South32 shares slump after lifting capital expenditure for Hermosa Project
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The news: Shares in South32 tumbled in afternoon trade after the miner lifted capital expenditure for its Taylor zinc-lead-silver project (Taylor) to USD3.3 billion ($4.6 billion), the key component of its Arizona-based Hermosa project.
Shares had fallen 8.10% to $3.91 at 12:29pm AEST.
The context: South32 said the increased expenditure was due to addition of a decline access, revised shaft construction costs, higher inflation and the impact of US tariffs.
The miner also delayed first production from the shafts to the first half of FY29. First production zinc-lead-silver ore mined via the clark decline is now expected in the second half of FY28.
The Taylor project was initially approved for development in February 2024, and is expected to deliver 10.4 million tonnes of zinc for over 33 years.
What they said: “First production is expected in H2 FY28 and nameplate capacity by FY31, reflecting our revised expectations for shaft construction, due to contractor performance and productivity challenges,” CEO Graham Kerr said.
“While targeted measures have been implemented to improve shaft construction productivity, our latest assessment has determined that these measures will only partially mitigate the impact of contractor underperformance,” he added.
The source: ASX
