Nexa Resources S.A. NEXA has completed the previously announced sale of the Pukaqaqa Project located in the Huancavelica region of Peru. This move aligns with NEXA’s ongoing portfolio optimization strategy to improve its free cash flow and returns.

Over the past few years, NEXA has been reviewing its assets and optimizing its portfolio per its disciplined capital allocation plan. In 2022, it announced its decision not to move forward with Pukaqaqa following a close assessment of its portfolio. On Sept. 4, 2024, Nexa Resources announced that it had inked a deal with Olympic Precious Metals to sell the Pukaqaqa Project for $29.3 million (to be received in several installments).

Milestone-Driven Payments for Nexa’s Pukaqaqa

The Pukaqaqa project, located in the Huancavelica region of Peru, is a greenfield project in the pre-feasibility study stage. The project involves the development of an open-pit copper and molybdenum mine, with additional gold credits.

Nexa Resources will receive an initial payment of $0.3 million in cash. It will receive another $1 million within 12 months and $3.0 million after 48 months. The company will also receive contingent payments totaling $25 million, payable in cash in three installments. This is, however, subject to the project achieving certain milestones in its development.

NEXA’s Ongoing Efforts to Drive Growth

Nexa Resources is a large-scale, low-cost, integrated zinc producer with more than six decades of experience in developing and operating mining and smelting assets in Latin America. It currently owns and operates five long-life mines, three of which are located in the central Andes region of Peru and two in Brazil.  Nexa Resources also owns and operates three smelters.

Nexa Resources continues to invest in maintaining and expanding existing brownfield operations and developing greenfield projects to sustain and extend the life of its existing mines to increase production.

In the mining industry, a greenfield project refers to the exploration and development of mineral reserves in areas where no mining activities have been conducted previously. The evolution of a greenfield project can take decades to reach full capacity and is capital-intensive. The steps through the whole process are pre-feasibility, feasibility study, construction/execution, commissioning, ramp-up and full/normal capacity. 

In 2022, along with the Pukaqaqa, the company had planned not to progress on the Shalipavco greenfield projects. NEXA has interests in three greenfield projects in Peru (Magistral, Hilarión and Florida Canyon Zinc) and one in Namibia, as well as several prospects in Peru, Brazil and Namibia. Magistral is currently under review and both Hilarión and Florida Canyon Zinc are in the exploration phase. Aripuanã is the only greenfield project that Nexa Resources has built in recent decades and is in the ramp-up stage.

In sync with its optimization efforts, in July 2024, Nexa Resources sold the Morro Agudo Complex in Brazil's Minas Gerais state, which consisted of the Morro Agudo mine and the Ambrósia mine. The total purchase price of the deal was set at R$80 million (around $16 million).

In September, NEXA announced the sale of the Chapi mine to Quilla Resources Peru S.A.C. The mine ceased operations in 2013 and is currently under care and maintenance. The total consideration for this transaction comprises $1 million in cash at closing and $4 million after the commencement of commercial production.

Nexa Resources will continue to focus on improving Aripuanã’s performance and developing the Cerro Pasco Integration Project while also extending the life of its existing mines.

Nexa Resources Stock’s Price Performance

Nexa Resources’ shares gained 30% in the past year against the industry's 7.1% decline.

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NEXA’s Zacks Rank & Stocks to Consider

Nexa Resources currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, Agnico Eagle Mines AEM and Fortuna Mining Corp. FSM. CRS sports a Zacks Rank #1 (Strong Buy) at present, while AEM and FSM carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.61 per share, indicating year-over-year growth of 39.5%. The consensus estimate has moved 8.5% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.1%. CRS’ shares have gained 178% in a year.

The consensus estimate for Agnico Eagle Mines’ 2024 earnings is pegged at $4.08 per share, which indicates year-over-year growth of 83%. The consensus estimate for earnings has moved up 8.5% in the past 60 days. AEM has an average trailing four-quarter earnings surprise of 19.2%. The company’s shares have gained 58% over the past year.

The Zacks Consensus Estimate for Fortuna Mining’s 2024 earnings is pegged at 48 cents per share, indicating year-over-year growth of 118%. The consensus estimate for earnings has moved up 2% in the past 60 days. It has an average trailing four-quarter earnings surprise of 17.9%. FSM’s shares have gained 23% in a year.

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