Nexa Reports Fourth Quarter and Full Year 2020 Results Including Adjusted EBITDA of US$403 Million
11 Febrero 2021 - 6:07PM
Business Wire
Nexa Resources S.A. (“Nexa Resources” or “Nexa” or the
“Company”) (NYSE:NEXA) (TSX:NEXA) has published its 4Q20 and
2020 Results.
CEO Message – Tito Martins
“Nexa delivered solid and sustainable operational results,
overcoming the challenges and restrictions imposed by the COVID-19
global outbreak.
We believe that the Nexa Way program, which aims to structurally
improve our business model and transform our culture, has assisted
us in adeptly navigating this unprecedented scenario. We would not
have been able to achieve these results without our team and their
enthusiasm to transform.
Following the end of government-mandated temporary suspension of
our Peruvian mines and limited smelters production, we safely
resumed our activities during the second semester and we are
currently running at normal levels. In Brazil, we operated our
mines at higher throughput that allowed Nexa to partially
compensate the Peruvian reduced volumes.
Our main development project, Aripuanã, is progressing according
to the updated project schedule and we are on track to begin
production in early 2022.
Moving forward, we remain committed to our capital allocation
discipline. With a unique portfolio of projects, we continue to
build a path to grow steadily in zinc and copper in the Americas in
the long-term.
In addition, we have strengthened our inclusion and plurality
program and we are establishing some metrics to enhance the
disclosures of our social and environmental programs.
Our balance sheet remains solid and we have proactively adopted
measures to continue to strengthen our business and protect our
people, contractors and host communities. We are confident that we
will be able to continue to create value for all our stakeholders
by maximizing the returns of our operations and growth projects,
building the mining of the future.”
4Q20 Highlights | Operational and Financial:
- Consolidated net revenue reached US$635 million in the fourth
quarter compared with US$586 million a year ago mainly driven by
higher zinc and copper prices.
- Zinc production of 92kt in the quarter was 11% higher than in
4Q19, primarily driven by higher production in Cerro Lindo due to
better zinc head grade and in Vazante, which was negatively
impacted in 4Q19 by the temporary reduction in processing capacity
in response to the trunnion repair. Compared to 3Q20, zinc
production increased by 12%.
- In 4Q20, metal sales were 162kt, relatively flat year-over-year
and 2% higher from 3Q20, mainly driven by the continued demand
recovery in our home markets.
- Adjusted EBITDA was US$167 million in 4Q20 compared with US$65
million in 4Q19 and US$152 million in 3Q20.
- Mining cash cost in 4Q20 was US$0.33/lb compared with
US$0.41/lb in 4Q19 mainly driven by higher by-products credits and
lower operating costs. Compared to 3Q20, mining cash cost decreased
by 1%.
- In 4Q20, smelting cash cost was US$0.92/lb compared with
US$0.89/lb in 4Q19 mainly driven by higher operating costs and LME
prices, partially offset by higher TCs and the Brazilian real
depreciation. Compared to 3Q20, smelting cash cost increased by
13%.
- Incremental costs related to COVID-19 amounted to US$5.6
million in 4Q20, which were partially offset by other costs
savings.
- Nexa also recognized a non-cash US$10 million pre-tax
impairment loss in 4Q20 primarily related to the suspension of
Ambrosia pit (Morro Agudo mine), which was reaching the end of its
life of mine.
- Net income in 4Q20 totaled US$53 million or US$0.38 earnings
per share, including the impairment loss effect.
2020 Highlights:
- In 2020, consolidated net revenue totaled US$1,951 million
compared to US$2,333 million a year ago explained by lower average
metal prices and lower volumes.
- Zinc production in 2020 was 313kt, down 13% from 2019 mainly
driven by the decrease in processed ore volumes in our Peruvian
mines, which were affected by the government-mandated temporary
shutdown in response to the COVID-19 outbreak.
- Metal sales volume of 585kt in 2020 was 6% lower versus 2019
driven by the decrease in production in the Cajamarquilla and Juiz
de Fora smelters, which were partially offset by Três Marias’ solid
performance.
- Adjusted EBITDA in 2020 was US$403 million compared with US$349
million in 2019, positively affected by the decrease in costs and
exploration and project evaluation expenses, and the depreciation
of the Brazilian real against the U.S. dollar.
- Net debt to Adjusted EBITDA for the last twelve months stood at
2.29x compared to 3.23x at the end of September, reflecting the
improvement in the results of our operations and cash
generation.
- In response to the COVID-19 outbreak, we proactively managed
our liquidity position by assuming additional debt during 1H20. We
added about US$300 million to our cash balance through export
credit notes in March and April. In June, we issued a 7-year bond
of US$500 million and the net proceeds were fully used to refinance
certain existing financial indebtedness.
- Liquidity remains strong. Total cash amounted to US$1,121
million at December 31, 2020 and our current available liquidity is
US$1,421 million, including the revolving credit facility.
Corporate highlights
- Nexa declared in February 2020 and paid in March 2020 a cash
dividend to shareholders of approximately US$50 million.
- We continue to focus on maximizing the efficacy of our
governance practices, and the mandate of the sustainability
committee of our Board of Directors (the “Board”) was updated to
broaden capital projects oversight. The committee assists and
advises the Company’s Board in supporting safe and sustainable
business practices in the conduct of the Company’s activities, as
well as in reviewing technical, economic and social matters with
respect to the Company's projects.
