South32’s production guidance unchanged after strong quarter
DIVERSIFIED miner South32 has reported copper production for the first time at its Sierra Gorda mine, while its production guidance remained unchanged following a strong March quarter.
The group released its quarterly report for March 2022 on Tuesday, saying the company attained several remarkable milestones.
Chief executive Graham Kerr said South32 made progress in reshaping its portfolio for a low carbon future.
“We reported copper production for the first time, having completed our acquisition of a 45 percent interest in the Sierra Gorda copper mine. We moved a step closer to doubling our share of green aluminium production, delivering first metal from our Brazil aluminium smelter following the end of the period.
“We also reported the prefeasibility results for our Taylor deposit, underlining its potential to add further growth in the metals critical to a low carbon future,” he said.
Kerr said the group delivered stellar operating results for the quarter. In April, the company also paid an interim dividend, returning a record $404 million (R6.36 billion) to shareholders off the back of a significantly improved financial performance in the December 2021 half.
“We achieved another excellent operating result, delivering to plan, capitalising on historically strong end markets for many of our commodities.
“Our strong financial position allowed us to close the acquisition of Sierra Gorda and return our balance sheet to a net cash position by the end of the March quarter,” Kerr said.
South32 said it finished the quarter with a net cash balance of $52m, following completion of the acquisition of the Sierra Gorda copper mine on February 22, 2022.
“The $1.4bn upfront cash payment for Sierra Gorda was funded by a combination of cash on hand of $600m and a short-term acquisition bridge facility of $800m. Further payments to finalise the tax liabilities associated with the acquisition are expected to be made over the next 15 months in accordance with their statutory due dates,” the company said.
Alumina production for the reported period were down 1 percent on the previous quarter, to 1.3 million tons, while alumina production in the same period also declined by 1 percent, to 243 000 tons, the company said.
South32 said in its first quarter of copper production, it delivered 8 400 tons of copper, after the completion of the Sierra Gorda production.
Manganese ore production for the March quarter was down 4 percent on the previous quarter, to 1.2 million tons, while metallurgical coal production was up by 31 percent in the same period, to 1.5 million tons.
South32 said nickel production increased by 1 percent, to 10 600 tons, payable zinc production was down by 5 percent on the previous quarter, to 16 400 tons, and payable lead production was up by 22 percent, to 34 600 tons.
Operating cost expectations for its Australian and South African business had increased on the back of stronger producer currencies, higher raw material costs and a hike in commodity prices which resulted in higher pricelined royalties.