in of we question can in impact for and cash flow Camilla terms have from XQ expect Aripuanã? another We Barder BBI. from

months the first on in far, year So we presentation. in $XXX this cash Aripuanã impact it the of million in flow as the was put X

in a number on We idea the quarter the process. the because summer For this the put expect breakeven number ramp-up, how be and fourth that goes or fourth the will depending start of EUR flow. towards And we outflow first quarter quarter. in XX cash on the year, quarter, the EUR cash XX in cannot here it the is we the million next end around of million. impact of the a is to to we of But assess a in third year

guidance when keep for January we market the of month. rest provide the So will posted we the in

color We have from for on expect from for and you And some in a do Camilla could of BBI. terms follow-up Bradesco XXXX? question volumes what you provide zinc copper

in guidance X to that is you, in X January. until months. Yes, that provide in this our also we come going coming would like I is wait to or please

Why costs Orlando costs. Cajamarquilla. related increase lower first in and We Barriga raw Capital. materials is quarter-on-quarter question question My have to a cost from conversion Credicorp from despite

increasing Actually, or driving driver energy. us main conversion was of the cost cost the Cajamarquilla in

Alexandra from a working capital outflow inventory shall big We in more reverse have Blair There this and the higher Symeonidi, to from was & question quarter. please And give William Can QX? a Company. lower there? payables due we expect you in color to

see we've been quarter, review quarter first and that quarter. will had third go is results if the and what the Actually, actually very you we a you second the capital, reversing in the you significant back working in investment which of

but beginning So actually working much have the at if are same capital. have we're of have These that with longer more as the for or we pretty a level, taken terms. lower should control we compare renegotiating industry of working slightly example, way capital, of result that that the with initiatives optimize a also payment suppliers, marginally to standards all inventory do, our we the always year, within the ourselves changing terms number we deteriorations to

contracts actually a our is implement continue. get renegotiate takes renew. this to in structural contracts So terms. consolidated cost initiatives will It’s that we contracts, better This time related order when change control to as to

worry of capital are recovering about think expect the reversal a quarter that the the the here be there don't in that. I wouldn't year. will we lost that fourth in the I is key I that quarter So point working because we first

an because will Credicorp to Barriga, one question it the costs. The was Orlando question audio We seems was had to Capital. Cajamarquilla related from question we that from go And back problem.

conversion and material So why Yes. despite did over quarter quite costs? cost lower raw increase

about communication. So that, with I'm the as sorry I probably was explaining,

our And mainly cost explaining, was was to inflation. is linked exposed to energy this I to Cajamarquilla contract. As is

to has longer a that been that. this have contract We

the this the conversion the was in as work program shown fewer productivity and be variable being Having this in people next reducing increment on quarter is that, to measures for year next to on our very on and benefits in we successful. production the work increasing going of operation, of well. said started to September a are year So these Most work budget first to main cost. have in the costs to

other Could from considering We color have geographies? capital from America. give allocation Asencio, Is question growth some about of Nexa forward? going Bank us in a Carlos you inorganic

question. this important a Yes, very is

our prices, And these with make optimization mines the that us mentioning are With money cash. on also still all are problems, helping with programs of it's smelters. most our worth that we generate running more

you as we debt had see, can to capital debt. this high and is reduce a However, allocation majority the in the

that, the for putting debt, And for have provide We coming assess going together priority. to months I as we much and are cash we're the coming to budget based was is to on this reducing how year. the the start saying, And the we generation look the more the growth, other early capital best still to allocation year next might inorganic option. I of beginning we is will From at options days for the next color This company. the of think to year. or and the market change the mid provide

some we This have assessing. We growth. that something options are in organic good is

the debt. was past is As finish the several today, -- the more clarity on to saying start to approval I Aripuanã have reducing and projects the of priority

are these have and priorities coming the that for for XXXX. So the X we months

capacity? is It's the annual expect What we year? Aripuanã & have production And Symeonidi, Company. what related Blair William Alexandra one should from to Aripuanã. question from We next

expect ramping up So to keep over the next we the year.

to We about reach color second the guidance the in the to running provide and by quarter, ratio So reading quarter. we're to work production, X.X full on issued tons production. the next more And plan, when we the year. million a still when is going start we the full expect

from to another There’s from Credicorp would breakeven? Capital. Barriga Aripuanã related expect When you question to reach Orlando Aripuanã

CapEx. Having capacity related case CapEx And months, this So it's end the those reach of full these installation as -- that, first of Leonardo a was mentioning, towards also this because and is and Aripuanã to the the investing in of is said are we next higher we year. the expect breakeven. the that also we will pumps pumps changing quarter in probably

is the said breaking. But the should year, second be we our this affecting in So we as breakeven of at costs. in presentation, quarter next

for question related can have Are comes another there from bottlenecks other It Aripuanã. to management Morgan identify. We Stanley. Aripuanã ramp-up any the [Indiscernible] that from

as has Yes, urinal very Aripuanã to affected this ramp-up a because start flaws very in is difficult And also can I there say summary were the that as a good been the some that construction. question. design

the system. say that many we bottlenecks pumping a had today, in is But have exposure of some small flotation we So the would I main in processes.

the that production year. us this, We first this we but bottlenecks. see is is other don't replacing today. end is besides the up, quarter the to flotation day might have the system So related the of of to But to small of the any some in towards full the going ramp next the one pumps take

are questions the the to these that go all please. back So moderator, we have. We

concludes This question-and-answer session. our

his will over Rosado, Ignacio for remarks. to hand I ahead. Now please go final Mr.

Thank you, everyone, for attending.

difficult quarter see, can this is still a you for us. As

As saying, coming that are discipline. work in make financial the to bring up running We're Aripuanã reduce and we to committed streams in and cost months. we working to is CapEx many sure try our the up the to to were

we day. forward of in more Have Thank color look the again very you you. provide So at good a for time, end the you thank to and the the much year. quarter next

The conference presentation. attending Thank concluded. has for you today's now

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