South32 bolsters net cash to $1.7bn, reports solid Q1 results

PERTH (miningweekly.com) – Diversified miner South32 on Thursday reported its financial and operational results for the first quarter of the 2018 financial year, telling shareholders that stronger commodity markets had delivered a $33-million increase in its net cash position.

“Our key commodity markets continue to benefit from strong demand and a steepening of industry cost curve,” said CEO Graham Kerr on Thursday.

“This supportive dynamic has further bolstered our net cash position despite the continuation of our capital management programme and the prepayment that will increase our interest in Arizona Mining.”

At the end of the three months to September, South32 had a net cash position of $1.7-billion.

The company explained that industry cost curves continued to steepen as a result of US dollar weakness, rising raw material input costs and the environmental policy response in China.

Meanwhile, Kerr reported that the group had maintained its full-year production guidance for its operations, following strong performances across its supply chain.

Alumina production for the quarter decreased by 3% on the previous quarter to 1.28-million tons, while aluminium production remained stagnant at 249 000 t.

The Mozal aluminium operation, in Mozambique, achieved record production during the three months under review, as the smelter continued to optimise performance and test its maximum technical capability.

Meanwhile, energy coal production for the quarter was down 9%, to just over seven-million tonnes, while metallurgical coal production was down 66% to 494 000 t.

South African energy coal production was affected by the completion of planned dragline maintenance, as well as the relocation of critical mobile equipment and the continued depletion of existing pits, while the Appin mine, in New South Wales, remained suspended.

South32 earlier this month announced that it would restart production at the Appin mine following remedial actions. One longwall would be in operation at the mine across the remainder of the 2018 financial year as part of a staged ramp-up of activities, before returning to a two longwall configuration in the December quarter.

Manganese ore production from its South African mines was maintained at 1.3-million tons and manganese alloy production decreased by 3% quarter-on-quarter to 56 000 t.

Nickel production during the quarter under review was up by 21%, to 11.7-million tonnes, while silver production was down 17% to 2.7-million ounces, lead production reached 25 800 t and zinc production reached 11 000 t.

PROJECTS
Meanwhile, South32 reported that it had approved a $38-million energy efficiency project at Mozal aluminium. The project is expected to deliver a 5%, or about 10 000 t/y, increase in production with no associated increase in power consumption.

First production is expected in the 2020 financial year and the full benefit from the AP3XLE energy efficiency is expected to be realised in the 2024 financial year.

At the South African energy coal operations, a major expansion is on the cards for the Klipspruit project. South32 said that the final approval of the $265-million Klipspruit Life Extension project would be announced before the end of 2017.