Nexa Resources reported a 4% increase in net revenue for the third quarter of 2023, despite facing downward pressure on metal prices due to inflation, high US interest rates, and uncertainty in the Chinese economy. The company's adjusted EBITDA decreased by 32% year-over-year, primarily due to lower metal prices. Meanwhile, Nexa Resources managed to maintain a positive cash generation and a healthy liquidity profile, with a cash balance of approximately $722 million.
Key takeaways from the call include:
- Nexa Resources revised the production range for the Aripuanã mine downwards due to limitations in the flotation pumping system.
- The company closed a $320 million sustainability-linked revolving rate facility to support liquidity and carbon reduction goals.
- Zinc production increased by 15% year-over-year, while smelting sales volume decreased by 5%.
- Nexa Resources is advancing the Pasco Integration Project and expects to submit it for approval in Q1 of the following year.
- The company anticipates short-term challenges due to global economic factors but remains committed to financial discipline and cost improvement measures.
Despite the downward revision in the Aripuanã mine's production range, estimates for other mines and smelters remain unchanged. The company also announced the successful closure of a five-year, $320 million sustainability-linked revolving credit facility, further bolstering its liquidity position.
Nexa Resources' operational performance showed a 15% year-over-year increase in Zinc production. However, smelting sales volume experienced a 5% decrease. Despite these mixed results, cash costs in both the mining and smelting segments showed a decline.
The company is making progress on the Pasco Integration Project, expecting to submit it for approval in the first quarter of the following year. Despite the anticipation of short-term challenges due to factors such as monetary policy and uncertainty about the Chinese economy, Nexa Resources remains steadfast in its commitment to financial discipline and cost improvement measures.
In terms of future plans, Nexa Resources is prioritizing the completion of the Aripuanã ramp-up, improving recoveries and concentrate quality, and increasing capacity through pump replacements. The company expects the Aripuanã mine to reach breakeven by the end of the first quarter of next year and full production, with an annual capacity of 2.2 million tons, by the second quarter.
Moreover, Nexa Resources is focusing on reducing its high debt and will assess capital allocation options in the future. The company is committed to finishing the Cerro Pasco project and reducing debt before considering inorganic growth. Nexa emphasized its commitment to financial discipline, cost reduction, and operational improvement during the call.
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