South32's Cash Pile Swells in Third Quarter

By David Winning Features Dow Jones Newswires

South32 Ltd. (S32.AU) overcame setbacks in Australia and South Africa to report a big jump in its cash pile in the latest quarter, but was silent on whether it will increase a planned capital return following the aborted purchase of a coal mine from Peabody Energy Corp. (BTU).

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South32 said its net cash rose by US$645 million to US$1.5 billion at the end of March, despite an underground fire at its Cannington silver and base metals mine in Australia and heavy rainfall in South Africa where it is a major producer of thermal coal.

Last month the company said it planned to hand US$500 million to shareholders, most likely via a share buyback, in another sign the global mining industry is regaining its footing.

Analysts have speculated that South32, the company spun out of BHP Billiton Ltd. (BHP.AU) in 2015, may top-up this capital-return program after the miner walked away from a US$200 million deal to buy Peabody Energy's (BTU) Metropolitan colliery in Australia's New South Wales state, together with a stake in a coal port, citing competition concerns.

On Thursday, South32 reported a mixed production performance in the three months through March. Metallurgical coal output rose by 3% to 1.4 million metric tons compared to the prior quarter, while manganese ore production also lifted 3% to 1.3 million tons.

However, energy coal production fell by 9% to 6.9 million tons due to bad weather in South Africa and an associated delay in the development of new mining areas at the Wolvekrans-Middelburg Complex.

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Alumina and aluminum production each fell 2% on quarter to 1.3 million tons and 245,000 tons, respectively.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

April 26, 2017 19:55 ET (23:55 GMT)