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Why is Nexa Resources S.A. (NEXA) suffering a dip in premarket trading?

Nexa Resources S.A. (NEXA) experienced a decline of 13.59% in the premarket after the company announced third-quarter 2021 results. However, the last trading session concluded at $9.27 with a decrease of 0.11%.


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Third Quarter 2021 Results

NEXA announced third quarter 2021 results on 28th October 2021. In the third quarter, consolidated net sales were US$655 million, up from US$538 million a year earlier and US$686 million in 2Q21. Moreover, Zinc output fell by 2% in the third quarter compared to both the third and second quarters of the previous year, owing to a lower average head grade. Maintenance shutdowns, both scheduled and unforeseen, also had an impact on production during this time. The adjusted EBITDA was US$155 million, up from US$152 million in the third quarter of last year and US$233 million in the second quarter of this year.

Mining cash cost in 3Q21 was US$0.23/lb., down from US$0.33/lb. in 3Q20, owing to reduced TCs and greater by-product credits (volume and pricing). Furthermore, the smelting cash cost was US$1.16/lb. in 3Q21, up from US$0.79/lb. in 3Q20. This was because of market-related factors such as higher zinc prices and reduced TCs. Smelting cash costs rose 8% in 2Q21, owing to the same variables. Last but not least, the company lost $9 million, or $0.14 per share. 

CEO Transition

On 16th September 2021, NEXA reported that Mr. Tito Martins will be replaced as President and Chief Executive Officer by Mr. Ignacio Rosado. Mr. Rosado will join Nexa on 1st November 2021 and will begin a smooth transfer with Mr. Martins. Mr. Rosado oversaw Hochschild Mining Plc’s first public offering and acquisition strategy focused on Canadian mining assets. Mr. Rosado was the CEO of Volcan since 2014 as well as its Deputy CEO from 2010.

Prior to joining Volcan, he worked at Hochschild Mining Plc. as a Director and Chief Financial Officer since 2005, and at McKinsey & Company as a Senior Project Manager since 2000. Moreover, he was part of boards of directors for Lake Shore Gold Corp., Zincore Metals, Cordoba Minerals, and Kaizen Discovery throughout his career. Lastly, he has earned a good reputation throughout his life and is capable to take the company to the next levels of success.

Second Quarter 2021 Results

NEXA released second-quarter 2021 results on 29th July 2021. Higher metal prices and volumes drove consolidated net revenue to US$686 million in the second quarter, up from US$337 million a year earlier and US$603 million in 1Q21. Moreover, higher production at Peruvian mines drove the quarter’s zinc output of 82kt up 31% and 5%, respectively, compared to 2Q20 and 1Q21. Metal sales totaled 305kt in 2Q21 owing mostly to global demand recovery.

Furthermore, Adjusted EBITDA totaled US$413 million, up from US$40 million in 2Q20 and US$180 million in 1Q21. Mining cash costs fell by 40% in 1Q22 compared to 1Q21. COVID-19-related incremental expenses were US$4.8 million in 2Q21. Lastly, the company had a net profit of US$122 million or $0.82 per share.

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