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Global resources company, BHP Group Limited (ASX:BHP) has released its quarterly activities report which contains the operational review for the half year ended 31 December 2018. The company has reported that the Production in the first half of FY 2019 was broadly in line with the prior period despite planned maintenance and outages. As per the operational review, the production guidance for the FY19 is unchanged for petroleum, iron ore, metallurgical coal, and energy coal. However, the total copper production guidance is increased to lie between 1,645kt and 1,740 kt. In H1 FY19, the company's copper equivalent production was broadly unchanged, with volumes for the full year expected to be in line with last year.Â
As per the company, the productivity of H1 FY19, was impacted due to lower than expected volumes at Olympic Dam, Spence (fire at the electro-winning plant in September 2018, volume impact of 25 kt) and WAIO (train derailment in November 2018, volume impact of 4 Mt), with a total negative impact of approximately US$600 million. The company is currently reviewing its Productivity guidance for FY 2019, and it is expected that revised guidance will be provided in the December 2018 half-year financial results.
The company is expecting that the full year unit costs for all major assets will be in line with guidance which reflects stronger anticipated volumes in the second half of FY 2019. However, in H1 FY 2019, the unit costs were tracking above full-year guidance mainly due to the planned maintenance and production outages.
During the December quarter, the company completed the sale of its US shale assets. From the sales proceeds, the company returned US$5.2 billion to shareholders through a share buy-back program. The company is going to return further US$5.2 billion as a special dividend on 30 January 2019. Due to the net proceeds received from the sale of Onshore US, it is expected that the Investing cash inflow in H1 FY2019 will increase by around US$7,028 million.
In the announcement, the company also provided information about its mineral exploration activities. In H1 FY 2019, the Minerals exploration expenditure was US$81 million of which US$56 million was expensed. In September 2018, the company acquired an initial 6.1% stake in SolGold Plc which was later increased to 11.2% after the company acquired additional 100 million shares in SolGold, for an investment of US$59mn.
As at 31 December 2018, the company had 339,000 tonnes of outstanding copper sales that were revalued at a weighted average price of US$2.70 per pound. At the end of December 2018, the company had 5 major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$10.6bn over the life of the projects.
Meanwhile, in the last six months, the share price of the company has increased by 6.71 percent as on 21 January 2019. BHPâs shares traded at $32.850 (-1.054% intraday) with a market capitalization of circa $97.8 billion as on 22 January 2019 (AEST 1:29 PM).
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