Nexa Resources S.A.(US:NEXA)2024-08-03 18:02Financial Data and Key Metrics Changes - Consolidated net revenues for Q2 2024 were $736 million, up 27% quarter-over-quarter and 17% year-over-year, driven by higher LME prices and increased smelting sales volume [3][15] - Adjusted EBITDA for Q2 2024 was $200 million, a 64% increase from the previous quarter and a 180% increase from $72 million in Q2 2023 [4][16] - The net leverage ratio improved to 2.72 times in Q2 2024 from 3.75 times in Q1 2024 and 2.83 times in Q2 2023 [4][21] Business Line Data and Key Metrics Changes - Zinc production reached 83,000 tons in Q2 2024, a 2% increase year-over-year but a 5% decrease quarter-over-quarter due to lower volumes from Peruvian mines and the cessation of Morro Agudo contributions [7] - Smelting segment metal sales totaled 148,000 tons in Q2 2024, down 1% year-over-year but up 7% from Q1 2024 [8] - Cash cost for mining decreased to $0.03 per pound in Q2 2024 from $0.37 per pound in Q2 2023, while smelting cash cost increased to $1.19 per pound from $1.12 per pound year-over-year [7][9] Market Data and Key Metrics Changes - The average LME zinc price in Q2 2024 was $2,833 per tonne, up 12% year-over-year and 16% quarter-over-quarter [22] - The average LME copper price was $9,753 per tonne in Q2 2024, reflecting a 15% increase year-over-year and 16% quarter-over-quarter [22] Company Strategy and Development Direction - The company is focused on optimizing its portfolio by divesting non-core assets, such as the Morro Agudo operation, to improve cash flow generation [6] - The Cerro Pasco integration project is advancing, with expectations for approval in the coming months, aimed at enhancing operational efficiency and extending mine life [5][14] - The company is committed to enhancing productivity and efficiency across operations while prioritizing safety and cash generation [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of zinc and copper markets, anticipating continued support for prices due to macroeconomic factors and tight concentrate markets [30][54] - The company aims to reduce gross debt while maintaining a disciplined approach to capital allocation, balancing investments in growth with shareholder returns [34][60] Other Important Information - The company reported a healthy liquidity position with approximately $794 million available at the end of Q2 2024, including an undrawn credit facility [19] - The company was recognized for sustainable practices by the Peruvian Stock Exchange, reflecting its commitment to ESG strategies [26] Q&A Session Summary Question: Thoughts on the zinc market with new production in Central Africa - Management is monitoring new production closely but believes it will not offset the current tight concentrate market, supporting positive zinc pricing [29] Question: Capital allocation decisions between Cerro Pasco expansion and debt repayment - The company plans to prioritize debt reduction while also considering dividends and investments in growth, particularly in the Cerro Pasco project [32][34] Question: CapEx expectations for next year - The company expects CapEx for 2025 to be similar to 2024, around $311 million, primarily for sustaining activities [50][52] Question: Plans for copper diversification - The company is exploring opportunities to increase copper in its portfolio, leveraging its competitive advantages in underground mining [54]