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Guidance & Outlook

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 (Updated) kt 299 334 318 379 327 383
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 (Updated) 20 23 45 60 58 76
Copper (Updated) kt 29 33 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 (Updated) 4.2 5.0 5.9 6.2 4.4 5.8
Lead (Updated) kt 53 65 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 (Updated) 5.7 6.9 15 20 19 25
Silver (Updated) MMoz 9.1 10 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 (Updated) 0.4 0.5 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$1.19/lb, Cu: US$3.84/lb, Pb: US$0.97/lb, Ag: US$23.3/oz, Au: US$1,927/oz);
  • Foreign exchange rates (BRL/USD: 4.99 and Soles/USD: 3.72); and
  • 2023 zinc treatment charges (“TCs”) of US$274/t concentrate.
Mining operating costs Cost ROM (US$/lb)
2023e
Cash Cost (US$/lb)
2023e
Updated
Mining Cash Cost¹ 43.9 46.4 0.35 0.38
Cerro Lindo 40.1 42.1 (0.12) (0.10)
El Porvenir 57.3 60.7 0.26 0.28
Atacocha 33.1 35.4 (0.45) (0.38)
Vazante 57.2 59.0 0.59 0.65
Morro Agudo 35.0 38.2 0.80 0.94

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, such as lower by-products contribution in Peru and higher TCs.
Smelting operating costs Conversion Cost (US$/lb)
2023e
Cash Cost (US$/lb)
2023e
Updated
Smelting Cash Cost2  0.29 0.32  1.07 1.12
Cajamarquilla 0.27 0.29 1.04 1.08
Três Marias 0.27 0.30 1.08 1.13
Juiz de Fora 0.45 0.49 1.19 1.28

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$49 million in exploration. Our mineral exploration expense guidance of US$30 million relates mainly to greenfield projects in the exploration phase (US$13 million) and brownfield projects (US$17 million), which are the exploration of orebody targets at our operations.

Our project evaluation expense guidance of US$50 million includes, approximately, US$15 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$6 million to improve our current operations and US$14 million to continue contributing to the social and economic development of our host communities.

Other operating expenses
(US$ million)
2023 Guidance
Updated
Exploration 49
Mineral exploration 30
Mineral rights 5
Sustaining (mine development) 14
Project Evaluation 50
Três Marias Project 15
Exploration & Project Evaluation 100
Other 20
Technology 6
Communities 14

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).