Wrap Text
Hermosa Project Update
South32 Limited
(Incorporated in Australia under the Corporations Act 2001 (Cth))
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32; ADR: SOUHY
ISIN: AU000000S320
south32.net
HERMOSA PROJECT UPDATE
Conference call at 9.00am Australian Western Standard Time, details overleaf.
South32 Limited (ASX / LSE / JSE: S32; ADR: SOUHY) (South32) provides an update on the Taylor zinc-lead-silver project (Taylor),
the first development at our Hermosa project in Arizona, United States.
South32 Chief Executive Officer, Graham Kerr said: "Our investment in Hermosa has established a regional-scale project with the
potential to produce critical minerals over several decades, with Taylor as the first stage.
"Our updated assessment of project execution has reaffirmed Taylor's potential to deliver our shareholders attractive returns from
its long-life, low-cost production of zinc, silver and lead.
"Taylor's initial operating life has been extended by 5 years to ~33 years1 since final investment approval, driven by successful infill
drilling programs. The deposit remains open in several directions, providing further growth potential, with life extensions beyond the
mine plan of operations subject to future regulatory approvals.
"At the adjacent Peake deposit, continued exploration success has underpinned a 32% increase in its Mineral Resource estimate to
33Mt2, supporting our expectation that Peake will become a source of future copper production and mine life extension within the
Taylor development.
"Recently completed study work for the co-located Clark deposit has confirmed the opportunity for additional
Taylor orebody access from Clark's decline infrastructure, improving operational flexibility and unlocking value across the life of mine.
This approach will enable first production ahead of shaft commissioning and increase ore handling capacity by approximately 25%,
providing potential to increase production above current design capacity.
"First production is expected in H2 FY28 and nameplate capacity by FY31, reflecting our revised expectation for shaft construction,
due to contractor performance and productivity challenges. While targeted measures have been implemented to improve shaft
construction productivity, our latest assessment has determined that these measures will only partially mitigate the impact of
contractor underperformance.
"Our expected growth capital expenditure for Taylor has been updated to ~US$3,300M 3 . This includes scope changes with the
addition of decline access, revised shaft construction costs, materially higher inflation,
industry-wide increases in key input costs such as steel, piping, concrete and electrical, and United States tariffs.
"Based on our updated assumptions, Taylor continues to demonstrate its quality, with expected steady-state EBITDA of ~US$650M
per annum4 and a net present value of ~US$3,100M5.
"Demonstrating the significant leverage to prices this long-life, high-quality project will deliver for years to come, these returns
increase further to steady-state EBITDA of ~US$800M per annum4 and a net present value of ~US$4,500M, at spot commodity
prices5."
Conference call
1
The information in this announcement that refers to Production Target and forecast financial information is based on Proved (41Mt, 32%) and Probable (58Mt, 44%) Ore Reserves and Measured (1.1Mt, 1%), Indicated
(4.2Mt, 3%), Inferred (13Mt, 10%) Mineral Resources and Exploration Target (13Mt, 10%) for the Taylor deposit. The Ore Reserves, Mineral Resources and Exploration Target underpinning the Production Target,
included in this announcement, have been prepared by Competent Persons and reported in accordance with the JORC Code (2012). All material assumptions on which the Production Target and forecast financial
information is based are provided in Annexure 2 of this announcement. There is low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work
will result in the determination of Indicated Mineral Resources or that the Production Target will be realised. The potential quantity and grade of the Exploration Target is conceptual in nature. In respect of Exploration
Target used in the Production Target, there has been insufficient exploration to determine a Mineral Resource and there is no certainty that further exploration work will result in the determination of Mineral
Resources or that the Production Target itself will be realised. The stated Production Target is based on South32's current expectations of future results or events and should not be solely relied upon by investors
when making investment decisions. Further evaluation work and appropriate studies are required to establish sufficient confidence that this Production Target will be met. South32 confirms that inclusion of 20% of
tonnage (10% Inferred Mineral Resources and 10% Exploration Target) is not the determining factor of the project viability and the project forecasts a positive financial performance when using 80% tonnage (32%
Proved and 44% Probable Ore Reserves and 1% Measured and 3% Indicated Mineral Resources). South32 is satisfied, therefore, that the use of Inferred Mineral Resources and Exploration Target in the Production
Target and forecast financial information reporting is reasonable.
2
The information in this announcement that relates to Mineral Resource estimate for Peake represents an estimate as at 30 April 2026 and is based on information compiled by Patrick Garretson. Mr Garretson is a
full-time employee of Terra Resources Consulting Group LLC. Mr Garretson is a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience relevant to the style of
mineralisation and type of deposit under consideration and to the activities being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mr Garretson consents to the inclusion in this announcement of the matters based on their information in the form
and context in which it appears. Refer to Annexure 2 for further details.
3
Growth capital expenditure incurred since 1 January 2024 to 31 March 2026 and remaining growth capital expenditure to be invested from 1 April 2026 to H2 FY28 (real as at 1 July 2026).
4
Average EBITDA and EBITDA margin calculated over the steady state production years (FY31-FY59).
5
Based on a valuation date of 1 July 2026.
Registered Office Level 2 100 St Georges Terrace Perth WA 6000 Australia
ABN 84 093 732 597 Registered in Australia
South32 will hold a conference call at 9.00am Australian Western Standard Time (11.00am Australian Eastern Standard Time) on 30
April 2026 to provide an update of the Hermosa project including Q&A, the details of which are as follows:
Conference ID
Please pre-register for this call at link.
Website
A replay of the conference call will be made available on the South32 website.
Taylor project update
In February 2026, we advised that an assessment of Taylor project milestones and capital expenditure would be completed in the
June 2026 half year. The recent receipt of updated pricing for the remaining surface and underground construction packages, has
enabled us to advance key estimates for capital expenditure and schedule. Along with these updates, we have increased our Ore
Reserve and Mineral Resource estimates for Taylor following successful infill drilling.
The assessment has reaffirmed Taylor's potential to deliver attractive returns as a large-scale, long-life,
low-cost producer of zinc, silver and lead. Taylor is expected to operate as a highly productive underground mine and a conventional
process plant with a nameplate capacity of 4.3Mtpa. Work completed since final investment approval in February 2024 has also
supported an extension of Taylor's mine life and confirmed potential for future copper production from the adjacent Peake deposit.
Following completion of the exploration decline for the co-located Clark deposit in the December 2025 quarter,
we assessed the feasibility of providing additional access to the Taylor orebody via the Clark exploration decline. This work highlighted
significant benefits from an integrated underground development standpoint, including the potential to access the Taylor orebody
ahead of full shaft commissioning, and an increase in ore handling capacity of approximately 25%. Over the next 12-months, we will
assess surface infrastructure de-bottlenecking options,
which combined with additional ore handling capacity, have the potential to increase production above current design rates.
First ore mined from Taylor via the Clark decline is expected in mid-FY28, with first production expected in
H2 FY28. First production from the shafts is now expected from H1 FY29, reflecting recently revised timing for shaft completion. This
revised schedule is inclusive of targeted measures that have been implemented to improve shaft construction productivity, including
strengthening contractor leadership, engaging specialist performance advisors, and bringing critical scope under direct owner
management. While these measures have improved performance in shaft sinking rates, our latest assessment has determined that
these measures will only partially mitigate the impact of contractor underperformance. As a result, we are now planning for a more
gradual ramp up to nameplate capacity, with full capacity expected in FY31 (previously FY30).
Expected growth capital expenditure for Taylor has been increased by ~US$1,100M, compared to final investment approval, to
~US$3,300M (from 1 January 2024), reflecting a change in scope with the addition of decline infrastructure (~US$100M), revised
shaft construction costs (~US$450M), materially higher inflation, industry-wide increases in key inputs including steel, piping,
concrete and electrical components, and United States tariff impacts (~US$500M).
Key outcomes of the project update include:
• 52% increase in the Taylor Ore Reserve to 99Mt, supported by successful infill drilling programs.
• 10% increase in the Taylor Mineral Resource to 169Mt, which remains open at depth and laterally.
• 32% increase in the Peake Mineral Resource to 33Mt, with ongoing drilling to test the potential for a continuous mineralised
system connecting Peake and Taylor Deeps.
• An increase in Taylor's initial operating life from ~28 years to ~33 years, with life extensions beyond the mine plan of
operations subject to future regulatory approvals.
• 17% increase in life of mine production to 10.4Mt ZnEq6 (3.7Mt zinc, 4.6Mt lead, 247Moz silver).
• Annual average steady-state production of 346kt ZnEq (123kt zinc, 155kt lead, 8.2Moz silver).
• Growth capital expenditure revised to ~US$3,300M, with ~US$2,100M to be spent over Q4 FY26 to H2 FY28.
• Sustaining capital expenditure revised to average ~US$50M per annum, including spend on the decline and underground
infrastructure over FY28 to FY30.
• Operating unit costs revised to ~US$100/t, reflecting general inflation and higher assumed energy costs.
Summary financial outcomes
Key estimated financial outcomes from the project update are summarised below. Unless stated otherwise, currency is in US
dollars (real) and units are metric.
Table 1: Estimated project update outcomes – Taylor stage one
6
Payable zinc equivalent (ZnEq) was calculated by aggregating revenues from payable zinc, lead and silver, and dividing the total revenue by the price of zinc.
Our long-term price assumptions for zinc (~US$3,390/t), lead (~US$2,200/t) and silver (~US$50/oz) have been used to calculate payable zinc equivalent production.
HERMOSA PROJECT UPDATE Page 2 of 40
Project Feasibility
Unit
update(a) study(b)
Nameplate processing capacity Mtpa ~4.3 ~4.3
Initial operating life Years ~33 ~28
First production FY H2 FY28 H2 FY27
3.7% Zn, 4.1% Pb, 3.9% Zn, 4.3% Pb,
Mined ore grades (average) %, g/t
Production 76 g/t Ag 78 g/t Ag
Annual payable zinc production (average/steady state) kt ~111 / ~123 ~114 / ~132
Annual payable lead production (average/steady state) kt ~141 / ~155 ~142 / ~163
Annual payable silver production (average/steady state) Moz ~7.5 / ~8.2 ~7.4 / ~8.5
Annual payable ZnEq production (average/steady state) kt ~314 / ~346 ~318 / ~364(d)
Operating costs Operating unit costs (average per tonne ore processed) US$/t ~100 ~86
Capital Pre-production growth capital expenditure US$M ~3,300(c) ~2,160
expenditure Sustaining capital expenditure (annual average) US$M ~50 ~36
a) Project update reflects values in real terms as at 1 July 2026.
b) Feasibility study reflects values in real terms as at 1 January 2024.
c) Includes actual expenditure incurred since 1 January 2024 to 31 March 2026 and forecast expenditure from 1 April 2026 to H2 FY28 (real as at 1 July 2026).
d) Zinc equivalent values from the feasibility study have been restated to reflect South32's updated long-term commodity price assumptions.
Table 2: Estimated project update returns – Taylor stage one
Project Spot
Unit
update(a) case(b)
Annual average EBITDA (steady state) US$M ~650 ~800
Average EBITDA margin (steady state) % ~58% ~64%
Financial Annual average net cash flow (post tax, steady state) US$M ~500 ~650
Post tax NPV (real, 7.0% discount rate)7 US$M ~3,100 ~4,500
Post tax IRR (nominal)7 % ~19% ~22%
Zinc US$/t ~3,390 (from FY34)(c) ~3,470
Commodity price
Lead US$/t ~2,200 (from FY34)(c) ~1,940
assumptions
Silver US$/oz ~50 (from FY34)(c) ~77
a) Project update reflects values in real terms as at 1 July 2026.
b) Reflects spot prices as at April 2026.
c) Commodity prices assumed for FY28 to FY33 are within the ranges: Zinc ~US$3,250/t to ~US$3,400/t, Lead ~US$2,000/t to ~US$2,200/t, Silver ~US$50/oz to ~US$70/oz.
7
Based on a valuation date of 1 July 2026.
HERMOSA PROJECT UPDATE Page 3 of 40
Hermosa project overview
Hermosa is a regional-scale project located in Santa Cruz, Arizona, 100% owned by South32. It comprises multiple deposits with the
potential to produce critical minerals for several decades, with the large-scale, long-life
Taylor zinc-lead-silver project as the first development. Hermosa also includes the Peake copper deposit located south of Taylor, the
Clark battery-grade manganese deposit, and an extensive, highly prospective land package with the potential for further polymetallic
and copper mineralisation.
Taylor was approved for development in February 2024 and is being constructed as a modern, highly efficient underground mine and
conventional process plant with a nameplate capacity of 4.3Mtpa. Taylor is now expected to deliver 10.4Mt of ZnEq production
(3.7Mt zinc, 4.6Mt lead, 247Moz silver) over an extended initial operating life of ~33 years, with life extensions beyond the mine plan
of operations subject to future regulatory approvals.
