|– Nexa, one of the world’s largest producers of zinc, reached US$ 686 million in consolidated net revenue in the second quarter of 2021, an increase of 104% compared to the second quarter of previous year.
– Adjusted EBITDA reached US$ 233 million in the second quarter, against US$ 40 million in the same period of the previous year, accounting for an increase of 483%.
– The company revised its investment plan and raised its CAPEX forecast to US$ 510 million in 2021.
Nexa continues recording robust financial and operating results despite the COVID-19 pandemic. In the second quarter, its consolidated net revenue reached US$ 686 million, accounting for an increase of 104% over the same period of last year, driven by higher sales volumes and higher metal prices in the international market. The significant percentage variation between the periods is also justified by the impact of restrictive measures related to COVID-19 on Nexa’s operations in Peru in the second quarter of 2020, and by the reduction in the utilization rate of the Juiz de Fora unit in Brazil in the same period of last year.
Zinc production grew 31% compared to the second quarter of 2020, totaling 82,000 tons, while copper production reached 7,000 tons, an increase of 46% over the same period of the previous year. Lead production increased 150% in the quarter, reaching 12,000 tons compared to the 5,000 tons produced between April and June of last year. The sale of metals totaled 157,000 tons, an increase of 31%.
This quarter, Nexa reached adjusted EBITDA of US$ 233 million, the highest quarterly result in its history. Said result accounts for an increase of 483% in EBITDA compared to the second quarter of last year, which is mainly driven by the sales growth and better prices in the international market. The company’s net income totaled US$ 122 million, against a loss of US$ 56 million in the second quarter of 2020.
“We safely delivered another quarter of strong results and sound operating performance. All protocols adopted to mitigate COVID-19 in our operations, projects and communities remain in place and we believe they have been effective. We are also close to completing our first greenfield project, in Aripuanã (MT), which will be our sixth mine in operation. Our mining and smelter operations are operating at high utilization rates and, looking ahead, we anticipate that demand for our products will also continue recovering as the global economy evolves. We will continue investing and growing, with the necessary adjustments in view of the challenges and opportunities imposed by COVID-19, among other factors. Considering the favorable situation of the markets and our sound performance, we are evaluating the capital allocation strategy and the geographies in which we operate”, says Nexa’s CEO, Tito Martins.
The Nexa Way Program, aimed at improving the business portfolio and cultural transformation, continues to bring positive results for the business. Since its implementation in 2019, we estimate an annualized impact on the Company’s EBITDA of US$ 110 million. Furthermore, in the second half of last year, an opportunity was identified to implement another Nexa Way work stream, which, until June of this year, generated an annualized impact on EBITDA of US$ 57 million.
In relation to the measures to combat COVID-19, US$ 4.8 million was dedicated in the quarter for the continuity of health protocols in operations, management of the impacts generated by social distancing and support to neighboring communities. In Peru, oxygen plants were donated to the communities of Chinca and Pasco. In Brazil, health professionals were trained and hospital equipment was donated in partnership with Instituto Votorantim. Moreover, a program to support public management to fight the pandemic is in progress and, by December this year, 28,000 basic food baskets will be distributed to communities in social vulnerability.
CAPEX increases to US$ 510 million in 2021
Nexa revised its Capex forecast for 2021 from US$ 450 million to US$ 510 million, due to the cost update of the Aripuanã (MT) project, and increased investments in expansion and non-expansion projects.
Investments in expansion currently planned for this year are estimated at US$ 273 million: 93% of which will go to Aripuanã, while for non-expansion projects, US$ 238 million should be invested. Regarding Aripuanã project, there was an increase in disbursements due to the costs for the development of social distancing protocols to mitigate the dissemination of COVID-19, as well as the periodic mass testing of over 4,000 employees and service providers on the work, among other actions. Regarding the progress of the work, the physical progress of the project reached around 90% at the end of June, and the completion of the project’s construction is scheduled for the fourth quarter of 2021. The start-up is scheduled for the beginning of 2022.
In the area of mineral exploration and project evaluation, Nexa continues its efforts to expand its reserves and mineral resources, which should add up to an investment of US$ 71 million in 2021, in addition to CAPEX.
In the second quarter, CAPEX totaled US$ 116 million. Of this amount, 53% was allocated to expansion projects, mainly driven by the development of the Aripuanã project (US$ 59 million).
Nexa advances its ESG strategy
At Nexa, protecting the environment, health and safety of employees and service providers, as well as the development of communities, have always been a priority. To improve these practices, the company is reviewing its initiatives and improving its ESG (Environmental, Social and Governance) strategy. In the quarter, the highlight was, for example, the evolution of the company’s plurality program. In June, Nexa signed the adhesion letter and the 10 commitments of the LGBTQIA+ Business and Rights Forum, an institution that brings together companies committed to the inclusion and defense of the LGBTQIA+ community and human rights.
Furthermore, to foster gender equality in the mining business, a partnership was established with Artemis, a Canadian company founded by female entrepreneurs. The work is being carried out in collaboration with Nexa’s innovation platform, Mining Lab.
In Aripuanã, Nexa is supporting local public management to improve the community’s structural issues, such as the renovation and improvement of the city’s water treatment plant and the expansion of the aerodrome, bringing benefits to the population in general.
Another highlight encompasses the actions to reduce greenhouse gas emissions, contributing to a low-carbon economy. Coupled with this initiative is the work to reduce the volumes of waste generated and transform them into secondary products, reducing the use of tailings dams.
Nexa Resources is one of the world’s largest producers of zinc, and also 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 and the United States, supplying its products to every continent on the planet. Its employees work every day focused on building the future of mining, in order to be increasingly sustainable and innovative, with the best safety practices and respect for people and the environment. Since 2017, its shares of stock have been traded on the New York and Toronto Stock Exchanges, and its majority shareholder is Votorantim S.A. For more information on Nexa or our full Earnings Release 2Q21, visit www.nexaresources.com.
São Paulo, July 29, 2021.