Nexa Resources Provides Update on Morro Agudo Complex
Nexa Resources S.A. announces the suspension of mining operations at the Morro Agudo Complex in Brazil effective May 1, 2024, to optimize its portfolio and improve cash flow. The company aims to minimize impacts on employees and communities while continuing limestone production at full capacity. The decision is part of Nexa's strategy to enhance shareholder value and assess risk-return alternatives for the complex.
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The suspension of mining operations at the Morro Agudo Complex may lead to a decrease in zinc and lead production, impacting Nexa's overall output and potentially affecting financial performance.
The announcement by Nexa Resources regarding the suspension of its mining operations at the Morro Agudo Complex has significant implications for the company's operational efficiency and cost management. The decision appears to be a strategic move to optimize the company's portfolio, which could potentially lead to an improved free cash flow. This is an important metric for investors as it indicates the company's ability to generate cash that can be used for expansion, dividends, or debt reduction.
While the suspension represents a small percentage of Nexa's overall zinc and lead production, it's essential to assess the broader market implications. The reduction in supply from a notable producer can influence commodity prices, particularly if the suspension leads to a tighter market for zinc and lead. Investors should monitor the price movements of these metals as they could impact Nexa's revenue streams and profitability from its other operations.
From a financial perspective, the suspension of mining operations at Morro Agudo is likely to affect Nexa Resources' cost structure, at least in the short term. The sustaining cash cost net of by-products at $0.87/lb suggests that the mine was operating efficiently. However, the lack of estimated Mineral Reserves could imply that the costs of finding new reserves might outweigh the benefits of continuing operations.
Investors should consider the impact of this suspension on Nexa's earnings and cash flow forecasts. While the 2024 consolidated guidance remains unchanged, the long-term effects of this operational shift could alter future financial projections. The company's commitment to a structured process to minimize impacts hints at potential severance costs or asset write-downs, which can affect the balance sheet and income statements. Stakeholders should look for updates on how these factors are managed.
The suspension of operations at a mine is a complex decision that often involves factors such as ore grade depletion, market conditions and regulatory challenges. In Nexa's case, the cessation of mining activities at the Morro Agudo Complex could be indicative of the natural progression of a mine reaching the end of its economically viable life, similar to the Ambrósia mine's closure in 2020.
For the mining industry, the management of end-of-life mines is a critical aspect of sustainability and corporate responsibility. Nexa's approach to continuing limestone production while reducing mining activities suggests a phased strategy, possibly to allow for the reassignment of resources or the exploration of alternative uses for the site. The company's focus on minimizing impacts on employees and host communities aligns with industry best practices for responsible mine closure.
03/19/2024 - 07:45 AM
LUXEMBOURG / ACCESSWIRE / March 19, 2024 / Nexa Resources S.A. ("Nexa Resources", "Nexa" or the "Company") (NYSE:NEXA) announces today the suspension of its mining operations at the Morro Agudo Complex in the state of Minas Gerais in Brazil effective May 1, 2024, until further notice.
Commencing from the date hereof until April 30, 2024, mining activities will be reduced while limestone production activities will continue at full capacity. Nexa is committed to carrying out a structured process, aiming to minimize impacts on the business and, particularly, on its employees and host communities.
In 2023, the Morro Agudo mine produced 23kt of zinc and 8.3kt of lead at a sustaining cash cost net of by-products of US$0.87 /lb. The mine does not currently have any estimated Mineral Reserves.
The Ambrósia mine reached the end of its life of mine during the fourth quarter of 2020 and operations have since been suspended.
This decision is part of Nexa's portfolio optimization process to improve free cash flow in line with the Company's disciplined capital allocation framework, along with its long-term strategy to maximize value for the Company and its shareholders.
As previously disclosed, we continue to actively assess risk-return alternatives for our Morro Agudo Complex in Brazil.
The Morro Agudo Complex produces approximately 1,650t of zinc and 390t of lead per month, accounting for 5% and 6% of Nexa's zinc and lead production, respectively.
The 2024 consolidated guidance remains unchanged as of the date of this press release.
