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Nexa Resources: A Deep Value Mining Opportunity Backed by Strong Cash Flow

Updated: 6 days ago

Summary

  • I rate Nexa Resources S.A. a Buy because I believe the market is significantly undervaluing one of the world's leading integrated zinc producers. The company combines mining and smelting operations across Brazil and Peru, giving it greater operational flexibility, diversified revenue streams, and meaningful exposure to zinc, copper, silver, and lead.


  • Nexa is entering a favorable period of earnings growth supported by stronger metal prices, improving operational performance, record production at its Aripuanã mine, and long-term projects that will extend mine life and increase cash flow. Management also expects free cash flow to strengthen throughout the remainder of 2026 as first-quarter seasonal working capital effects reverse.


  • The company's valuation remains exceptionally attractive. Nexa trades well below comparable base metals producers such as Hudbay Minerals Inc. (NYSE: HBM) and Teck Resources Ltd. (NYSE: TECK) despite improving profitability, lower leverage, and multiple long-term growth catalysts.


  • Although commodity prices remain cyclical, I believe Nexa's integrated business model, disciplined capital allocation, improving balance sheet, and expanding reserve base position the company to generate attractive shareholder returns over the long term.


Large yellow industrial machine over rows of metal rollers in a factory, with a bright orange grated walkway and no people.
Source: Nexa Resources

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