The cash build is despite a number of operational challenges during the quarter, including a fire at the Cannington mine in Queensland and heavy rainfall and associated development delays at South Africa Energy Coal.
At Cannington, zinc production plummeted by 38% to 15,100 tonnes, while silver and lead production were each down by 12% to 3.5 million ounces and 31,300t respectively.
Full-year guidance has been revised to 16.5Moz of silver, 135,000t of lead and 70,000t of zinc at unit costs of $155 per tonne, from $141/t.
The development of the replacement crusher is on schedule for commissioning in the March 2018 quarter.
South32 also revised down South Africa Energy Coal guidance for FY17 and FY18 to 30 million tonnes and 27.5Mt respectively due to wet weather and associated delays in developing new mining areas at the Wolvekrans-Middleburg Complex.
In positive news, first ore from the La Esmeralda deposit at Cerro Matoso was delivered, while Worsley Alumina’s alumina hydrate production rate was in excess of 4.6Mt per annum.
Ore production at South Africa Manganese increased to 3.8Mtpa due to favourable market conditions.
South32 CEO Graham Kerr said despite the challenges, it was pleasing to report an increase in the net cash balance.
“Having achieved the right balance of strength and flexibility, we announced a $500 million capital management program and subsequently commenced an on-market share buy-back in April,” he said.
South32 also had more of a business development focus during the quarter.
“Consistent with our strategy to identify new opportunities through the drill bit, we entered into a strategic alliance with AusQuest,” Kerr said.
“Under this agreement, we will pursue five early stage base metal opportunities in Australia and Peru.
“We have also entered into an option agreement with Trilogy covering the more advanced Upper Kobuk Mineral projects in Alaska and will initially test the extent of their high grade Bornite copper resource.”
The company has spent $13 million on exploration so far this financial year, but now expects total expenditure for the year to be $30 million as work ramps up on the new projects.
South32 shares opened unchanged at A$2.78.
