South32 has announced plans to return US$500 million ($655 million) to shareholders in the form of a buy-back, showing positive signs in Australia’s commodity market.
The funds equate to 4.5 per cent of the company’s current market capitalisation of US$11 billion ($14 billion).
South32 chairman, David Crawford said it showed the company’s confidence in its cash generating ability.
“The combination of our operating leverage, strong balance sheet and simple capital management framework is designed to maximise returns and rewards shareholders as financial performance improve,” he said.
South32 CEO Graham Kerr said, “Our net cash balance continues to build giving us the financial strength and flexibility to invest in our existing operations, pursue opportunities where we can create value and return excess capital to shareholders.”
The timing and the number of shares for the buy-back will depend on the current share price and market conditions. It will be funded from existing cash reserves.
The buyback is set to be completed over 12 months.