– Evolution of international base metal prices contributed to a 20% increase in consolidated net revenue, reaching US$ 722 million.
– Adjusted net income reached US$ 94 million, accounting for a growth of 194% over the same period of the previous year.
Nexa, one of the five largest zinc mining companies in the world, ended the first quarter of 2022 with a financial performance above market expectations, mainly due to the increase in metal prices in the world market. The average prices of zinc, copper and lead on the London Stock Exchange increased 37%, 18% and 16%, respectively, compared to the first quarter of 2021. With such scenario, consolidated net revenue reached US$ 722 million, compared to US$ 603 million in the same period of the previous year, despite the lower production volume of zinc and copper, mainly due to the lower treated ore volume in Cerro Lindo (Peru) and the temporary stoppage of the underground mine at Vazante (MG) between mid-January and the end of March, caused by the record volume of rainfall for the period. From January to March, zinc production reached 66.3 thousand tons (-14%), 6.9 thousand tons of copper (-13%), 12.4 thousand tons of lead (+19%), 2.2 million ounces of silver (+9%) and 6.4 thousand ounces of gold (+33%). Sales of metallic zinc and zinc oxide, products with higher added value, reached 134 thousand tons, accounting for a decrease of 9%, following the reduction of volumes produced.
In the quarter, Nexa signed an agreement for the sale of copper to be produced by the Aripuanã unit for five years, limited to 31 thousand tons, at market prices (offtake agreement). This arrangement replaced a previously established royalty payment obligation and generated a non-cash impact of US$ 19 million in the quarter. Excluding said non-cash effect, adjusted EBITDA for the period reached a record level, totaling US$ 208 million, a growth of 16% over the first quarter of 2021. In this sense, it is important highlighting that higher metal prices in the global market and cost reduction initiatives allowed Nexa to partially balance inflationary costs and the appreciation of the Brazilian currency.
The company’s adjusted net income in the first quarter reached US$ 94 million, an expressive growth over the result of US$ 32 million in the same period of the previous year.
“We have delivered another strong result, overcoming operational challenges such as the emergence of Omicron variant and the flooding in Vazante. We believe that our financial discipline combined with our focus on operational efficiency along with constantly improving execution, will support our annual guidance and create sustainable value, allowing us to grow stronger as a socially responsible Company and an attractive investment option for the market. Looking ahead, we remain optimistic, and the fundamental outlook for base metals remains positive, supporting solid demand for our products. Nonetheless, we continue to closely monitor risks associated with the potential of new COVID-19 variants, the Russia-Ukraine war, and supply chain disruptions amid inflationary pressures”, highlights Ignacio Rosado, CEO of Nexa.
Regarding investments to fight COVID-19, Nexa dedicated US$ 2.8 million to adopt sanitary measures and health and safety protocols in all its operations and to support the communities where it operates during the first three months of the year. The expectation is that such costs will continue at least until the end of 2022.
CAPEX reaches US$ 83 million in the first quarter
Nexa’s CAPEX investments reached US$ 83 million in the first three months of the year, 35% of which was dedicated to expansion projects, mainly to Aripuanã (MT). Moreover, regarding CAPEX, the
appreciation of the Brazilian currency against the US dollar generated a negative impact of US$ 4.7 million for the quarter. For the year 2022, Nexa expects that investments will be accelerated in the coming quarters, maintaining the guidance of US$ 385 million.
This year, commercial production at Aripuanã is scheduled for the third quarter, with an estimated volume of 120 thousand tons of zinc equivalent per year, when the mine will be operating at full capacity. By the end of the first quarter, physical progress reached 100% and the project mechanical completion was concluded. The investment in Aripuanã seeks to increase the integration between the company’s mines and smelters. Furthermore, the undertaking is considered one of the most sustainable in Brazilian mining, with dry tailings disposal and reuse of practically all the water used in the production process.
Regarding the area of mineral exploration and project evaluation in 2022, Nexa will continue its efforts to expand its reserves and mineral resources, which should add up to an investment of US$ 82 million in addition to CAPEX. In this first quarter of the year, exploration expenses totaled US$ 16 million.
Nexa continues advancing in its plurality and positive impact practices on the supply chain
During the first quarter, Nexa became the first international partner of Artemis Project, based in Canada, with activities in Brazil. This initiative was founded by women entrepreneurs who work focused on disruptive solutions in the economic, environmental and social areas in the mining sector. In the case of Nexa, one of the goals is to also expand plurality in its supply chain.
Moreover, the company published the code of conduct for its suppliers, aiming to establish clear rules of ethical behavior and socio-environmental performance, stressing the company’s commitment to improving its positive impact on the supply chain.
Nexa Resources is one of the world’s largest producers of zinc and produces copper and lead. It has over 60 years of experience in the mining and smelting segments, with operations located in Brazil and Peru and offices in Luxembourg, supplying its products to every continent on the planet. Its employees work every day focused on building the future of mining, to be increasingly sustainable and innovative, with the best safety practices and respect for people and the environment. Since 2017, its shares have been traded on the New York Stock Exchange, and its majority shareholder is Votorantim S.A. For more information on Nexa or our full Earnings Release, visit www.nexaresources.com.
São Paulo, April 28, 2021.