Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

April 28, 2025 07:57 PM AEST | By Team Kalkine Media

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year — Image source: Shutterstock

Recent Share Price Movements

Despite broader gains in the S&P/ASX 200 Index (ASX:XJO), South32 shares have experienced a notable decline over the past year. As of the latest trading session, the stock was priced at $2.70 per share. Share price movements have mirrored the overall challenges within the commodities landscape, especially for diversified miners.

Strategic Asset Base Supports Diversification

Following its separation from BHP Group Ltd (ASX:BHP), South32 has developed a portfolio spanning alumina, aluminium, manganese, nickel, coking coal, silver, zinc, and lead. According to market insights, the company's diversified asset base means that no single operation is central to overall earnings. This broad exposure provides resilience against fluctuations in any one commodity sector.

Quarterly Update and Key Developments

South32 announced its third-quarter results in April, outlining several operational developments. One area of challenge involved the Cannington mine, where full-year guidance was revised downward. Increased unit costs were attributed to difficult geological conditions and weather impacts affecting workforce availability.

On the positive side, alumina production aligned with expectations, while aluminium output exceeded previous estimates due to strong performances at Brazil Aluminium and Mozal. These production figures underscored South32’s ability to maintain output stability across key commodities.

In addition, South32 received an insurance payout connected to prior disruptions. The funds supported ongoing recovery work, with major infrastructure expected to resume operations within the next financial year.

Financial Position and Cash Flow Strength

South32 reported significant free cash flow during the quarter, even after allocating funds towards growth projects. External insurance payments and disciplined capital management contributed to a strong financial standing.

Chief Executive Officer Graham Kerr emphasized the company's commitment to operational discipline, cost management, and maintaining a solid balance sheet. This approach is designed to position South32 for resilience amid changing global economic conditions.

Broader Context in ASX Stocks

Within the broader landscape of ASX Stocks, South32 (ASX:S32) exemplifies the challenges and resilience shown by diversified miners. Despite headwinds, operational efficiencies and strategic asset positioning remain important factors in navigating sector volatility.

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