The South32 Ltd (ASX: S32) share price is in focus today after the company delivered an update on its flagship Hermosa project. Key outcomes include a 52% boost to the Taylor deposit's Ore Reserve and an increased project operating life of around 33 years.
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What did South32 report?
- Taylor Ore Reserve increased 52% to 99 million tonnes, driven by successful infill drilling
- Initial operating life for Taylor extended by 5 years to approximately 33 years
- Expected steady-state annual EBITDA of ~US$650 million, with potential to rise to ~US$800 million at spot prices
- Growth capital expenditure for Taylor revised up to ~US$3.3 billion, reflecting scope changes and inflation
- Peake copper resource estimate up 32% to 33Mt, supporting longer mine life and future copper production potential
- First production from Taylor now expected in the second half of FY28, with nameplate capacity by FY31
What else do investors need to know?
Recent work confirms Taylor remains a high-quality, long-life zinc-lead-silver asset, with the deposit open for further growth. Operational flexibility will improve, as first ore is expected via the Clark decline before shaft commissioning, increasing ore handling capacity by 25%.
The nearby Peake deposit is shaping up as a future copper development, underpinned by a significant uplift in its Mineral Resource. South32's battery-grade manganese Clark deposit has also attained US government support, with federal permitting for Hermosa's components progressing as planned.
What did South32 management say?
Chief Executive Officer Graham Kerr said:
Our investment in Hermosa has established a regional-scale project with the potential to produce critical minerals over several decades, with Taylor as the first stage. Our updated assessment of project execution has reaffirmed Taylor's potential to deliver our shareholders attractive returns from its long-life, low-cost production of zinc, silver and lead.
What's next for South32?
Looking ahead, South32 expects construction of the Hermosa project's key infrastructure, including Taylor's shafts and processing plant, to be complete between FY27 and FY28. The path to nameplate production is set for FY31, slightly later than previously planned, due largely to contractor challenges and higher input costs.
The company is also focusing on integrating Peake's copper with Taylor's mine plan and advancing the Clark manganese project, aiming to support US critical minerals supply for decades. Ongoing drilling and exploration at Hermosa's wider tenement could unlock further value in future updates.
South32 share price snapshot
Over the past 12 months, South32 shares have risen 55%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 7% over the same period.
