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Final investment approval to develop Hermosa’s Taylor deposit

15 FEBRUARY 2024

Today we have announced final investment approval for the Taylor zinc-lead-silver deposit, the first development at our Hermosa project in Arizona, United States.

The South32 Board has approved the development of Taylor, for direct and indirect capital expenditure of US$2,160M. Taylor is expected to reach first production in H2 FY27 and deliver nameplate production in FY30.

“Final investment approval to develop Taylor is a major milestone aligned with our strategy to reshape our portfolio toward commodities that are critical for a low-carbon future,” said Graham Kerr, South32 Chief Executive Officer.

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(a), an average EBITDA margin of ~50 per cent and an internal rate of return of ~12 per cent.

"Once in production, Taylor is expected to add an additional eight per cent to Group volumes relative to FY23 levels, increasing our supply of critical commodities and sustainably lifting margins due to its first quartile cost position,” said Graham.

With global zinc demand growth expected to outpace production by ~3Mt to 2031, an industry challenge of similar magnitude to copper, we expect higher incentive prices for zinc as Taylor ramps up to nameplate capacity.

"Since inception, our disciplined approach to capital allocation has supported the significant transformation of our portfolio and consistent shareholder returns.” said Graham.

“With the potential to be one of the world's largest, lowest cost zinc producers, we expect Taylor will deliver value for our shareholders for decades to come.”

Watch: Graham Kerr, South32 CEO, discusses our half year financial results and investment in Hermosa's Taylor deposit

Supporting further development at Hermosa

As the first phase of a regional scale opportunity at Hermosa, Taylor's infrastructure including dewatering, power, roads and site facilities, will unlock value for future growth options.

These include Clark, our battery-grade manganese deposit, and potential discoveries in our highly prospective regional land package, which has already returned high-grade copper and zinc results from Peake and Flux.

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.

Delivering local benefits

Today’s announcement is aligned with our purpose to make a difference by developing natural resources, improving people’s lives now and for generations to come. 

Hermosa is the only advanced mine development project in the United States as of 2024 that could produce two federally designated critical minerals — manganese and zinc.

The development of Taylor represents the largest-ever private investment in southern Arizona and will strengthen the United States domestic supply of commodities needed for the transition to a low-carbon future.

It will also create hundreds of jobs in Santa Cruz County, Arizona, where nearly 25 per cent of its residents live below the poverty line, and support economic growth throughout the region where the operation is located.

See the full announcement released today for more information about Hermosa, Taylor and the results of the recent feasibility study (.pdf)




(a) The information in this announcement that refers to Production Target and forecast financial information is based on Probable (65Mt, 61%) Ore Reserves and Measured (1.1Mt,1%), Indicated (4.7Mt, 5%), Inferred (10Mt, 9%) Mineral Resources and Exploration Target (26Mt, 24%) for the Taylor deposit. The Ore Reserves, Mineral Resources and Exploration Target underpinning the Production Target, included in this announcement, have been prepared by a Competent Person and reported in accordance with the JORC Code (2012). All material assumptions on which the Production Target and forecast financial information is based are provided in Annexure 1 of this announcement. There is low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the Production Target will be realised. The potential quantity and grade of the Exploration Target is conceptual in nature. In respect of Exploration Target used in the Production Target, there has been insufficient exploration to determine a Mineral Resource and there is no certainty that further exploration work will result in the determination of Mineral Resources or that the Production Target itself will be realised. The stated Production Target is based on South32’s current expectations of future results or events and should not be solely relied upon by investors when making investment decisions. Further evaluation work and appropriate studies are required to establish sufficient confidence that this target will be met. South32 confirms that inclusion of 33% of tonnage (9% Inferred Mineral Resources and 24% Exploration Target) is not the determining factor of the project viability and the project forecasts a positive financial performance when using 67% tonnage (61% Probable Ore Reserves and 1% Measured and 5% Indicated Mineral Resources). South32 is satisfied, therefore, that the use of Inferred Mineral Resources and Exploration Target in the Production Target and forecast financial information reporting is reasonable.