There is significant opportunity for life extension from Taylor, with the deposit remaining open in several directions, and the adjacent
Peake copper deposit. The development of Taylor will also establish significant shared infrastructure, including water management,
permanent power and non-processing infrastructure, that is expected to unlock value for future growth phases at Hermosa.
Hermosa was the first mining project added to the US Government's FAST-41 process, recognising its potential to strengthen the
domestic supply of critical minerals in the US. Federal permitting under FAST-41 is progressing to schedule, based on the existing
mine plan of operations, with a Final Record of Decision and notice to proceed
on-track for H1 FY27. All State approvals required to construct Taylor have been received.
Taylor Mineral Resource
The Taylor deposit is a carbonate replacement style zinc-lead-silver massive sulphide deposit. It is hosted in Permian carbonates of
the Pennsylvanian Naco Group of south-eastern Arizona. The Taylor deposit comprises the upper Taylor sulphide (Taylor Mains) and
lower Taylor deeps (Taylor Deeps) domains that have a general northerly dip of 30° and are separated by a low angle thrust fault.
The deposit has an approximate strike length of 2,500m and a width of 1,900m. Mineralisation extends 1,200m from near-surface
and is open in several directions, offering the potential for further growth. Recent exploration drilling at Taylor has been focused on
infill programs, with extensional drill targets identified and prioritised for future exploration programs.
Taylor's Mineral Resource estimate is reported in accordance with the 2012 Edition of the 'Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves' (JORC Code). We have today announced a 10% increase in the Mineral
Resource estimate to 169Mt at 3.51% zinc, 3.88% lead and 76?g/t silver, compared to the previously disclosed Mineral Resource
estimate as at 30 June 2025 8 (see Annexure 1 - Table 1 and Table 2).
The increase is due to additional drilling.
Table 3: Mineral Resource estimate for the Taylor deposit as at 30 April 2026
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % g/t % % g/t % % g/t % % g/t
Mt Mt Mt Mt
Zn Pb Ag Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) 57 4.56 4.68 75 86 3.11 3.86 78 26 2.48 2.18 67 169 3.51 3.88 76
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: Net Smelter Return (NSR) of US$90/dmt for UG Sulphide.
b) Metallurgical weighted recovery assumptions in Taylor Sulphide are 85-92% for zinc, 89-92% for lead, and 76-83% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence small differences may be
present in the totals.
d) Mineral Resources are reported inclusive of Ore Reserves.
Competent Person's Statement
The information in this announcement that relates to Mineral Resources for the Taylor and Peake Deposit are presented on a 100%
basis, represent an estimate as of 30 April 2026, and are based on information compiled by Patrick Garretson. Mr Garretson is a
consultant employed by Terra Resources Consulting Group LLC and is a member of the Australasian Institute of Mining and
Metallurgy. Mr Garretson has sufficient experience relevant to the style of mineralisation and type of deposit under consideration,
and to the activities being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves'. The Competent Person consents to the inclusion in this
announcement of the matters based on his information in the form and context in which it appears.
Taylor Ore Reserve
8
Information in this announcement that relates to Mineral Resource estimate for Taylor deposit was declared as part of South32's annual Resource and Reserve declaration in the FY25 Annual
Report (www.south32.net) issued on 28 August 2025 and prepared by a Competent Person in accordance with the requirements of the JORC Code. South32 confirms that it is not aware of any
new information or data that materially affects the information included in the original announcement. South32 confirms that the form and context in which the Competent Person's findings are
presented have not been materially modified from the original announcement.
HERMOSA PROJECT UPDATE Page 4 of 40
Taylor's Ore Reserve estimate is reported in accordance with the JORC Code.
Following final investment approval, 95 infill drill holes have been completed at Taylor to enhance orebody definition and enable
further efficiency gains. This work has supported a significant 52% increase in the Ore Reserve estimate to 99Mt at 3.95% zinc, 4.50%
lead and 77 g/t silver, compared to the previously disclosed estimate as at
30 June 20259 (see Annexure 1 - Table 3 and Table 4). The Ore Reserve underpins approximately 25 years of Taylor's initial operating
life of ~33 years, providing strong orebody definition.
Table 4: Ore Reserve estimate for Taylor deposit as at 30 April 2026
Reserve
Ore Type Proved Ore Reserves Probable Ore Reserves Total Ore Reserves
life
% % g/t % % g/t % % g/t
Mt Mt Mt Years
Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) 41 5.02 5.12 79 58 3.19 4.05 76 99 3.95 4.50 77 25
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$90/dmt.
b) Metallurgical weighted recovery assumptions in Taylor Sulphide are 85-92% for zinc, 89-92% for lead, and 76-83% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence small differences may be
present in the totals.
Competent Person's Statement
The information in this announcement that relates to Ore Reserves for the Taylor deposit is presented on a 100% basis, represents
an estimate as of 30 April 2026, and is based on information compiled by Kevin McCoy. Mr McCoy is a full-time employee of South32
and is a member of the Australasian Institute of Mining and Metallurgy. Mr McCoy has sufficient experience relevant to the style of
mineralisation and type of deposit under consideration, and to the activities being undertaken, to qualify as a Competent Person as
defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. The
Competent Person consents to the inclusion in this announcement of the matters based on his information in the form and context
in which it appears.
9
Information in this announcement that relates to Ore Reserve estimates for the Taylor deposit was declared as part of South32's annual Resource and Reserve declaration in the FY25 Annual
Report (www.south32.net) issued on 28 August 2025 and prepared by a Competent Person in accordance with the requirements of the JORC Code. South32 confirms that it is not aware of any
new information or data that materially affects the information included in the original announcement. All material assumptions and technical parameters underpinning the estimate in the
relevant announcement continue to apply and have not materially changed. South32 confirms that the form and context in which the Competent Person's findings are presented have not been
materially modified from the original announcement.
HERMOSA PROJECT UPDATE Page 5 of 40
Peake Mineral Resource
Peake is a copper-lead-zinc-silver deposit located south of the Taylor deposit, at a depth of approximately
1,300m-1,500m. Since our reporting of an initial Mineral Resource estimate as at 30 June 2023, subsequent diamond drilling has
returned high-grade copper and polymetallic intercepts that support the interpretation of a potentially continuous mineralised
system connecting Peake and Taylor Deeps.
We have today announced a 32% increase in the Mineral Resource estimate for Peake to 33Mt at 1.78% CuEq10 (0.87% Cu, 0.28%
Zn, 0.32% Pb and 36g/t Ag), compared to the previously published 30 June 2025 estimate 11
(see Annexure 1 – Table 5 and Table 6). This reflects successful extensional and infill drilling to the south and southwest of the existing
high-grade mineralised domain. The deposit remains open, with further drilling planned to test the extent of mineralisation.
We are continuing to assess the potential to integrate Peake within the Taylor development. Under this scenario, the Peake orebody
would be accessed utilising the shaft infrastructure established for Taylor.
The Taylor process plant has been designed with flexibility to allow for the addition of a low-cost copper circuit, enabling production
of copper and other base and precious metals from Peake and Taylor Deeps.
With high-grade Taylor zinc-lead-silver mining zones expected to underpin production during the first several years, a future
development of Peake could add copper production in the medium to longer-term in a combined development with Taylor, extending
overall mine life. Further updates on Peake will be provided as work progresses.
Table 5: Mineral Resource estimate for the Peake deposit as at 30 April 2026
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % % g/t % % % g/t % % % g/t % % % g/t
Mt Mt Mt Mt
Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag
UG Sulphide(a) - - - - - - - - - - 33 0.87 0.28 0.32 36 33 0.87 0.28 0.32 36
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: Net Smelter Return (NSR) of US$90/dmt for UG Sulphide.
b) Total metallurgical recovery assumptions are 73% for copper, 75% for Zn, 85% for Pb, and 52% for Ag in Pb Concentrate and 30% for Ag in Cu Concentrate.
10
CuEq (%) = Cu (%) + 0.3577 * Zn (%) + 0.2421 * Pb (%) + 0.0203 * Ag (g/t). The copper equivalent (CuEq %) was calculated using South32's internal price forecasts and laboratory tests completed to
derive metallurgical recovery. The price is commercially sensitive and is not disclosed. Average payable metallurgical recovery assumptions are 75% for Zn, 85% for Pb, 82% for Ag and 73% for Cu.
11
Information in this announcement that relates to Mineral Resource estimate for the Peake deposit was declared as part of South32's annual Resource and Reserve declaration in the FY25 Annual
Report (www.south32.net) issued on 28 August 2025 and prepared by Competent Persons in accordance with the requirements of the JORC Code. South32 confirms that it is not aware of any
new information or data that materially affects the information included in the original announcement. South32 confirms that the form and context in which the Competent Persons' findings are
presented have not been materially modified from the original announcement.
HERMOSA PROJECT UPDATE Page 6 of 40
Taylor construction
Non-process infrastructure
The first of two dry stack tailings storage facilities (TSF) has already been established as part of our voluntary remediation program
completed in CY20. The second TSF will be constructed on federal land in CY29, following federal approvals under FAST-41.
All required dewatering infrastructure for Taylor, Peake and Clark, including two water treatment plants and associated dewatering
wells, has been successfully commissioned, with flow rates lower than expected.
A permanent 138kV transmission line to the local grid will provide all site power, with discussions ongoing with local providers to
potentially secure 100% renewable energy. Construction of the transmission line will enable a transition from temporary, self-
generated natural gas power to cost-efficient, long-term supply. Construction on private lands is underway, with construction of the
remaining approximately seven miles on federal land scheduled to commence in H1 FY27, following federal approvals under FAST-
41.
Mine infrastructure
Integrated underground access and mine development
An exploration decline for the Clark battery-grade manganese deposit was completed in the December 2025 quarter, on-schedule
and on-budget, benefitting from favourable ground conditions. Following completion, we assessed the feasibility of providing
additional access to the Taylor orebody via the Clark exploration decline.
This work has highlighted significant benefits from an integrated underground development standpoint, including the potential to
access the Taylor orebody ahead of full shaft commissioning, and an increase in ore handling capacity of approximately 25%. First
ore from decline access is expected in mid-FY28. Over the next 12-months, we will assess surface infrastructure de-bottlenecking
options, which combined with additional ore handling capacity, have the potential to increase production above current design rates.
Underground infrastructure and shafts
In addition to decline access, we are constructing dual shafts for underground mining operations. Ore will be mined in an optimised
sequence across four independent mining areas, crushed underground and hoisted to the surface for processing.
Sinking of the ventilation and main shafts commenced during FY25. The ventilation shaft has reached a depth of approximately 618
metres (~75% complete) as at April 2026, with lateral development and construction of the first underground mining level from the
ventilation shaft completed in the March 2026 quarter. Shaft sinking and construction productivity on the ventilation shaft has been
impacted by challenges related to contractor performance and engineering and procurement delays. While targeted measures to
address shaft sinking productivity have improved performance, our latest assessment has determined that these measures will only
partially mitigate the impact of contractor underperformance. As a result, construction of the ventilation shaft is expected to be
completed in H2 FY27 (previously H1 FY27).
The main shaft has reached a depth of approximately 478 metres (~53% complete) as at April 2026. Despite some carry-over delays
from ventilation shaft activity, main shaft sinking rates have benefitted from improvement measures implemented on the ventilation
shaft. Sinking of the main shaft is now expected to be completed in
H1 FY28, with additional underground infrastructure to be installed following shaft sinking.
HERMOSA PROJECT UPDATE Page 7 of 40
Figure 1: Taylor mine plan
Process infrastructure
The process plant is designed as a sulphide ore flotation circuit producing separate zinc and lead concentrates,
with silver by-product credits, and has a nameplate capacity of 4.3Mtpa.
Following final investment approval, construction of process infrastructure has reached several key milestones,
with the flotation circuit and process plant tracking to plan. The process plant is expected to be commissioned in H1 FY28, coinciding
with completion of the decline access, with first production expected in H2 FY28, and nameplate capacity from FY31.
Figure 2: Hermosa surface infrastructure as at April 2026
HERMOSA PROJECT UPDATE Page 8 of 40
Taylor production profile
The production profile for Taylor is shown in Figure 3 below. First ore is expected in mid-FY28, first production in H2 FY28 and full
capacity from FY31.
Taylor's initial operating life has been extended by approximately 5 years to ~33 years, with life extensions beyond the mine plan of
operations subject to future regulatory approvals. Total production has increased by approximately 17% to 10.4Mt ZnEq (3.7Mt of
zinc, 4.6Mt of lead and 247Moz of silver).
Annual average production over the steady-state years (FY31 to FY59) is expected to be approximately
123kt of zinc, 155kt of lead and 8.2Moz of silver, for 346kt ZnEq (previously 132kt of zinc, 163kt of lead and 8.5Moz of silver, for
364kt ZnEq), with the value uplift from additional ore processed over the initial operating life more than offsetting slightly lower
average metal grades.
