Australian Investment Blog
ASX:S32 18/06/2018
South32 (ASX:S32) spending cash
Stock
South32 (S32) $3.80 as at 18/06/2018
Event
South32 has agreed to buy junior Canadian Zinc miner Arizona Mining for $1.75bil in cash, a huge 50% premium to the last traded price. South32 already holds 17% of the Toronto listed company, earning it a board seat and a close look at Arizona’s key asset, Hermosa, which holds zinc, silver and lead. The deal, although sizable, doesn’t require South32 to raise debt, with enough cash on the balance sheet, however the asset is still in development phase and will require working capital to begin production.
South32 (S32) Chart
Market Matters Take/Outlook
The purchase is positive, however it has come at a cost – S32 paying well over market value. We are negative South32 for its exposure to a range of base metals/commodities we don’t like – met coal being the biggest problem.
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