Nexa Resources S.A. (NYSE:NEXA) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 10:00 am ET

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Nexa Resources S.A. (NYSE:NEXA) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Nexa Resources Second Quarter 2020 Conference Call. [Operator Instructions]

The presenters on this call are Mr. Tito Martins, CEO of Nexa Resources; Mr. Rodrigo Menck, CFO of Nexa Resources; and Ms. Roberta Varella, Head of Investor Relations. Please note this event is being recorded.

I would now like to turn the conference over to Mr. Tito Martins. Please go ahead.

Executive
Tito Martins

Thank you, and good morning and good afternoon, everyone. Thanks for joining us in another Nexa's earnings conference call.

Today we'll be talking about our results for the second quarter of 2020. I hope you and your loved ones remain safe and healthy.

Please let's move to Slide 3, where we will begin our presentation. As we stated before in our presentation related to the results of the first quarter, the health and safety of our people and local communities are our highest priority. COVID-19, for most of mining companies, had a negative impact in our business in the second quarter. Our mining operations in Peru, in response to the Peruvian government requirement to combat the virus, remained suspended almost half of the quarter, while the Cajamarquilla smelter operated at reduce rates. By mid-May, we started to return our operations in Peru. Cerro Lindo mine and El Porvenir are ramping up production since then.

We are still facing from time to time some constraints related to workforce availability. The spread of the virus in Atacocha remains a big concern. This problem probably will last for some more months. In the process of returning the mines, we decided to keep Atacocha underground production suspended. Its higher costs made it less competitive. The Cajamarquilla smelter is already running at full capacity.

In Brazil, the Juiz de Fora smelter, which was operating in May and June at reduced rates because of lower demand, is now almost back at full capacity. Our third smelter Tres Marias has been operating normally during all this complex time. Despite the challenging scenario, we were able to mitigate the economic impacts of the pandemic, thanks to the business continuity measures implemented and the strong commitment of our team. Our mines in Brazil posted a record high throughput in the quarter. A series of measures were implemented in our operations and all of our properties in Peru and in Brazil have been in home offices since the beginning of the crisis. To mitigate the spread of the virus, we implemented benchmark protocols in all of our operations and projects. In order to keep social distance, we adapted accommodations, cafeterias, and transportation. We changed the workforce shift in our Peruvian mines and we are providing COVID antibody tests and health checks for all income personnel in our sites.

In the second quarter of 2020, incremental costs related to COVID-19 were approximately $4 million. We believe that 50% to 60% of them will become recurring costs in our operations at least until the end of the pandemic. Although a high level of uncertainty remains, we expect