Figure 3: Ore processed and payable ZnEq production
Table 6: Project update production vs. FS production
Item Unit Project update Feasibility study
Initial operating life Years ~33 ~28
Total payable zinc production Mt ~3.7 ~3.2
Total payable lead production Mt ~4.6 ~4.0
Total payable silver production Moz ~247 ~208
Total payable ZnEq production Mt ~10.4 ~8.9(a)
a) Zinc equivalent values from the feasibility study have been restated to reflect South32's updated long-term commodity price assumptions.
HERMOSA PROJECT UPDATE Page 9 of 40
Taylor capital expenditure estimate
The project update was undertaken with approximately 80% of Taylor's growth capital expenditure now invested, contracted or
subject to final pricing.
Taylor's expected growth capital expenditure has been revised to ~US$3,300M (real), with ~US$2,100M remaining to be invested
over Q4 FY26 to H2 FY28. This update reflects a change in scope with construction costs to establish decline access (~US$100M),
revised shaft construction costs (~US$450M), and materially higher inflation, industry-wide cost increases in key input costs such as
steel, piping, concrete and electrical components, and United States tariff impacts (~US$500M).
Following our final investment approval, external factors including geopolitical tensions and higher tariffs in the United States, have
driven materially higher inflation and escalation in key input costs. Compared to our feasibility study estimate, installed prices for
steel, piping and concrete have more than doubled. While steel requirements have been optimised and reduced by approximately
30% following detailed engineering, the uncontrollable pricing impacts have driven higher than expected capital costs. This has been
reflected in recently priced surface infrastructure and underground development work packages.
Looking ahead, the capital risk profile is significantly lower with, the majority of work packages now contracted or subject to final
pricing, remaining shaft development delivered under unit rate contracts, and detailed engineering further advanced.
Sustaining capital expenditure is expected to average approximately US$50M per annum over the life of the mine, including spend
on the decline and underground infrastructure across FY28 to FY30. Annual average sustaining capital during steady state years is
largely unchanged at approximately US$37M.
Figure 4: Capital expenditure (US$M, real) (from 1 January 2024)(a)
HERMOSA PROJECT UPDATE Page 10 of 40
Taylor project summary
Our Taylor project update has reaffirmed its potential to deliver attractive returns as a large-scale, long-life,
low-cost producer of zinc, silver and lead. Key estimated economic outcomes from the project update are summarised below. Unless
stated otherwise, currency is in US dollars (real) and units are metric.
Table 7: Estimated Taylor financial returns – stage one
Unit Project update(a) Spot case(b)
Zinc revenue(c) US$M ~10,800 ~11,150
Lead revenue(c) US$M ~9,200 ~8,050
Silver revenue(c) US$M ~12,600 ~19,000
(c)
Total revenue US$M ~32,600 ~38,200
Total EBITDA US$M ~18,900 ~24,200
Total net cash flow US$M ~12,200 ~16,350
Annual average EBITDA (steady state) US$M ~650 ~800
Average EBITDA margin (steady state) % ~58% ~64%
Annual average net cash flow (post tax, steady state) US$M ~500 ~650
Post tax NPV (real, 7.0% discount rate)12 US$M ~3,100 ~4,500
Post tax IRR (nominal)12 % ~19% ~22%
a) Project update reflects values in real terms as at 1 July 2026.
b) As at April 2026.
c) Revenue is net of treatment and refining charges and penalties.
12
Based on a valuation date of 1 July 2026.
HERMOSA PROJECT UPDATE Page 11 of 40
Clark battery-grade manganese deposit
Clark is currently the only advanced project in the US with a clear pathway to produce battery-grade manganese for the domestic
electric vehicle market from locally sourced ore. Recognising Clark's strategic importance, we have received two grants from the US
Government, with a US$20M grant from the US Department of War used to part fund construction of the exploration decline, and a
US$166M grant from the US Department of Energy to support the potential development of a future commercial-scale manganese
production facility.
In FY23, we completed a selection phase pre-feasibility study (PFS-S) for Clark, confirming the potential to produce ~185ktpa of high-
purity manganese sulphate monohydrate (HPMSM), together with zinc and silver by-products, over an operating life of up to ~70
years13.
Following the PFS-S, we undertook pilot-scale production of HPMSM, with samples provided to potential customers for initial
qualification. An exploration decline to access the Clark orebody was completed on-schedule and
on-budget in the December 2025 quarter. This has enabled collection of the first bulk ore sample and will provide the feedstock for
an integrated test plant (ITP). The ITP is expected to complete in FY27 and will inform flowsheet and engineering design, while
supporting further customer qualification.
Regional exploration
Hermosa hosts a highly prospective regional land package which offers the potential for further polymetallic and copper resource
growth. Since our initial acquisition, we have more than doubled our land tenure in the most prospective areas. We have used
quantitative approaches utilising data analysis, geophysics, soil sampling and mapping to identify a highly prospective corridor with
over 15 prospects identified for future drill testing.
Within this corridor, the Flux prospect is located approximately 5km from Taylor. The Flux prospect is located
down-dip of a historic mining area, where initial drilling has returned high-grade polymetallic intersections from shallow depths,
highlighting the potential for Taylor-like mineralisation.
Looking ahead, our exploration strategy will focus on prioritising, permitting and drilling exploration prospects in this highly
prospective corridor.
Figure 5: Hermosa land package and high priority corridor
13
The information in this announcement that refers to the Production Target for Clark is based on Indicated (69%) and Inferred (31%) Mineral Resources and was originally disclosed in "Hermosa
Project Update" dated 9 May 2023. The Mineral Resources underpinning the Production Target is based on Mineral Resources disclosed in South32's Annual Report published on 28 August 2025
and is available to view on www.south32.net. South32 confirms that all the material assumptions underpinning the Clark Production Target as set out in the ASX announcement dated 9 May 2023
continue to apply and have not materially changed. There is low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work
will result in the determination of Indicated Mineral Resources or that the Production Target will be realised. The stated Production Target for Clark is based on South32's current expectations of
future results or events and should not be solely relied upon by investors when making investment decisions. Further evaluation work and appropriate studies are required to establish sufficient
confidence that this Production Target will be met. South32 confirms that inclusion of 31% of Inferred Mineral Resources is not the determining factor of the project viability and the project
forecasts a positive financial performance when using 69% Indicated Mineral Resources. South32 is satisfied, therefore, that the use of Inferred Mineral Resources in the Production Target for Clark
is reasonable.
HERMOSA PROJECT UPDATE Page 12 of 40
Update on estimates of Mineral Resources, Ore Reserves, and Exploration Target for the Taylor deposit
The estimates of Mineral Resources and Ore Reserves are reported in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and the Australian Securities Exchange Listing Rules. The
breakdown of the total estimates of Mineral Resources and Ore Reserves into the specific JORC Code categories is contained in the
Annexure 1 tables. This announcement summarises the information contained in the JORC Code Table 1 which is included in Annexure
2.
Estimate of Mineral Resources for Taylor
Geology and geological interpretation
The Taylor deposit within the Hermosa project is a Carbonate Replacement Deposit (CRD) style zinc-lead-silver massive sulphide
deposit located in south-eastern Arizona in the US (Annexure 2 – Figure 1). It is hosted in Permian carbonates of the Pennsylvanian
Naco Group within the Concha, Scherrer, and Epitaph lithological units and the Jurassic Hardshell Volcanic sequence (Annexure 2 –
Figure 4).
The Taylor deposit comprises the upper Taylor sulphide and lower Taylor deeps domains that have a general northerly dip of 30° and
are separated by a low angle thrust fault. Mineralisation within the stacked profile of the thrusted host stratigraphy extends 1,200m
from near-surface and is open at depth. Mineralisation is modelled for an approximate strike length of 2,500m and width of 1,900m
(Annexure 2 – Figure 5 and Figure 6).
Drilling techniques
The Mineral Resource estimate is based on data from 740 surface diamond drill holes (Annexure 2 - Figure 8) of HQ (95.6mm) or NQ
(75.3mm) diameter. Since August 2018, holes have been drilled between 60° and 75° dip to maximise the angle at which
mineralisation is intersected. Oriented drilling was introduced in October 2018 to incorporate structural measurements into
geological modelling for stratigraphy and fault interpretation. In September 2020, acoustic televiewer data capture was implemented
for downhole imagery for most drilling to improve orientation and geotechnical understanding. From September 2021 onwards, the
acoustic televiewer was the sole drill core orientation method applied. Structural measurements from oriented drilling are
incorporated in geological modelling to assist with fault interpretation.
All diamond core holes were used for geology, geometallurgy and geotechnical purposes. The drill half cores were sampled at either
1.5m intervals or terminated at litho-structural boundaries. Samples were submitted for preparation at an external ISO-17025
certified laboratory, Australian Laboratory Services (ALS). Preparation was completed by the ALS laboratory in Tucson, Arizona, US
and then chemical analyses was completed in Vancouver, Canada. Preparation involved crushing to 2mm, a rotary split to 250g and
pulverisation to 85% passing 75µm from which a 0.25g pulp was measured for assay. The mineralised intersections were verified by
geologists throughout each drilling program and reviewed independently against core photos by an alternate geologist prior to
geological interpretation.
Sample analysis method
Samples of 0.25g from 1kg pulps were processed at ALS Vancouver using a combination of inductively coupled plasma – mass
spectrometry ICP-MS four-acid 48 element assay and the addition of overlimit packages. A range of certified reference materials
(CRM) were routinely submitted to monitor assay accuracy, with low failure rates within expected ranges for this deposit style,
demonstrating reliable laboratory accuracy.
External third-party laboratory pulp duplicate and CRM checks indicate no significant bias for the primary assay laboratory. Results
of field duplicates, laboratory pulp duplicates, and certified blanks were all within acceptable range for resource modelling.
Estimation methodology
Resource estimation was performed by ordinary kriging interpolation for four elements of economic interest
(Zn, Pb, Ag, Cu), three potentially deleterious elements (As, Mn, Sb) and two estimation elements (Ca, S) used for environmental
reporting. Search estimation criteria were consistent with geostatistical models developed for each estimation domain according to
the appropriate geological controls. Validation includes statistical analysis, swath plots and visual inspection.
Specific gravity measurements from drill cores were used as the basis for estimating dry bulk density in tonnage calculations for both
mineralised and non-mineralised material.
Mineral Resource classification
HERMOSA PROJECT UPDATE Page 13 of 40
Mineral Resource classification criteria are based on the level of data informing both the geological model and grade estimation.
Grade estimation confidence is overlain on the geological modelling classification criteria whereby kriging variance is matched to
block estimation conditions - that relates to the number and distance of data informing the estimate in relation to semivariogram
models for Zn, Pb and Ag. Measured Resources are interpolated from data within a range equivalent to a likely drill spacing of 30m
to 50m. Indicated Resources are estimated from data spacing within approximately 180m, 120m and 15m in the maximum,
intermediate and short-range grade continuity directions respectively. Inferred Resources are constrained by the reporting of
estimates to within demonstrated grade and geological continuity ranges, and generally to a maximum of 250m beyond data.
Mining and metallurgical methods and parameters
Reasonable prospects for eventual economic extraction have been determined through assessment of the Mineral Resource at a
scoping study level for processes, ranging from stope optimisation and mine scheduling through to mineral processing and detailed
financial modelling. Underground mining factors and assumptions for longhole stoping on a sub- or full-level basis with subsequent
paste backfill are made based on industry benchmark mining production and project related studies, and calibrated against South32's
Cannington zinc, lead and silver mine production.
Cut-off grade
The Taylor deposit of the Hermosa project is a polymetallic deposit which uses an equivalent net smelter return (NSR) value as a
grade descriptor. Input parameters for the NSR calculation are based on South32's long-term forecasts for zinc, lead and silver pricing,
haulage, treatment, shipping, handling and refining charges. Metallurgical recovery assumptions differ for geological domains and
vary from 85% to 92% for zinc, 89% to 92% for lead, and 76% to 83% for silver. NSR considers the remaining gross value of the in-situ
revenue generating elements once processing recoveries, royalties, concentrate transport, refining costs and other deductions have
been considered.
A dollar equivalent cut-off of NSR US$90/dmt (dry metric tonne) forms the basis of assessment for reasonable prospects for eventual
economic extraction, supported by scoping level studies.
Estimate of Ore Reserves for Taylor
The declared Ore Reserves are based on the updated Mineral Resource estimate as at 30 April 2026.
Material and economic assumptions
The Taylor project is currently in the construction phase. Sufficient studies have been undertaken to enable
Mineral Resources to be converted to Ore Reserves on the basis of detailed cost estimates and benchmarking of similar South32
operations. The run-of-mine (ROM) ore will be beneficiated on site before being transported by road to the port in Guaymas, Sonora
in Mexico or Corpus Christi, Texas in the US.
Capital costs are based on the expected development of the mine, supported by contractor bids and engineering procurement
activities. The costs are accounted for in the valuation model. Operating costs are estimated primarily using first principles and as
part of the internal budgeting process. Transport charges are based on estimates at the time of reporting. Other economic
assumptions used for valuation reflect South32's view on demand, supply, volume forecasts, and competitor analysis and are
commercially sensitive.
