- Strong Financial Performance Underlying EBITDA of $1.1 billion and a 28.2% group operating margin, with $435 million in underlying earnings growth.
- Dividend and Capital Returns $175 million fully franked ordinary dividend announced, alongside a $100 million increase in the capital management program.
- Operational Expansion 28% increase in underground ore reserves at Cannington, extending mine life by 2 years, and $65–80 million in infrastructure investment to boost production.
- Balance Sheet Strength Net debt of $25 million supports high-return growth projects and shareholder returns, with $5 million annual costs for Mozal care and maintenance.
- Strategic Safety Improvements Hazard frequency reduced, fostering a proactive safety culture, alongside $25 million allocated for low-cost heap leaching feasibility at Sierra Gorda.
Operational Highlights
The company is making significant progress in its operations, with the Taylor zinc-lead-silver project advancing on schedule. The underground ore reserve at Cannington increased by 28%, adding about 2 years of life to the underground. South32 is also pursuing growth in copper and zinc through the Ambler Metals Joint Venture in Alaska. As Graham Kerr noted, the team has done excellent work in extending the life of Cannington, and there is potential for further extension.
Valuation and Outlook
With a P/E Ratio of 45.85 and an EV/EBITDA of 16.68, the market is pricing in a certain level of growth for South32. Analysts estimate next year's revenue growth at -5.5%, indicating a potential decline in revenues. However, the company's strong balance sheet, with net debt of $25 million, and its commitment to returning value to shareholders through dividends and capital management programs, position it well for the future.
Project Updates
The Hermosa project is tracking well against budgets and timelines, with the shafts approximately 56% and 41% complete. At Sierra Gorda, the company is working to resolve issues with the fourth grinding line, and an independent review of the feasibility study is nearing completion. Mozal is planned to be put into care and maintenance due to a lack of power supply, with the estimated ongoing cost of care and maintenance being approximately $5 million per year.
Decarbonization and Future Plans
South32 is exploring options for decarbonization, particularly at Hillside, where the company is working with Eskom to secure a more balanced power solution. Graham Kerr expressed confidence in Hillside's future, citing its importance to Eskom and the significant number of jobs dependent on it in South Africa. The company is well-positioned for the future, with a series of growth projects to continue reshaping its portfolio.