South32 is currently carrying out a share buy-back programme. In addition, it appears to be protected against proposed government legislation, which aims to increase BEE ownership from 25% to 30%.
Since reaching its best-ever valuation since listing in mid-2015, shares in South32 have been experiencing something of a correction, down about 18% between April and June. This is probably owing to a first-quarter weakening in manganese prices, a mineral it mines in the Northern Cape.
There are grounds, however, for a re-look at the company, especially since it recorded cash of $1.5bn at the end of the first quarter. Some $500m of that has been earmarked for a share buy-back programme of which just over $100m has already been executed.
Given, though, that the company views cash holdings over $500m as excess to its needs, and no longer sees an opportunity in buying the shares it doesn’t own in the Samancor joint venture it has with Anglo American, there’s the possibility of a year-end special or bumper dividend.
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