Nexa Resources S.A.(NEXA) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total consolidated net revenues for Q3 2024 reached $709 million, up by 9% year-over-year, largely due to higher average LME prices [4][13] - Adjusted EBITDA was $183 million, 111% higher than the $87 million reported in the same quarter last year, with an adjusted EBITDA margin of around 26% [4][13] - Net leverage ratio improved to 2.2 times, down from 2.7 times in Q2 2024 and 3.1 times in Q3 2023 [5][16] Business Line Data and Key Metrics Changes - Zinc production reached 83,000 tons in Q3 2024, down by 5% year-over-year, primarily due to the absence of contributions from Morro Agudo and lower average grades [7] - Smelting segment metal sales totaled 153,000 tons in Q3 2024, down 1% from the same quarter last year, but up 3% compared to Q2 2024 [8] - Aripuanã achieved positive adjusted EBITDA for the third consecutive quarter and recorded its first full quarter of positive operating cash flow [9] Market Data and Key Metrics Changes - Average LME zinc price in Q3 2024 was $2,779 per ton, up by 14% from Q3 2023 [17] - Copper price averaged $9,210 per ton in Q3 2024, up by 10% from Q3 2023 [18] - Silver price averaged $29 per ounce in Q3 2024, up by 25% from Q3 2023 [18] Company Strategy and Development Direction - The company is focused on cash flow generation initiatives, operational efficiency, and enhancing productivity across all operations [4][19] - The Cerro Pasco integration project aims to unlock significant value, with investments to extend operational capacity and prolong operations [11][12] - The company is prioritizing efficient capital allocation to high-return assets, including the sale of non-core projects [6] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued support for zinc and copper prices due to stable demand and supply constraints [19] - The company anticipates further increases in treated ore and throughput rates, higher metal recoveries, and cost reductions [10] - Management acknowledged challenges in the smelting segment due to negative treatment charges and lower premiums, indicating potential production cuts [25] Other Important Information - The company invested $191 million in CapEx in the first nine months of 2024, with a reduction in capital expenditures guidance from $311 million to $300 million [14] - Available liquidity at the end of Q3 2024 was approximately $845 million, with a sound balance sheet and improved debt maturity profile [16] Q&A Session Summary Question: Status of Aripuanã and tailings filter - Management indicated that Aripuanã is currently operating at 90% capacity and plans to implement a fourth tailings filter, expected to be operational in 10 to 14 months [21][22] Question: Impact of recent trends on TCRCs - Management noted that negative treatment charges are unusual and may lead to production cuts if conditions do not improve [25] Question: Capital allocation and M&A focus - The company aims to reduce gross debt while exploring M&A opportunities, particularly in copper, to diversify and stabilize its portfolio [29][30] Question: Year-end reserves expectations - Management expressed confidence in extending the life of Cerro Lindo and Aripuanã through ongoing drilling and exploration efforts [32][34]