An upbeat March quarter and nine month production report from South32 yesterday, even if its coal business in NSW continues to have problems.
The solid tone to the report saw the shares rose 4.8% to $4.03, close to its all time highs from earlier this year.
The company said on Thursday its third quarter coking coal production slumped 44.5% from a year ago due to restricted mining at its Appin coal mine south of Sydney where methane gas intrusion has been a continuing concern now for the past year.
Coking coal production fell to 794,000 tonnes in the quarter ending March 31, from 1.4 million tonnes a year earlier and aluminium production came in at 242,000 kilo tonnes during the quarter, the company said inits March quarter three and nine month report (https://www.south32.net/docs/default-source/values-and-commitments/1792841.pdf?sfvrsn=2757e1f9_6).
As a result, South32 cut its Illawarra Metallurgical saleable coal production guidance to 4.1 million tonnes from 4.5 million tonnes for the June 30, 2018 year as the company does ground rehabilitation work at its Appin mine, south of Sydney, after the methane outage.
South32 suspended operations at Appin in mid-2017 because of concerns over high methane levels in the mine. Government regulators allowed the company to partially restart the mine in August last year and it has slowly been ramping up output.
South32 says it has plans to expand in the Illawarra, despite the problems at Appin.
It said yesterday it had “finalised plans at Illawarra Metallurgical Coal that are expected to deliver more productive longwall and development performance, underpinning a recovery in production to more than 6Mt in FY19 and an anticipated return to historical rates above 8Mtpa from H2 FY20."
The Appin colliery accounts for about 60% of South32’s overall production of metallurgical coal. he company produces thermal coal in South Africa but those assets are in the process of being separated and will become a standalone business from the June quarter of this year.
South32 reported a 6.5% rise in quarterly manganese ore production to 1.4 million wet tonnes from a year earlier but a 4.3% drop in alumina production.
The company also said in its report that the “strong commodity prices and a partial unwind of working capital delivered a US$477M increase in net cash to US$1.9B after allocating a further US$85M to our on-market share buy-back in the quarter.”
"Production so far in 2917-18 is a record at Mozal Aluminium (in Mozambique ) the smelter continued to test its maximum technical capability. Payable payable nickel production at Cerro Matoso was up 21% so far in the year as the performance of La Esmeralda continued to exceed expectations and payable silver production at Cannington mine in Queensland rose by 28% in the quarter as mining entered a higher grade sequence of (mining) stopes.”
South32 said it had increased production guidance at Australia Manganese by 6% and South Africa Manganese by 5% on the back of strong market demand and what it said was record operating performance at Australia Manganese.
