Nexa | Guidance 2023-2025
Guidance is based on several assumptions and estimates and is subject to the continuous evaluation of several factors, including but not limited to metal prices; operational performance; maintenance and input costs; and exchange rates.
Nexa will continue to monitor risks associated with global supply chain disruptions, which could be exacerbated by the Russia-Ukraine war, unusual weather conditions and/or increased restrictions related to the COVID-19 pandemic; global recession, and the potential impact on the demand for our products; inflationary cost pressure; metal prices; communities protests, political situation and changes to the regulatory framework in the countries in which we operate that could affect our production levels; among others.
Production and Sales
| Metal contained (in concentrate) |
2023e | 2024e | 2025e | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Zinc | kt | 307 | – | 351 | 318 | – | 379 | 327 | – | 383 | |||
| Cerro Lindo | 69 | – | 79 | 71 | – | 92 | 76 | – | 85 | ||||
| El Porvenir | 51 | – | 55 | 44 | – | 57 | 32 | – | 37 | ||||
| Atacocha | 9 | – | 11 | 8 | – | 9 | 12 | – | 18 | ||||
| Vazante | 131 | – | 144 | 131 | – | 141 | 131 | – | 149 | ||||
| Morro Agudo | 17 | – | 23 | 17 | – | 21 | 17 | – | 19 | ||||
| Aripuanã | 28 | – | 40 | 45 | – | 60 | 58 | – | 76 | ||||
| Copper | kt | 31 | – | 36 | 29 | – | 32 | 29 | – | 33 | |||
| Cerro Lindo | 25 | – | 28 | 23 | – | 26 | 26 | – | 27 | ||||
| El Porvenir | 0.2 | – | 0.3 | 0.3 | – | 0.4 | 0.3 | – | 0.3 | ||||
| Aripuanã | 6.3 | – | 7.8 | 5.9 | – | 6.2 | 4.4 | – | 5.8 | ||||
| Lead | kt | 56 | – | 71 | 64 | – | 71 | 70 | – | 82 | |||
| Cerro Lindo | 11 | – | 13 | 11 | – | 12 | 13 | – | 15 | ||||
| El Porvenir | 20 | – | 26 | 21 | – | 25 | 21 | – | 24 | ||||
| Atacocha | 10 | – | 12 | 12 | – | 13 | 11 | – | 12 | ||||
| Vazante | 1.1 | – | 1.2 | 0.9 | – | 1.1 | 0.9 | – | 1.0 | ||||
| Morro Agudo | 4.9 | – | 6.1 | 4.3 | – | 4.8 | 4.3 | – | 4.8 | ||||
| Aripuanã | 8.9 | – | 12.9 | 15 | – | 20 | 19 | – | 25 | ||||
| Silver | MMoz | 9 | – | 11 | 11 | – | 12 | 11 | – | 13 | |||
| Cerro Lindo | 3.5 | – | 3.8 | 3.7 | – | 4.2 | 4.0 | – | 4.5 | ||||
| El Porvenir | 3.7 | – | 4.5 | 3.9 | – | 4.5 | 4.5 | – | 5.1 | ||||
| Atacocha | 1.0 | – | 1.2 | 1.2 | – | 1.3 | 1.0 | – | 1.1 | ||||
| Vazante | 0.3 | – | 0.4 | 0.3 | – | 0.4 | 0.3 | – | 0.4 | ||||
| Aripuanã | 0.8 | – | 1.2 | 1.4 | – | 1.6 | 1.5 | – | 2.0 | ||||
For the forecasted periods, zinc head grade is expected to be in the range of 2.75% and 2.89%, copper head grade is expected to be in the range of 0.29% and 0.30%, and lead head grade is expected to be in the range of 0.65% and 0.68%.
| Smelting sales | 2023e | 2024e | 2025e | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Metal | kt | 580 | – | 605 | 580 | – | 605 | 580 | – | 605 |
| Zinc metal | 545 | – | 565 | 545 | – | 565 | 545 | – | 565 | |
| Zinc oxide | 35 | – | 40 | 35 | – | 40 | 35 | – | 40 | |
For the forecasted periods, the smelters are expected to operate at normal levels and sales are expected to be similar to production levels. Metal sales volume at the midpoint of the guidance range in 2023 is estimated to decrease by 4% compared to 2022, as these estimates do not assume the resale of material from third parties. For 2024-2025, metal sales volume is estimated to remain stable over 2023.