Ore Reserve classification
Proved Ore Reserves are derived from the Measured Mineral Resource and Probable Ore Reserves are derived from Indicated Mineral
Resource estimate. Internal dilution, defined as blocks with NSR value less than processing operating cost, within Ore Reserve stope
boundaries represents 17% of the Ore Reserve by mass and less than 1% of NSR value and is considered to have the same level of
confidence as the reported Mineral Resource.
The Mineral Resource inside each stope is considered for Ore Reserve if the Measured and Indicated Mineral Resources within the
stope return positive economic value (more than US$90/dmt) considering other material as waste. Stopes within the life of operation
plan are excluded from the Ore Reserve if they are considered uneconomic, or where there is uncertainty in the modifying factors.
Mining method and assumptions
The mine design for Taylor is a dual shaft underground mine with decline access, employing longhole open stoping with paste backfill.
The mine development schedule has been aligned to a federal permitting process under
FAST-41, which enables earlier access to multiple mining areas and an efficient ramp up to nameplate processing capacity of 4.3Mtpa.
Ore will be mined in an optimised sequence concurrently across four independent mining areas, crushed underground and hoisted
to the surface for processing. The mine design contemplates two vertical shafts, for access, ore hoisting, ventilation and cooling. The
HERMOSA PROJECT UPDATE Page 14 of 40
primary haulage and material handling level is expected to be located at a depth of approximately 800m. The mine design
incorporates battery electric load-haul-dump vehicles, drilling and ancillary fleets, resulting in improved efficiency, reduced diesel
consumption and greenhouse gas (GHG) emissions. We have embedded flexibility in the mine design to utilise an all-electric
underground fleet to reduce operational GHG emissions as these options become commercially available. The operation will be
largely resourced with a local owner-operator workforce. Construction has commenced for an integrated remote operations centre
(iROC) located in Nogales, Arizona. The iROC will monitor and control mining, processing, maintenance and engineering to ensure
the integration of activities and optimise the entire value chain.
Mining dilution was derived from extensive geotechnical modelling. Anticipated slough was applied to the stope shapes based on
rock mass properties, in-situ stress, stope dimensions and extraction sequencing. Average waste and backfill dilution were calculated
and applied to each stope. Stope optimisation was performed using
Deswik-SO and material below cut-off grade was allowed to be included in the development of the stope shapes. The mining recovery
factor is based on the stope dimension and ranges from 95% to 96%.
Processing method and assumptions
The process plant design is based on a sulphide ore flotation circuit to produce separate zinc and lead concentrates, with silver by-
product credits. The flowsheet adheres to conventional principles with an underground primary crusher, crushed ore bins,
comminution circuit, sequential flotation circuit, thickening and filtration. Tailings are filtered and either dry-stacked or converted to
paste capable of being returned underground. Approximately half of the planned tailings will be sent underground as paste fill,
reducing the surface environmental footprint.
Pre-flotation cleaning steps have been included in the plant design to prevent talc from affecting flotation performance and
concentrate quality. Jameson cell technology has been selected to enhance recoveries and deliver power efficiencies. Once filtered,
concentrate would be loaded directly into specialised bulk containers.
Test work has confirmed the key processing assumptions, with average design process recoveries of 90% for zinc and 91% for lead,
and target concentrate grades of 54% for zinc and 70% for lead. Silver primarily reports to the lead concentrate, with a design process
recovery of 81%. Additionally, silver reports to the zinc concentrate with a design process recovery of 9%. The zinc concentrate will
be considered a clean, mid-grade product, and the lead concentrate considered a clean, high-grade product with mid-range silver
content.
Cut-off grade
The Taylor deposit uses an equivalent NSR value as a grade descriptor. NSR considers the remaining gross value of the in-situ revenue
generating elements once processing recoveries, royalties, concentrate transport, refining costs and other deductions have been
considered. The elements of economic interest used for cut-off determination include silver, lead and zinc. The cut-off grade strategy
employed at Taylor is to optimise the NPV of the operation. A variable cut-off grade was considered in the creation of mineable stope
shapes. Early mining area designed stope shapes greater than US$100/tonne. Mid-mine life areas designed with US$95/tonne. Late
mining areas designed with US$80/tonne. After the mine was designed, all stopes with an NSR less than US$90/tonne were excluded
from the mine plan. All input assumptions are included in Annexure 1 of this announcement.
Estimation methodology
The estimates for Proved and Probable Ore Reserves are defined based on Measured and Indicated Mineral Resources. Stopes
containing less than 50% Measured and Indicated Resource, or where Measured and Indicated Resource grade does not meet or
exceed cut-off, are not included. Mine shapes not meeting the above requirements are removed from the schedule. The resulting
Reserve plan is rescheduled and economically evaluated.
Material modifying factors
The reported Ore Reserves are those that are mined from underground using current mining industry methods and practices. Early
ore is contained on claim. All ore is within South32 mining tenements. The Ore Reserves are scheduled to be extracted within
compliance of permits currently in progress.
Estimate of Exploration Target for Taylor
While exploration activity to date has predominantly focused on improving resource definition to support the development of Taylor,
work has also aimed at developing an unconstrained, spatial view of the Exploration Target at Taylor. The geological model
interpreted from the results to date indicates the potential for continued mineralisation down dip and along strike in the favourable
HERMOSA PROJECT UPDATE Page 15 of 40
carbonate units. As a result of the improved understanding of the Taylor sulphide deposit, an update to the Exploration Target has
been completed.
The Hermosa project has sufficient distribution of drill data to support evaluation of the size and quality of Exploration Targets. Tables
of individual drill hole results to support the Taylor sulphide Exploration Targets have been previously reported in several company
disclosures from time to time and is available to view at www.south32.net.
Deterministic estimates of maximum-case, mid-case, and minimum-case potential volumes and grades within geological models were
completed considering a range of continuity assumptions and mineralisation extents consistent with available data. These estimates
were created using radial basis function (RBF) numeric models following the same grade domain cut-offs as the Mineral Resource
Estimate using Leapfrog Geo 3D Modeling software. The Exploration Target volumes were further improved by geologic trends and
manual line work to expand volumes along geologic contacts where drilling is too sparse for implicit modelling. The volumes were
clipped to the Mineral Resource boundary to avoid double counting of tonnes. The Exploration Target reported in Annexure 1 –
Tables 7 and 8 is exclusive of the Mineral Resource reported. The estimates were input into a Monte Carlo style Crystal Ball
probabilistic model to derive a statistically reasonable distribution of outcomes to create a low and high case for Exploration Target
range reporting. The Exploration Target range is reported from 5Mt to 45Mt with grades ranging from 3.51% to 1.63% for Zn, 3.88%
to 2.02% for Pb, and 76 to 43g/t for Ag.
The potential quantity and grade represented in defining Exploration Targets is conceptual in nature. There has been insufficient
exploration to define a Mineral Resource, and it is uncertain if further exploration will result in the determination of a Mineral
Resource. Future exploration drilling is planned to follow up the reported
Exploration Target. An exploration program starting in FY28 will begin to test the Exploration Target. Drill holes will have a planned
depth ranging from 600m to 1,600m, depending on location. These drill holes are intended to test extensions of the favourable
carbonate/volcanic contact down dip and along strike from open-ended mineralisation and reduce geological uncertainty in future
Exploration Target modelling. Hermosa Exploration is also currently assessing additional geophysical inversion modelling to refine
targeting and improve subsurface imaging, including ambient noise tomography (ANT) and magnetotellurics (MT).
Competent Person's Statement
The information in this announcement that relates to the Exploration Target for the Taylor deposit is presented on a 100% basis,
represents an estimate as of 30 April 2026, and is based on information compiled by Robert Wilson.
Mr Wilson is a full-time employee of South32 and is a member of the Australasian Institute of Mining and Metallurgy. Mr Wilson has
sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the activities being
undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. The Competent Person consents to the inclusion in this announcement of the matters
based on his information in the form and context in which it appears.
Additional information is contained in Annexure 1 and 2.
HERMOSA PROJECT UPDATE Page 16 of 40
Forward-looking statements
This release contains forward-looking statements, including statements about trends in commodity prices and currency exchange
rates; demand for commodities; production forecasts; plans, strategies and objectives of management; capital costs and scheduling;
operating costs; anticipated productive lives of projects, mines and facilities; and provisions and contingent liabilities. These forward-
looking statements reflect expectations at the date of this release, however they are not guarantees or predictions of future
performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and
which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are
cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, the South32
Group does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or
future events. Past performance cannot be relied on as a guide to future performance. South32 cautions against reliance on any
forward-looking statements or guidance.
About us
Our purpose is to make a difference by developing natural resources, improving people's lives now and for generations to come. We
are trusted by our owners and partners to realise the potential of their resources.
We produce minerals and metals critical to the world's energy transition from operations across the Americas, Australia and Southern
Africa and we are discovering and responsibly developing our next generation of mines.
We aspire to leave a positive legacy and build meaningful relationships with our partners and communities to create brighter futures
together.
Investor Relations Media Relations
Ben Baker Jamie Macdonald
T +61 8 9324 9363 T +61 8 9324 9000
M +61 403 763 086 M +61 408 925 140
E Ben.Baker@south32.net E Jamie.Macdonald@south32.net
Further information on South32 can be found at www.south32.net.
This announcement contains inside information.
Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
30 April 2026
HERMOSA PROJECT UPDATE Page 17 of 40
Annexure 1: Taylor, Peake Mineral Resource, Ore Reserve and Exploration Target
Table 1: Mineral Resource estimate for the Taylor deposit as at 30 April 2026
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % g/t % % g/t % % g/t % % g/t
Mt Mt Mt Mt
Zn Pb Ag Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) 57 4.56 4.68 75 86 3.11 3.86 78 26 2.48 2.18 67 169 3.51 3.88 76
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: Net Smelter Return (NSR) of US$90/dmt for UG Sulphide.
b) Metallurgical recovery assumptions in Taylor Sulphide are 85-92% for zinc; 89-92% for lead, and 76-83% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence small
differences may be present in the totals.
d) Mineral Resources are reported inclusive of Ore Reserves.
Table 2: Mineral Resource estimate for the Taylor deposit as at 30 June 2025
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % g/t % % g/t % % g/t % % g/t
Mt Mt Mt Mt
Zn Pb Ag Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) 41 4.22 4.25 67 83 3.38 3.91 76 28 2.96 2.97 93 153 3.53 3.83 77
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$80/dmt for UG Sulphide.
b) Metallurgical weighted recovery assumptions in Taylor Sulphide are 90% for zinc; 91% for lead, and 81% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence small
differences may be present in the totals.
d) Mineral Resources are reported inclusive of Ore Reserves.
Table 3: Ore Reserve estimate for Taylor deposit as at 30 April 2026
Reserve
Ore Type Proved Ore Reserves Probable Ore Reserves Total Ore Reserves
life
% % g/t % % g/t % % g/t
Mt Mt Mt Years
Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) 41 5.02 5.12 79 58 3.19 4.05 76 99 3.95 4.50 77 25
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$90/dmt.
b) Metallurgical recovery assumptions in Taylor Sulphide are 85-92% for zinc; 89-92% for lead, and 76-83% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence
small differences may be present in the totals.
Table 4: Ore Reserve estimate for Taylor deposit as at 30 June 2025
Reserve
Ore Type Proved Ore Reserves Probable Ore Reserves Total Ore Reserves
life
% % g/t % % g/t % % g/t
Mt Mt Mt Years
Zn Pb Ag Zn Pb Ag Zn Pb Ag
UG Sulphide(a) - - - - 65 4.35 4.90 82 65 4.35 4.90 82 19
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$90/dmt.
b) Metallurgical weighted recovery assumptions in Taylor Sulphide are 90% for zinc; 91% for lead, and 81% for silver.
c) All masses are reported as dry metric tonnes (dmt). All tonnes and grade information have been rounded to reflect relative uncertainty of the estimate, hence
small differences may be present in the totals.
HERMOSA PROJECT UPDATE Page 18 of 40
Table 5: Mineral Resource estimate for the Peake deposit as at 30 April 2026
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % % g/t % % % g/t % % % g/t % % % g/t
Mt Mt Mt Mt
Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag
UG Sulphide(a) - - - - - - - - - - 33 0.87 0.28 0.32 36 33 0.87 0.28 0.32 36
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$90/dmt for UG Sulphide.
b) Total metallurgical recovery assumptions are 73% for copper, 75% for Zn, 85% for Pb, and 52% for Ag in Pb Concentrate and 30% for Ag in Cu Concentrate.
Table 6: Mineral Resource estimate for the Peake deposit as at 30 June 2025
Measured Indicated Inferred Total
Ore Type
Mineral Resources Mineral Resources Mineral Resources Mineral Resources
% % % g/t % % % g/t % % % g/t % % % g/t
Mt Mt Mt Mt
Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag Cu Zn Pb Ag
UG Sulphide(a) - - - - - - - - - - 25 0.79 0.45 0.47 42 25 0.79 0.45 0.47 42
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$80/dmt for UG Sulphide.
b) Total metallurgical recovery assumptions are 73% for copper, 75% for Zn, 85% for Pb, and 52% for Ag in Pb Concentrate and 30% Ag in Cu Concentrate.
