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Illawarra Metallurgical Coal update
South32 Limited
(Incorporated in Australia under the Corporations Act 2001
(Cth))
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32
ISIN: AU000000S320
south32.net
ILLAWARRA METALLURGICAL COAL UPDATE
South32 Limited (ASX, JSE, LSE: S32) (South32) advises that saleable coal production of 7.9Mt
is anticipated at its Illawarra Metallurgical Coal operation in FY17, including 3.6Mt in
H1 FY17. While ground conditions at the Appin Area 9 longwall have stabilised, additional work
is being undertaken to recondition the maingate roadway to ensure the safe extraction of the
901 panel. At Appin Area 7, production continues to be progressively ramped-up to ensure safe
levels of gas are maintained.
As a result, Illawarra Metallurgical Coal sales of 8.1Mt are now anticipated in FY17, while our
average realised hard coking coal sales price will continue to reflect the premium low volatile
index on a Month -1 (prior month) basis.
On the basis of unchanged assumptions for foreign exchange rates and coal prices, an average
Operating unit cost (including Sustaining capital expenditure)1 of approximately US$86/t is now
anticipated for Illawarra Metallurgical Coal in H1 FY17 (previously US$75/t). This cost is forecast
to decline towards US$80/t in H2 FY17 (previously US$71/t) for an average Operating unit cost
(including Sustaining capital expenditure) of US$83/t in FY17.
Illawarra Metallurgical Coal
FY16 H1 FY17e H2 FY17e FY17e
Revised guidance
Metallurgical coal production (kt) 7,059 2,740 3,620 6,360
Metallurgical coal sales (kt) 6,984 2,780 3,750 6,530
Energy coal production (kt) 1,307 900 640 1,540
Energy coal sales (kt) 1,333 950 610 1,560
Total coal production (kt) 8,366 3,640 4,260 7,900
Total coal sales (kt) 8,317 3,730 4,360 8,090
Operating unit cost, incl. Sustaining capital
80 86 80 83
expenditure (US$/t)1
With the completion of the 901 panel and the associated release of ground stresses, a strong
improvement in longwall availability and cutting rates is anticipated in FY18 with total saleable
production forecast to exceed 9.0Mt. Consequently, Operating unit costs (including Sustaining
capital expenditure)1 are forecast to decline towards approximately US$77/t given the operation’s
high fixed cost base.
Restated FY17 production guidance incorporates a longwall move for each of the March and
June 2017 quarters. To allow comparison to prior guidance, the various unit cost estimates do
not take account of currently elevated coal prices, which increase royalty rates, and changes in
the Australian dollar to US dollar rate, which has remained persistently above 0.72. FY17
Operating unit cost, including Sustaining capital expenditure, guidance for our upstream
operations will be updated when we report H1 FY17 financial results and will incorporate revised
foreign exchange rate and price assumptions.
Notes:
1. Operating unit costs, including Sustaining capital expenditure, include royalties and the influence of exchange rate
assumptions, and are based on: an average blended coal price of US$83/t for Illawarra Metallurgical Coal; and an
AUD:USD exchange rate of 0.72.
About South32
South32 is a globally diversified mining and metals company with high quality operations in
Australia, Southern Africa and South America. Our purpose is to make a difference by
developing natural resources, improving people’s lives now and for generations to come. We are
trusted by our owners and partners to realise the potential of their resources. We have a simple
strategy to maximise the potential of our assets and shareholder returns by optimising our
existing operations, unlocking their potential and identifying new opportunities to compete for
capital.
Forward-looking statements
This release contains forward-looking statements, including statements about currency exchange
rates, commodity prices, production forecasts, plans, exploration and capital expenditure. These
forward-looking statements reflect expectations at the date of this release; however, they are not
guarantees or predictions of future performance. They involve known and unknown risks,
uncertainties and other factors, many of which are beyond our control, and which may cause
actual results to differ materially from those expressed in the statements contained in this
release. Readers are cautioned not to put undue reliance on forward-looking statements. Except
as required by applicable laws or regulations, South32 Limited does not undertake to publicly
update or review any forward looking statements, whether as a result of new information or
future events. Past performance cannot be relied on as a guide to future performance.
FURTHER INFORMATION
INVESTOR RELATIONS
Alex Volante Rob Ward
T +61 8 9324 9029 T +61 8 9324 9340
M +61 403 328 408 M +61 431 596 831
E Alex.Volante@south32.net E Robert.Ward@south32.net
MEDIA RELATIONS
Diana Wearing Smith James Clothier
T +61 8 9324 9198 T +61 8 9324 9697
M +61 436 482 290 M +61 413 319 031
E Diana.Smith@south32.net E James.Clothier@south32.net
Further information on South32 can be found at www.south32.net.
JSE Sponsor: UBS South Africa (Pty) Ltd
16 December 2016
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