Nexa Resources S.A. NEXA announced that it agreed to sell the Pukaqaqa Project for $29.3 million (to be received in several installments). 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.

Details of Nexa Resources’ Pukaqaqa Project Deal

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.

The sale to Olympic Precious Metals Ltd is expected to close by Dec. 2024, subject to the fulfillment of certain customary conditions. The conditions include the transfer of some peripheral concessions held by Nexa Resources.

Nexa Resources will receive an initial payment of $0.3 million in cash on the closure of the transaction. 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 over 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 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 a number of prospects in Peru, Brazil and Namibia. Magistral is currently under review and both Hilarión and Florida Canyon Zinc are in the exploration phase. Aripuan? is the only greenfield project that Nexa Resources has built in recent decades and is in the ramp-up stage.