South32 buyback ploughs in $ 655m
Townsville DIVERSIFIED miner South32 is launching a buyback worth about $ 655 million as the BHP Billiton spin- off continues to benefit from the recovery in commodity prices.
The company says the yearlong buyback program will return the equivalent of 4.5 per cent of its market capitalisation, based on the group’s closing share price on Friday.
South32 will buy back $ US500 million ($ 655 million) of its shares in the on- market campaign.
Announcing the move yesterday, chief executive Graham Kerr ( pictured) said the group’s cash balance continued to build.
That gave the company “the financial strength and flexibility to invest in our existing operations, pursue opportunities where we can create value and return excess capital to shareholders”, he said in a statement.
Based in Perth, South32 is the world’s biggest producer of manganese ore and was spun out of Melbourne- based mining titan BHP in 2015.
The company said “all alternatives will continue to be assessed to ensure this capital is returned in an efficient manner”.
RBC Capital Markets min- ing analysts Paul Hissey and Connor O’Brien said this suggested South32 could pursue other means if the buyback ceased to provide value.
“This announcement, while positive, is not entirely unexpected, given South32’ s balance sheet position as well as the supportive commodity price environment of ( the financial year) so far,” the RBC analysts said in a note for investors.
South32’ s share price more than doubled to about $ 3 between March and December last year, but has since fallen back slightly. Against the backdrop of a weaker resources sector, it slipped 5¢, or 1.8 per cent, to $ 2.67 yesterday.