The company’s net cash position rose by $US239 million to $551 million.

CEO Graham Kerr attributed it to stronger commodity prices and cost-saving initiatives.

“The combination of a strong balance sheet and operating leverage ensures we are well positioned to deliver superior performance as we optimise our operations, unlock their potential and identify opportunities beyond our current portfolio,” he said.

South32 maintained cost and production guidance for the bulk of its operations, though production disruptions at Appin saw Illawarra Coal’s outlook revised.

Illawarra is now expected to produce 9 million tonnes this financial year, down from 9.5Mt, while cost guidance of $71 per tonne won’t be achieved until the June half, with costs for the current period to be $4/t higher.

South Africa Energy Coal production was up by 2%, but nickel production dropped by 9%, silver output was down by 7% and zinc fell by 5% due to lower grades and scheduled maintenance.

The company announced that it entered into an agreement with Alcoa to access bauxite close to its Worsley Alumina infrastructure.

“While subject to government and regulatory approvals, this agreement has the potential to defer capital expenditure required to develop new mining areas,” Kerr said.

South32 shares dropped by A7.5c to $2.515 after reaching an all-time high of $2.59 yesterday.