South32 has increased its 2022 financial year (FY22) production guidance for the Cannington lead-silver mine as the Queensland operation exceeded expectations in the back half of 2021.
Cannington’s payable zinc equivalent production increased from approximately 140,500 tonnes to circa 152,500 tonnes half-on-half, with output from July to December buoyed by higher grades and a strong underground performance.
Payable zinc equivalent production is calculated by totalling revenues from payable silver, lead and zinc, and dividing the total revenue by the price of zinc.
South32 has boosted Cannington’s FY22 production guidance by 5 per cent, with 12.28 million ounces of silver, 117,900 tonnes of lead and 66,700 tonnes of zinc amounting to circa 292,200 tonnes of payable zinc equivalent production.
Cannington’s payable zinc sales increased by 29 per cent in the December quarter as South32 capitalised on its growing inventories.
The mine’s payable lead and silver sales bounced back from adverse weather in the September 2021 quarter, increasing by 50 per cent and 47 per cent respectively.
Elsewhere, South32’s Cerro Matoso open-cut nickel mine in Colombia and its South Africa manganese operations also performed strongly.
Payable nickel production increased by 26 per cent half-on-half at Cerro Matoso as the site’s processing plant bounced back from refurbishments in the 2021 financial year. Saleable production from South Africa manganese increased by 7 per cent half-on-half.
Despite this, saleable production from South32’s Australian manganese operations in the Northern Territory (NT) decreased by 7 per cent half-on-half as the company experienced lower yields from the primary concentrator.
South32 has revised its FY22 production from Australian manganese 9 per cent lower as wet weather and COVID-19 labour constraints in the NT have prevented the company from accumulating stockpiles ahead of the wet season.
An extended longwall move at the Dendrobium coal mine in New South Wales contributed to South32 experiencing a 23 per cent decrease in its saleable production from the Illawarra metallurgical coal operation.
South32 chief executive officer Graham Kerr said rewarding shareholders was a key part of his company’s strategy for the second half of 2021.
“We returned $US316 million ($440 million) to shareholders during the period through our on-market share buy-back and the payment of ordinary and special dividends,” he said.
“Looking forward, our shareholders are well positioned to benefit from stronger markets and production growth, with our capital management framework designed to reward owners as our financial performance improves.”
South32’s share price was $3.90 at the time of writing, a 4.77 per cent decrease on the day.