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South32 shares hike by 5% in June

South32 shares hike by 5% in June

CAPE TOWN: SOUTH32, the diversified mining company spun out of BHP Billiton, on Wednesday released “solid” June quarter production numbers, but investors are waiting to see full-year financial numbers next month.

South32 — which has operations straddling Australia, Southern Africa and South America — said it had hit annual production records in alumina, metallurgical coal and manganese ore in the quarter.South32 was demerged from BHP on May 25, with net cash of $54m, and the performance of assets under its own management only reflected in a less than half of the fourth quarter.

“Output was solid, with most projects delivering results within 5% of our forecasts. Beats on metallurgical coal, zinc and manganese alloy were offset by misses on nickel and lead,” Macquarie Group said on Wednesday. The full-year financial results due on August 24 will be closely watched by the market for cost guidance and production targets for the 2016 financial year, which were expected to be “broadly flat”, it said.

“We have the right balance sheet for the times and intend to distribute a minimum 40% of underlying earnings to our shareholders from next year,” said South32 CEO Graham Kerr. South32 said its manganese assets in Australia and SA were impaired by $1.33bn and its Wolvekrans Middelburg coal complex in SA by $539m. BHP had notified South32 of the $1.9bn pre-tax impairment charge effective May 6, but South32 was doing its own review of the fair value of its assets and would notify the market if there was a “material difference” to the BHP figures.

The shares fell 3.7% on Wednesday to R15.80, giving it an R84bn market capitalisation. South32 closed its first day of trade on May 18 at R20.24 on the JSE.