Nexa Resources NYSE: NEXA reported a sharply stronger first quarter of 2026, with management pointing to higher metals prices, improved sales volumes and better operating performance, particularly at its Aripuanã mine.
Chief Executive Ignacio Rosado said adjusted EBITDA more than doubled year over year to $283 million, with a margin of nearly 32%. Net income totaled $118 million, or $0.67 per share. Net leverage ended the quarter at 1.59 times, down from 2.09 times a year earlier, supported by stronger last-12-month adjusted EBITDA.
Rosado said the quarter benefited from “a constructive price environment across our entire metal mix,” higher sales volumes in both mining and smelting, and continued operational improvement. He said silver was a standout, with average prices 164% above the first quarter of 2025.
The company also faced temporary disruptions at its Peruvian operations. Rosado cited heavy rainfall at Cerro Lindo, an illegal community blockade at Atacocha and a shaft constraint at El Porvenir as factors that affected sequential production. He said those issues have been addressed and the affected operations returned to normal run rates.
Mining Segment Benefits From Grades and Byproducts
Mining zinc production reached 79,000 tons in the quarter, up 18% from a year earlier, as all five mines benefited from improved ore grades. Sequentially, production declined because of the temporary constraints in Peru.
Rosado said mining cash costs, net of byproducts, were negative $0.76 per pound, below the company’s 2026 guidance range, helped by stronger byproduct grades and higher zinc, copper, silver and gold prices. Cost per run-of-mine ton was $57, in line with guidance.
The mining segment generated net revenue of $460 million and adjusted EBITDA of $231 million, representing a 50% EBITDA margin.
Aripuanã was the standout operation in the quarter, Rosado said. The mine produced 13,000 tons of zinc, a quarterly record since reaching commercial production, supported by higher grades, better plant utilization and improved operational stability. Construction and installation of the fourth tailings filter were completed in late April, with commissioning beginning in May and expected to conclude in the second quarter.
Rosado said the filter should materially reduce exposure to weather-related throughput disruptions during the rainy season. He also highlighted exploration results at Massaranduba, including a 16.6-meter intercept grading 9.6% zinc and 3% lead.
Smelting Volumes Improve, but Treatment Charges Pressure Margins
In smelting, zinc metal and oxide sales totaled 147,000 tons, up both year over year and quarter over quarter. Rosado said Brazilian units continued to recover their production pattern, with Juiz de Fora producing 56% more zinc than in the first quarter of last year and Três Marias producing 17% more. Cajamarquilla continued to operate at solid levels.
Smelting cash costs, net of byproducts, were $1.40 per pound, slightly above the upper end of annual guidance, reflecting higher LME zinc prices and lower treatment charges affecting concentrate purchases. Rosado said the company expects this to ease modestly in coming quarters as Peruvian operations return to normal run rates, reducing the need for third-party concentrate.
The smelting segment posted net revenue of $609 million and adjusted EBITDA of $51 million, an 8% margin. Rosado said margins reflected “structural pressure on global smelter economics from very low TCs.”
In response to a question from Pedro Melo of Citi, management said Brazilian smelter operations are expected to hold through the next three quarters and “probably” perform a little better than in the first quarter, while continuing to recover toward 2023 and 2024 operating indicators. Management also said low or negative treatment charges remain a challenge, though byproducts such as sulfuric acid, silver and copper are helping offset the pressure.
Revenue Rises, Free Cash Flow Turns Negative on Seasonal Factors
Chief Financial Officer José Carlos del Valle said first-quarter net revenue totaled $888 million, up 42% year over year and down 2% sequentially. The annual increase was driven by higher metal prices, a $158 million larger byproduct contribution and improved performance in both operating segments.
Adjusted EBITDA rose 126% year over year to $283 million. Sequentially, EBITDA declined 6%, mainly because of higher unit costs from increased third-party concentrate consumption needed to offset temporarily lower output at Nexa’s Peruvian mines, del Valle said.
