The South32 Ltd (ASX: S32) share price is pushing higher in morning trade following the release of the diversified miner's first half production update.
At the time of writing the South32 share price is up 1.2% to $3.37.
How did South32 perform in the first half?
During the second quarter the company's strong production performance continued leading to record ore production at its Australia Manganese operation in the first half.
Another highlight was its metallurgical coal production during the half. South32 achieved production of 3,082kt, up 140% on the prior corresponding period.
This was ahead of expectations and has led to management increasing its full year Illawarra metallurgical coal production guidance by 7%. All other guidance for FY 2019 remains unchanged.
CEO Graham Kerr advised "We achieved a strong quarter of production, maintaining full year guidance for all operations with the exception of Illawarra Metallurgical Coal where improved longwall performance has underpinned a seven per cent increase to our prior estimate."
Before adding: "We achieved record production at Australia Manganese as our PC02 circuit continued to exceed its design capacity, delivering additional tonnes into a strong market."
During the half South32 benefitted from favourable commodity price movements in comparison to the prior corresponding period. For example, the Worsley Alumina price was up 29% and the Brazil Alumina price increased 36%. In addition to this, export coal, manganese ore, and metallurgical coal prices were up approximately 10%.
This appears to have put South32 in a solid position to deliver another strong first half result and increase its interim dividend.
Should you invest?
I think South32 is a quality option for investors looking for exposure to the resources sector.
While I would still choose BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) ahead of it, I do think it is a great alternative due to its world class operations which are generating significant free cash flows.
