NEXA Resources Q3 2025 Earnings Call Summary

1Key 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.

2Strategic 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.

3Forward 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.

4Challenges 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.

5Notable 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.