Asset Sale Offers Relief for Exxaro Share Price – Will JSE: EXX Break Above Resistance?
Exxaro Resources’ recent share recovery offers a glimmer of hope, but the miner’s strategic reshuffling and weak commodity backdrop...
Quick overview
- Exxaro Resources experienced a slight share price recovery following the sale of its FerroAlloys stake for R250 million, but faces ongoing structural challenges.
- Despite a 13% rise in headline earnings and a stable dividend, analysts caution that declining coal and iron ore prices may impact future profitability.
- The company's planned manganese acquisition raises concerns among investors about potential overreach in a volatile market, with regulatory approval still pending.
- Overall, while recent developments provide temporary relief, Exxaro's long-term outlook remains uncertain due to weak global demand and rising costs.
Exxaro Resources’ recent share recovery offers a glimmer of hope, but the miner’s strategic reshuffling and weak commodity backdrop highlight ongoing structural challenges.
Asset Sale Offers Share Lift
Exxaro Resources (JSE: EXX) saw a mild rebound in November after announcing the sale of its entire stake in Exxaro FerroAlloys Proprietary Limited for R250 million, lifting the stock 1.6% on the day. The buyer consortium — comprising FerroAlloys employees, management, and EverSeed Energy — marks another effort by Exxaro to streamline operations after years of underperformance.
EverSeed, an investor active across Africa, Europe, and North America, now holds 60% of FerroAlloys, with management and employees controlling the rest. The deal, finalized on October 31, 2025, was funded through a mix of debt, equity, and vendor financing — a structure that underscores limited external appetite for Exxaro’s non-core assets.
Technical Picture: Fragile Rebound Faces Resistance
Exxaro’s share price has shown signs of stabilization, but the recovery appears fragile and technically constrained. After bottoming near R13.40 in April 2025, the stock has climbed roughly 33%, finding short-term support around key moving averages on the monthly chart.
EXXJ Chart Monthly – Rebounding off the 200 SMA
However, the broader trend remains downward, with the 50-day simple moving average (SMA) near R185 acting as a persistent ceiling. Each attempt to break higher has been met with renewed selling pressure, suggesting that momentum traders remain cautious. The 200-day SMA still slopes downward, reinforcing the broader bearish bias.
EXXJ Chart Daily – Facing the 50 SMA As Resistance
Unless the stock can establish consistent closes above the R185–R190 resistance zone, the latest recovery risks fading, with potential downside targets near R150 and then R135 if support levels give way. Overall, the chart structure signals consolidation rather than a confirmed reversal, pointing to a market still lacking conviction in Exxaro’s longer-term turnaround.
H1 Earnings Strong, But Outlook Weakens
The company posted a 13% rise in headline earnings and declared its 45th consecutive dividend of R8.43 per share, suggesting balance sheet stability.
However, analysts warn that coal and iron ore price declines, alongside weak Chinese construction demand, could erode these gains in the second half of the year.
Despite EBITDA growth of 10% to R5.6 billion, Exxaro’s profitability remains highly exposed to cyclical price pressures.
Strategic Expansion or Costly Diversion?
Exxaro’s planned manganese acquisition — valued between R9 billion and R14.6 billion — is pitched as diversification, but some investors see it as overreach during a volatile market cycle. Regulatory approval remains pending, and financing could add balance sheet strain.
Production rose only 1%, while wind energy output was flat, showing limited operational leverage despite heavy capital expenditure.
Conclusion: Exxaro’s recent rebound and asset sale offer temporary relief but fail to address deeper structural challenges — slowing global demand, falling commodity prices, and rising costs. Without clearer signs of margin recovery or sustainable growth, the company’s rally risks losing momentum just as quickly as it began.
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