South32 takes next step at Hermosa

South32 will go ahead with a $US2.16 billion development of…


South32 will go ahead with a $US2.16 billion development of the Taylor critical minerals deposit at its Hermosa project in Arizona, US.

The company announced it had reached a final investment decision to approve the development of Taylor with production expected to commence in 2027.

South32 chief executive officer Graham Kerr said the decision was a milestone for Hermosa and the company as it reshapes its portfolio towards commodities for a low-carbon future.

“Taylor is expected to deliver attractive returns over multiple decades, with the feasibility study confirming the potential for a long-life, low-cost, low-carbon operation, with an initial operating life of 28 years, an average earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 50 per cent and an internal rate of return of 12 per cent,” he said.

“Once in production, Taylor is expected to add an additional eight per cent to group volumes relative to 2022-23 financial year (FY23) levels, increasing our supply of critical commodities and sustainably lifting margins due to its first quartile cost position.”

Kerr said Taylor has been designed to minimise its environmental impact, featuring a small footprint underground mine with efficient water use and dry-stack tailings.

“We have applied ‘next generation mine’ design principles utilising automation and technology to drive efficiencies and lower our operational greenhouse gas emissions,” he said.

The first phase of a regional scale opportunity at Hermosa will see the growth of Taylor’s infrastructure including dewatering, power, roads and site facilities.

Though Kerr emphasised the development of Taylor “will unlock value for future growth options”, it remains to be seen whether the adjoining Clark deposit at Hermosa is progressing to development.

Last May, South32 revealed Clark to be a battery-grade manganese deposit with potential to supply materials to the rapidly forming North American electric vehicle supply chain. The company said it continues to progress studies at the deposit.

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