REG - South32 Limited - Illawarra Metallurgical Coal Sale Unconditional

South32Announcement

29/07/2024 08:45

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RNS Number : 1868Y  South32 Limited  29 July 2024

 

 

 

 

29 July 2024

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

 

 

 

 

ILLAWARRA METALLURGICAL COAL SALE UNCONDITIONAL

South32 Limited (ASX / LSE / JSE: S32; ADR: SOUHY) (South32) advises that all
conditions precedent to the sale of Illawarra Metallurgical Coal (Transaction)
to an entity owned by Golden Energy and Resources Pte Ltd and M Resources Pty
Ltd (the Buyer) 1  (#_ftn1) have been satisfied.

Accordingly, the Transaction is unconditional and is expected to complete on
or around 2 September 2024.

South32 Chief Executive Officer, Graham Kerr said: "The sale of Illawarra
Metallurgical Coal is a significant milestone in the transformation of our
portfolio towards commodities critical to a low-carbon future. The transaction
will simplify our business, strengthen our balance sheet and reduce our
capital intensity, unlocking capital to invest in our high-quality development
projects in copper and zinc.

"Looking forward, our strategy and disciplined approach to capital allocation
is unchanged. We remain focused on delivering our development projects and
advancing our portfolio of earlier stage options to further increase our
exposure to commodities critical to a low-carbon future and realise
substantial value for our shareholders.

"I would like to thank our colleagues at Illawarra Metallurgical Coal for the
contribution they have made to our business and wish them every success for
the future."

Further information

The Buyer will assume economic and operating control of Illawarra
Metallurgical Coal on completion, including all current and future
liabilities.

On completion, we will receive the upfront cash consideration of US$1,050M 2 
(#_ftn2) , less the already paid deposit of US$40M.

The deferred cash consideration of US$250M, payable in 2030, and the
contingent price-linked cash consideration of up to US$350M 3  (#_ftn3) , will
be recognised in our financial statements as a non-current other receivable
and a on-current other financial asset, respectively.

The upfront cash consideration will be allocated in accordance with our
capital management framework and commitment to an investment grade credit
rating. Our capital management framework is designed to support investment in
our business and deliver returns to shareholders in the most efficient and
value accretive manner. Further detail will be provided with our FY24
financial results.

 

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, copper, silver, lead, zinc, nickel, metallurgical
coal and manganese from our operations in Australia, Southern Africa and South
America. We also have a portfolio of high-quality development projects and
options, and exploration prospects, consistent with our strategy to reshape
our portfolio toward commodities that are critical for a low-carbon future.

 Investor Relations
 Ben Baker

T          +61 8 9324 9363

M        +61 403 763 086
 E          Ben.Baker@south32.net (mailto:Ben.Baker@south32.net)
 Media Relations
 Jamie Macdonald                                                            Miles Godfrey

T          +61 8 9324 9000                                                T          +61 8 9324 9000

M        +61 408 925 140                                                  M        +61 415 325 906

E          Jamie.Macdonald@south32.net
E          Miles.Godfrey@south32.net
                                                                            (file://///auper-p-vfs04/South32/Investor%20Relations/12.%20ASX%20Releases/FY23/Project%20Matrix/Current%20draft/Miles.Godfrey@south32.net)

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

Approved for release to the market by Graham Kerr, Chief Executive Officer

JSE Sponsor: The Standard Bank of South Africa Limited

29 July 2024

 1  (#_ftnref1) Refer to market release "Sale of Illawarra Metallurgical Coal"
dated 29 February 2024.

 2  (#_ftnref2) Subject to customary working capital, net debt and capital
expenditure adjustments.

 3  (#_ftnref3) The contingent price-linked cash consideration comprises up to
US$350M applicable for five years from the date of completion with no annual
cap. The first two years will be calculated and paid on the second anniversary
of completion and annually thereafter. The contingent price-linked
consideration will be calculated as 50% of incremental metallurgical coal
revenue from equity production, net of royalties, based on the following
metallurgical coal price thresholds: Year 1: US$200/t, Year 2: US$200/t, Year
3: US$190/t, Year 4: US$180/t, Year 5: US$180/t.

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