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South32 (ASX:S32) will sell its Cerro Matoso nickel mine to a subsidiary of CoreX Holding after it took a look at the market – mostly taking into account “structural changes” – and decided it was financially wiser to separate.
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CoreX will take control of Cerro Matoso, including all current and future liabilities, after the sale goes through. South32 will net up to US$100 million (A$152M) in return.
CoreX is owned by nickel-eager Turkish shipping billionaire Robert Yuksel Yildirim, who’s been extremely bullish on the white metal for some time now.
“The transaction will deliver a clean separation of Cerro Matoso and provide additional balance sheet flexibility to support investment in our growth options in copper and zinc,” South 32’s CEO, Graham Kerr, explained.
South32 has pledged to help the buyer with all ownership transitions. They’ll be bound for the next five years, with US$20M payments planned once a year.
(The deal is still pending today as international merger clearances are arranged.)
Markets seem okay with the split; South32 headed into Week 28 at $3.12 a share and has added a hair under +1% in value since the sale was announced.
A “separation” makes sense for South32 as it looks to get back into the black, especially considering the last year has seen the $14 billion Australian miner’s share price dip as much as -17.54% over the last year of trade.
The move is “consistent with our strategy,” Mr Kerr added, and is expected to streamline the company’s portfolio towards higher margin businesses in minerals and metals South32 believe will be critical to the world’s energy transition.
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Beyond this $152M sale, South32 still carries several projects on its books, including Mozal and Hillside (aluminium) as well as Hermosa in Arizona in the U.S. and Cannington and Worsley Alumina in Western Australia.
The company also boasts several mines in the manganese-rich Kalahari Basin.
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