– Nexa, one of the world’s largest zinc producers, reached US$ 2 billion in consolidated net revenue in 2020.
– Adjusted EBITDA reached US$ 403 million in 2020, a 15% increase over 2019.
– CAPEX investments planned for 2021 amount to US$ 450 million.
Nexa showed solid and sustainable results for the year, overcoming the challenges imposed by the COVID-19 global outbreak, which impacted the average prices of base metals as well as the volumes sold on the global market. Against this backdrop, the Company’s consolidated net revenue reached US$ 2 billion, compared to the US$ 2.3 billion recorded in 2019.
On the other hand, mining production guidance for the year was achieved, while the metal sales exceeded 2020 projections. Nexa produced 313,000 tons (metric tons) of zinc; 28,000 tons of copper; 38,000 tons of lead; and 6.8 million ounces of silver. In Peru, the mines were shuttered for roughly two months, due to the state of national emergency decreed by the Peruvian government in response to the COVID-19 outbreak. However, during the second half of 2020, activities were resumed safely, and operations are currently normal. In Brazil, despite the challenges of the pandemic, the mines operated with higher throughput, which allowed the Company to partially offset the reduced volumes in Peru.
Over the 12-month period, sales of metallic zinc and zinc oxide reached 585,000 tons, a 6% drop compared to the previous year, due to the lower production volumes in Cajamarquilla (Peru) because of the restrictions imposed by the pandemic, as well as in Juiz de Fora-MG (Brazil), as production volumes were adapted to market demand. However, the solid performance of the Três Marias-MG (Brazil) smelter partially offset the reduced production at the other smelters.
“We overcame the challenges imposed by the pandemic through our teams’ tremendous efforts and willingness to transform. Our Nexa Way program, which aims to structurally improve our business model and transform our culture, has assisted us in adeptly navigating this unprecedented scenario. In 2021, we remain committed to our capital allocation discipline. With a unique portfolio of projects, we continue to build a path to grow steadily in zinc and copper in the Americas in the long term. Plus, our main development project, in Aripuanã-MT (Brazil), is progressing according to the updated project schedule and we are on track to begin production in early 2022”, says Nexa CEO Tito Martins.
Adjusted EBITDA reached US$ 403 million in 2020, a 15% increase over the previous year, influenced by lower operating costs, reduced expenses on mineral exploration and project evaluation, and the positive effect of the depreciation of the Brazilian Real against the US Dollar. The Nexa Way program generated an estimated annualized positive impact to EBITDA of US$98 million in 2020. The company’s net income, in turn, was negative by US$ 653 million compared to net losses of US$ 158 million in 2019. The result for the year was affected by losses due to non-cash accounting effects (impairment) in the amount of US$ 577 million.
The net debt to EBITDA ratio in the last twelve months was 2.29x, compared to 3.23x at the end of September, reflecting the improvement in results of operations and cash generation. Liquidity, in turn, remains strong.
Regarding investments to cope with COVID-19, Nexa invested US$ 15 million during the year to adopt sanitary measures as well as health and safety protocols in all of its operations, in addition to supporting the host communities where it operates. For 2021, these costs are expected to total around US$ 10 million.
In 4Q2020, Nexa recorded consolidated net revenue of US$ 635 million, 8% higher than the previous year, primarily due to higher zinc and copper prices. Adjusted EBITDA was US$ 167 million, compared to US$ 65 million in the same period last year. Net income was US$ 53 million in the fourth quarter, compared to net losses of US$ 1 million in the same period last year.
CAPEX investments are expected to reach US$ 450 million in 2021
For 2021, CAPEX investments are estimated at US$ 450 million, of which US$ 232 million will be earmarked to the Aripuanã Project. Throughout 2020, there was an effort to preserve cash; consequently, there was a reduction in CAPEX, maintaining essential investments to ensure that operations met all safety requirements. In 2021, Nexa is expected to resume its investments at levels similar to the period prior to the pandemic, in order to ensure the long-term sustainability of its business. In 2020, CAPEX investments totaled US$ 336 million.
Regarding Nexa’s main project currently under development, Aripuanã-MT (Brazil), it is expected to start operating next year. Currently, around 1,400 people are working on its implementation. By the end of 2020, the project’s overall physical progress had reached 70% completion.
In mineral exploration and project evaluation, Nexa will continue its efforts to expand its mineral reserves and resources, which is expected to add investments of US$ 71 million in 2021, in addition to CAPEX. In 2020, a total of US$ 54 million was allocated. For 2021, the resources involve the development of new greenfield and mine projects already in operation, as well as the execution of mining projects in phases FL1 and FL2, among others.
Nexa Resources is one of the world’s largest zinc mining companies, and is also a major producer of copper and lead. It has been operating for over 60 years in the mining and metallurgy segments, with operations located in Brazil and Peru as well as offices in Luxembourg and the United States, supplying its products to all continents around the globe. The employees every day work focused on constructing the mining of the future, in order 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 and Toronto Stock Exchanges, and its majority shareholder is Votorantim S.A. For further information, please visit www.nexaresources.com
São Paulo, February 11, 2020.