South32 resumes share buybacks as cash position improves
Programme is already 92% complete, leaving $121m remaining amid improvement in quarter to end-September
Diversified miner South32, which supplies coal to Eskom, is resuming its $1.43bn (R23.6bn) share buyback programme as commodity markets and its cash position improve.
The buyback programme is already 92% complete, with $121m remaining. It had been suspended in March as the group battled with the prospect of production restrictions and market volatility.
The world’s largest manganese miner deferred the buyback to protect its financial position amid Covid-19-induced market uncertainty.
“With another quarter of strong operating performance behind us and the further strengthening of our financial position, we have lifted the suspension of our on-market share buy-back. Out capital management program has $121m remaining and recommencing our buy-back will deliver immediate value to our shareholders,” said Graham Kerr, South32 CEO.
The group reported that its cash position improved $70m to $378m in the quarter to end-September.
During the period, South32 said it had continued its work to reshape and improve its portfolio. That includes the divestment from its SA coal assets to Seriti Resources.
The deal to sell SA Energy Coal has already obtained final approval under Section 11 of the Mineral and Petroleum Resources Development Act (MPRDA), allowing for the transfer of the mining right.
Separately, the Competition Commission recommended that the Competition Tribunal conditionally approve the transaction with the Tribunal hearings expected to be finalised in the December 2020 quarter.
While the transaction remains subject to material conditions, including approvals from Eskom, South32 said it expected to agree a resolution for the future of it SA Energy Coal business by no later than December 31.
SA Energy Coal saleable production increased by 20% to record 6.3-million tonnes in the September 2020 quarter as production ramped up following the disruption to operations caused by the nationwide Covid-19 restrictions in the prior quarter.
South32 said export sales benefitted as additional volumes were delivered from new pits at the Klipspruit colliery in Mpumalanga. Domestic sales benefited from improved demand from Eskom following the easing of the Covid-19 restrictions.
SA Manganese production increased by 55% in the September 2020 quarter and the company took advantage of favourable market conditions by utilising higher cost trucking as an alternate route to market while rail logistics continued to normalise.
South32 did not produce manganese alloy in the September 2020 quarter as its Metalloys manganese alloy smelter remained on care and maintenance.
The group meanwhile operated its Hillside and Mozal aluminium smelters at maximum capacity, despite load-shedding.
In Monday afternoon trade, South32’s share had risen 2.61% to R25.53, having fallen 3.08% so far in 2020.
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