- In 2020, Mr. Gianfranco Castagnola was elected as the newest
member of Nexa’s Board and Mr. Jaime Ardila was appointed as the
new Chairman of the Board.
- The extraordinary general meeting of the Company’s shareholders
approved the cancellation of the 881,902 common shares held in
treasury, repurchased under the Nexa repurchase program concluded
in November 2019.
- On February 11, 2021, Nexa’s Board approved a cash dividend
distribution to Nexa’s shareholders of US$0.264273 per common share
or approximately US$35 million to be paid on March 26, 2021.
Operational efficiency initiatives program
| Nexa Way
- The Nexa Way program generated an estimated annualized positive
impact to EBITDA of US$98 million in 2020, based on the initiatives
implemented in 2019. We continue to target an improvement of at
least US$120 million in annualized EBITDA from initiatives by the
end of 2021.
- In light of COVID-19, new Nexa Way initiatives have emerged and
during 2H20 some of these initiatives have been implemented at a
cost included in our selling, general and administrative expenses
(“SG&A”) of US$12 million.
- We expect additional initiatives to be implemented in 1H21 at
an estimated cost of US$3 to 13 million, temporarily increasing
SG&A. The new initiatives should generate a potential
additional EBITDA contribution of approximately US$60 million by
the end of 2021.
- Our ability to achieve this target through 2021 depends on
future metal prices, production and demand recovery, among other
factors.
Guidance:
- Mining production guidance for 2020 was achieved. We produced
313kt of zinc in concentrate, 28kt of copper in concentrate and
38kt of lead in concentrate in the year. Silver production exceeded
guidance totaling 6,826koz.
- Metal sales of 585kt exceeded 2020 guidance.
- Mining cash cost of US$0.39/lb in 2020 was 14% lower than 2020
guidance, positively affected by higher by-product credits and cost
reduction initiatives from the Nexa Way program.
- Smelting cash cost of US$0.81/lb in 2020 was 4% above 2020
guidance mainly driven by higher zinc prices (2020 zinc price
estimates of US$0.99/lb versus 2020 actual LME average zinc price
of US$1.16/lb).
- In 2020, CAPEX before tax credits amounted to US$354 million
compared with US$350 million guidance. We have accrued tax credits
of US$18 million with respect to our ongoing projects.
Consequently, CAPEX totaled US$336 million in 2020. We also
continued to invest in our future with an additional US$38 million
of exploration and US$15 million project evaluation investments in
our greenfield and brownfield projects.
- On January 19, 2021 Nexa published its three-year period
2021-2023 operational guidance. The Company also provided cash
cost, capital expenditures and other operating expenses guidance
for 2021. Refer to our “Nexa | Guidance 2021-2023” section for
further details.
Projects:
- In response to our commitment to capital discipline to navigate
this uncertain scenario, Nexa has maintained its revised project
portfolio and timeline, subject to additional COVID-19
related-measures.
- The Vazante mine-deepening brownfield project progressed as
planned and the investment amounted to US$13 million in 2020. In
2021, we plan to complete the excavation of phase 2 of the EB-140.
The EB-140 is the main stage of the mine deepening project and its
final assembly is estimated to be concluded by 2022.
- Exploration activities at the Bonsucesso project were resumed
as planned. Engineering studies (FEL3) are resuming in 1Q21.
Bonsucesso is expected to extend the life of mine of Morro Agudo
and to use the existing infrastructure and mine facilities of the
complex, reinforcing the integration of our mines and smelters in
Brazil.
- Magistral engineering studies (FEL3) continue to progress. In
2021, we expect to advance further detailed engineering and
optimization opportunities to mitigate the risk of project
execution, before consideration of project approval.
- Exploration activities at the Hilarión project restarted and in
4Q20 we executed 4,603 meters of exploratory drilling.
- The pre-feasibility studies at Shalipayco and Pukaqaqa remain
on hold. Exploration activities at Florida Canyon are also on
hold.
- The Jarosite conversion project for Cajamarquilla should be
reassessed in 2021.
Aripuanã
- Construction works continue to advance and 70% of physical
progress was achieved by the end of 4Q20. We are on track to
conclude mechanical completion in 4Q21 and to start production in
early 2022.
- In 2020, we invested US$187 million, with cumulative incurred
CAPEX of US$312 million since the beginning of the construction.
Estimated CAPEX for 2021 is US$232 million.
- The pre-operational equipment is mobilized and stopes are under
development phase for Arex and Link mines. Mining activities are
starting in February. We have 186 employees from mine operations
actively working on mine development.
- The qualification program for future mining operators has
continued to progress and the second class with 104 students will
graduate in March 2021.
- Refer to our “Aripuanã project” section for further
details.
For full details, please visit our Investor Relations webpage
at:
http://ir.nexaresources.com E-mail: ir@nexaresources.com
About Nexa Resources
Nexa is a large-scale, low-cost integrated zinc producer with
over 60 years of experience developing and operating mining and
smelting assets in Latin America. Nexa currently owns and operates
five long-life underground mines - three located in the Central
Andes of Peru and two located in the state of Minas Gerais in
Brazil - and is developing the Aripuanã Project as its sixth
underground mine in Mato Grosso, Brazil. Nexa was among the top
five producers of mined zinc globally in 2020 and also one of the
top five metallic zinc producers worldwide in 2020, according to
Wood Mackenzie.
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version on businesswire.com: https://www.businesswire.com/news/home/20210211005969/en/
Nexa Resources - Investor Relations Roberta Varella
ir@nexaresources.com
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