Table 7: Ranges for the Exploration Target for Taylor sulphide mineralisation (as at 30 April 2026)
Low Case Mid Case High Case
% % g/t % % g/t % % g/t
Mt Mt Mt
Zn Pb Ag Zn Pb Ag Zn Pb Ag
Taylor Sulphide(a) 5 3.51 3.88 76 25 3.62 4.61 71 45 1.63 2.02 43
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$90/dmt for UG Sulphide.
b) Total metallurgical recovery assumptions are 85-92% for zinc, 89-92% for lead, and 76-83% for silver.
Table 8: Ranges for the Exploration Target for Taylor sulphide mineralisation (as at 31 January 2024)
Low Case Mid Case High Case
% % g/t % % g/t % % g/t
Mt Mt Mt
Zn Pb Ag Zn Pb Ag Zn Pb Ag
Taylor Sulphide(a) - - - - 33 3.60 3.69 72 64 3.58 3.57 73
Mt - Million dry metric tonnes, % Zn – percent zinc, % Pb – percent lead, g/t Ag – grams per tonne of silver.
a) Cut-off grade: NSR of US$80/dmt for UG Sulphide.
b) Total metallurgical recovery assumptions are 90% for zinc, 91% for lead, and 81% for silver.
HERMOSA PROJECT UPDATE Page 19 of 40
Annexure 2: JORC Table 1
The following table provides a summary of important assessment and reporting criteria used at the Hermosa project for the
reporting of the Taylor deposit Mineral Resource and Ore Reserve in accordance with the Table 1 checklist in The Australasian Code
for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition) on an 'if not, why not'
basis.
Section 1: Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
Criteria Commentary
Sampling techniques • The FY26 Taylor Mineral Resource Estimate is based on a database comprising of 740 drill holes,
including 166 historical reverse circulation (RC/RCD) and 574 diamond core (DD) drill holes of
primarily HQ and NQ sizes.
• In total, this database features approximately 634,100m of drilling. 227 holes totalling
approximately 51,653m are excluded from the database where twinned holes were drilled or
where the quality of drilling was compromised due to deficiencies in logging, survey, lack of assays,
or quality assurance/control.
• 70 drill holes were used to refine the geological model but were not used in estimation.
• A heterogeneity study was undertaken in FY24 to determine sample representativity with
recommendations to improve duplicate performance including increasing sub-sample and
pulverising volumes.
• Sampling is predominantly at 1.5m intervals on a half-core basis.
• Core is competent to locally vuggy and sample representativity is monitored using half core field
duplicates submitted at a rate of approximately 1:40 samples. Field duplicates located within
mineralisation envelopes demonstrate an 80% performance to within 30% of original sample
splits.
• Core assembly, interval mark-up, recovery estimation (over the 3m drill string) and photography
are all activities that occur prior to sampling and follow documented procedures.
• Sample size reduction during preparation involves crushing and splitting of PQ (122.6mm), HQ
(95.6mm) or NQ (75.3mm) half-cores.
• All 1.5m half core samples are crushed to 70% passing two-millimetre mesh and reduced to 1kg.
1kg sample is pulverised to 85% passing 75µm. Samples of 0.25g from pulps are processed at ALS
(Australian Laboratory Services) Vancouver using a combination of inductively coupled plasma –
mass spectrometry ICP-MS (ME-MS61) four-acid 48 element assay and addition of overlimit
packages of OG62 for Ag, Pb, Zn, Mn, S-IR07 for sulphur, VOL50 for high grade Zn, VOL70 for high
grade Pb, and ME-ICP81 for higher grade Mn.
Drilling techniques • Data used for reporting results is based on logging and sampling of PQ, HQ, and NQ diamond core.
Triple and split-tube drilling methods are employed in situations where ground conditions require
such coring mechanisms to improve core recovery.
• From mid-August 2018 until September 2021, all drill cores were oriented using the Boart
Longyear 'Trucore' system. In Q3 FY20, acoustic televiewer data capture was implemented for
downhole imagery for most drilling to improve orientation and geotechnical understanding. From
September 2021, the acoustic televiewer was the sole drill core orientation method applied.
Structural measurements from oriented drilling are incorporated in geological modelling to assist
with fault interpretation.
Drill sample recovery • Core recovery is determined by summation of measurement of individual core pieces within each
3m drill string during the logging process.
• Core recovery is recorded for all diamond drill holes. Recovery on a hole basis exceeds 90%.
• Poor core recovery can occur when drilling through the oxide material and in major structural
zones. To maximise core recovery, drillers vary speed, pressure, and composition of drilling muds,
reduce PQ to HQ to NQ core size and use triple tube and '3 series' drill bits.
• When core recovery is compared to Cu, Zn, Pb, and Ag grades for either a whole data set or within
individual lithology, there is no discernible relationship between core recovery and grade.
HERMOSA PROJECT UPDATE Page 20 of 40
Criteria Commentary
• Correlation analysis suggests there is no relationship between core recovery and depth from
surface except where structure is a consideration. In isolated cases, lower recovery is observed at
intersections of the carbonates with a major thrust structure, or when locally natural karstic voids
have been encountered alongside shallow historic workings.
Logging • The entire length of core is photographed and logged for lithology, alteration, structure, rock
quality designation (RQD) and mineralisation.
• Logging is both quantitative and qualitative, of which there are several examples including
estimation of mineralisation percentages and association of preliminary interpretative
assumptions with observations.
• All logging is peer reviewed against core photos. The context of current geological interpretation
and information from surrounding drill holes are used when updating geological model.
• Geologic and geotechnical logging is recorded on a tablet with inbuilt Quality Assurance and
Quality Control (QA/QC) processes to minimise entry errors before synchronising with the site
database.
• Logging is completed to an appropriate level to support assessment of mineral resource estimates
and exploration results.
Sub-sampling techniques and • Sawn half core samples are taken on predominantly 1.5m intervals for the entire drill hole after
sample preparation logging. Mineralisation is highly visual. Sampling is also terminated at
litho-structural and mineralogical boundaries to reduce the potential for boundary/dilution effects
on a local scale.
• Sample lengths vary between 0.6m and 3m. The selection of the sub-sample size is not supported
by sampling studies.
• All sample preparation is performed offsite at Australian Laboratory Services (ALS), an ISO 17025
certified laboratory. Samples submitted to ALS are generally four to six kilograms in weight.
• Sample size reduction during preparation involves crushing of PQ (122.6mm), HQ (95.6mm) or NQ
(75.3mm) half or whole core, splitting of the crushed fraction, pulverisation, and splitting of the
sample for analysis.
• Core samples are crushed and rotary split in preparation for pulverisation. Depending on the
processing facility, splits are completed via riffle or rotary. Splits are used for pulp samples.
• Samples are crushed to 70% passing two-millimetre mesh. A 1kg split of crushed sub-sample is
obtained via rotary or riffle splitter and pulverised to 85% passing 75µm. The 1kg pulp samples are
taken for assay, and 0.25g splits are used for digestion.
• ALS protocol requires five percent of samples to undergo a random granulometry QC test. Samples
are placed on a 2mm sieve and processed completely to ensure the passing mesh criterion is
maintained. Pulps undergo comparable tests with finer meshes. Results are uploaded to an online
portal for review by the client.
• The sub-sampling techniques and sample preparation procedures employed are adequate for
generating reliable assay data necessary for the reporting of exploration results.
• Precision in sample preparation is monitored with blind laboratory duplicates assayed at a rate of
1:50 submissions.
• Coarse crush preparation duplicate pairs show that more than 85% of all Cu, Zn, Pb, and Ag pairs
for sulphide mineralisation report within +/-30% of original samples. Performance significantly
improves to 98.5% for all analytes in higher grade samples. With Cu and Zn reporting 100% pass
rates.
• Pulp duplicates for Ag pass at 83%, Cu at 90%, Pb at 87%, and Zn at 92% within +/-20% tolerances.
For higher pulp grade samples, the performance improves to 99% or higher for all elements of
concern.
Quality of assay data and • Historical descriptions of the analytical techniques conducted by ASARCO from 1950-1991 for 113
laboratory tests drill holes (15 drill holes are used in this mineral resource) from ASARCO AC (air circulation), RAB
(rotary air blast), RC (reverse circulation) and DD (diamond drilling) are not available. As infill
drilling continues near the original 113 drill holes, historical data is updated with modern
techniques.
• From 2006 to 2009, Arizona Mining Inc (AMI) used Skyline Laboratories sampling with ICP-AES with
atomic absorption spectrometry (AAS) to test for copper, lead, zinc and manganese after a multi-
acid digestion. Silver and gold fire assays were undertaken by Assayers Canada in Vancouver from
HERMOSA PROJECT UPDATE Page 21 of 40
Criteria Commentary
a split of each pulp using a 30g charge that was reduced in weight on occasion for high manganese
oxide samples. In 2006, 4,272 ASARCO pulp samples (90% of sampling except for the silver, where
the re-analysis program represented 77% of the total silver assays) were re-analysed to validate
the copper, lead, zinc and manganese assay results.
• In 2010 to 2012, AMI changed to Inspectorate in Reno, Nevada laboratories for gravimetric fire
assay of gold and silver, with repeat assays of silver values greater than 102g/t (3 ounces per US
ton).
• From 2014 to 2020, samples of 0.25g from pulps were processed at ALS Vancouver. ME-ICP61
analysis was used where the samples were totally digested using a four-acid method followed by
analysis with a combination of Inductively Coupled Plasma – Mass Spectrometry (ICP-MS) and
Inductively Coupled Plasma – Atomic Emission Spectroscopy (ICP-AES) determination for 33
elements. Overlimit values for Ag, Pb, Zn and Mn utilise OG-62 analysis.
• In November 2020, the analytical method improved with ME-MS61 for the four-acid 48 element
assay. Samples of 0.25g from 1kg pulps were processed at ALS Vancouver using a combination of
inductively coupled plasma – mass spectrometry ICP-MS (ME-MS61) four-acid 48 element assay
and addition of overlimit packages of OG62 for Cu, Ag, Pb, Zn, Mn, S-IR07 for sulphur, VOL50 for
high grade Zn, VOL70 for high grade Pb, and ME-ICP81 for higher grade Mn.
• Digestion batches comprising 36 samples plus four internal ALS control samples (one blank, two
certified reference material (CRM), and one duplicate) are processed using four-acid digestion.
Analysis is conducted in groups of three larger digestion batches. Instruments are calibrated for
each batch before and after analysis.
• The performance of ALS internal QA/QC samples is continuously monitored. In the event of a blank
failure, the entire batch is re-processed from the crushing stage. If one CRM fails, data reviewers
internal to ALS examine the location of the failure in the batch and determine how many samples
around the failure should be re-analysed. If both CRMs fail, the entire batch is re-analysed. No
material failures have been observed from the data.
• Coarse and fine-grained certified silica blank material submissions, inserted at the beginning and
end of every work order of approximately 200 samples, indicate a lack of systematic sample
contamination in sample preparation and ICP solution carryover. Systematic contamination issues
are not observed for the blanks.
• A range of CRMs are submitted at a rate of 1:40 samples to monitor assay accuracy. All CRMs near
mineralised intervals passed QA/QC.
• The nature and quality of assaying and laboratory procedures are appropriate for supporting the
disclosure of mineral resource estimates and exploration results.
Verification of sampling and • Core photos of the entire hole are reviewed by modelling geologists to verify significant
assaying intersections and to finalise the geological interpretation of core logging.
• In September of 2023, the database was migrated from a software as a service (SAAS) product
(Plexer) to an internally hosted web application and database (acQuire) hosted on South32's Azure
environment. Geological data is uploaded via the acQuire Arena web application by onsite
geologists. Laboratory information management system (LIMS) data from the ALS laboratory is
uploaded digitally using an import object that writes directly to the acQuire database. Uploaded
results are reconciled after this import process utilising quality control (QC) objects within the
acQuire 4 interface.
• No adjustment to assay data has been undertaken.
Location of data points • Drill hole collar locations are surveyed using a GPS Real Time Kinematic (RTK) rover station
correlating with the Hermosa project RTK base station and Global Navigation Satellite Systems
with up to 1cm accuracy.
• In August 2023, the downhole survey tool switched to the Reflex OMNIx42 multi-shot survey tool
with Earth rate delta recorded, and surveys are rejected and reshot if the delta is above a set
threshold. From mid-August 2018 to end-August 2023, surveys were undertaken with a 'TruShot'
single shot tool. In August 2019, downhole survey incidence was increased from every 76m and at
the bottom of the hole to every 30m and at the bottom of the hole.
