South32: Big Hermosa write-down

About the author:

Adrian Prendergast
Author name:
By Adrian Prendergast
Job title:
Senior Analyst
Date posted:
24 July 2023, 8:00 AM
Sectors Covered:
Mining, Energy

  • South32's (ASX:S32) 4Q’FY23 marked a significantly better operational result compared to the previous period, mostly in-line with expectations.
  • Illawarra, Sierra Gorda and Cerro Matoso were in-line. While manganese was the standout. Ali segment production was mixed.
  • S32 outlined a ~US$1.3bn impairment against Taylor Deposit in Hermosa.
  • High earnings and cash flow leverage, but we see S32’s final dividend at risk.
  • We maintain an Add recommendation, viewing S32 as representing attractive long-term value at current levels.

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