PERTH (miningweekly.com) – Triple-listed diversified miner South32 has suspended the remaining $121-million of its current on-market share buy-back programme and has lowered its sustaining capital expenditure (capex) guidance for the 2020 financial year to $500-million as the miner moved to conserve cash amid the outbreak of Covid-19.

Sustaining capex will be cut by $150-million while exploration expenditure will be cut by $10-million.

“We have responded to the Covid-19 pandemic by introducing a number of measures aligned to our priorities of keeping our people safe and well, maintaining reliable operations and supporting our communities,” said CEO Graham Kerr on Monday.

“We have acted to protect our strong financial position, reducing capital and exploration expenditure, suspending our on-market share buy-back and commencing a group-wide review aimed at delivering a reduction in controllable costs.”

South32 has also removed the guidance for its operations in South Africa and Colombia following the nation-wide lockdown of both these countries, while production expectations from the Australian manganese assets have been lowered by 5% in response to restrictions aimed at containing the spread of Covid-19.

The miner on Monday reported a fall in production for most of its commodities, as measures were implemented globally to stop the spread of the virus.

Alumina production for the third quarter ended March was down 4%, to 1.2-million tonnes, while aluminium production was down 1%, to 245 000 t. Energy coal production was also down 1%, to 5.8-million tonnes, while metallurgical coal production was down 3% to 1.1-million tonnes.

Manganese alloy production for the quarter was down 19%, to 38 000 t, while payable nickel production bucked the trend, reporting a 3% increase to 10 300 t.

Silver production was down 24% during the quarter, to 2.4-million ounces, while lead production was down 13%, to 25 000 t. Zinc production for the three months under review reported a 23% increase, to 17.3-million tonnes.

“At our operations, we have delivered a strong operating result in the year to date, highlighted by a record production at Brazil Alumina and Hillside Alumina,” said Kerr.

The record production at Hillside, in South Africa, was achieved as the smelter had a government exemption to maintain production during a nation-wide lockdown.

“Despite market volatility, we continue to work to reshape and improve our portfolio, forming the Ambler Metals joint venture (JV), progressing the sale of South Africa Energy Coal and maintaining momentum at Hermosa.”

During the quarter under review, South32 formed a JV with Trilogy Metals over the Upper Kobuk minerals project, in Alaska. Dubbed the Ambler Metals JV, South32 subscribed for a 50% interest by paying $145-million to the JV, of which $57.5-million has been loaned back to South32.

As part of the formation of the JV, Trilogy contributed all its assets associated with the 172 675 ha Upper Kobuk Mineral projects, including the Arctic and Bornite projects.

The Arctic project has an indicated resource of 36-million tonnes containing about 2.4-billion pounds of copper, 3.36-billion pounds of zinc, 581-million pounds of lead, 55-million ounces of silver and 0.73-million ounces of gold.

A 2018 prefeasibility study for the project describes the potential technical and economic viability of establishing a conventional openpit copper/zinc/lead/silver/gold mine-and-mill complex for a 10 000 t/d operation.

On average, the Arctic project will deliver payable production of 159-million pounds of copper, 199-million pounds of zinc, 33-million pounds of lead, 30 600 oz of gold and 3.3-million ounces of silver over its life-of-mine.

The Bornite deposit lies 25 km southwest from Arctic. The project has indicated resources of 900-million pounds of copper and inferred resources of 5.5-billion pounds of copper and 77-million pounds of cobalt.