South32 sticks to guidance despite Covid setback


South32 sticks to guidance despite Covid setback

Published Date: 2020-10-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

South32 sticks to guidance despite Covid setback

The diversified mining group says it will also deliver immediate value to shareholders by resuming share buybacks.

South32 is sticking to its annual production guidance despite the setbacks caused by the Covid-19 health crisis. It is also resuming its programme of buying back its own shares due to a strong first-quarter operating performance and stronger financial position.

Reporting back for the three months to end-September, the diversified miner said its capital management programme had $121 million remaining and recommencing share buybacks would deliver immediate value to shareholders. It suspended the programme in July as it adjusted its capital expenditure priorities due to the uncertainty caused by Covid-19.

Over the quarter, it delivered a $70 million increase in its net cash position to $368 million despite a build in working capital as commodity markets improved. It increased production of metallurgical coal by 22% as its Illawarra operation in Australia benefitted from the successful return to a three longwall configuration during the prior quarter. Manganese ore output rose 19% as South Africa Manganese returned to full production following Covid-19 restrictions. However, output of alumina, manganese alloy, lead and zinc declined from the earlier quarter.

Plans to dispose of its local coal operation also moved ahead after it received Competition Commission approval and advanced discussion with Eskom to meet outstanding conditions for the sale to Mike Teke's Seriti Resources.

South32's shares rose 2.9% to R25.59 yesterday.

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