Business SummarySouth32 Limited (S32) is a diversified mining and metals company producingbauxite, alumina, aluminium, energy and metallurgical coal, manganese,nickel, silver, lead and zinc at our operations in Australia, Southern Africa andSouth America.

Australia: The Australia Region has operations spread across Australia andproduces commodities including alumina, metallurgical coal, manganese andsilver. It operates producing silver mine, Cannington, in northwestQueensland. Its metallurgical coal operations operate in the southerncoalfields of New South Wales, near the city of Wollongong, have beenproducing premium quality, hard coking coal for steelmaking, for 80 years.Manganese operations include an open-cut mine in the Northern Territory. Itsalumina operations in Western Australia include alumina refineries and havebeen mining, refining and exporting alumina since 1984. The AustraliaRegion also covers Colombian nickel mine and smelter, Cerro Matoso.

Africa: In Africa region S32 has four Assets, namely Aluminium South Africa(ASA), Energy Coal South Africa, Mozal and Manganese South Africa. Itsmanganese operations are located in Hotazel in the Northern Cape withinSouth Africa. The Energy Coal operations of South32 are located in SouthAfrica's coal rich corridor, in the towns of eMalahleni and Middleburg. Itsaluminium operations are located in the South African province of Kwa-ZuluNatal and in Maputo, in a province by the same name.

Marketing: South32 Marketing is responsible for the organisation's sales anddistribution activities. These marketing activities include sale of South32'scommodities and purchase of selected raw material inputs, optimising thesupply chain for delivery flow of commodities to both internal and externalcustomers, working closely with the South32 Businesses to maximise thevalue from the resource base and defining the company's view of thelong-term markets.

Latest ResearchNo pre-emption for Sierra Gorda, revising up EPS

We raise earnings estimates as we incorporate Sierra Gorda into our

forecasts and lift our TP to A$4.45. S32 trades on FY23/24 EV/EBITDA of

2.9x and we stay Buy rated.

For more information see research 30 Nov 2021.

GICS - Materials

South32 Limited

ASX Code: S32 Price: $3.75 12 Mth Target Price: $4.45 Rating: Buy

Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.

Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

5 December 2021$17,460m4,656.1m$4.07$2.44

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Buy$4.4520.0%12.3%32.3%

Investment FundamentalsFYE 30 Jun 2021A 2022F 2023F 2024F

Profit $m 655.0 2,912.0 2,928.0 2,726.0Profit (norm)* $m 655.0 2,912.0 2,928.0 2,726.0

EPS* ¢ 14.0 63.0 64.0 59.0EPS Growth % 133.3 350.0 1.6 -7.8P/E* x 26.5 5.9 5.8 6.3P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 9.0 32.0 32.0 30.0Yield % 2.4 8.6 8.6 8.1Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2017A 2018A 2019A 2020A 2021A

Sales Revenue 9,191 10,214 10,372 8,852 7,284Total Revenue ex. Int. 9,393 10,520 10,712 9,140 7,493EBITDA 3,328 3,481 3,103 1,457 2,201Depreciation & Amort. -992 -1,004 -1,079 -1,077 -958Goodwill Amortisation -- -- -- -- --EBIT 2,336 2,477 2,023 380 1,244Net Interest -222 -135 -120 -203 -214Profit Before Tax 2,114 2,342 1,904 178 1,030Income Tax -511 -390 -590 -272 133Outside Equity Int. -- -- -- -- --Profit after Tax 1,603 1,952 1,313 -95 714Significant Items after Tax -3 -150 -759 -- -974Reported Profit after Tax 1,600 1,802 555 -95 -259Preferred Dividends -- -- -- -- --

Cash Flow ($M)2017A 2018A 2019A 2020A 2021A

Receipts from Customers -- -- -- -- --Funds from Operations -- -- -- -- --Net Operating Cashflow 2,772 2,323 2,591 1,989 1,869Capex -415 -590 -1,012 -1,086 -753Acquisitions & Investments -458 -369 -2,735 -484 -202Sale of Invest. & Subsid. 447 551 435 300 186Net Investing Cashflow -376 -407 -3,297 -1,272 -809Proceeds from Issues -- -- -- -- --Dividends Paid -317 -958 -937 -358 -153Net Financing Cashflow -511 -1,514 -1,527 -819 -666Net Increase Cash 1,885 402 -2,233 -102 394Cash at Beginning 1,593 3,619 4,235 2,049 1,749Exchange Rate Adjust. -- -3 3 -31 3Cash at End 3,478 4,018 2,005 1,916 2,146

Ratios and Substantial Shareholders2017A 2018A 2019A 2020A 2021A

Profitability RatiosEBITDA Margin % 36.21 34.08 29.91 16.46 30.22EBIT Margin % 25.42 24.25 19.51 4.30 17.07Net Profit Margin % 17.44 19.12 12.66 -1.07 15.96Return on Equity % 12.05 13.47 9.06 -0.68 9.76Return on Assets % 9.38 10.31 6.98 0.46 7.54

Debt/Safety RatiosNet Debt/Equity % -16.02 -19.06 -4.96 -3.12 -4.53Interest Cover x 10.51 18.31 16.89 1.88 5.81

Top 5 Substantial ShareholdersBlackRock Group 5.1%

Balance Sheet ($M)2017A 2018A 2019A 2020A 2021A

Cash & Equivalent 3,478 4,018 2,008 1,916 2,146Receivables 933 1,118 1,266 774 701Inventories 1,015 1,199 1,357 1,071 952Other Current Assets 205 188 218 119 88Current Assets 5,632 6,523 4,850 3,880 3,887Prop. Plant & Equipment 10,883 11,089 13,683 13,987 11,685Intangibles 328 299 332 361 251Other Non-Current Assets 680 524 632 561 432Non-Current Assets 13,522 13,952 16,133 16,136 13,727Total Assets 19,154 20,475 20,982 20,016 17,614Interest Bearing Debt 1,346 1,257 1,289 1,482 1,605Other Liabilities 4,502 4,729 5,195 4,601 4,098Total Liabilities 5,848 5,986 6,484 6,083 5,704Net Assets 13,306 14,489 14,499 13,933 11,910Share Capital 19,138 19,497 20,115 20,245 18,057Reserves -4,554 -4,510 -4,976 -5,196 -4,745Retained Earnings -1,277 -497 -639 -1,115 -1,401Outside Equity Int. -1 -1 -1 -1 -1Total Shareholders Equity 13,306 14,489 14,499 13,933 11,910

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Ms Claire Tolcon

Directors

Ms Karen Joy Wood(Non-Executive Director,Non-ExecutiveChairman)Mr Frank Charles Cooper(Non-Executive Director)Mr Keith Christopher Rumble(Non-Executive Director)Mr Wayne Geoffrey Osborn(Non-Executive Director)Mr Graham Kerr(Chief Executive Officer,Managing Director)Dr Ntombifuthi Temperance Mtoba(Non-Executive Director)Dr Xiaoling Liu(Non-Executive Director)Mr Guy Lansdown(Non-Executive Director)

To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au

© 2021 Morningstar, Inc. All rights reserved.Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liabilityfor its use or distribution. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or MorningstarResearch Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice ProviderDisclosure Statement (NZ) at www.morningstar.com.au/s/fsg.pdf and www.morningstar.com.au/s/fapds.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product DisclosureStatement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does notnecessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASXOperations Pty Ltd ACN 004 523 782.

South32 Limited

Bell Potter Securities Research

AFS Licence No. 243480 ABN 25 006 390 772

Email info@bellpotter.com.au

Website www.bellpotter.com.au