NEXA

Current Thesis

Brazilian/Peruvian zinc-lead-copper miner flipping from "high-cost laggard" to "Aripuanã ramp + copper optionality" narrative. Citi PT bump to [entry redacted] (2026-04-14) + rare limit-up halt +9.30% on 2026-04-15 broke the tape out of a 2-year base. Now 5 trading days post-halt, approaching the binary: Q1 2026 production report is due ~2026-04-28 to 2026-05-02, with earnings ~2026-05-07–14. We do not front-run the print — either the breakout holds into the number and we take a probe on confirm, or it rolls over pre-print and the leg is dead.

Bull Case

• Citigroup PT raised to $12.50 on 2026-04-14 (Neutral maintained) — first sell-side re-rate after a year of PT cuts; the direction of revision matters more than the rating.
• Circuit breaker up +9.30% on 2026-04-15 — forced-buyer / short-cover signature; Nexa does not print limit-up halts in normal tape. First one in recent memory = regime change.
• LME zinc at multi-quarter highs into April 2026 — Nexa is ~60% zinc revenue and the highest zinc-beta US-listed miner; every $100/t in zinc above $2,800/t drops disproportionately to EBITDA given fixed cost base.
• Aripuanã (Brazil polymetallic) ramp — 2025 throughput disappointments are the overhang; management guided nameplate achievement in 2026 and Q1 production number is the first scoreboard check.
• Cerro Lindo (Peru) copper byproduct credits — with Cu spot strong, byproduct credits lower realized zinc cost, compressing the "high-cost producer" discount.
• Float dynamics: Votorantim owns ~64%, so actual float is thin — any genuine institutional rotation into base-metals equities hits NEXA disproportionately hard.

Bear Case

• Balance sheet: Net debt/EBITDA ~2.5x entering 2026 per last 20-F; a zinc rollover re-opens the refi/dilution narrative fast.
• Citi is still Neutral, not Buy — consensus PT cluster $10–13 implies the upside from current ~$11 zone is already capped unless a sell-side Buy upgrade arrives (asymmetric trigger for re-rate).
• Peru political/tax risk — Cerro Lindo and Atacocha exposed to royalty reopenings; a single headline on community levies prints -8% overnight.
• Zinc forward curve in contango — spot-to-forward >$100/t suggests market expects mean-reversion to 2025 $2,500/t range; FY26 EBITDA guide resets down if that plays out.
• Liquidity trap: ADV $15–25M means any >0.5% portfolio position creates real slippage on exit; unsuitable for SUPREME sizing regardless of thesis.
• Binary event risk: Q1 production miss on Aripuanã (which has disappointed 4 quarters running) unwinds the entire breakout in one session.

Setup & Price Structure

• 2026-04-14: Citi PT raise pre-open.
• 2026-04-15: Halt limit-up +9.30%, resumed, closed green — breakout character, not a one-print fakeout.
• 2026-04-16 to 2026-04-20 (today): 5 sessions post-halt — the decisive question is whether the 04-15 intraday high holds as support or cracks. As of this dossier refresh, no intraday price context is loaded; operator must check before any add.
• Key levels (from halt-day tape): the 2026-04-15 open is the pivot; holding above = trend intact, losing it on volume = blow-off top and re-DORMANT.
• Volume structure: post-halt follow-through volume is the tell; if ADV dropped back to $15–20M range within 3 sessions, the 04-15 flow was one-off short cover, not durable rotation.
• No prior position, no prior decisions — this is a first-look, not an add. Probe size only if we enter.

Catalyst Calendar (next 30 days)

• ~2026-04-28 to 2026-05-02 (est.): Q1 2026 production report — THE binary for Aripuanã ramp thesis.
• ~2026-05-07 to 2026-05-14 (est.): Q1 2026 earnings release + call — EBITDA sensitivity to zinc spot will be scrutinized.
• 2026-05-06 to 2026-05-08: LME Week Asia (Hong Kong) — zinc/copper price-setting event; commentary from Chinese smelters moves spot.
• Ongoing daily: LME zinc 3M spot close — a 3-session close below $2,800/t is a thesis-ender.
• Pre-production-report blackout window: 2026-04-25 onwards — do not initiate new size inside the 3-day window before the production print.

What Would Change Our Mind

• Bull confirm → upgrade ACTIVE: Q1 2026 zinc production ≥ guidance midpoint AND Aripuanã throughput >90% nameplate. Sell-side (Itaú, BTG) moves from Neutral to Buy within 5 sessions of the print.
• Structural invalidation: Price closes below the 2026-04-15 pre-halt reference ($10.30 area estimate) on volume >ADV → breakout failed, revert DORMANT.
• Thesis break (cyclical leg): LME zinc 3M closes below $2,800/t for 3 consecutive sessions → the macro leg is gone regardless of what Nexa reports.
• Asymmetric exit: Any of Citi / Itaú / BTG moving Neutral → Sell/Underperform → flat the probe immediately.
• Trim discipline if long: weekly close below 20-EMA on the NEXA weekly chart → reduce; RSI-14 >75 into earnings = trim 50% into strength (archetype-5 binary reduction).

Correlation Notes

• TECK (Teck Resources) — zinc/copper diversified comp; closest read-through on base-metals tape and sell-side sentiment.
• HBM (Hudbay Minerals) — Peru copper/zinc exposure, same macro & political-risk driver.
• FCX (Freeport-McMoRan) — copper benchmark; NEXA's copper-optionality leg only re-rates if FCX is trending up.
• SCCO (Southern Copper) — Peru political-risk canary; SCCO weakness on Peru headlines drags NEXA regardless of zinc tape.
• Zinc ETF proxy: no clean single-name ETF; LME zinc 3M spot + ZINC-LME curves are the direct read. ZINC (ticker removed in 2019) — use physical spot instead.
• BHP / RIO — broad-cycle correlation only; not useful as daily read but weekly-chart direction matters for the regime.