Costs rise following disruption

SOUTH32 has cut its full-year production guidance for several commodities, after heavy rain at its South African thermal coal operations and a fire at its Cannington mine in Western Australia.

The diversified miner expects unit production costs at Cannington’s silver, lead and zinc mine to rise to $US155 ($207) a tonne, up from its previous guidance of $US141, following disruption of operations in early April.

The BHP Billiton spin-off reported a decline in March quarter production for several commodities and said it was pursuing exploration opportunities for base metals in four countries, after signing two joint venture agreements.

“Despite several operational challenges during the quarter, we increased our net cash balance by $US645 million to $US1.5 billion,” chief executive Graham Kerr said.

RBC Capital Markets analyst Paul Hissey said the report appeared weaker than expected, but did not alter the medium-term view for the group.

“Although we would argue production was generally softer across the group, we don’t see material implications going forward,” Mr Hissey said.

South32 shares closed up 1.1 per cent at $2.81.