The South32 Ltd (ASX: S32) share price rose to $4.28 earlier today, meaning the resources company has reached an all-time high.
If you don't know, South32 works with a number of different commodities including alumina, aluminium, bauxite, metallurgical coal, lead, nickel, manganese, silver and zinc. It will soon have exposure to copper.
Every commodity behaves differently, however some of them have seen strong price action with increased demand and inflation over the past couple of years.
South32 recently said that it experienced record aluminium pricing the half-year to December 2021, while managing the impact of third-party port and freight congestion for its South African smelters.
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Strong production
There are two main components to a resource company's revenue – the price of the commodity and how much it produces. Therefore, production can have an important impact on profit and the South32 share price.
In the miner's quarterly report to December 2021, it revealed increased production for several segments.
There was a 4% increase in quarterly alumina production, with record production at Brazil Alumina as it returned to normalised rates after the prior quarter's bauxite unloader outage.
It revised the Cannington mine (one of the world's largest producers of silver and lead) production guidance for FY22 to be higher by 5% with the operation on-track to transition to 100% truck haulage in the quarter for the three months to June 2022.
There was increased payable nickel production at Cerro Matoso by 26% with plant availability benefiting from the completion of the furnace refurbishment in FY21.
However, Australian manganese FY22 production guidance was lower by 9% due to COVID-19 and weather impacts, preventing the re-build of stockpiles ahead of the wet season.
Expansion plans
South32 has added copper exposure to the portfolio, announcing the acquisition of a 45% interest in the Sierra Gorda joint venture, which is expected to complete in the March 2022 quarter.
It has also finalised the zinc-lead-silver Taylor Deposit's pre-feasibility study following the end of the period, confirming its potential to be the first development option at its Hermosa project.
Is the South32 share price a buy?
South32 is a highly rated ASX right now, with buy ratings from many of Australia's brokers.
One of the most positive is Credit Suisse, with a price target of $5.30. That implies a rise of another 25% over the next year, if the broker is right.
On Credit Suisse's numbers, the South32 share price is valued at 8x FY22's estimated earnings with a projected grossed-up dividend yield of 7.25%.
