REG - South32 Limited - Acquisition of Sierra Gorda Copper Mine

South32Announcement

22/02/2022 09:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220222:nRSV4242Ca&default-theme=true

RNS Number : 4242C  South32 Limited  22 February 2022

South32 Limited

(Incorporated in Australia under the Corporations Act 2001 (Cth))

(ACN 093 732 597)

ASX / LSE / JSE Share Code:  S32 ADR: SOUHY

ISIN:  AU000000S320

south32.net

22 February 2022

 

SOUTH32 COMPLETES ACQUISITION OF 45% INTEREST IN SIERRA GORDA COPPER MINE

South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is pleased to
announce that today we completed the acquisition of a 45% interest in the
Sierra Gorda copper mine from Sumitomo Metal Mining and Sumitomo Corporation
(collectively Sumitomo) 1 . The final purchase price includes a US$1.4B
upfront cash payment 2  plus a contingent price-linked consideration component
of up to US$500M, payable at threshold copper production rates and prices in
the years 2022-25. The upfront consideration was funded from cash on hand
(~US$600M) and an acquisition debt facility (~US$800M).

South32 Chief Executive Officer, Graham Kerr said: "Our acquisition of an
interest in the Sierra Gorda copper mine is a major milestone for South32. By
adding copper to our portfolio, along with our recent commitments to
substantially increase our green aluminium production, we are making
significant progress reshaping our portfolio for a low carbon future.

"Sierra Gorda will immediately contribute to earnings, improve Group operating
margins and give South32 long term exposure to a metal that is increasingly
hard to discover, develop and produce. We believe copper will play a key role
in the world's decarbonisation and energy transition."

Production, operating unit costs and capital expenditure guidance for
South32's interest in Sierra Gorda over the remainder of FY22 from completion
is included in the table below. FY23 guidance will be provided with our FY22
Financial Results.

 45% South32 share                                          FY22e
 Ore processed (Mdmt)                                       7.9
 Copper equivalent production (kt) 3                        31
 Copper production (kt)                                     27
 Molybdenum production (kt)                                 0.4
 Gold production (koz)                                      10
 Silver production (koz)                                    225
 Operating unit costs (US$/lb CuEq) 4                       1.63
 Safe and reliable capital expenditure (US$M) 5             50
 Improvement and life extension capital expenditure (US$M)  15

 

 

About us

South32 is a globally diversified mining and metals company. Our purpose is to
make a difference by developing natural resources, improving people's lives
now and for generations to come. We are trusted by our owners and partners to
realise the potential of their resources. We produce commodities including
bauxite, alumina, aluminium, metallurgical coal, manganese, nickel, silver,
lead, zinc and copper from our operations in Australia, Southern Africa and
South America. With a focus on growing our base metals exposure, we also have
two development options in North America and several partnerships with junior
explorers around the world.

 

 Investor Relations
 Alex Volante                                    Tom Gallop

T          +61 8 9324 9029
T          +61 8 9324 9030

M        +61 403 328 408
M        +61 439 353 948

E          Alex.Volante@south32.net
E          Tom.Gallop@south32.net
 Media Relations
 Miles Godfrey                                   Jenny White

M        +61 415 325 906
T          +44 20 7798 1773

E          Miles.Godfrey@south32.net
M        +44 7900 046 758

E          Jenny.White@south32.net

Further information on South32 can be found at www.south32.net
(http://www.south32.net) .

Approved for release by Graham Kerr, Chief Executive Officer

JSE Sponsor:  UBS South Africa (Pty) Ltd

22 February 2022

 

Forward-looking statements

This release contains forward-looking statements, including statements about
trends in commodity prices and currency exchange rates; demand for
commodities; production forecasts; plans, strategies and objectives of
management; capital costs and scheduling; operating costs; anticipated
productive lives of projects, mines and facilities; and provisions and
contingent liabilities. These forward-looking statements reflect expectations
at the date of this release, however they are not guarantees or predictions of
future performance. They involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, and which may cause
actual results to differ materially from those expressed in the statements
contained in this release. Readers are cautioned not to put undue reliance on
forward-looking statements. Except as required by applicable laws or
regulations, the South32 Group does not undertake to publicly update or review
any forward-looking statements, whether as a result of new information or
future events. Past performance cannot be relied on as a guide to future
performance. South32 cautions against reliance on any forward looking
statements or guidance, particularly in light of the current economic climate
and the significant volatility, uncertainty and disruption arising in
connection with COVID-19.

 

 1  Refer to market release "South32 to acquire a 45% interest in the Sierra
Gorda copper mine" dated 14 October 2021. The estimates indicated in the
original announcement are qualifying foreign estimate and are not reported in
accordance with the JORC Code. A Competent Person has not done sufficient work
to classify foreign estimates as Mineral Resources or Ore Reserves in
accordance with the JORC Code. It is uncertain that following evaluation
and/or further work that the foreign estimates will be reported as Mineral
Resources or Ore Reserves in accordance with the JORC Code.

 2  Based on initial upfront consideration of US$1.55B, with adjustments
including working capital and net debt.

 3  Copper equivalent production (kt) was calculated by aggregating revenues
from copper, molybdenum, gold and silver, and dividing the total Revenue by
the price of copper. Average metallurgical recoveries are 83% for copper, 57%
for molybdenum and 53% for gold. FY21 index prices for copper (US$4.23/lb),
molybdenum (US$15.7/lb), gold (US$1,796/oz) and silver (US$25.2/oz) have been
used for FY22e.

 4  US dollar per pound of copper equivalent production. FY21 index prices for
copper (US$4.23/lb), molybdenum (US$15.7/lb), gold (US$1,796/oz) and silver
(US$25.2/oz) have been used for FY22e Operating unit costs.

 5  Safe and reliable capital expenditure includes deferred stripping.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQFIFLAFDIFFIF