Joint Statement by Baillieu Limited Chairperson David Trude and Managing Director Gavin Powell

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South32 (S32) SNAPSHOT

Profile: South32 Limited (S32) is a global resources company headquartered in Perth, WA, with activities in Australia, South Africa and South America. S32’s operations span the exploration, development, production and processing of products including alumina, aluminium, manganese, energy and metallurgical coal, bauxite, nickel, silver, lead and zinc.

History: S32 was formed in May 2015, when BHP Billiton Ltd divested its alumina, aluminium, coal, manganese, nickel, silver, lead and zinc assets. In August 2018, S32 completed the acquisition of Arizona Mining for an all cash offer of US$1.4bn. S32 acquired a 50% interest of the Eagle Downs metallurgical coal project in September 2018 for a consideration of US$133m.

Earnings composition: US$927m (34%) of S32’s FY19 underlying EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) was generated from aluminium and alumina. US$913m (34%) was from manganese ore and alloys, while US$542m (20%) of underlying EBITDA was metallurgical coal. US$288m (11%) was from base and precious metals and US$42m (1%) from energy coal.

Most recent result – FY19: Underlying EBITDA was down 13% on the prior corresponding period (pcp) to US$2.2bn. Underlying earnings were down 25% on the pcp to US$992m as a 3% rise in production volumes (driven by a 57% increase in production at Illawarra Metallurgical coal) and exchange range benefits were offset by lower realised aluminium and thermal coal prices as well as higher costs. Statutory NPAT decreased by 71% on the pcp to US$389m, impacted by a post-tax impairment charge of US$578 on its South African Energy Coal (SAEC) business. A US$0.028 dividend was declared, bringing the full year dividend to US$0.096 (including a US$0.017 special dividend) down from US$0.135 in the pcp.

Company outlook: In August 2019, S32 announced it had entered into negotiations with Seriti Resources to divest its SAEC business, subject to approvals. The SAEC transaction approvals are expected to be finalised by June 2020. As at 22 August 2019, S32 intends to buyback a further c.US$264m by 4 September 2020 on-market as part of its capital management program.

Important dates: Ex-dividend date is 12 September 2019. Payment date is 10 October 2019. AGM is scheduled for 24 October 2019.

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