Diversified mining company South32 announced last week that it intends to return an additional $500-million to shareholders, equating to 4.5% of the group’s current market capitalisation.
The Sydney-, London- and Johannesburg-listed company said in a media release that this dividend-complementing capital management programme would initially take the form of an on-market share buy-back in Australia.
South32 chairperson David Crawford said the combination of the company’s operating leverage, strong balance sheet and simple capital management framework is designed to maximise returns and reward shareholders as financial performance improves.
The announcement demonstrates the company’s approach to capital management and its confidence in its cash generating capacity.
South32 CEO Graham Kerr noted that the company’s net cash balance continued to build up, providing scope for investing in existing operations, pursuing value accretive opportunities and returning excess capital to shareholders.
The $500-million capital management programme increases shareholder returns and follows the recent announcement of the $192-million interim dividend.
The timing and number of shares bought under the on-market share buy-back will be contingent on the prevailing share price and market conditions.
The on-market share buy-back will be funded from existing cash reserves.
The $500-million capital management programme is expected to be completed over a 12 month period and all alternatives will continue to be assessed to ensure this capital is returned in an efficient manner, the company said.