South32 sees massive resources increase

South32 has seen major increases in its resources and reserves across three of its operations.

The miner has upgraded its resources at Cannington, GEMCO, and across its Illawarra Coal operations.

This is welcome news for the miner, which has recorded a series of heavy blows to its share price.

It also recorded a 56 per cent fall YoY in its profits after tax.

At Cannington the miner has recorded a 21 per cent increase in estimated mineral resources, compared its previous figures.

This was due to the inclusion of areas previously excluded that were part of the transition from open cut to underground and along the perimeter of the potential open cut pit shell offset by depletion.

However, the miner was quick to state that the updated mineral resource estimates do not affect its ore reserve estimates.

South32 stated it now has 71 million tonnes of total resources, with approximately 170 grams of silver per tonne for its underground operations, and 21 million tonnes at a grade of 78 grams of silver per tonne for its open cut operations.

This is mixed news for the miner, as silver is currently at a five year low due to the strong US dollar, but an expected shortage due to lower production rates in the near term is forecast to drive up the metal’s price, and outperform gold in relative terms.

At GEMCO, it has upgraded its mineral resources from indicated to measured, although it has downgraded some ore reserves from proved to probable.

“The upgrading of mineral resources is a result of additional drilling in areas previously classified as indicated resources,’ South32 said in a company statement.

“Some of the measured resources were converted to probable to reflect uncertainty in areas where there was a difference of more than 10 per cent between the ‘grade control model’ ore volumes and ‘mineral resource model’ ore volumes.”

In terms of coal, it has upgraded its reserves after it obtained approvals for the mining of longwall panels 901-904.

At the Appin coal mine it now has a combined measured, indicated, and inferred resource of 696 million tonnes; at West Cliff there is a total resources of 105 million tonnes; at Dendrobium the miner recorded 285 million tonnes; while at Cordeaux is has approximately 199 million tonnes.