** Shares of South32 fall as much as 1.6% to A$3.640

** Diversified miner reports 61% drop in Q1 manganese production to 597,000 wmt

** However, co says net debt fell by $723 mln to $39 mln after sale of Illawarra metallurgical coal ops

** S32 reiterates FY25 production forecasts across all operations

** Stock up 11.1% YTD, as of last close

(Reporting by Shivangi Lahiri in Bengaluru)

((shivangi.lahiri@thomsonreuters.com))