• The Hermosa project uses the Arizona State Plane (grid) Coordinate System, Arizona Central Zone,
and International Feet. The datum is NAD83 with the vertical heights converted from the
ellipsoidal heights to NAVD88 using GEOID12B.
• All drill hole collar and downhole survey data was audited against source data.
HERMOSA PROJECT UPDATE Page 22 of 40
Criteria Commentary
• Survey collars have been compared against a 1ft topographic aerial map. Discrepancies exceeding
1.8m were assessed against a current aerial flyover and the differences attributed to surface
disturbance from construction development and/or road building.
• Survey procedures and practices result in data location accuracy suitable for the information
disclosed in this announcement.
Data spacing and distribution • Drill hole spacing ranges from 10m to 500m. The spacing supplies sufficient information for
geological interpretation and mineral resource estimation.
• Drill holes are composited to nominal 5ft (1.5m) downhole composites.
Orientation of data in relation • Mineralisation varies in dip. 30°NW in the upper Taylor Sulphide 20°N and 30°N in the lower Taylor
to geological structure Deeps.
• Drilling is oriented at a sufficiently high angle and close drill spacing to allow for accurate
representation of grade and tonnage using three-dimensional modelling methods.
• There is indication of sub-vertical structures, conduits for or offsetting mineralisation, which have
been accounted for at a regional scale through the integration of mapping and drilling data.
Angled, oriented core drilling introduced from October 2018 is designed to improve understanding
of the relevance of structures to mineralisation as well as the implementation of acoustic
televiewer capture in 2020.
Sample security • Samples are tracked and reconciled through a sample numbering and dispatch system from site
to the ALS sample distribution and preparation facility in Tucson or other ALS preparation facilities
as needed. The ALS LIMS assay management system provides an additional layer of sample
tracking from the point of sample receipt. Movement of samples from site to the Tucson
distribution and preparation facility is currently conducted through contracted transport.
Distribution to other preparation facilities and Vancouver is managed by ALS dedicated transport.
• Assays are reconciled and results are processed in a secure database (acQuire) which has password
and user level security.
• Core is stored in secured onsite storage prior to processing. After sampling, the remaining core,
returned sample rejects and pulps are stored at a purpose-built facility that has secured access.
• All sampling, assaying and reporting of results are managed with procedures that provide
adequate sample security.
Audits or reviews • The FY26 Mineral Resource was externally audited by an independent consultant. The audit
concluded that the information used in the resource estimation is managed to industry standard.
• The ALS laboratory sample preparation and analysis procedures were audited by internal South32
Geoscientists during the drilling campaign with no significant issues identified. Outcomes of the
audit were communicated to ALS and recommendations implemented.
• Recent changes to improve duplicate performance by increasing the size of sub-sample splits and
pulverising volumes have been implemented.
Section 2: Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Criteria Commentary
Mineral tenement and land • The Hermosa project mineral tenure (Annexure 2 - Figure 1 and Figure 2) is secured by 30 patented
tenure status mining claims totalling 228 hectares that have full surface and mineral rights owned fee simple.
These claims are retained in perpetuity by annual real property tax payments to Santa Cruz County
in Arizona and have been verified to be in good standing until 31 December 2026.
• The patented land is surrounded by 2,505 unpatented lode mining claims totalling 19,225
hectares. These claims are retained through payment of federal annual maintenance fees to the
Bureau of Land Management (BLM) and filing record of payment with the Santa Cruz County
Recorder. Payments for these claims have been made for the period up to their annual renewal
on or before 1 September 2026.
HERMOSA PROJECT UPDATE Page 23 of 40
Criteria Commentary
• Title to the mineral rights is vested in South32's wholly owned subsidiary South32 Hermosa Inc.
No approval is required in addition to the payment of fees for the claims.
• AMI purchased the project from ASARCO, but no legacy royalties, fees or other obligations are due
to ASARCO or its related claimants (i.e. any previous royalty holders under ASARCO royalty
agreements). At present, four separate royalty obligations apply to the Hermosa project
(Annexure 2 - Figure 3):
o Ozama River Corporation: A 2% NSR royalty payable by AMI to Ozama River Corporation
(Ozama) for the future sale of all production minerals from certain identified claims.
o Osisko Gold Royalties Ltd.: A 1% NSR royalty to Osisko Gold Royalties Ltd. (Osisko) on all
sulphide ores of lead and zinc (and any copper, silver or gold recovered from the concentrate
from such ores) in, under, or upon the surface or subsurface of the Hermosa project.
o Bronco Creek Exploration, Inc.: A 2% NSR Allis Holdings Arizona.
o LLC: A 1.5% NSR royalty on all production minerals extracted from three patented mining
claims consisting of approximately 60.94 acres (24.66 hectares).
• In addition to the 30 patented mining claims with the surface and mineral rights owned fee simple,
South32 Hermosa Inc. also owns other fee simple properties totalling 1,609 hectares which are
not patented mining claims, and which are a mix of residential and vacant properties.
Exploration done by other • ASARCO LLC (ASARCO) acquired the property in 1939 and completed intermittent drill programs
parties between 1940 and 1991. ASARCO initially targeted silver and lead mineralisation near historical
workings of the late 19th century. ASARCO identified silver-lead-zinc bearing manganese oxides in
the manto zone of the overlying Clark deposit between 1946 and 1953.
• Follow up rotary air hammer drilling, geophysical surveying, detailed geological, and metallurgical
studies on the manganese oxide manto mineralisation between the mid-1960's and continuing to
1991 defined a heap leach amenable, low-grade manganese and silver resource reported in 1968,
updated in 1975, 1979 and 1984.
• In March 2006, AMI purchased the ASARCO property and completed a re-assay of pulps and
preliminary SO2 leach tests on the manto mineralisation to report a Preliminary Economic
Assessment (PEA) in February 2007. Drilling of RC and diamond holes between 2006 and 2012
focused on the Clark deposit (235 holes) and early definition of the of the Taylor deposit sulphide
mineralisation (16 holes), first intersected in 2010. Data collected from the AMI 2006 campaign is
the earliest information contributing to estimation of the Taylor deposit Mineral Resource. AMI
drill programs between 2014 and August 2018 (217 diamond holes) focused on delineating Taylor
deposit sulphide mineralisation, for which Mineral Resource estimates were reported in
compliance to NI 43-101 (Foreign Estimate) in November 2016 and January 2018.
HERMOSA PROJECT UPDATE Page 24 of 40
Criteria Commentary
Geology • The regional geology is set within Lower-Permian carbonates, underlain by Cambrian sediments
and Proterozoic granodiorites. The carbonates are unconformably overlain by Triassic to late-
Cretaceous volcanic rocks (Annexure 2 - Figure 4). The regional structure and stratigraphy are a
result of late-Precambrian to early Paleozoic rifting, subsequent widespread sedimentary aerial,
and shallow marine deposition through the Paleozoic Era, followed by Mesozoic volcanism and
late batholitic intrusions of the Laramide Orogeny. Mineral deposits associated with the Laramide
Orogeny tend to align along regional NW and NE structural trends.
• Cretaceous-age intermediate and felsic volcanic and intrusive rocks cover much of the Hermosa
project area and host low-grade disseminated silver mineralisation, epithermal veins and silicified
breccia zones that have been the source of historic silver and lead production.
• Mineralisation styles in the immediate vicinity of the Hermosa project include the carbonate
replacement deposit (CRD) style zinc-lead-silver base metal sulphides of the Taylor deposit and
the lateral skarn-style copper-zinc-lead-silver Peake deposit, and an overlying manganese-zinc-
silver oxide manto deposit of the Clark deposit (Annexure 2 - Figure 5, Figure 6, and Figure 7).
• The Taylor deposit comprises the overlying Taylor Sulphide and Taylor Deeps domains separated
by a thrust fault.
• The north-bounding edge of the thrusted carbonate rock is marked by a thrust fault where it ramps
up over the Jurassic/Triassic 'Older Volcanics' and 'Hardshell Volcanics'. This interpreted pre-
mineralising structure that created the thickened sequence of carbonates also appears to be a key
mineralising conduit. The thrust creates a repetition of the carbonate formations below the Taylor
Sulphide domain, which hosts the Taylor Deeps mineralisation.
• The Taylor Deeps mineralisation dips 10°N to 30°N, is approximately 100m thick, and primarily localised
near the upper contact of the Concha Formation and unconformably overlying Older Volcanics. Some
of the higher-grade mineralisation is also accumulated along a westerly plunging lineation intersection
where the Concha Formation contacts the Lower Thrust. Mineralisation has not been closed off down-
dip or along strike.
Drill hole information • The Taylor deposit drill hole information, including tabulations of drill hole positions and lengths, is
stored within project data files created for this estimate on a secure server.
• Hole depths vary between 15m and 2075m and have been collared across the patented land block
(Annexure 2 – Figure 8).
Data aggregation methods • Data is not aggregated other than length-weighted compositing for grade estimation.
Relationship between • Vertical (90-85 degrees dip) and angled drilling is used in the creation of the geology model. For
mineralisation widths and vertical holes, where they intersect the low to moderately dipping (30 degree) stratigraphy, the
intercept lengths intersection length can be up to 15% longer than true width.
• Since August 2018, drilling has been intentionally angled between 60 and 85 degrees to maximise
the angle at which mineralisation is intersected.
• The mineralisation is modelled in 3D to appropriately account for sectional bias or apparent
thickness issues which may result from 2D interpretations.
Diagrams • Relevant maps and sections are included with this announcement.
Balanced reporting • Exploration results are not specifically reported as part of this disclosure.
Other substantive exploration • Aside from drilling, the geological model is compiled from local and regional mapping,
data geochemistry sampling and analysis and geophysical surveys. Metallurgical test work, specific
gravity sampling and preliminary geotechnical logging have contributed to evaluating the potential
for reasonable economic extraction at a scoping study level.
Further work • Planned elements of the resource development strategy include extensional and infill drilling, all
oriented and logged for detailed structural and geotechnical analysis, sample representivity
determination, comprehensive specific gravity sampling and moisture analysis, further
geophysical, geochemical and geotechnical analysis, and structural and paragenesis studies.
Section 3: Estimation and Reporting of Mineral Resources
HERMOSA PROJECT UPDATE Page 25 of 40
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
Criteria Commentary
Database integrity • Drill hole data is stored in an internally hosted database hosted on South32's Azure environment.
Collar, survey, sample dispatch data and analytical results are uploaded from csv files as they
become available. The upload process includes validation checks for consistency and anomalous
values.
• Digital logging was implemented in October 2018 and continued with an internally hosted web
application whereby this data is generated as csv files for upload and validation.
• All logging is peer reviewed by experienced geologists against core photos and in the context of
surrounding geological interpretation as part of update of the geological model.
Site visits • The Competent Person has reviewed the Taylor deposit Mineral Resource Estimates and visited
the site regularly as a full-time employee of the company prior to recent retirement.
• The site visit objectives are to understand all inputs and processes contributing to the FY26 Mineral
Resources including core drilling, changes in core logging procedures, digital core logging,
database audits and resampling programs to improve confidence in geological interpretation,
density estimation and geometallurgical inputs.
• The Competent Person discussed sample preparation and laboratory procedures with ALS
representatives to ensure that these procedures are applied.
• The findings of site visits indicate the data and procedures are of sufficient quality for Mineral
Resource estimation and reporting. Review and required improvement are continuously discussed
and required changes are implemented.
Geological interpretation • 'Mineralisation domains' are created within bounding lithologies using indicator modelling
methods of the cumulative in situ value of metal content. The metal content descriptor, "Metval"
and "Oxval", is calculated by summing the multiplication of economic analyte grades for Mn, Zn,
Pb, Cu and Ag, price, and recovery. Metval and Oxval cut-off ranges for mineralisation domains
ranged from US$7-50 for the different litho-structural domains. Material above the Metval and
Oxval cut-off is modelled utilising the indicator numerical model function in Leapfrog Geo™ to
create volumes.
• Indicator models are guided using geologic trends based on modeled lithologic contacts and
structures within a post mineralisation fault block model. Constraints on these domains include
known bounding structures, stratigraphy, and manually digitised limits on the extents of
mineralisation. In addition to drill hole data, historic underground mine plans and mapping and
surface geologic mapping is used to help extend geologic features to the topography. The purpose
of these domains is to provide mineralised volumes within the larger lithologic boundaries, and to
ensure relevant geological controls and constraints are considered. Indicator cut-offs are selected
to create continuous volumes consistent with the overall modelling approach for a CRD-style of
mineralisation.
• Mineralised domains are evaluated against multiple indicator scenarios for parameters such as
inherent dilution, exclusion, and volumetric changes to balance these parameters with understood
continuity of mineralisation from site geological staff interpretation.
• Alternate geological interpretations have not been used, however, the model is evolving as new
data is collected.
Dimensions • The mineralising system is yet to be fully drilled in multiple directions. The Taylor sulphide
mineralisation is constrained up-dip where it transitions to oxide mineralisation, representing a
single contiguous mineralised system. Taylor is open in multiple directions.
