Nexa Resources Q2 Earnings Call Highlights

Adjusted EBITDA rose 78% year over year to $286 million, while revenue increased 28% to $908 million, driven by higher metal prices, recovering Peruvian mining operations and improved Brazilian smelter performance. Zinc production increased 8% year over year, with Aripuanã treated ore up 33% and zinc output up 44% after commissioning a fourth tailings filter. Management expects further production gains as the plant approaches nameplate capacity. Net leverage fell to 1.4 times, but free cash flow was negative $10 million after a $131 million Peruvian tax-settlement payment, while Cajamarquilla fire-related disruptions pushed smelting costs above guidance. Nexa maintained its full-year production, capital-spending and smelting-sales outlooks. Nexa Resources NYSE: NEXA reported second-quarter 2026 adjusted EBITDA of $286 million, up 78% from a year earlier, as higher metal prices, a recovery in Peruvian mining operations and improved Brazilian smelter performance lifted results. Net income was $98 million, or $0.52 per share, while net revenue rose 28% year over year to $908 million. Chief Executive Officer Ignacio Rosado said the company’s adjusted EBITDA margin reached about 31%, supported by a favorable pricing environment across its metal portfolio. Silver prices averaged 117% higher than in the second quarter of 2025, according to the company, while zinc and copper prices also contributed to revenue and byproduct credits. Net leverage declined to 1.4 times at quarter-end, from 1.59 times in the preceding quarter and 2.28 times a year earlier. Chief Financial Officer José Carlos del Valle said the improvement reflected trailing 12-month adjusted EBITDA exceeding $1 billion. The company is targeting net leverage close to 1 times by year-end while maintaining its investment-grade rating. Mining zinc production totaled 79,000 tonnes during the quarter, an 8% year-over-year increase driven by higher ore grades at key operations. Sequential production was broadly flat, as recovering Peruvian operations offset temporary lower grades, the commissioning of a new tailings filter and scheduled maintenance at Aripuanã. Mining net revenue was $524 million, and adjusted EBITDA was $220 million, representing a 42% margin. Cash costs net of byproducts were $0.04 per pound in the second quarter and negative $0.35 per pound for the first half, below the company’s 2026 guidance range. Nexa attributed the first-half result to stronger copper, silver and gold byproduct credits and lower treatment charges. At Aripuanã, treated ore increased 33% year over year to 399,000 tonnes and zinc output climbed 44% to 8,800 tonnes. The company commissioned its fourth tailings filter during the quarter, a project intended to remove a production bottleneck and reduce exposure to weather-related disruptions during Brazil’s rainy season. The new filter processed more than 50,000 tonnes of tailings and supported average plant feed rates of 249 tonnes per hour in June, or more than 86% utilization, according to Rosado. Peak daily rates exceeded 92%, although average utilization for the full quarter was 71%. Management said the operation is approaching nameplate capacity and expects a further production increase in the second half as the plant is adjusted to the higher throughput. Nexa also implemented block caving at Cerro Lindo, which Rosado said should over time lower unit costs and improve access to higher-grade areas. Smelting zinc metal and oxide sales totaled 134,000 tonne