Nexa Resources S.A.

Nexa adopted a new dividend policy effective January 1, 2025, targeting an annual dividend of up to 20% of free cash flow before significant non-recurring events, with a minimum of US$0.08 per common share, applying to fiscal 2024 onwards. Payments depend on distributable amounts under Luxembourg law and factors such as cash, leverage and capex plans.

dividend declaration

Nexa kept its 2024 total zinc (323-381 kt) and lead (66-82 kt) mining guidance, but raised guidance at Cerro Lindo, Vazante and Atacocha and cut it at Aripuanã (zinc 31-42 kt, down 26% at mid-point), citing lower ore volumes, fewer working days, lower grades and filter and flotation problems. It also lowered mining cash cost guidance to US$0.03-0.20/lb of zinc (from US$0.23-0.42) and 2024 capex to US$300 million from US$311 million. The release confirms Morro Agudo's sale closed July 1, 2024, with mining ceasing April 30, 2024, so only four months count in guidance; the Aripuanã shortfall continues the project's difficult ramp-up after its long-delayed start.

production update

Nexa's subsidiary Nexa Resources Perú announced early redemption of all its 4.625% Senior Notes due 2023, US$128,470,000 in principal, to be redeemed on March 28, 2022. The price is the greater of 100% of principal or a make-whole present value calculation, plus accrued interest. The filing does not say how the redemption will be funded or give the total amount payable.

debt financing

Nexa's board approved a US$50 million distribution: about US$44 million as a cash dividend (about US$0.331275 per share) and about US$6 million as a share-premium distribution (about US$0.046258 per share), based on 132,438,611 shares outstanding at December 31, 2021. It goes to holders of record on March 11, 2022 and is payable March 25, 2022. A 15% Luxembourg withholding tax applies to the cash dividend (refunds may be possible); the share-premium portion is tax-exempt. The approval is subject to shareholder ratification at the meeting for fiscal 2022, expected June 2023.

dividend declaration

The TSX approved Nexa's voluntary delisting; the last day of trading in Toronto will be November 30, 2021. The shares stay listed on the NYSE as NEXA, and Nexa intends to apply to cease being a reporting issuer in Canada, subject to regulatory requirements. This completes the delisting announced on November 9, 2021, ending the TSX listing noted in earlier filings.

listing compliance notice

Nexa applied to voluntarily delist its common shares from the Toronto Stock Exchange, expected at the close of trading on or about November 30, 2021, subject to TSX acceptance. It cites the burdens of the listing, minimal TSX trading volumes and the availability of the NYSE, where shares keep trading as NEXA. It says operations are not expected to be affected and that it intends to apply to stop being a reporting issuer in Canada. Canadian-account holders are told to check with brokers how to trade on the NYSE.

listing compliance notice

Nexa received the operating license for Aripuanã on October 7, 2021 from the Mato Grosso state environmental secretariat (SEMA). This resolves the open licensing step, which earlier filings expected by end-2020, so it arrived later than planned. Mechanical completion is expected in 4Q21 and commercial production is now scheduled for 2022, a move from the 2021 start-up expected in earlier filings.

regulatory community update

Nexa signed a loan agreement of up to R$750 million (about US$140 million) with Brazil's development bank BNDES to finance the Aripuanã project. It matures in 2040 at an average annual rate of TJLP plus 3.14%; disbursements are expected to follow the project's completion curve and depend on conditions precedent being met, with the remainder in 2021. This is the first project-specific debt for Aripuanã, which earlier filings said would be funded from cash and operating cash flow.

debt financing

Nexa asked to draw the full US$300 million of its revolving credit facility, expected April 14, 2020; the facility matures October 2024 at three-month LIBOR plus 1.00%. The filing says this strengthens liquidity during the COVID-19 outbreak. It also says Peruvian mines were preparing to restart April 13 after the quarantine ended, Brazilian operations and Aripuanã construction continue, and Nexa is evaluating cost cuts and postponing spending (including capex, project development and exploration), with a guidance revision to come with Q1 results.

debt financing

Nexa released the preliminary economic assessment for Hilarión, due by end-2019 per earlier filings and now delivered in March 2020. It envisions a 16-year underground mine at 10,000 tonnes per day, averaging about 115kt of zinc a year (about 150kt zinc equivalent), with capex of US$585 million, after-tax NPV of US$231 million at 8% and IRR of 15.5%. The filing calls it a conceptual study with no certainty the forecasts will be realized; Nexa says it is still early stage and expects a pre-feasibility study in the medium term, and Hilarión remains 100% held by Nexa Perú (80% owned by Nexa).

resource reserve update

Nexa and Karmin completed the plan of arrangement on October 30, 2019; former Karmin shareholders get US$0.770467 in cash per share, and Karmin's other assets (including 20,615,138 VI Mining shares) went to the separate company Kar Gold, in which Nexa has no management role. This completes the deal announced in August; based on the earlier announcement, Nexa now owns 100% of Aripuanã (the closing release itself does not restate the ownership). Karmin shares were expected to be delisted from the TSX Venture and Lima exchanges after trading on November 1, 2019.

business combination

Nexa agreed on August 26, 2019 to buy Karmin Exploration, which holds the 30% of the Aripuanã zinc project Nexa does not already own, for an aggregate US$70 million (US$69.3 million to Karmin shareholders, about US$0.77 per share in cash, plus a US$700,000 loan to Karmin). This resolves the open question of whether Karmin would fund its share of Aripuanã: instead Nexa would own 100% on closing, to be paid from cash on hand. Completion needs a two-thirds Karmin shareholder vote, court approval and other customary conditions, and is expected by end of 2019.

business combination

Nexa reported that 2018 mining output met its guidance for all metals (373 kton zinc, 39 kton copper, 52 kton lead, 7,992 koz silver, 29 koz gold, with gold above the top of its range), and smelting sales of 617 kton were also within guidance. For 2019 it guides to about 3% more zinc (375-395 kton) and capex of about US$420 million, including about US$140 million for Aripuanã; the filing says the Aripuanã Installation License was received December 20, 2018, which resolves the open licensing item. Figures are preliminary and unaudited.

production update

On October 19, 2018 the Board approved construction of the Aripuanã project, following the feasibility study (first-time reserves: 26.2 million tonnes). The study estimates capex of about US$392 million, NPV of US$129 million at 9%, IRR of 15.8%, a 13-year mine life and production starting early 2021; Nexa holds 70% and expects to fund it from cash and operating cash flow. This follows the April 2018 preliminary license, and the installation license is still expected by end of 2018, with Karmin (30%) having one year to decide whether to contribute funding.

resource reserve update

Nexa's Board approved a share buyback of up to US$30 million of its common shares over the 12 months from November 6, 2018 to November 6, 2019, carried out on the NYSE. The filing says it will not change the existing dividend policy, and there is no assurance how many shares will actually be bought.

security holder rights change

Environmental authorities in Mato Grosso, Brazil granted the Preliminary Environmental License for Nexa's Aripuanã zinc-lead-copper project on April 25, 2018. The filing calls it an important milestone, but the Installation and Operating licenses are still pending; the feasibility study was 58% done at end of March 2018 and is expected to go to the Board during 2018.

regulatory community update