Finals:
https://www.investegate.co.uk/announcem ... 3-/7714324South32 delivers strong growth in commodities critical for a low-carbon future
"We continued our work to fundamentally shift our safety performance following the devastating loss of two of our colleagues, Mr Cristovão Alberto Tonela and Mr Alfredo Francisco Domingos João, in a fatal incident at Mozal Aluminium in November 2022.
"We are working to enhance our safety culture through the use of our 'safety guarantee' - an internal approach where each of us stop and ask ourselves whether we can guarantee our own safety and that of our colleagues before undertaking each task.
"During the year, we delivered strong production growth in commodities that are critical for a low-carbon future. We set three annual production records and realised the benefit of our recent portfolio improvements, increasing aluminium production by 14 per cent, base metals by 17 per cent and manganese by 4 per cent.
"This growth, coupled with our continued focus on cost efficiencies, underpinned one of our largest underlying financial results, with Underlying EBITDA of US$2.5 billion. This was achieved despite lower commodity prices and industry-wide inflationary pressures.
"A record US$1.2 billion was returned to shareholders during the 2023 financial year and the Board has today resolved to pay a fully-franked ordinary dividend of 3.2 cents per share or US$145 million in respect of the June 2023 half year.
"Reflecting our disciplined approach to capital management, the Board has also resolved to further expand our capital management program by US$50 million to US$2.4 billion, leaving US$133 million to be returned by 1 March 2024.
"We invested to grow our future production of critical commodities and achieved significant milestones at our Hermosa project in Arizona, the first mining project added to the FAST-41 process. We are on-track to make a final investment decision to develop Hermosa's Taylor base metals deposit in FY24, and continue to progress the opportunity at Hermosa's Clark deposit to supply battery-grade manganese for rapidly forming North American markets.
"Sierra Gorda continued work on its capital efficient plant de-bottlenecking project and advanced studies for the fourth grinding line expansion, designed to deliver a significant uplift in future copper production.
"We added further greenfield exploration options as we worked to discover our next generation of base metals mines, consolidating our position in San Juan, Argentina.
"We continue to execute our strategy and our portfolio is leveraged to the increasing commodity demand required for the global energy transition."
Specific highlights for FY23 included:
· Record annual production at three operations;
· Embedded portfolio improvements in copper and low-carbon aluminium(17);
· 15% production growth(18) in aluminium and base metals;
· Record US$1.2B returned to shareholders, equivalent to 11% of our current market capitalisation(19);
· Advanced our portfolio of high-quality growth options, progressing work to support planned investment decisions for the development of Hermosa's Taylor zinc-lead-silver deposit and the Sierra Gorda copper expansion in FY24;
· Confirmed the opportunity to produce battery-grade manganese from Hermosa's Clark deposit and signed multiple non-binding, non-exclusive memorandums of understanding for future potential supply into North American markets;
· Consolidated our position in San Juan, Argentina, exercised our earn-in right for a 50.1% interest in the Chita Valley copper prospect(20) and acquired a strategic interest(21) in Aldebaran Resources Inc.;
· Advanced near-term decarbonisation programs to support our target(22) to halve operational greenhouse gas (GHG) emissions by 2035, with Worsley Alumina on-track to convert its first onsite boiler from coal to natural gas in Q1 FY24;
· Sierra Gorda transitioned to cost efficient, 100% renewable electricity supply from January 2023; and
· Progressed partnerships to address value chain emissions and expanded our climate change goals(23) to include net zero Scope 3 GHG emissions by 2050.
EARNINGS RECONCILIATION
The Group's statutory profit after tax decreased by US$2,842M to a loss of US$173M in FY23, including the US$1,300M non-cash impairment of Hermosa's Taylor deposit, while Underlying earnings decreased by US$1,686M to US$916M.
Consistent with our accounting policies, various items are excluded from the Group's statutory profit/(loss) to derive Underlying earnings. Total adjustments to derive Underlying EBIT (US$1,418M), shown in the table below, include:
· Net impairment loss of non-financial assets (+US$1,300M): non-cash impairment expense of Hermosa's Taylor deposit, as announced on 24 July 2023(13). The impairment reflected the impact of delays due to COVID-19, significant dewatering requirements, and current inflationary pressures;
· Significant items (-US$186M): gain on disposal of non-core base metal royalties to Ecora Resources PLC(15) (-US$189M pre-tax) and recognition of other income in relation to the indemnity for Chilean mining tax changes(24) negotiated as part of our acquisition of Sierra Gorda (-US$48M pre-tax), partially offset by a non-cash asset write-off following our decision not to proceed with the Dendrobium Next Domain (DND) project at Illawarra Metallurgical Coal(25) (+US$51M pre-tax);
· Sierra Gorda (+US$144M) and Manganese (+US$147M) joint venture adjustments: adjustments to reconcile the statutory equity accounting position to a proportional consolidation basis; and
· Net impairment loss of financial assets (+US$71M): periodic revaluation of the shareholder loan receivable from Sierra Gorda reflecting copper price and other macroeconomic assumptions. An offsetting amount is recorded in the Sierra Gorda joint venture adjustments noted above.
Further information on these earnings adjustments is included on page 40.
The Group's Underlying EBITDA decreased by US$2,221M (or 47%) to US$2,534M in FY23, as lower commodity prices (-US$1,781M) and sales volumes (-US$539M), together with higher inflation, raw material and energy costs (-US$445M), more than offset the benefit of weaker producer currencies (+US$369M). Our recent portfolio improvements in Sierra Gorda and an additional interest in Mozal Aluminium added US$240M to Group Underlying EBITDA with a combined operating margin of 38%. This was partially offset by Brazil Aluminium (-US$32M) as the smelter continued to ramp-up, following the restart of all three potlines.
The Group's Underlying EBIT decreased by US$2,351M (or 59%) to US$1,616M, as Underlying depreciation and amortisation increased by US$130M to US$918M with the inclusion of Sierra Gorda in our portfolio.
The results don't look that good with them falling to a loss due to non-cash impairment charge, but even with this removed underlying earnings and profit are down.
Also the dividend is well down compared to last year:
South32 Limited (ASX, JSE, LSE: S32; ADR: SOUHY) (South32) announced that the Board has resolved to pay an final dividend of US 3.2 cents per share (fully franked) for the full year ended 30 June 2023. The record date for determining entitlements to dividends is 15 September 2023; payment date is 12 October 2023.
https://www.investegate.co.uk/announcem ... a-/7714407plus a third announcement:
Sierra Gorda mineral declaration
https://www.investegate.co.uk/announcem ... n-/7714403