Nexa Resources S.A.(NEXA) - 2024 Q2 - Quarterly Report

Financial Performance - Net revenues for Q2 2024 were US$736 million, a 17% increase from US$627 million in Q2 2023 and a 27% increase from US$580 million in Q1 2024[2]. - Adjusted EBITDA for Q2 2024 was US$200 million, up from US$72 million in Q2 2023 and US$123 million in Q1 2024, reflecting a year-over-year increase of 178%[5]. - The net loss for Q2 2024 was US$69 million, with a basic and diluted loss per share of US$0.58, compared to a net loss of US$103 million in Q2 2023[2]. - In 1H24, total net revenues amounted to US$1,316 million, up 2% year-over-year[23]. - The company reported a net loss of $102.8 million in Q2 2024, compared to a net loss of $15.4 million in Q1 2024[123]. - Adjusted EBITDA for Q2 2024 was $71.5 million, with an adjusted EBITDA margin of 11.4%[123]. - The company reported a gross profit of US$120.1 million in 2Q24, an increase of 852.4% from US$12.6 million in 2Q23[61]. - Adjusted EBITDA for the mining segment was US$132 million in 2Q24, up 561.9% from US$20 million in 2Q23, primarily due to higher LME metal prices and lower treatment charges (TCs)[63]. Production and Sales - Zinc production in Q2 2024 was 83kt, a 2% increase from Q2 2023, but a 5% decrease from Q1 2024 due to lower volumes from Peruvian mines[3]. - The smelting segment achieved total production of 152kt in Q2 2024, a 3% increase year-over-year and a 10% increase quarter-over-quarter[4]. - In 2Q24, Nexa's zinc production was 170 kt, with a guidance of 381 kt for the full year 2024[12]. - Zinc equivalent production totaled 159kt in Q2 2024, up 5% compared to Q2 2023, with average zinc head grades increasing by 27bps to 2.99%[32]. - Zinc production was 82.5kt in Q2 2024, a 2% increase from Q2 2023, while copper production rose by 12.6% to 9.7kt year-over-year[32]. - Zinc metal and oxide sales in 2Q24 totaled 148.0kt, down 0.6% from 2Q23, but up 7% compared to 1Q24[66]. - In 2Q24, zinc production totaled 12.1kt, down 13% from 2Q23, due to reduced treated ore volumes and lower zinc grades[39]. Costs and Expenses - The mining cash cost net of by-products decreased to US$0.03/lb in Q2 2024, down from US$0.37/lb in Q2 2023[3]. - Cost of sales in 2Q24 was US$557 million, down 1% year-over-year, primarily due to lower consumption of third-party concentrate in the smelting segment[24]. - In 2Q24, SG&A expenses were US$30 million, down 7% from 2Q23 and down 10% from 1Q24[26]. - The company reported a total COGS (Cost of Goods Sold) of $454.8 million for Q2 2024, with a breakdown of $127.0 million for Três Marias, $65.7 million for Juiz de Fora, and $262.1 million for Cajamarquilla[132]. - The All-in Sustaining Cash Cost (AISC) for mining operations was US$65.5 per ton in Q2 2024[128]. - Cash cost net of by-products decreased to US$(0.58)/lb in Q2 2024 from US$(0.13)/lb in Q2 2023, primarily due to higher by-products contribution[37]. Cash Flow and Liquidity - Total cash at June 30, 2024, was US$474 million, an increase from US$324 million at March 31, 2024[6]. - Free cash flow for Q2 2024 was positive US$149 million, influenced by a debenture issuance[6]. - Operating activities generated net cash flows of US$78 million in 2Q24, with cash provided by operating activities before working capital variations at US$133 million[101]. - The company is focused on maintaining liquidity and managing financial risks amid market uncertainties[120]. Debt and Financing - Nexa's consolidated gross debt reached US$1,854 million as of June 30, 2024, a 7% increase from US$1,733 million on March 31, 2024[98]. - Net debt decreased to US$1,387 million at the end of Q2 2024 from US$1,427 million at the end of Q1 2024[99]. - Nexa extended its debt maturity profile with a new bond offering of US$600 million and a debenture issuance of approximately US$130 million[98]. - The company accessed a R$200 million (approximately US$40 million) credit line from BNDES with an interest rate linked to ESG targets[98]. Market Conditions - The average LME prices for zinc, copper, and lead rose by 12%, 15%, and 2% respectively compared to the same period in 2023[23]. - The average LME zinc price was US$2,833/t, up 12.2% from 2Q23 and 16% from 1Q24[108]. - The U.S. Federal Reserve maintained interest rates, but analysts anticipate potential cuts in the second half of 2024, impacting base metal prices[108]. - Zinc demand in Latin America slightly increased in 2Q24, driven by a surge in Peru's export sector[108]. Environmental and Social Responsibility - The Environmental Impact Assessment for the Magistral Copper Project was rejected, prompting Nexa to reassess the project's feasibility[10]. - The company has trained over 600 local residents in technical fields since 2019, reflecting its commitment to local talent development[8]. - Nexa's first ESG-linked debenture issuance totaled R$650 million (approximately US$130 million) to improve liquidity and manage liabilities[8].