Exxaro’s Share Price Hits Support, JSE: EXX Builds Momentum on New Mining Deal
South Africa’s Exxaro Resources (JSE:EXX) is battling a multi-year share price decline but recent support levels and new acquisition moves..
Quick overview
- Exxaro Resources is experiencing a multi-year share price decline, recently hitting a low of R13.40 after peaking above R23.
- The company's share price has shown signs of recovery, climbing nearly 25% since its April low, supported by key moving averages.
- Despite a low price-to-earnings ratio of 4.7x, analysts express caution due to a projected 30%-40% decline in headline earnings for the year.
- Exxaro is strategically diversifying its revenue by acquiring a significant portfolio of manganese assets, aiming to strengthen its position in the market.
South Africa’s Exxaro Resources (JSE:EXX) is battling a multi-year share price decline but recent support levels and new acquisition moves hint at a possible turning point.
EXX Share Price Struggles but Finds Support
Since early 2023, Exxaro Resources’ share price has been under sustained pressure. After peaking above R23 per share, it has repeatedly made lower highs, falling to R13.40—marking a loss of around 40% from its top.
However, in June the stock found a floor at key moving averages on the monthly chart—similar to its support pattern back in 2020. This technical level spurred a rebound of around 6% for the month. Since hitting its low in April, EXX has actually climbed nearly 25%, suggesting that while the broader downtrend is intact, the stock is showing signs of buyers returning.
Valuation Signals Raise Eyebrows
Even with the recovery, Exxaro’s price-to-earnings ratio is remarkably low at 4.7x. That stands out in South Africa, where many listed firms trade at P/Es above 9x or even 14x. This discount has led some analysts to suggest there’s value to be found, but caution remains. Investors are wary that Exxaro’s low multiple reflects real challenges, not just a bargain opportunity.
Profits Set to Fall Sharply
Adding to the caution, Exxaro issued a trading statement in May, warning of a 30%–40% decline in headline earnings per share (HEPS) for the year ending December 31.
Management cited weaker iron ore prices and falling sales volumes as key drivers of the profit drop. Meanwhile, inflation, rising marketing and distribution costs, and growing amounts of overburden (the material that must be removed to access coal) have all contributed to a rise in operating and maintenance expenses.
Strategic Bet on Manganese Growth
Despite these headwinds, Exxaro is pushing ahead with plans to diversify its revenue base. The company signed binding agreements to acquire a major portfolio of manganese assets in South Africa’s Kalahari Manganese Field.
The R11.67 billion deal includes:
- A controlling 74% stake in Ntsimbintle Mining
- A 19.99% shareholding in Jupiter Mines
- 100% of Ntsimbintle Marketing and Trading
- 51% of Mokala Manganese Mine
- 9% of Hotazel Manganese Mines
This move will make Exxaro one of the largest manganese players in South Africa’s Northern Cape region and represents a bold strategic step away from its traditional coal focus.
Conclusion: Exxaro Resources faces significant short-term pressures—from falling commodity prices to surging costs. But with technical support levels holding and a major acquisition diversifying its portfolio, the company may be positioning itself for a longer-term turnaround. Investors will be watching upcoming earnings closely for signs that this strategic pivot can deliver growth in an increasingly tough operating environment.
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