JOHANNESBURG (miningweekly.com) - Diversified miner South32 will return more money to shareholders, after reporting a stronger-than-expected $543-million underlying profit for the first half of the 2018 financial year.
This meant that dividends to shareholders would be doubled.
This, South32 CEO Graham Kerr said during a media conference call, on Thursday, demonstrates the company's "flexible approach to capital management and the company's commitment to returning excess cash in the most efficient manner possible."
South32's dividend pay-out includes $223-million of fully franked ordinary dividends, and a special dividend of $155-million, partially franked to 81%, which is expected to be paid on April 5.
The ordinary interim dividend is $0.043 a share, compared with $0.036 a share reported for the first half of the prior financial year, and the special dividend $.03 a share.
Kerr stated that South32 had endured "a challenging start to the year", but that production was "tracking on, or ahead of schedule" at a majority of the company's operations.
"We have seen an improvement in margins across most operations. We've achieved record ore production at Australian manganese, and increased production guidance at South African manganese as we've responded to favourable market conditions," he said.
He further cited record production at Australian manganese and at Mozal Aluminium; an increased production guidance at South Africa manganese in response to favourable market conditions; and the delivery of a 23% increase in payable nickel production at Cerro Matoso as ore grades improved, as some of the highlights of the six months under review.
Meanwhile, South32 will invest R4.3-billion in the South African Klipspruit colliery, which will extend its life by about 20 years, and it updated the market on its plans to manage its South Africa Energy Coal operation as a standalone business, as announced late last year.
Kerr explained that the move was a "major strategic initiative" that would allow the miner "to transform the ownership of South Africa Energy Coal, consolidate our functions and further reduce duplication".
"We continue to deliver strong returns by maintaining a disciplined and flexible approach to capital management. We resolved to pay $378-million in shareholder dividends, directed $93-million to our buy-back programme and announced a further $250-million increase to our capital management programme to $1-billion, leaving $540-million outstanding."
With a net cash balance of $1.4-billion - more than what analysts expected - working capital is expected to partially unwind, with group volumes expected to increase marginally in the second half of the financial year.
This, Kerr said, means the company is "well-positioned" despite a reduction in future processing rates and metal production at the Cannington mine, in Australia.