Nexa Resources S.A. (NYSE:NEXA) Q3 2023 Earnings Call Transcript
Nexa Resources S.A. (NYSE:NEXA) Q3 2023 Earnings Call Transcript October 31, 2023
Operator: Good morning and welcome to Nexa Resources Third Quarter 2023 Conference Call. All participants will be in a listen-only mode. This event is being recorded and is also being broadcast via webcast and may be accessed through Nexa's Investor Relations website where the presentation is also available. [Operator Instructions] I would now like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations for opening remarks. Please go ahead.
Rodrigo Cammarosano: Good morning, everyone, and welcome to Nexa Resources' third quarter 2023 earnings conference call. Thanks for joining us today. During the call, we will be discussing the company's performance as per the earnings release that we issued yesterday. We encourage you to follow along with this onscreen presentation through the webcast. Before we begin, I would like to draw your attention to slide 2, as we will be making forward-looking statements about our business. And we just ask that you refer to the disclaimer and the conditions surrounding those statements. It is now my pleasure to introduce our speakers. Joining us today is our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior Vice President of Mining, Leonardo Coelho. So now I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.
Ignacio Rosado: Thank you, Rodrigo and thanks to everyone for joining us this morning. Please let's move now to slide 3 where we will begin our presentation. Let me start by providing you a brief overview on our third quarter of 2023. We continue to experience a scenario of downward pressure on metal prices driven by negative external factors such as inflation and high interest rates in the US in addition to uncertainty about the performance of key sectors of the Chinese economy. Although the prices of our main metals have performed at levels below our expectations, we remain committed to our financial discipline which made possible to have a positive cash generation in the third quarter of this year. Our operating performance was in line with expectations in our mining and smelting segments in both segments.
A large open-pit mining site, its machinery providing a long-term supply of copper.
We also provided cash cost guidance revised downwards. Total revenue reached $649 million and was down 8% year-over-year, mainly due to lower Zinc LME prices and smelting sales volumes. Compared to the last quarter, net revenues increased by 4% as a result of higher mining production and metal sales volume in the period, which were partially offset by lower LME metal prices. Consolidated adjusted EBITDA for the quarter decreased by 32% year-over-year, reaching $82 million. This performance was mainly explained by lower LME prices. Compared to the second quarter of this year, adjusted EBITDA grew 14% due to higher metal sales, mine production and lower costs in Brazil. We revised the Aripuanã production range downwards for the year, given the limitations we found related to the design capacity of the flotation pumping system, which resulted in the extension of the ramp up phase.
Nonetheless, 2023 production estimates for Nexa’s other mines and smelters remain unchanged. Our Cerro, Pasco integration project is advancing as expected. Exploration project evaluation and other expenses were reduced by 15%. However, we are still prioritizing the expansion of the resource and mineral research base in our mines. I would like to close this slide by mentioning that we have successfully closed a $320 million sustainability linked revolving rate facility, which will support Nexa’s liquidity profile and is linked to our carbon reduction key performance indicators. Jose Carlos will go into details later on in the presentation. Now moving to slide 4. Regarding the operating performance of the mining segment, you can see that Zinc production increased to 87,000 tons, up 15% year-over-year, mainly explained by the increase in critical volume and the startup of the Aripuanã mine.
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