JOHANNESBURG (miningweekly.com) – The share price of the new South32 mining company soared superlatively on day two.

The demerged entity shot up 14% on the Australian Stock Exchange (ASX), rose 6.23% on top of Monday’s 3% rise in early morning trade on the Johannesburg Stock Exchange (JSE), and even closed higher at £1.08 a share in London, despite several investment banks having to shed the share to meet index-weighting mandates.

“Stellar second-day for South32,” was the headline chosen by Investec Securities.

So far, some 120-million South32 shares have traded on the ASX and more than 57-million on the JSE, where Tuesday’s mid-afternoon price was R21.50 a share.

There are 5.39-billion shares in issue with investors receiving one share in South32 for every BHP Billiton share held.

But South32’s gain has been parent company BHP Billiton’s loss, as the shares of the world’s biggest mining company fell over the two days on all three exchanges, which prompted the Wall Street Journal to comment that BHP Billiton’s shares had proved less resilient than some had hoped.

“While BHP slumped, South32 soared,” said the Sydney Morning Herald’s Business Day.

The BHP Billiton spin-off is the biggest company to list on the ASX in 15 years and the country’s third-biggest mining company overall, said Australia’s Financial Review.

South32 is the fifty-seventh mining company on the JSE, which has a combined mining market capitalisation of R2.13-trillion and which has been voted the best regulated exchange in the world for the fifth consecutive year by the World Economic Forum, which rates it number three in capital raising, Creamer Media's Mining Weekly Online can report.

Analysts have turned bullish on South32 with four investment banks issuing 'buy' recommendations for the stock, which was simultaneously listed in Australia, Johannesburg and London.

RBC Capital Markets and Macquarie Group initiated coverage of South32 with an 'outperform' note and Citibank put a 12-month price target of A$2.50 for the BHP Billiton spin-off, which it described as “a cost out yield story with limited growth options, but strong balance sheet and cash flow generation offering optionality to buy growth".

The company has a suite of 12 well-maintained assets that produce aluminium, coal, manganese, silver, nickel, lead and zinc in five countries on three continents.

“We’ve already started to see the value coming out of these assets,” said South32 president and COO Africa Mike Fraser of the new company's performance in the last few months, as designated management began aggregating the business support from its assets into its African and Australian regions.

“For the first time we're actually able to operate them as integrated businesses, which we believe will generate a lot of value for our shareholders, firstly by taking out costs but also focusing on driving real reliability and getting the most cash out,” Fraser added.

The company’s attraction to the investor community is expected to become better known as its assets begin being analysed outside of the BHP Billiton fold by the investment community.

Investec calculated that, even after the South32 demerging, BHP Billiton still holds $2.8-billion worth of what it described as “even harder-to-shift rejects” in the form of nine assets ranging from a thermal coal mine in the US to oil and gas platforms in the UK.

But in the main, the demerger has left BHP Billiton with big, high-margin and long-life assets that should command a better valuation over time.

Of South32’s 27 000 employees and contractors, 15 000 are from Southern Africa, where the company has the world’s largest manganese ore mines in South Africa’s Northern Cape and two cost-competitive aluminium smelters in KwaZulu-Natal and neighbouring Mozambique.

In Australia, it has the world’s largest silver mine and in Australia and Brazil, it has two exceptionally high-quality alumina refineries.

In Colombia, it has one of the world’s largest ferronickel operations.

One-third of the business is in Africa, where it has considerable growth potential.