The South32 Ltd (ASX: S32) share price has been a strong performer in 2022.
Since the start of the year, the mining giant's shares have gained 17%.
This compares favourably to a ~5% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.
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Can the South32 share price rise further?
The good news for investors is that one leading broker still sees plenty of room for the South32 share price to push higher from current levels.
According to a note out of Goldman Sachs this morning, the broker has retained its conviction buy rating and lifted its price target to $5.60.
Based on the current South32 share price of $4.75, this implies potential upside of 18% for investors over the next 12 months.
But the returns don't stop there! Goldman estimates that South32's shares currently offer a fully franked 7% FY 2022 dividend yield. The broker then expects a 13% dividend yield in both FY 2023 and FY 2024.
Why is Goldman bullish?
Goldman has updated its earnings estimates to reflect the completion of the company's acquisition of a 45% stake in the ~200ktpa Sierra Gorda copper mine in Chile from Sumitomo Corporation.
In addition, the broker continues to believe that the South32 share price trades at a very attractive level, particularly given the company's strong free cash flow generation. The latter is why Goldman is forecasting such big yields in the coming years.
Goldman explained: "The stock is trading at c. 0.9x NAV (A$5.18/sh) including the completion of the acquisition of a 45% stake in the Sierra Gorda copper mine in Chile."
"We forecast a FCF yield of c. 20% in FY23 (over 25% at spot), driven mostly by exposure to base metal price momentum (aluminium & alumina c. 55% of FY23 EBITDA, zinc/nickel c. 20%, copper c. 10%), met coal (c. 10% of EBITDA), a c. 30% or c. 280ktpa increase in aluminium production over the next 18 months from the Alumar restart & c. 17% increase in Mozal stake, creep in nickel from Cerro Matoso and lead/zinc/silver from Cannington, and uplift from the Sierra Gorda acquisition," it added.