2023 Cash costs
Cash costs for 2023 are based on several assumptions, including but not limited to:
- Production volumes;
- Commodity prices (Zn: US$1.29/lb, Cu: US$3.54/lb, Pb: US$0.91/lb, Ag: US$20/oz, Au: US$1,700/oz);
- Foreign exchange rates (BRL/USD: 5.07 and Soles/USD: 3.94); and
- 2023 zinc treatment charges (“TCs”) of US$285/t concentrate.
| Mining operating costs | Cost ROM (US$/lb) 2023e |
Cash Cost (US$/lb) 2023e |
|||||
|---|---|---|---|---|---|---|---|
| Mining Cash Cost¹ | 43.9 | – | 46.4 | 0.49 | – | 0.54 | |
| Cerro Lindo | 40.1 | – | 42.1 | 0.11 | – | 0.13 | |
| El Porvenir | 57.3 | – | 60.7 | 0.39 | – | 0.42 | |
| Atacocha | 33.1 | – | 35.4 | 0.26 | – | 0.30 | |
| Vazante | 57.2 | – | 59.0 | 0.68 | – | 0.74 | |
| Morro Agudo | 35.0 | – | 38.2 | 1.02 | – | 1.18 | |
¹C1 Weighted Cash cost net of by-products credits is measured with respect to zinc sold per mine.
- Mining: In 2023, consolidated run of mine mining costs at mid-range of the guidance are expected to increase 2% year-over-year, primarily driven by Vazante. Mining cash costs are expected to increase due to several reasons, as highlighted below.
| Smelting operating costs | Conversion Cost (US$/lb) 2023e |
Cash Cost (US$/lb) 2023e |
|||||
|---|---|---|---|---|---|---|---|
| Smelting Cash Cost2 | 0.29 | – | 0.32 | 1.13 | – | 1.18 | |
| Cajamarquilla | 0.27 | – | 0.29 | 1.11 | – | 1.15 | |
| Três Marias | 0.27 | – | 0.30 | 1.10 | – | 1.15 | |
| Juiz de Fora | 0.45 | – | 0.49 | 1.27 | – | 1.37 | |
²C1 Weighted Cash cost net of by-products credits is measured with respect to zinc sold per smelter.
- Smelting: In 2023, conversion costs are expected to increase mainly driven by Brazil due to inflationary costs pressure and estimated higher energy costs. On the other hand, consolidated smelting cash costs in 2023 are expected to decrease year-over-year primarily due to an estimated decrease in zinc prices and higher TCs, which should be partially offset by lower by-product credits.
2023 CAPEX
In 2023, CAPEX guidance is US$310 million. Sustaining investments are expected to total US$268 million, with smelting accounting for US$66 million and mining accounting for US$200 million, including US$53 million at Aripuanã.
In the mining segment, the majority of sustaining capital expenditures are US$79 million for underground mine development, US$54 million for tailings storage facility (“TSF”), and US$1.5 million for water management works.
In the smelting segment, the majority of sustaining capital expenditures are US$12 million for TSF, US$8 million for roaster maintenance, US$4 million for compliance with regulatory standards, and US$3 million for assets improvement.
Health, safety and environmental (“HSE”) capital expenses are forecasted to be US$26 million.
| CAPEX (US$ million) |
2023 Guidance | |
|---|---|---|
| Expansion projects (1) | 7 | |
| Non Expansion | 303 | |
| Sustaining (2) | 268 | |
| HSE | 26 | |
| Others (3) | 10 | |
| TOTAL | 310 |
(¹) Includes Vazante deepening (US$4 million), among other several projects to improve operational performance.
(²) Investments in tailing dams are included in sustaining expenses. For further detail please refer to the Appendix.
(³) Modernization, IT and others.
2023 Exploration & Project Evaluation and Other Expenses
As part of our long-term strategy, we continued to maintain our efforts to replace and increase mineral reserves and resources. We expect in the future to continue advancing our exploration activities, primarily focusing on identifying new ore bodies and upgrading resources classification through infill drilling campaigns.
In 2023, we plan to invest US$55 million in exploration. Our mineral exploration expense guidance of US$33 million relates mainly to greenfield projects in the exploration phase (US$18 million) and brownfield projects (US$15 million), which are the exploration of orebody targets at our operations.
Our project evaluation expense guidance of US$55 million includes, approximately, US$20 million to extend the life of the disposal facility of Três Marias smelter. The remaining is for corporate IT, potential growth projects and various projects across our business units.
In addition, we expect to invest US$10 million to improve our current operations and US$15 million to continue contributing to the social and economic development of our host communities.
| Other operating expenses (US$ million) |
2023 Guidance | ||||||
|---|---|---|---|---|---|---|---|
| Exploration | 55 | ||||||
| Mineral exploration | 33 | ||||||
| Mineral rights | 7 | ||||||
| Sustaining (mine development) | 15 | ||||||
| Project Evaluation | 55 | ||||||
| Três Marias Project | 20 | ||||||
| Exploration & Project Evaluation | 110 | ||||||
| Other | 25 | ||||||
| Technology | 10 | ||||||
| Communities | 15 | ||||||
Note: Exploration and project evaluation expenses consider several stages of development, from mineral potential definition, R&D, and subsequent scoping and pre-feasibility studies (FEL1 and FEL2).