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Nexa Resources (NEXA) 1 Nov 24 2024 Q3 Earnings call transcript

AInvestFriday, Nov 1, 2024 11:04 pm ET
2min read

Nexa Resources, a leading global player in the base metals sector, recently held its third quarter 2024 earnings call, revealing a robust performance despite facing market challenges. The company showcased a resilient financial outlook, underscoring its strategic initiatives and operational efficiency.

Financial Performance and Market Dynamics

Nexa Resources' financial performance in the third quarter of 2024 reflected a 9% increase in total consolidated net revenues compared to the same period last year. The surge was primarily attributed to higher average LME metal prices, particularly for zinc, which has been a key driver of industry resilience. The company reported an adjusted EBITDA of $183 million, a significant improvement from the previous year, demonstrating the positive impact of zinc's price trend and operational efficiency.

The zinc market has been characterized by stable demand and supply constraints, fueling optimism about the metal's future trajectory. The average LME zinc price for the third quarter of 2024 averaged $2,779 per tonne, up from the previous year, highlighting the market's confidence in zinc's role in galvanizing sustainable infrastructure and its role in green innovations.

Operational Highlights and Challenges

Nexa Resources' operational performance was marked by significant achievements and challenges. The company's flagship project, Aripuana, recorded positive operating cash flow for the first time and marked its third consecutive quarter of EBITDA growth. This milestone is a testament to Nexa's commitment to enhancing operational efficiency and exploiting the potential of its assets.

However, Aripuana's zinc production experienced a minor dip in the third quarter of 2024 due to lower grades and increased talc levels in the flotation circuit. This challenge is currently being addressed with the acquisition of a fourth filter, which is expected to significantly boost filtering performance and support further production increase.

Strategic Investments and Expansion

Nexa Resources is actively pursuing strategic investments and expansion initiatives. The company's focus on copper, a metal with significant growth potential, is a testament to its forward-looking strategy. Nexa's exploration efforts in copper, particularly in the promising Cerro Lindo project, are expected to yield substantial benefits in the coming years.

The company's commitment to reducing debt and optimizing financial structure is noteworthy. With a net debt to adjusted EBITDA ratio of 2.2x, Nexa Resources is well-positioned to navigate market dynamics and capitalize on opportunities.

Conclusion

Nexa Resources' third quarter 2024 earnings call underscored the company's resilience and strategic acumen. Despite operational challenges, the company's robust financial performance and strategic investments position it well for future growth. With a focus on enhancing productivity, efficiency, and performance across all operations, Nexa Resources is poised to seize growth opportunities and create value for its stakeholders. As the base metals market continues to evolve, Nexa Resources remains a key player, leveraging its operational expertise and strategic vision to navigate the challenges and opportunities ahead.

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