Nexa Resources S.A.(US:NEXA)2025-04-29 20:08Financial Performance - In Q1 2025, Nexa reported net revenues of US$627 million, an increase of 8% from US$580 million in Q1 2024, driven by higher LME metal prices[17]. - Net income for Q1 2025 was US$29 million, with basic and diluted earnings per share of US$0.09, a significant improvement from a net loss of US$12 million in Q1 2024[7][17]. - Adjusted EBITDA in Q1 2025 was US$125 million, down from US$128 million in Q1 2024 and US$197 million in Q4 2024, reflecting higher costs and lower smelting sales volume[17]. - Free cash flow was negative at US$226 million in Q1 2025, mainly due to a seasonal variation in working capital of US$265 million[20]. - Total cash at the end of Q1 2025 was US$401 million, down from US$640 million at the end of Q4 2024, with total available liquidity of US$721 million[15]. - Net debt increased to US$1,488 million in Q1 2025, with a Net Debt to Adjusted EBITDA ratio of 2.1x, up from 1.7x in Q4 2024[9][20]. - Nexa's consolidated cash cost guidance for 2025 remains reaffirmed, with 1Q25 C1 cash cost at US$0.11/lb, in line with expectations despite operational challenges[29][37]. - Cost of sales in Q1 2025 amounted to US$501 million, a 2% increase year-over-year, primarily due to higher zinc prices impacting concentrate purchases[50]. - Adjusted net income attributable to Nexa's shareholders was US$21 million in Q1 25, with basic and diluted earnings per share of US$0.16, compared to a loss of US$0.74 in 4Q24[74]. Production and Operations - Zinc production in Q1 2025 totaled 67kt, a decrease of 23% year-over-year, primarily due to lower output across all units except for Atacocha[13]. - The company anticipates higher production across all metals in 2Q25 compared to 1Q25, driven by improved access to higher-grade zones and increased treated ore volumes[26]. - Total ore mined decreased by 8.6% year-over-year to 2,983kt in Q1 25, while treated ore volume fell by 10.2% to 3,048kt, attributed to operational challenges and adverse weather conditions[79][80]. - Zinc production totaled 67.3kt in Q1 25, down 23% from Q1 24, with a 19% decline in zinc equivalent production to 133.4kt[79][81]. - The average zinc head grade declined to 2.62% in Q1 25, down 40bps from Q1 24, while copper head grade increased slightly to 0.34%[82]. - Total production at Três Marias reached 39kt in Q1 25, down 13% from Q1 24, impacted by hydrometallurgical instability[159]. - Zinc metal production in Q1 25 was 11.2 kt, down 42% year-over-year and 46% quarter-over-quarter due to a fire incident affecting production facilities[166]. Exploration and Development - In 1Q25, Nexa's Proven and Probable Mineral Reserves increased to 110.3 million tonnes, containing 4,075kt of zinc, up from 4,031kt at the end of 2023, primarily due to infill drilling and resource conversion efforts[23]. - The company invested US$16 million in mineral exploration and project evaluation in 1Q25, compared to US$12 million in 1Q24[51]. - Nexa's exploration expenses in 1Q25 were US$14 million, with a full-year guidance of US$70 million, focusing on mineral exploration and project evaluation[40]. - The company anticipates a total exploration and project evaluation budget of US$88 million for 2025, with US$20 million allocated for other operating expenses[51]. - The company plans to enhance utilization capacity with the installation of a fourth tailings filter expected in 2H25[128]. Financial Strategy and Debt Management - Nexa raised US$500 million through a 12-year bond issuance at a 6.600% coupon, allowing the repurchase of approximately 49% of the 2027 notes and 72% of the 2028 notes, enhancing financial flexibility and reducing refinancing risk[23]. - Nexa executed a US$500 million bond issuance with a 6.600% interest rate, maturing in April 2037[199]. - The bond proceeds were used to repurchase approximately 49% of the 2027 notes and 72% of the 2028 notes, reflecting effective liability management[199]. - This refinancing initiative extends the Company's debt maturity profile and enhances financial flexibility[200]. - The actions taken reduce near-term refinancing risk and highlight solid credit metrics and investor confidence[200]. Market Conditions and Risks - The company is closely monitoring global supply chain risks, including geopolitical tensions and inflationary pressures, which could impact production levels and costs[28]. - Nexa's 2025 commodity price assumptions include zinc at US$1.29/lb and copper at US$4.22/lb, with treatment charges potentially adjusting downward due to market trends[31][36]. - Foreign exchange variations positively impacted net financial results by US$44 million in Q1 25, compared to a negative impact of US$76 million in Q4 24[68]. - The Brazilian real appreciated by 7% against the U.S. dollar, with the end-of-period exchange rate at R$5.742/US$1.00 in Q1 25[69].