NEXA Q2 Earnings Call Emphasizes 2H Ramp and Debt Reduction

NEXA Keeps 2026 Guidance Intact

President and CEO Ignacio Rosado said first-quarter constraints in Peru are behind the company. He expects Aripuana and Cajamarquilla to support stronger second-half volumes.

A Citi analyst asked whether weaker first-half output pointed to the low end of full-year ranges. Head of Treasury and Investor Relations Rodrigo Cammarosano said production should rise, but he would not commit to the midpoint.

Rosado also addressed expected El Nino effects in Peru. He said Nexa has mitigation measures and does not expect a large 2026 impact under current projections, while national infrastructure remains outside its control.

Nexa Puts Aripuana at Center of 2H Ramp

A Morgan Stanley analyst asked how Aripuana should run after the fourth tailings filter. Cammarosano said throughput has reached about 260 tons per hour, close to nameplate capacity.

Rosado said plant adjustments should take two to three months before full capacity is reached. He sees no significant remaining bottleneck and expects materially more cash flow toward year-end and in 2027.

Rosado also highlighted Cerro Lindo's new block-caving method, which management expects to lower unit costs and improve access to higher-grade copper areas. The silver streaming share fell from 65% to 25% effective in May, increasing spot-price exposure.

NEXA Targets Smelter Cost Recovery

BofA Securities pressed management on smelter conversion costs running above guidance. Rosado blamed Cajamarquilla's fire-related volume loss and Brazilian real strength, which raises dollar-reported costs.

First-half conversion cost was $0.35 per pound versus the $0.31-$0.34 guidance. Nexa expects recovering volumes and cost controls to bring full-year conversion cost back within range.

Cash cost was $1.42 per pound, above the $1.15-$1.34 range, mainly because zinc prices exceeded the guidance assumption. The company said sustained current metal prices would keep pressure on cash cost and prompt reassessment.

Nexa Prioritizes Debt Before Large-Scale M&A

Group CFO and senior VP of Finance José del Valle Castro said gross debt reduction remains the first capital-allocation priority. Net leverage ended Q2 at 1.40x, with management targeting roughly 1x by year-end.

Castro said cash above dividend-policy needs will go toward debt repayment. He stressed that EBITDA can move with commodity prices, reinforcing the focus on gross debt.

When BofA Securities asked about M&A, Rosado said a transformational $800 million to $1 billion acquisition is not feasible with the current balance sheet. He expects larger acquisition capacity to align with deleveraging over the next three to four years.

NEXA Rephases Cerro Pasco Spending

Rosado said the Cerro Pasco review favors longer Atacocha open-pit production and defers Phase 2 to 2032. Management said the sequence preserves expected long-term production while spreading capital over more years.

Estimated project capex rose from $138 million to $180 million, mainly from a geomembrane lining, engineering updates and an earlier tailings-facility raise. The 2026 project budget remains $31 million.

Castro said total 2026 capex guidance remains $381 million after $160 million was spent in the first half. Q2 free cash flow was negative $10 million after a $131 million Peruvian tax settlement; excluding it, free cash flow would have been positive $120 million.

Nexa Enters 2H With Execution as the Focus

Rosado's closing message centered on converting repaired operations and new capacity into production. He emphasized Aripuana, recovered Peruvian output, Cajamarquilla normalization and cost discipline over near-term M&A.

Management remained confident on the second-half ramp but measured on external risks and guidance outcomes. Production growth, smelter normalization and debt reduction remain its priorities for the rest of 2026.

NEXA Zacks Signals Pair Hold Rank With A Scores

NEXA carries a Zacks Rank #3 (Hold), a more neutral near-term signal than the top-ranked #1 (Strong Buy) or #2 (Buy) categories. Its Value, Growth, Momentum and VGM Scores are all A, the highest grade in the framework. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks positions Style Scores as complements to the Rank, with A or B scores generally more favorable. The Rank can change as analysts revise estimates after the just-reported results, so the current signal is not fixed.

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