Nexa 3Q26 Results: Adjusted EBITDA Rises 62% as Margin Expands

Nexa Resources (NYSE: NEXA) reported 3Q26 net revenue of US$937 million, up 23% year over year, and a net loss of US$47 million. Adjusted EBITDA increased 62% to US$301 million as higher zinc prices, stronger by-product contributions, and improved mining and smelting performance expanded the margin to 32.1%. Free cash flow reached US$73 million, while net leverage declined to 1.24x.

Core Earnings Data

Revenue and Adjusted EBITDA benefited from higher zinc prices and stronger by-product contributions. Sequential performance also improved as Cajamarquilla recovered from its May fire-related disruption and increased smelting sales volumes.

The reported net loss reflected two non-cash items rather than a deterioration in cash generation: a US$124 million impairment of Brazilian smelting assets and a US$51 million silver-streaming remeasurement adjustment.

Business and Segment Performance

Mining output improved for zinc and lead. Zinc production reached 85kt, up 1% year over year and 7% sequentially, supported by higher treated ore volumes and grades. Lead production rose 4% year over year and 18% sequentially to 18kt. In contrast, copper production fell 30% year over year to 6.0kt because of lower head grades at Cerro Lindo and Aripuanã. Silver production was broadly stable year over year at 2.9 million ounces.

Aripuanã continued to ramp up, with average plant utilization increasing from 71% in 2Q26 to 84% in 3Q26 and reaching 90% in September. The fourth tailings filter supported higher processing rates and zinc production while expanding dry-stack tailings capacity.

Smelting production totaled 159kt of zinc metal and oxide, up 8% year over year and 28% sequentially. Sales reached 146kt, down 2% year over year but up 9% from 2Q26. Cajamarquilla returned to full capacity and processed most of the cathode inventory accumulated after the May fire, partly offset by an unplanned roaster stoppage at Juiz de Fora in September.

By-products provided an additional earnings contribution. Silver content sales rose 23% year over year to 532koz, while copper cement sales increased 60% to 3.2kt, reflecting higher production and improved recovery rates. Sulfuric acid sales were broadly stable year over year at 178kt but increased 18% sequentially.

Non-Cash Charges Mask Stronger Operating Cash Generation

The net loss and cash flow moved in opposite directions because the impairment and silver-streaming remeasurement did not require cash outflows. Together, these two charges were about US$175 million, helping explain why Nexa generated US$185 million of operating cash flow and US$73 million of free cash flow despite reporting a loss.

Quarterly CapEx rose to US$111 million, primarily because of higher spending on tailings storage facilities and mine development. Nexa ended the quarter with US$415 million in cash, cash equivalents, and financial investments. Total available liquidity was US$735 million, including an undrawn US$320 million revolving credit facility.

Net leverage improved from 1.40x in 2Q26 and 2.21x in 3Q25 to 1.24x. The decline reflected both lower net debt and higher last-12-month Adjusted EBITDA of US$1.169 billion.

2026 Guidance

Nexa raised its 2026 CapEx guidance by 10% to accelerate mine development at Aripuanã, bring forward Cerro Pasco Integration Project spending, and account for appreciation in the Brazilian real. The additional Aripuanã investment is intended to support higher throughput in 2027.

The company lowered its mining cash cost range because of stronger by-product credits but raised its smelting cash cost range to reflect higher zinc prices and the stronger Brazilian real. Mining production and smelting sales guidance remained unchanged, although the source did not provide the underlying ranges.

Management Commentary

Management said the zinc concentrate market remained tight, but Nexa’s integrated mining and smelting model allowed it to capture higher zinc prices in mining while using stronger by-product contributions to support smelting margins.

The company is also preparing for a potentially strong to very strong 2026–2027 El Niño event. No operational impact occurred during 3Q26, but Nexa built strategic zinc concentrate inventories and increased critical-material inventories and transportation alternatives. Its Peruvian energy requirements for 2027 are fully contracted, while uncovered positions in Brazil represent less than 10% of expected consumption.

Votorantim’s agreement to sell its 64.68% controlling stake in Nexa to Boliden is expected to close in the first quarter of 2027, subject to approvals. Nexa said it will continue operating separately without changes to strategy or capital allocation priorities until closing.

Risks Investors Should Watch

• Commodity-price and currency sensitivity: Higher zinc prices and by-product credits supported 3Q26 earnings, while the stronger Brazilian real increased expected CapEx and smelting costs. Changes in these factors could affect margins and cash generation.
• Operational reliability: Cajamarquilla recovered from its May fire, but the Juiz de Fora roaster experienced an unplanned September stoppage. Further disruptions could affect production and sales volumes.
• El Niño exposure: The event had no quarterly impact, but official forecasts indicated potentially strong to very strong conditions. Flooding, landslides, drought, or transportation interruptions could affect operations and smelter feed availability.
• Cerro Pasco execution and approvals: Mechanical completion is expected by December 2026, with operating authorization targeted for 2Q27 and tailings pumping in early 3Q27. The schedule depends on commissioning and regulatory approvals.
• Ownership transition and debt management: S&P lowered Nexa’s long-term rating to BB+ from BBB-, while Fitch placed certain ratings on Rating Watch Negative. After the Boliden transaction closes, Nexa will be required to offer to repurchase its 2028 notes at 101% of principal, creating an additional liability-management consideration.

Summary

Nexa’s 3Q26 operating performance improved as higher zinc prices, by-product contributions, Cajamarquilla’s recovery, and Aripuanã’s ramp-up lifted revenue, Adjusted EBITDA, and free cash flow. Non-cash charges produced a reported net loss, but liquidity and leverage improved. The main issues ahead are execution of the higher capital-spending plan, continued operational stability, El Niño preparedness, and debt management around the planned change in control.