South32 might be looking at a handy rise in first-half earnings, judging by some of the figures in its first-quarter production report released yesterday.
The stand out was the more than tripling of coking coal output from the same year-ago period, helped by robust production at its Appin and Dendrobium collieries south of Sydney.
This surge in output (thanks to better and safer mining conditions at Appin) comes at a time of continuing sold world prices for high-quality coking coal.
Production of coking coal rose to 1.5 million tonnes in the first quarter of the 2019 fiscal year from 494,000 tonnes a year earlier. Annual production is now running at a rate of 7.6 million tonnes against 2 million a year ago, according to the company.
South32 had suspended operations at its Appin coal mine on the order of a government regulator last June due to concerns over high gas levels in the mine.
“Illawarra Metallurgical Coal … enjoyed a strong start to the year as an improvement in longwall productivity underpinned an annualised production rate of 7.6Mt in the quarter,” chief executive Graham Kerr said in a statement.
The world’s largest manganese miner produced 1.4 million tonnes of the commodity during the quarter, about 11% higher over last year which will also benefit from firmer prices.
However, the company reported a 12 percent drop up in alumina sales from its Worsley Alumina refinery, hit by maintenance efforts.
South32 maintained fiscal 2019 production guidance for all its operations.
In South Africa, the company says he has started the process to “broaden and transform the ownership of South Africa Energy Coal, receiving formal expressions of interest from prospective parties.”
And the company’s cash position ended the quarter in a still solid position despite completing two major acquisitions and spending on investment and capital management.
“Our net cash balance decreased by US$1,362M to US$679M during the September 2018 quarter following completion of the Arizona Mining and Eagle Downs acquisitions for a combined US$1,457M, and the continuation of our US$1B capital management program.
“To the end of the September 2018 quarter we had completed 65% of this program, having paid a US$154M special dividend on 5 April 2018 and purchased 216M shares at a volume-weighted average price of A$3.03 per share. Subsequent to the end of the September 2018 quarter we also paid a US$316M fully-franked dividend in respect of the June 2018 half year,” the company said.
South32 shares fell 0.7% to $3.85 in what was weak day’s trading.