Nexa Resources 2Q26 Results: Smelting Beats JPMe - Positive

Research evidence excerpt

J P M O R G A N

Latin America Equity Research

05 August 2026

Nexa Resources

2Q26 Results: Smelting Beats JPMe - Positive

Neutral

NEXA, NEXA US

Price (05 Aug 26):$14.05

LatAm Basic Materials

Our take: Smelting drives better-than-expected results – positive. Nexa’s

reported EBITDA of $286M was an increase of 1.2% q/q and 3.5% ahead of our

estimates. The beat to JPMe came mainly from the smelting unit, while mining

figures came roughly in-line with JPMe. (a) Smelting EBITDA of $66M increased

29.1% q/q and 161.0% y/y, beating JPMe by 13.5%. The positive surprise came

from lower-than-expected cash opex per ton, which came 3.9% below our

estimates. (b) In the mining unit, EBITDA of $220M contracted 4.9% q/q but came

in-line with our estimates. Despite this, revenues came in above our expectations

with zinc volumes 5.7% above JPMe and realized prices +10.0% vs. JPMe. While

cash opex per ton came in 14.4% higher than our estimates. The quarterly increase

in cash costs net of by-products was driven by lower by-product contribution,

mainly from silver and gold prices and mark-to-market adjustments, and higher

operating costs across the portfolio, except for Cerro Lindo. This is in addition to

the effect of the Cerro Lindo silver streaming agreement. In our calculations, FCF

was positive but shy at $6M, implying an annualized yield of 1.3%. The outcome

was driven by solid operational cash flow generation, partially offset by working

capital consumption of $82.2M and capex of $92.2M. Net debt decreased $5.5M

with leverage reaching 1.4x in the quarter. The company also flagged that during

the quarter, the fourth filter was commissioned in Aripuanã in order to reduce its

constraints in filtration. At the end of June, the mine was operating at 86% average

capacity utilization. At Cerro Lindo, the company noted that it initiated block

caving operations in a portion of the mine in July, marking the first application of

this mining method at the site. The company expects to lower unit costs, improve

access to higher-grade copper areas, and further enhance the safety of the

operations through reduced risk exposure. Finally, the company confirmed the

…