South32 (ASX:S32) share price lower despite ‘next generation mine’ update

South32 has provided an update on a key future operation…

| More on:
A mining worker wearing a white hardhat stands on a platform overlooking a huge mine as ASX 200 mining shares fall over the month of June

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • South32 has completed the pre-feasibility study of its Taylor Deposit
  • Results show potential for Taylor to be a multi-decade operation through its zinc-lead-silver underground mine
  • Operation will leverage automation and technology to be carbon neutral

In morning trade, the South32 Ltd (ASX: S32) share price is edging lower on Monday.

At the time of writing, the mining giant’s shares are down 0.5% to $4.15.

Why is the South32 share price falling?

The South32 share price is falling on Monday after weakness in the materials sector offset an announcement relating to its Hermosa project in the United States.

According to the release, the company has completed its pre-feasibility study (PFS) for the Taylor Deposit at the 100% owned Hermosa project in Arizona.

Pleasingly, the PFS support Taylor’s potential to be the first development of a multi-decade operation aiming to establish Hermosa as a globally significant producer of metals critical to a low carbon future and delivering attractive returns over multiple stages.

The release notes that an initial development case demonstrates a sustainable, highly productive zinc-lead-silver underground mine and conventional process plant, in the first quartile of the industry cost curve.

As a result, the Taylor Deposit will now progress to a feasibility study, including work streams designed to unlock additional value. This will be by optimising operating and capital costs, extending the life of the resource, and the further assessment of options identified to target a carbon neutral operation. Completion of the feasibility study and a final investment decision to construct Taylor are expected in mid 2023.

“An important first development option”

South32’s Chief Executive Officer, Graham Kerr, said: “The Taylor Deposit provides an important first development option for our Hermosa project in Arizona, USA. The project has the potential to sustainably produce the metals critical for a low carbon future across multiple decades from different deposits.”

“Completing the pre-feasibility study for the Taylor Deposit is an important milestone that demonstrates its potential to be a globally-significant and sustainable producer of base and precious metals in the industry’s first cost quartile. Beyond Taylor, [the] Clark [depost] offers the potential to realise further value from our investment in Hermosa through the production of battery-grade manganese, a mineral designated as critical in the United States.”

Mr Kerr also revealed that the company intends for the Taylor Deposit operation to leverage automation and other technologies in order to be carbon neutral.

He explained: “We are designing the Taylor Deposit to be our first ‘next generation mine’, using automation and technology to minimise our impact on the environment and to target a carbon neutral operation in line with our goal of achieving net zero operational carbon emissions by 2050.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

A miner holds two hands full of coal, indicating share price movement for coal and energy companies
Resources Shares

Own Soul Patts shares? Here’s how much of its portfolio is exposed to coal

Is Soul Patts heavily invested in coal shares?

Read more »

Gold bars and Australian dollar notes.
Resources Shares

Do Evolution Mining shares pay a dividend?

The ASX 200 mining shares are known as good dividend payers -- is Evolution among them?

Read more »

A woman frowns and crosses her arms.
Resources Shares

What’s dragging on the Fortescue share price today?

Fortescue's shares have dropped into the red today...

Read more »

A mining worker wearing a white hardhat stands on a platform overlooking a huge mine as ASX 200 mining shares fall over the month of June
Resources Shares

How have ASX 200 mining shares fared over June?

We examine the share price performance of BHP, Rio Tinto, Fortescue, and South32.

Read more »

Two men sit in garden on chairs facing each other and fist bump while holding a beer.
Resources Shares

Own Rio Tinto shares? Here’s how the company is ‘canning’ carbon emissions

Let's have a CANdid look at what Rio is up to.

Read more »

Oil miner holding a laptop and mobile phone looks at his phone and sees the falling oil price and falling Woodside share price
Broker Notes

Can the Beach Energy share price hit $1.95?

Buoyant energy markets are continuing to bolster the case...

Read more »

A man wearing a blue jumper and a hat looks at his laptop with a distressed and fearful look on his face as he reads about the Core Lithium share price falling 30% in a month
Resources Shares

Down 30% in a month, what’s been driving the Core Lithium share price lower?

It's been a rollercoaster ride for Core Lithium shareholders in June.

Read more »

A group of people in suits and hard hats celebrate the rising share price with champagne.
Broker Notes

Goldman Sachs says Iluka shares are a strong buy with 40% upside

This resources share could be a strong buy according to Goldman Sachs...

Read more »