About Nexa
Nexa is a large-scale, low-cost integrated zinc producer with over 65 years of experience developing and operating mining and smelting assets in Latin America. Nexa currently owns and operates five long-life mines, three of which are located in the central Andes region of Peru, and two of which are located in the state of Minas Gerais in Brazil. Nexa is ramping up Aripuanã, its sixth mine, in the state of Mato Grosso in Brazil. Nexa also currently owns and operates three smelters, two of which are located in the state of Minas Gerais in Brazil, and one of which is located in Cajamarquilla in Peru, which is the largest smelter in the Americas.
Nexa was among the top five producers of mined zinc globally in 2023 and one of the top five metallic zinc producers worldwide in 2023, according to Wood Mackenzie.
Cautionary Statement on Forward-Looking Statements
This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to in this news release as "forward-looking statements"). Forward-looking statements contained in this news release may include, but are not limited to, zinc and other metal prices and exchange rate assumptions, projected operating and capital costs, metal or mineral recoveries, head grades, mine life, production rates, and returns; the Company's potential plans; the estimation of the tonnage, grade and content of deposits and the extent of mineral resource and mineral reserve estimates; timing of commencement of production; exploration potential and results; the timing and receipt of necessary permits for future operations; and the impacts of COVID-19 on our operations.
These statements are based on information currently available to the Company and the Company provides no assurance that actual results and future performance and achievements will meet or not differ from the expectations of management or qualified persons. All statements other than statements of historical fact are forward-looking statements. The words "believe," "will," "may," "may have," "would," "estimate," "continues," "anticipates," "intends," "plans," "expects," "budget," "scheduled," "forecasts" and similar words are intended to identify estimates and forward-looking statements. Forward-looking statements are not guarantees and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments may be substantially different from the expectations described in the forward-looking statements for a number of reasons, many of which are not under our control, among them, the activities of our competition, the future global economic situation, weather conditions, market prices and conditions, exchange rates, and operational and financial risks. The unexpected occurrence of one or more of the abovementioned events may significantly change the results of our operations on which we have based our estimates and forward-looking statements. Our estimates and forward-looking statements may also be influenced by, among others, legal, political, environmental, or other risks that could materially affect the potential development of the Project, including risks related to outbreaks of contagious diseases or health crises impacting overall economic activity regionally or globally, as well as risks relating to ongoing or future investigations by local authorities with respect to our business and operations and the conduct of our customers, including the impact to our financial statements regarding the resolution of any such matters.
These forward-looking statements related to future events or future performance and include current estimates, predictions, forecasts, beliefs and statements as to management's expectations with respect to, but not limited to, the business and operations of the Company and mining production, our growth strategy, the impact of applicable laws and regulations, future zinc and other metal prices, smelting sales, capex, expenses related to exploration and project evaluation, estimation of Mineral Reserves and/or Mineral Resources, mine life and our financial liquidity.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable and appropriate by management and qualified persons considering their experience are inherently subject to significant uncertainties and contingencies and may prove to be incorrect. Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, full integration of mining and smelting operations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labor disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in metal prices, exchange rates, or the cost of energy, supplies or transportation, among other assumptions.
Estimates and forward-looking statements refer only to the date when they were made, and we do not undertake any obligation to update or revise any estimate or forward-looking statement due to new information, future events or otherwise, except as required by law. Estimates and forward-looking statements involve risks and uncertainties and do not guarantee future performance, as actual results or developments may be substantially different from the expectations described in the forward-looking statements. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our public disclosures filed under our profile on SEDAR (www.sedarplus.ca ) and on EDGAR (www.sec.gov ).
For further information, please contact:ir@nexaresouces.com
SOURCE: Nexa Resources S.A.
press release on accesswire.com
Why is Nexa suspending mining operations at the Morro Agudo Complex?
Nexa is suspending mining operations at the Morro Agudo Complex to optimize its portfolio and improve cash flow.
When will the suspension of mining operations at the Morro Agudo Complex take effect?
The suspension of mining operations at the Morro Agudo Complex will take effect on May 1, 2024.
What is the impact of the suspension on Nexa's zinc and lead production?
The suspension may lead to a decrease in zinc and lead production, affecting Nexa's overall output.
How does Nexa plan to minimize impacts on employees and communities during the suspension?
Nexa aims to minimize impacts by carrying out a structured process and continuing limestone production at full capacity.
What is the reason behind the decision to suspend operations at the Morro Agudo Complex?
The decision is part of Nexa's strategy to enhance shareholder value and assess risk-return alternatives for the complex.
