Nexa Resources S.A.(NEXA) - 2022 Q4 - Annual Report

Company Overview - Nexa Resources S.A. reported a total of 132,438,611 common shares outstanding as of December 31, 2022[3]. - The company is classified as an accelerated filer under the Securities Exchange Act of 1934[4]. - Nexa Resources S.A. has filed all required reports during the preceding 12 months, indicating compliance with regulatory obligations[4]. - The financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board[4]. - The company has not indicated any error corrections or restatements in its financial statements[4]. - There is no indication that Nexa Resources S.A. is a shell company as defined by the Exchange Act[5]. - The company is incorporated in the Grand Duchy of Luxembourg[2]. Financial Performance - The company reported a revenue of $5.2 billion for the last quarter, representing a 15$1.5 billion for the fiscal year 2022, representing a 15% year-over-year growth[20]. - The company achieved an EBITDA of $600 million, with an EBITDA margin of 40$200 million for 2022, reflecting a 20% increase from the previous year[20]. - Shareholder returns were strong, with a dividend increase of 5% announced, reflecting the company's robust financial health[10]. Production and Operations - Zinc production totaled 200,000 tons in 2022, a 10% increase compared to the previous year, driven by improved mining operations[20]. - The Aripuanã mine commenced sales of concentrates in Q4 2022, contributing to the overall production growth[20]. - The company achieved a production of 606.9 thousand tonnes of zinc metal and oxide available for sale in 2022, along with by-products including sulfuric acid and silver concentrate[145]. - In 2022, the company produced 296.4 thousand tonnes of zinc contained in concentrates, 33.2 thousand tonnes of copper, 57.4 thousand tonnes of lead, 9,974.5 thousand ounces of silver, and 27.2 thousand ounces of gold, totaling 495.7 thousand tonnes of metal on a zinc equivalent basis[143]. - The company’s mining operations in Peru saw a 12.1% increase in zinc production compared to 2021, despite temporary suspensions due to local community blockades[142]. Strategic Initiatives - The company provided guidance for the next quarter, expecting revenue between $5.5 billion and$5.7 billion, indicating a potential growth of 6% to 9%[3]. - New product launches contributed to a 20% increase in sales, with the latest product line accounting for $1 billion in revenue[4]. - The company is investing$300 million in research and development for new technologies aimed at enhancing user experience[5]. - Market expansion efforts have led to a 25% increase in international sales, particularly in the Asia-Pacific region[6]. - The company announced a strategic acquisition of a smaller tech firm for $200 million to enhance its product offerings[7]. Risks and Challenges - The mining industry is subject to inherent risks, including underground hazards and geotechnical challenges, which could adversely affect operations and financial position[48][51]. - Future declines in metal prices could lead to curtailing operations or modifying growth strategies, impacting overall financial performance[41]. - The company faces competition from other mining and processing companies, which could impact costs, productivity, and competitiveness[46]. - The ongoing geopolitical tensions and economic conditions may continue to create volatility in metal prices and demand for Nexa Resources' products[40]. - The company is exposed to political, economic, and social risks in countries like Peru and Brazil, which could adversely affect financial performance and operational stability[109]. Environmental, Social, and Governance (ESG) Initiatives - The company is focusing on sustainability initiatives, with a commitment to reduce carbon emissions by 30$300 million in capital expenditures for 2023, focusing on expanding mining operations and enhancing production capacity[20]. - In 2022, the company invested $381.2 million in capital expenditures, with$112.5 million allocated to the Aripuanã expansion and sustaining investments[82]. - The company must continuously invest capital to maintain and expand operations, with reliance on operating cash flows to support these expenditures[82]. Market Conditions - In 2022, global demand for metals continued to recover, but international market prices remained volatile due to macroeconomic conditions, including the Russia-Ukraine conflict and high inflation[39]. - In 2022, Chinese demand accounted for 49% of global zinc demand and 54% of global copper demand, indicating significant reliance on the Chinese market[45]. - The company is exposed to financial risks due to currency exchange rate fluctuations, as revenues are primarily in U.S. dollars while operating costs are in reais and soles[77]. Legal and Regulatory Compliance - The company is subject to regulatory changes that could increase the time and costs associated with building and operating tailings dams, particularly following incidents in Brazil[55]. - The company is subject to anti-corruption and anti-bribery laws across multiple jurisdictions, with potential violations posing risks to reputation and financial position[121]. - Noncompliance with data privacy regulations such as GDPR, LGPD, and LPDP could result in fines, penalties, and damage to the company's reputation[75].