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South 32 reports FY16 financial results

Published by
World Coal,


Graham Kerr, South32 CEO, praised the company's solid 2016 performance.

“The disciplined application of our strategy and stronger commodity prices underpinned a significant improvement in financial performance. We generated free cash flow of US$626 million for a net cash position of US$859 million as we further optimised our operations and benefitted from our operating leverage. “We continue to unlock value through the accelerated development of La Esmeralda, the progression of the Klipspruit Life Extension project towards a final investment decision, the completion of the West Marradong mining access agreement and the commencement of exploration in the Southern Areas at GEMCO.

“The proposed US$200 million acquisition of the Metropolitan Colliery is expected to create additional value and realise unique synergies with Illawarra Metallurgical Coal.

“Our strong balance sheet and simple capital management framework is designed to reward shareholders as financial performance improves. We have declared our first interim dividend of US$192 million and will continue to manage our financial position to ensure we retain the right balance of flexibility and efficiency.”

Performance highlights

The disciplined application of our strategy and stronger commodity prices underpinned a significant improvement in financial performance. Specific highlights included:

  • The company restarted 22 pots at South Africa Aluminium and opportunistically increased manganese ore production.
  • A substantial 197% improvement in free cash flow to US$626 million, including distributions from equity accounted investments, as the company continued to optimise operations and benefit from our operating leverage.
  • The further strengthening of our Balance Sheet with an increase in our net cash position to US$859 million, despite a temporary build in working capital.
  • The unlocking of additional value with the accelerated development of La Esmeralda (Cerro Matoso), the progression of the Klipspruit Life Extension project towards a final investment decision, the completion of the access agreement for the West Marradong mining area (Worsley Alumina), and the commencement of exploration for high grade manganese ore in the Southern Areas at GEMCO and Cu-Ni-PGE mineralisation at Huckleberry in Canada.
  • The creation of value beyond our existing portfolio with the proposed acquisition of the Metropolitan Colliery(8) and potential realisation of unique synergies with Illawarra Metallurgical Coal.
  • South 32's first interim dividend of US 3.6 cents per share to shareholders (US$192 million).
  • Production guidance for FY17 is unchanged for all operations and is predicated on a strong finish to the financial year. South 32 continue to pursue cost saving targets, which have been revised to reflect changes in foreign exchange rates and price-linked royalties.

For the full results please visit: https://www.south32.net/getattachment/Investors-Media/financial-results/FY2017-Half-Year-Financial-Results.pdf

Read the article online at: https://www.worldcoal.com/coal/16022017/south-32-reports-fy16-financial-results/


 

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