Nexa Resources S.A. Q2 FY26 earnings call NEXA

Nexa Resources achieved a significant operational inflection in Q2 FY26, with Adjusted EBITDA growing 78% year-over-year to $286 million, representing a 31% margin. Net income was $98 million, or $0.52 per share. This performance was supported by a constructive metal price environment, particularly for silver (up 117% YoY), and the recovery of production at Peruvian mines. Net leverage continued its downward trend, reaching 1.4x, a substantial improvement from 2.28x a year ago, underpinned by over $1 billion in LTM adjusted EBITDA.

Zinc production from mining operations reached 79,000 tonnes, an 8% increase year-over-year, driven by better ore grades across key assets. Cash cost net of byproducts was $0.04 per pound in Q2, resulting in -$0.35 per pound for the first half, well below the 2026 guidance range. This was primarily due to strong byproduct credits from higher copper, silver, and gold prices, as well as lower treatment charges. Cost per tonne of run-of-mine was $57 per tonne for both the quarter and the first half, in line with full-year guidance, despite higher personnel and maintenance costs and Brazilian real appreciation.

Aripuana delivered strong year-over-year performance, with treated ore up 33% to 399,000 tonnes and zinc production up 44% to 8,800 tonnes. A key milestone was the commissioning of the fourth tailings filter, which processed over 50,000 tonnes of tailings and supported average plant feed rates of 249 tonnes per hour in June, achieving 86% capacity utilization. This new capacity is expected to enable higher throughput and increased production in the second half of the year, reducing exposure to weather disruption^🌐s. Exploration efforts focused on infill drilling in H1, with a geophysical program planned for H2 to identify new opportunities.

The Cerro Pasco Integration Project underwent a scope review, increasing the total estimated investment from $138 million to $180 million for Phase 1, with incremental investments allocated to 2027 and beyond. This revision incorporates a geomembrane lining and anticipates the Atacocha tailings storage facility raise. Phase 2 has been deferred to 2032, as the Atacocha open pit mine is now expected to remain in operation longer due to a more favorable metal price environment. Mechanical completion of the pumping system is expected in December 2026, with operating authorization processes starting in Q1 2027.

Smelting zinc metal and oxide sales totaled 134,000 tonnes, down 7% year-over-year and 8% quarter-over-quarter, primarily due to a fire at Cajamarquilla in May. However, the company continued producing cathodes and expects to recover lost volume in the second half. Byproducts significantly contributed to the segment, with sulfuric acid sales up 4%, silver content sales up 22%, and copper cement sales up 40% year-over-year. Cash cost net of byproducts was $1.44 per pound in Q2, above guidance, reflecting higher zinc LME prices impacting raw material costs and temporary higher operating costs at Cajamarquilla.

Nexa maintains a healthy liquidity position with $707 million in total liquidity, including an undrawn $320 million sustainability-linked revolving credit facility. Cash on hand covers financial commitments for the next three years, and the average debt maturity stands at seven years with an average cost of debt of 6.22%. The company remains committed to disciplined deleveraging, targeting net leverage close to 1x by year-end 2026, while prioritizing gross debt reduction and extending the life of existing mines through capital allocation.

Zinc prices remained strong, averaging $3,466 per tonne (up 31% YoY), supported by tight fundamentals and geopolitical risk, though smelter margins were compressed by negative spot treatment charges. Copper prices averaged $13,329 per tonne (up 40% YoY), driven by tight fundamentals and electrification expectations. Precious metals, particularly silver ($73/ounce, more than double YoY), provided diversification and strong byproduct credits. Nexa continues to advance ESG priorities, including strengthening safety controls, investing in communities, deploying AI in operations, and reinforcing risk management and tailings management practices.