South32 boss Graham Kerr is upbeat on the potential to stretch out operations at the long-running Cannington underground mine, including the option of an open pit.
The chief executive officer was commenting after the company released its full-year result, outlining reduced mining volumes at the North-West Queensland lead-zinc-silver site over the next five years due to complex underground conditions.
Main image: Cannington headframe
While Cannington had been in operation 27 years and was becoming more complex to mine as time went by, Mr Kerr said it still had a very healthy EBITDA margin and was a strong cashflow generator.
He was taking a more optimistic view of the site’s open pit potential than 12 months to 18 months ago due to some the metallurgical work rolling out, and also pointed to the ability to cut more costs out of the business and further extend the underground reserve life.
Looking at the underground mining reserve life, he said it had been pinned at five years this time last year and the company was now talking about six years.
“But there is a potential I think to squeeze another couple of years on top of that six out of the underground,” he said.
Mr Kerr said the company had also been looking into lower-grade material sitting in stockpiles and various parts of the open pit and underground shells at Cannington.
That work flagged the potential to extract lower grade material which had previously been viewed as challenging, he said.
“So I think there’s actually probably more hope in the open pit than I thought there was probably 12 to 18 months ago,” Mr Kerr said.
“I think it’s still very dependent on silver price and we don’t take today’s spot silver price and take it forward to make our economic justification.”
He was questioned in an investor call following yesterday’s FY25 results presentation on whether the work the company was undertaking was an attempt to sweeten up the asset for a potential sale or demerger.
Mr Kerr described Cannington as a core asset for South32.
“If you think about the transition in Cannington over the last couple of years, we’ve gone from the shafts to trucking and then we’ve gone to far more stopes.
“So I think this is a natural evolution of that work plan that’s been in place for a period of time.
“I would certainly say we see it as an attractive asset, but I’ll be open like everything else in the portfolio – from Taylor to Hillside to Worsley to Cannington – everything’s for sale at the right price.
“If someone’s willing to pay us more than we think it’s worth, absolutely we’ll sell it.”