South32 (ASX:S32,OTC Pink:SHTLF) said on Monday (July 7) that it has agreed to sell the Cerro Matoso nickel mine in Colombia to a subsidiary of CoreX Holding following recent changes in the nickel market.
South32 now plans to focus on critical minerals, describing its flagship Hermosa project in Patagonia as a “next generation mine.” Hermosa hosts the zinc-lead-silver Taylor sulphide deposit, and the zinc-manganese-silver Clark oxide deposit.
“The Transaction is consistent with our strategy and will further streamline our portfolio toward higher margin businesses in minerals and metals critical to the world’s energy transition,” said South32 CEO Graham Kerr.
“The Transaction will deliver a clean separation of Cerro Matoso and provide additional balance sheet flexibility to support investment in our growth options in copper and zinc.”
Cerro Matoso is an open-cut mine in Northern Colombia located about 20 kilometres southwest of Montelibano. The project boasts almost 40 years of operations, with 40.6 kilotonnes of payable nickel produced in 2024.
Under the agreement, CoreX will make cash payments of up to US$80 million worth of price-linked consideration based on future production and nickel prices, and up to US$20 million based on permitting milestones within the next five years for the Queresas & Porvenir North project. The US$20 million will come in four equal payments.
South32 said it intends to work with the buyer, the company’s workforce, local communities, government, customers and suppliers to support the transfer of ownership.
Upon transaction completion, all economic and operating control of Cerro Matoso will fall under the buyer’s hands. Cerro Matoso will be reported in South32’s underlying financial results as a discontinued operation once the transaction is completed.
Subject to certain conditions such as international merger clearances and a reorganisation of the entity which holds Cerro Matoso, the transaction is scheduled to be completed towards the end of this year.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