• The north-bounding edge of the thrusted carbonate rock is marked by a thrust fault where it ramps
up over the Jurassic/Triassic 'Older Volcanics' and 'Hardshell Volcanics'. This interpreted pre-
mineral structure that duplicated and thickened the sequence of carbonates also appears to be a
key conduit for mineralisation.
• The Taylor Sulphide Deposit has an approximate strike length of 2,500m and width of 1,900m. The
stacked profile of the thrusted host stratigraphy extends 1,200m from near-surface and is open in
several directions (Annexure 2 - Figure 6, Figure 7 and Figure 8).
Estimation and modelling • Geologic modelling and grade estimations use Leapfrog Geo™ and Maptek Vulcan, respectively.
techniques • Elemental estimation includes Zn, Pb, Ag and Cu. As, Sb, Na, K, Bi, Mn and Mg are estimated as
potential deleterious analytes and Fe, Ca, S and Mg are estimated as tonnage inputs.
HERMOSA PROJECT UPDATE Page 26 of 40
Criteria Commentary
• The specific gravity is also estimated using a restricted search guided by geologic trends.
• Estimation and modelling techniques reflect the interpreted structural and lithological controls on
mineralisation apparent in the core and data. These align with the current understanding of the
formation of CRD-style mineralisation. Key assumptions include:
o The relative importance of structure and lithology in either facilitating or constraining the
deposition of mineralisation;
o Geological domaining according to these controls; and
o All boundaries are considered 'hard'.
• Search orientations are aligned with mineralised structures and lithological contacts using locally
varying anisotropy to assign directions on a block-by-block basis. Search distances and variography
parameters are interpolated into 'parent' blocks of 9m by 9m by 4.5m from 3D geological
wireframes taken from the geological model.
• Assay data is composited to a nominal interval of 1.5m within mineralisation domains for the
purpose of exploratory data analysis to derive estimation parameters for ordinary kriging.
• To manage the risk of local grade overestimation, high-grade outliers in the drill holes are capped
prior to compositing. Cap values are determined using log probability plots for each domain.
Selected thresholds are typically above the 99.5 percentile where the distribution or sample
support deteriorates and to minimise the co-efficient of variation. No bottom caps are applied.
• The outputs of geostatistical analysis, including variography and quantitative kriging neighborhood
analysis (QKNA), are used to optimise grade estimation parameters. This includes search distances,
sample selection criteria, and block dimension. A parent block size of 9m by 9m by 4.5m is
selected, relative to a data spacing of between 25m and 150m but typically approximately 50m
within the core of mineralisation allows for mining study selectivity within the minimum selective
mining unit (SMU) dimension.
• Sub-cells to a 1.5m minimum are built along the contacts of the estimation domains to reduce the
volume variance between wireframe models and the orthogonal block model.
• The dimensions of the anisotropic search ellipses for each estimation pass are matched to the
ranges of the first and second structures of the variograms per domain using ranges of the overall
structure of grade continuity for the zinc variogram models. The search ellipse ranges vary
between estimation domains but remain the same for all elements within individual domains.
While related elements (Pb-Ag, Pb-Zn, Ag-Zn) are not co-kriged, their correlated nature is validated
to be preserved in block estimates.
• Minimum and maximum sample criteria, an octant search strategy and a restriction of samples
used from each drill hole are applied to help reduce local grade bias. A second search pass, set at
the entire range of the zinc variogram, is used to estimate lower confidence areas of the model.
• Kriging tests with visual and statistical validation of results indicate the appropriateness of an
initial top cap applied, which is then adjusted up or down to counter any introduced global bias.
The degree of grade smoothing between data and block values is analysed through comparison of
mean differences, histograms, q-q plots, and swath plots.
• Classification criteria constrain the reporting of estimates to within demonstrated grade and
geological continuity ranges. As all estimation passes rely on at least two holes to inform the
estimate, there is no extrapolation from single holes in any classified material.
• The appropriateness of estimation techniques contributes to the high confidence estimation
outcome achieved in areas of data spacing within the full ranges of grade continuity.
• The grade estimations are compared against previous estimates and reviewed locally for
differences in data/interpretation, as well as globally using graded tonnage plots and waterfall
analysis.
• The Mineral Resource is reported for Zn, Pb and Ag, without any assumptions relating to recovery
of by-products.
Moisture • Based on logging observations and pre- and post-dried sample weights tested by ALS on assay
samples from July 2019 to February 2022 on over 50,000m, moisture content of the core is
minimal. A dry bulk density is assumed for estimation and reporting purposes.
Cut-off parameters • NSR reporting cut-off values are based on relevant project study operational costs and pricing
scenarios. Application of a nominal lower limit of breakeven economics from these costs is
considered to have reasonable prospects for eventual economic extraction under current
economic modelling.
HERMOSA PROJECT UPDATE Page 27 of 40
Criteria Commentary
• The calculations for each block are used to determine resource block cut-off according to
variability of physical costs such as logistics, treatment and refining costs, and economic factors
such as metal pricing.
• The NSR cut-off values for reporting the FY26 Taylor Sulphide Deposit Mineral Resource is
US$90/dmt for material considered extractable by underground open-stope methods.
• The input parameters for the NSR calculation include South32 long-term forecasts for manganese,
zinc, lead, copper and silver pricing, haulage, treatment, shipping, handling, and refining charges.
• NSR considers the remaining gross value of the in situ revenue generating elements once
processing recoveries, royalties, concentrate transport, refining costs and other deductions have
been considered.
Mining factors or assumptions • Underground mining factors and assumptions are based on feasibility level project studies and are
calibrated against South32's Cannington zinc, lead, and silver mine production. Longhole stopes
on a sub- or full-level basis with subsequent paste backfill is the assumed mining method.
• Reasonable prospects for eventual economic extraction are determined through assessment of
the model at scoping, feasibility study/pre-feasibility study levels using processes ranging from
stope optimisation and mine scheduling through to detailed financial modelling.
Metallurgical factors or • The NSR block value incorporates metallurgical recovery based on test work for composite and
assumptions individual mineralisation domains.
• Total metallurgical recovery assumptions for sulphide are domain dependent and as follows: Zn
(85%-92%), Pb (89%-92%) and Ag (76%-83%).
Environmental factors or • Feasibility level environmental assumptions, including waste and process residue disposal options,
assumptions are factored into physical and financial modelling used to evaluate reasonable prospects for
eventual economic extraction.
Bulk density • Dry bulk density is estimated for mineralisation domains where data density is sufficient to
estimate zinc on the first pass. Zinc variograms and first pass search criteria are applied to density
measurements. The current database records 26,394 specific gravity (SG) measurements.
• SG was originally calculated beyond the range of the first pass using Zn, Pb, Ag, Fe, Ca and Mg
using a regression formula. Measurements from previous campaigns, small numbers of which
were taken from sulphide and oxide mineralisation in carbonates, are excluded from the analysis
as assaying did not include the full complement of elements used for the regression formulae.
• A final pass of assigned average density values is applied to fill blocks on the outskirts that did not
have grade in them.
• Historically, SG measurements were taken from an approximate 20cm representative section of
competent core within a 1.5m sample interval. Since May 2021, to improve the SG regression
analysis the SG measurements are broken out with an associated assay interval greater than 60cm.
The measurement technique uses the core weight in air and weight immersed in water to
determine a specific gravity. Routine calibration of scales and duplicate measurements are
undertaken for quality control.
• The core is not oven dried or coated to prevent water ingress prior to immersion unless porosity
is noted in the sample, in which case the core was coated in plastic film.
• Lithology outside of mineralisation domains have an average bulk density assigned by rock type.
Classification • Mineral Resource classification criteria are based on the level of data informing the geological
model and grade estimation.
• Classification is achieved by manual selection of blocks within a triangulation designated by the
Competent Person. The triangulation is a smoothed version of a model calculation field.
• The calculation used to guide the Competent Person in creation of the triangulation overlays grade
estimation confidence indicators, such as kriging variance, on block estimation conditions that
relate to the number and distance of data informing the estimate in relation to semivariogram
models for Mn, Zn, Pb, Cu and Ag.
• Classification criteria are determined on an individual estimation domain basis:
o Measured Mineral Resource classification approximates an area of high geological modelling
confidence that has block grades for Mn, Zn, Pb and Ag informed by a high number of data
sourced within first pass search radii. The block is also interpolated from data within a range
equivalent to 'two-thirds' of the variogram range.
HERMOSA PROJECT UPDATE Page 28 of 40
Criteria Commentary
o Indicated Mineral Resource classification meets similar conditions to that of the Measured,
except data spacing criteria are expanded to ranges matching the final range in variography.
Search ranges constraining this classification are typically around 150m for Sulphide.
• Estimated blocks exceeding prior criteria are classified as an Inferred Mineral Resource up to about
250m from contributing data.
• The FY19 through FY25 geological models were developed internally by South32. Estimation up to
FY23 has been a collaboration with SRK and South32 geology staff, with internal South32
estimation starting in FY24. Peer review at various stage gates of the modelling and estimation
process was conducted by South32.
Audits or reviews • The FY26 Mineral Resource estimate was reviewed by an Independent Consultant. The outcome
suggests the model is appropriate for mine planning and reporting purposes. The
recommendations will be attended to in the next resource update.
Discussion of relative • Geological modelling is at a level where there is a moderate to high degree of predictability of the
accuracy/confidence position and quality of mineralisation where infill drilling is being conducted. Geostatistical
analysis indicates a low nugget effect, and ranges of grade continuity are beyond drill spacing in
Measured and Indicated areas of the deposit.
• Measured Resources of the FY26 Taylor deposit Mineral Resource global estimate are expected to
be within 15% accuracy for tonnes and grade when reconciled over any production quarter using
mining assumptions matched to the determination of reasonable prospects for eventual economic
extraction. Indicated Mineral Resource uncertainty should be limited to ±30% quarterly and ±15%
on an annualised basis. Inferred Mineral Resources are expected to be converted to higher
confidence classifications before extraction.
• The Competent Person is satisfied that the accuracy and confidence of the Mineral Resource
estimation is well established and reasonable for the deposit.
Section 4: Estimation and Reporting of Ore Reserves
(Criteria listed in Section 1, and where relevant in Sections 2 and 3, also apply to this section.)
Criteria Commentary
Mineral Resource estimate for • The Ore Reserve estimation is based on 57Mt of Measured and 86Mt of Indicated Mineral
conversion to Ore Reserves Resources as at 30 April 2026. The Mineral Resource estimate has been updated and reported as
part of this disclosure.
• Mineral Resources are inclusive of Ore Reserves.
Site visits • The Competent Person is a full-time employee of South32 and works as the Manager of Project
Strategy & Performance for Hermosa (site and Tucson office). The Competent Persons reviewed
all input that has been used as modifying factors including understanding of legal and
environmental assessment.
Study status • A feasibility study (FS) was completed for the Taylor deposit in 2023 in compliance with the AACE
International Class 3 cost estimation standard. The study was reviewed in accordance with
South32's internal processes to validate all inputs and outcome.
• A technically achievable and economically viable mine plan was developed as part of the FS.
• Additional work has been performed since FS, including detailed engineering as part of project
execution.
• All modifying factors have been reviewed based on the additional work and are included in this
announcement.
Cut-off parameters • Taylor is a polymetallic deposit which uses an equivalent NSR as grade descriptor. NSR considers
the remaining gross value of the in situ revenue generating elements once processing recoveries,
royalties, concentrate transport, refining costs and other deductions have been considered.
• The elements of economic interest used for cut-off determination include silver, lead and zinc.
• The cut-off strategy employed at Taylor is to optimise the NPV of the operation. All material
assumptions used to calculate NSR values are included in this announcement.
HERMOSA PROJECT UPDATE Page 29 of 40
Criteria Commentary
• A variable NSR cut-off grade was used in the development of mineable stope shapes. Early mining
areas, Zones ABCD, designed stope shapes with a minimum of US$100/tonne. Mid-mine life
mining areas, Zone FG, designed stope shapes with a minimum of US$95/tonne. Late mining areas,
Zones EHJ, designed stope shapes with a minimum of US$80/tonne.
• After development design and scheduling was completed, all stopes with an NSR less than
US$90/tonne were excluded from the mine plan.
Mining factors or assumptions • The mining method applied is longhole open stoping with paste backfill. This is the preferred
mining method based on a combination of orebody geometry, productivity, cost, resource
recovery and risk of surface subsidence. (Annexure 2 - Figure 9: Mine design).
• Geotechnical recommendations based on deposit geology, geotechnical data, and numerical
modelling have been used to develop the stope shape dimensions and preferred stope extraction
sequence.
• There are three areas of varying stope dimensions in the Taylor mine design. Above the Taylor
thrust fault, stope dimensions are 27.4m high, 22.9m wide and between 15.2m and 36.6m long.
