NEXA — Nexa Resources S.A.

NEXA Resources Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Revenues: $764 million, up 8% sequentially and year-over-year.
• Adjusted EBITDA: $186 million, a 16% increase from the previous quarter and a 2% increase year-over-year, with a margin of 24%.
• Net Income: $100 million ($0.52 per share).
• Free Cash Flow: $52 million, reflecting improved cash generation.
• Zinc Production: 84,000 tons, a 14% increase from Q2, driven by strong performance at Aripuana and recovery at Vazante.
• Mining Segment EBITDA Margin: 44%, supported by stronger prices and operational performance.
• Net Leverage: Improved to 2.2x from 2.3x in the previous quarter.

2. Strategic Updates and Business Highlights

• Aripuana Project: Installation of a fourth tailings filter is underway, expected to enhance production capacity by mid-2026.
• Cerro Pasco Integration: Progressing on Phase 1 with site mobilization and major procurement packages secured.
• Operational Improvements: Enhanced mining output and smelting performance, with Cajamarquilla achieving its highest output to date.
• Exploration Investments: $53 million year-to-date, focusing on long-term value creation and mine life extensions.

3. Forward Guidance and Outlook

• Working Capital: Expected to contribute positively in Q4, aiming for a neutral cash flow impact for the full year.
• CapEx Guidance: Maintained at $347 million for 2025, with flexibility for adjustments in 2026 based on market conditions.
• Zinc Market: Prices expected to remain stable around $3,000 per ton, supported by tightening supply and robust demand.

4. Challenges and Points of Concern

• Workforce Turnover: High turnover rates at Aripuana (currently 18-20%) remain a concern, impacting operational stability.
• Market Volatility: The company operates in a cyclical industry, with potential risks from fluctuating zinc prices and treatment charges.
• Geopolitical Risks: Upcoming elections in Peru may introduce uncertainty regarding mining regulations and community relations.

5. Notable Q&A Insights

• Leverage Management: The company aims to reduce gross debt by $500-$600 million over the next four years, targeting net leverage closer to 1x.
• CapEx Flexibility: While some projects are essential, there is flexibility in discretionary spending depending on market conditions.
• Silver Production: Limited flexibility to increase silver output due to existing mining plans, but a silver streaming agreement may enhance cash flow in 2026.
• Political Environment: The new Peruvian administration may pose challenges, but maintaining strong community relations is seen as crucial for project sustainability.

Overall, Nexa Resources reported a strong Q3 performance, with strategic initiatives in place to enhance production and cash flow, while navigating challenges related to workforce stability and market volatility.