SOUTH32 has cut its full-year production forecast at its Cannington lead, silver and zinc mine following an underground fire causing damage that would take four weeks to repair.
The Johannesburg- and Perth-listed company said in an announcement today that silver output would be just over 13% lower at some 16.5 million ounces compared to the previous production guidance of 19.1 million oz. Production for the nine months to date was 12.3 million ounces.
The fire damaged the load out and shaft haulage infrastructure. “Remediation work will be undertaken over a four week period and extraction of the higher grade (silver/lead) stope 60L will be delayed,” the company said in an announcement.
Similarly, lead and zinc production of 135,000 tonnes and 70,000 tonnes respectively would be produced compared to previous estimates of 163,000 tonnes and 80,000 tonnes.
South32 anticipated that for its 2017 financial year, revised mill throughput of about 3.1 million tonnes compared to 3.3 million tonnes would be achieved. “An update, including revised unit cost (including sustaining capital expenditure) guidance will be produced in our March 2017 quarterly report,” the company said.
Shares in the company were 0.5% lower on the Australian Stock Exchange.
The production interruptions at Cannington are a speck compared to the largely successful year South32 has experienced after an improvement in commodity prices combined with its own cost-lowering measures saw cash generation leap. Some analysts said the company could have net cash of $1bn by the year end (from net debt of about $400m at founding).
This net cash estimate was before announcement by South32 of a 12-month, $500m capital return to shareholders unveiled on March 27. The capital return would start with a share buy-back programme.
“This $500m capital management programme meaningfully increases shareholder returns and follows the recent announcement of our $192m interim dividend,” said South32 CEO, Graham Kerr at the time.