Below the Taylor thrust level, spacing remains at 27.4m but stope widths are reduced to 19.8m in
accordance with geotechnical modelling. Above the 1,122m elevation, stope dimensions have
been reduced to 19.8m high by 10.7m wide where appropriate, to be more selective as the
sulphide and oxide ore bodies overlap.
• Mining dilution was derived from extensive geotechnical modelling. An in situ stress model was
developed during the FS and was used to quantify anticipated slough based on rock mass
properties, in situ stress, stope dimensions, and extraction sequencing. Internal ore dilution was
ignored and average external waste and backfill dilution were calculated and applied to each
stope. This methodology has remained unchanged since the previous declaration.
• Stopes identified for the Ore Reserve estimation were created using Deswik-SO (Stope Optimizer)
without a limit on waste that could be included in the stope shape. An analysis was completed on
the stope shapes created and it was found that 17% of tonnes within the stope shapes have blocks
with NSR grades less than US$20/tonne, representing a secondary cut-off. This material could be
optimised in short-range mine planning and is considered as internal dilution within the reserve
inventory.
• The mining recovery factor is based on the stope dimension and ranges from 95% to 96%, with the
greatest number of stopes having the 96% factor. The recovery factor was applied to all stope
tonnes.
• Inferred Mineral Resources were included in the development of the mine plan. Inferred Mineral
Resources were considered as diluting material or waste. The total Inferred Resources considered
in the mine plan constitutes 1% of the total tonnes.
• Primary access to the orebody will be through one of two shafts. Ore passes, haulage levels and
ventilation raises will be established to move material internally within the mine and to provide
ventilation and cooling. Secondary access is achieved via continuing the existing decline from
surface to both the 3,680L and 2,550L stations.
• Underground mining equipment selected for use includes jumbo development drills, ground
support drills, LHD underground loaders, haul trucks, and LH drills. This prime fleet is industry
standard for this mining method.
• Backfill of open voids will consist of waste rock or cemented paste backfill. Paste backfill will be
produced in a surface backfill plant and distributed underground via a backfill reticulation system.
• The proposed mining method with modifying factors applied supports a ramp up to the preferred
mine plan of up to 4.3Mt per annum.
Metallurgical factors or • The Taylor process plant will consist of well-established processing techniques. Primary crushing
assumptions will be conducted underground, and crushed ore will be hoisted to the surface. Grinding will be
conducted by a primary AG mill, secondary vertical tower mill, and pebble crusher, to a size
suitable for flotation. Sequential flotation will be followed by pressure filtration for concentrates
and tailings.
• Metallurgical test work has been conducted using samples which cover the orebody vertically and
horizontally. Process design was developed based on the results from test work and has been
reviewed by independent consultants.
• Total metallurgical recovery assumptions differ between geological domains ranges from 85% to
92% for Zn, 89% to 92% for Pb, and 76% to 83% for Ag.
HERMOSA PROJECT UPDATE Page 30 of 40
Criteria Commentary
• Lead is found to occur primarily as galena and zinc is found to occur primarily as sphalerite, with
small amounts of non-sulphide zinc occurring in the geological domains close to surface. Galena
and sphalerite are coarse grained and easily liberated for effective recovery by sequential
flotation.
• Manganese occurs in relatively high concentrations in gangue and can occur as an inclusion of
sphalerite especially in the higher geological domains. This can cause manganese in zinc
concentrate to exceed penalty limits for most smelters. No other deleterious elements are
expected to exceed penalty limits for lead or zinc concentrates.
• Metallurgical test work programs have included:
o Comminution – crushing work index (CWi), rod work index (RWi), SAG power index (SPi),
Bond ball mill work index (BWi), abrasion index (Ai), high-pressure grinding rolls (HPGR), SMC
and JK drop weight tests, low-impact energy test (formerly crushing work index), MacPherson
autogenous grindability test, and advance media competency tests (AMCT);
o Flotation – rougher variability, rougher and cleaner kinetics, primary grind size variability,
regrind size variability, conventional locked cycle tests, dilution cleaner and dilution locked
cycle tests (Jameson cell amenability);
o Preconcentration – heavy media separation followed by flotation on HMS concentrates and
rejects and ore sorting;
o Stockpile oxidation simulation;
o Humidity cell testing;
o Cyanide destruction; and
o Solid-liquid separation testing.
• Metallurgical test work has been conducted at discrete drill hole intervals to capture the full
variability of the orebody as well as on composite samples. Samples were selected from all
geological domains and cover the orebody vertically and horizontally.
Environmental factors or • The project consists of patented claims surrounded by the Coronado National Forest and
assumptions unpatented claims located within the surrounding Coronado National Forest and managed by the
United Sates Forest Service.
• A permitting schedule has been developed for obtaining all critical state and federal approvals
consistent with South32's Annual Declaration of Resources and Reserves in the Annual Report
published on 28 August 2025. A further schedule consistent with this updated declaration will be
developed in due course as planning efforts advance.
• Waste rock generated from surface and underground excavations is delineated into potentially
acid generating (PAG) or non-acid generating (NAG) rock. As often as practical, waste rock
excavated underground will remain underground for use as backfill. All PAG material not being
used as backfill will report to a lined facility. NAG material not being used as backfill will be placed
in surface stockpiles or within the lined facilities, except for a limited amount that will be used for
construction material.
• The tailings storage facilities have been designed in accordance with South32's Dam Management
Standard and are consistent with the International Council on Mining and Metals (ICMM) Tailings
Governance Framework, in addition to the Australian National Committee on Large Dams
(ANCOLD) guidelines.
• Tailings from processing will be filtered and stored in purpose-built, lined, surface storage facilities
or returned underground in the form of paste backfill. An existing tailings storage facility on
patented claims will be used to store tailings from early operations.
Infrastructure • Current site activity is supported by and consists of office buildings, core processing facilities,
existing tailings storage facility, water treatment plants, dewatering wells, ponds, road network
and laydown yards.
• Planned infrastructure currently in construction, or that will be installed to support future
operations, will consist of:
o Dual shafts;
o Decline extension (of exploration decline);
o Ventilation and refrigeration systems;
o Process comminution, flotation and concentrate loadout;
o Tailings filtration plant and tailings storage facilities;
o Paste backfill plant;
HERMOSA PROJECT UPDATE Page 31 of 40
Criteria Commentary
o Dewatering wells and pipelines;
o Surface shops, fuel bays, wash bays and office buildings;
o Powerlines and substations;
o Surface stockpile bins; and
o Underground maintenance shops and ore and waste storage.
• A site layout plan and construction schedule support the above listed infrastructure.
Costs • The capital cost estimate is supported by sufficient engineering scope and definition for
preparation of an AACE International Class 2 cost estimate.
• The operating cost estimate was developed in accordance with industry standards and South32
project requirements.
• Mining costs were calculated primarily from first principles and were substantiated by detailed
labour rate calculations and vendor-provided equipment operating costs. Materials and
consumables costs were escalated from the feasibility study's budgetary quotations by 6% and
applied on a first principles basis.
• Processing costs account for plant consumables and reagents, labour, power and maintenance
materials and tailings storage facility costs.
• General and administrative costs are based on current operating structures and have been
optimised based on industry benchmarks and fit-for-purpose sizing. Permitting and
environmental estimates are based on current permitting timelines.
• Long-term commodity price forecasts for silver, lead and zinc, and foreign exchange rates, are
based on South32 internal analysis. Long-term price protocol reflects South32's view of demand,
supply, volume forecasts and competitor analysis.
• Transportation charges have been estimated using information on trucking costs, rail costs,
export locations, transload capabilities and transit time associated with moving concentrate
from site to port to market.
• Treatment and refining charges used for valuation are based on a long-term view of the refining
costs and metal prices for zinc concentrate and an average consensus view for lead concentrate.
• Applicable royalties and property fees have been applied using current private royalty
agreements.
Revenue factors • The life of operation plan provides the mining and processing physicals such as volume, tonnes
and grades, to support the valuation.
• Revenue is calculated by applying forecast metal prices and foreign exchange rates to the
scheduled payable metal. Metal payability is based on contracted payability terms typical for the
lead and zinc concentrate markets.
Market assessment • The South32 price protocols reflect its view on demand and supply, including customer analysis,
competitor analysis, identification of major market windows and volume forecasts.
Economic • Economic inputs are described in the cost, revenue, and metallurgical factors commentary. Key
economic assumptions are assessed in ranging workshops with project and industry leaders to
ensure base case assumptions are appropriate.
• Sensitivity analyses have been completed on metal prices, metallurgical recoveries, mine
operating costs, growth capital costs and use of Inferred Mineral Resources to understand the
value drivers and impact on valuation.
• Sensitivities were evaluated to assess the impact of changes in mineable tonnes and head grades,
initial capital expenditure, project execution schedule, production ramp up period, steady-state
production rate, metallurgical recoveries, mining and processing operating costs, refining costs,
metal prices, and local and federal tax policy.
Social • South32 maintains relationships with stakeholders in its host communities through structured and
meaningful engagement including community forums, industry involvement, employee
participation, local procurement and local employment.
• A community management plan has been developed in accordance with the South32 Social
Performance Standard and includes baseline studies, community surveys, risk assessments,
stakeholder identification, engagement plans, cultural heritage, a community investment plan and
closure and rehabilitation.
HERMOSA PROJECT UPDATE Page 32 of 40
Criteria Commentary
Other • Hermosa has developed a comprehensive risk register and risk management system to address
foreseeable risks that could impact the project and future operations.
• An assessment of physical climate risks(a) in 2022 identified climate hazards of concern for
Hermosa including extreme rainfall and flooding events, drought, increased wildfires and more
extreme temperatures. However, the 2022 assessment did not identify any material change to
Hermosa's risk profile as a result of considering the physical impacts of climate change.
• No other material naturally occurring risks have been identified and the project is not subject to
any material legal agreements or marketing arrangements.
• The inclusion of Hermosa in the FAST-41 process is expected to make federal permitting more
efficient and transparent, supporting the attainment of federal permits. The current, published
date for a federal permitting decision is in July 2026 and the Mine Plan of Operation (notice to
proceed) in September 2026.
Classification • Proved Ore Reserve is derived from Measured Mineral Resource and Probable Ore Reserves is
derived from Indicated Mineral Resource. Internal dilution within Ore Reserve stope boundaries
represents 17% of the Ore Reserve by mass and is considered to have the same level of confidence
as the reported Mineral Resource.
• Inferred Mineral Resources are used to define the economic mining limits but are excluded from
the Ore Reserve estimate. The Taylor deposit is well understood through drilling as defined by the
high percentage of Proved and Probable Ore Reserve.
• Ore Reserves are classified and reported in accordance with the JORC Code guidelines. Modifying
factors including stope size, stope geometry, geotechnical parameters, mining cost, processing
cost, metallurgical recovery, transportation and refining costs and royalty fees have been applied
accordingly.
• The Ore Reserve classifications reflect the Competent Person's view of the deposit.
Audits or reviews • An independent audit was completed by an independent consulting firm. The following areas were
identified to be considered in future Ore Reserve updates:
o Create procedures and processes for variances prior to commencing production
o Revisit recovery factors of small stope subshapes
o Revise cut-off grade strategy in future planning processes to reflect changes in metal price
and operating costs
Discussion of relative • Ore Reserve estimation techniques are robust and well understood. The estimates are global with
accuracy/confidence local estimates plan to be achieved following grade control drilling during execution.
• Ore Reserves are based on a set of stopes of sufficient value to maintain a stable reporting
platform and positive NPV over an expected range of modifying factors.
• Sensitivity analysis conducted on the feasibility evaluation considered external factors (variances
to ROM head grade, foreign exchange, commodity prices, capital and operating costs, and mill
recovery) and various internal factors. The resultant NPV is sensitive to commodity price.
• Sufficient studies, reviews, and audits have been conducted both internally and externally to
confirm the modifying factors used.
• The Competent Person is comfortable that these estimates are tabulated in accordance with the
JORC guidelines and are suitable for the reporting of Ore Reserves for the Taylor deposit.
(a) South32's physical climate risk assessment methodology is presented in our Climate Change Action Plan 2022 which is available to view at www.south32.net.
HERMOSA PROJECT UPDATE Page 33 of 40
Figure 1: Regional location plan
HERMOSA PROJECT UPDATE Page 34 of 40
Figure 2: Hermosa project tenement map
HERMOSA PROJECT UPDATE Page 35 of 40
Figure 3: Patented and unpatented claim boundaries and royalties
HERMOSA PROJECT UPDATE Page 36 of 40
Figure 4: Hermosa project regional geology
HERMOSA PROJECT UPDATE Page 37 of 40
Figure 5: Plan view of mineralisation domains with drilling
Figure 6: Oblique NE view of mineralisation domains and drilling
HERMOSA PROJECT UPDATE Page 38 of 40
Figure 7: Cross section of geology and structure
HERMOSA PROJECT UPDATE Page 39 of 40
Figure 8: Plan view of drilling locations
Figure 9: Taylor mine plan
HERMOSA PROJECT UPDATE Page 40 of 40
Date: 30-04-2026 08:32:00
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