Capital expenditures totaled $72 million in the first quarter, about 19% of full-year guidance. Del Valle said spending was directed mainly toward sustaining activities, mine development and tailings storage facilities. Phase 1 of the Cerro Pasco integration project accounted for $8 million of the quarter’s CapEx, compared with full-year guidance of $31 million. Nexa reaffirmed total 2026 CapEx guidance of $381 million and exploration and project evaluation guidance of $86 million.
Free cash flow was negative $126 million in the quarter. Del Valle said operating cash flow before working capital was $308 million, but working capital and other variations were negative $283 million, consistent with typical first-quarter seasonality. The quarter also included tax payments related to stronger 2025 results, annual bonuses and settlement of year-end confirming payables. Management said it expects these impacts to reverse substantially over the coming quarters.
Nexa ended the quarter with $716 million in total liquidity, including an undrawn $320 million sustainability-linked revolving credit facility. Average debt maturity was 7.2 years, and the average cost of debt improved to 6.27% from 6.49% at the end of 2025. Del Valle said the company remains focused on reducing gross debt, lowering interest expense and keeping net leverage below 1.7 times during 2026.
Cerro Pasco Project Remains on Schedule
Rosado said Phase 1 of the Cerro Pasco integration project remained on schedule during the quarter. Nexa completed slope stabilization at the construction site, began civil works and structural assembly of the pump building, and completed manufacturing, testing and packaging of main equipment including the thickener and pumps.
Construction is targeted for completion in the third quarter, with full project finalization expected in the fourth quarter. The company expects to begin operating authorization work ahead of a targeted start of pumping in the second quarter of 2027.
Environmental approvals for El Porvenir and Atacocha are expected in the first quarter of 2027, Rosado said. In the Q&A session, management said Nexa has more than one year of tailings capacity at the operations and is confident the permits will arrive in time.
Management said Phase 2 of Cerro Pasco, which involves integrating the two mines and producing more ore, is still being evaluated. The company expects to update the market in the second half of 2026 on how it plans to manage the next stage. Management said permits expected for El Porvenir and Atacocha would also apply to the integration.
Silver Stream Step-Down to Boost Cash Generation
Rodrigo Cammarosano, head of investor relations and treasury, said silver and gold should continue contributing strongly to cash generation. He noted that in April Nexa reached a delivery threshold under its Cerro Lindo silver streaming agreement, reducing the streamed share of Cerro Lindo production from 65% to 25%. The remaining 75% will now be sold at prevailing market prices.
In response to a question from Adam Smiransky, del Valle said the stream step-down could add about $100 million per year in cash generation at current prices, assuming Cerro Lindo produces about 3.6 million ounces of silver annually. He said the additional cash does not change Nexa’s capital allocation strategy and will help accelerate gross debt reduction.
Asked by Peter Varga of AAM about leverage, del Valle said an overall net leverage ratio of about 1 time would give the company “a lot of comfort” through commodity cycles, though the pace depends on prices. Management declined to comment on market rumors about the company’s parent potentially divesting Nexa, but said the company continues to evaluate growth opportunities, especially in copper, while balancing them with deleveraging priorities.
Rosado closed the call by saying the company is committed to stable operations for the rest of the year and to offsetting cost pressures from oil, inflation and Brazil-related effects through productivity measures. He said Nexa remains confident it will deliver on its commitments and guidance.
About Nexa Resources NYSE: NEXA
Nexa Resources SA is a Brazil-based metals and mining company with a primary focus on zinc and copper. Listed on the New York Stock Exchange under the ticker NEXA, the firm develops, extracts and processes mineral resources for industrial applications worldwide. Headquartered in São Paulo, Brazil, Nexa is a leading participant in Latin America’s mining sector with a diversified portfolio of upstream and downstream operations.
The company’s operations span multiple mining and smelting complexes in Brazil’s Minas Gerais and Mato Grosso regions, as well as in Peru’s coastal and Andean zones.
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