Wrap Text
Lonmin Plc (Incorporated in England and Wales)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
JSE code: LON
Issuer Code: LOLMI & ISIN: GB0031192486 ("Lonmin")
Third Quarter Production Report and Interim Management Statement
6 August 2008
Lonmin today announces its production report and interim management statement
for the three months and nine months to 30 June 2008 (unaudited).
Chief Executive, Brad Mills said "The effectiveness of our new Mining team is
already being demonstrated and the detailed plans now in place will continue to
improve performance. I am confident that we are now substantially better
equipped to exploit Lonmin`s unique and high quality PGM deposits."
Q3 Production
Metallurgical production for the third quarter was 188,350 ounces of Platinum
and 369,674 ounces of total PGMs, an increase of 8.2% and 13.1% respectively on
production through our Process Division for the third quarter of 2007. Sales
for the period were 180,270 ounces of Platinum and 345,887 ounces of PGMs.
At our interim results on 8 May 2008, we announced that we had hired a new
senior Mining management team led by Chris Sheppard. We also announced that
this team was implementing a number of initiatives to optimise our Mining
operations and increase efficiency, reliability and productivity. We are
starting to see the benefits of these initiatives with our mining operations
showing positive momentum in the third quarter delivering total tonnes mined of
3.2 million, an increase of 11.0% on the second quarter of the 2008 financial
year. Tonnages declined by 12.0% on the same period in the prior year as a
result of the continued impact of a number of safety related shutdowns
(including section 54 shutdowns following two fatal accidents), the slower than
anticipated ramp up of our mechanised shafts and our increased emphasis on
accelerating ore reserve development across the operations, with development
rates rising quarter on quarter.
The Marikana mining operations mined a total of 2.6 million tonnes from
underground up 7.0% on the second quarter of 2008. Tonnages declined by 10.0% on
the 2.9 million tonnes mined in the prior year period. Conventional underground
operations contributed 2.3 million tonnes of ore in the quarter an increase of
5.3% on the second quarter of the financial year and a decrease of 15.0% on the
2.7 million tonnes mined for the same period in 2007.
Production from our mechanised shafts continued to increase with 0.3 million
tonnes mined, an increase of 64.0% on the same period last year, contributing
around 12% of our underground production from Marikana.
The concentrators produced a total of 184,919 saleable ounces of Platinum in
concentrate for the quarter, an increase of 18.0% on the second quarter on 2008.
Output was down 15.2% on the third quarter of the 2007 financial year primarily
as a result of the lower throughput from the mines. Our improvement programmes
in the concentrators showed encouraging results with overall recoveries up to
79.9% from 75.6% and underground recoveries at 82.4% up from 79.3% for the prior
year period.
Nine Month Production
Total refined production for the nine months was 470,999 ounces of Platinum, a
decrease of 9.1% on the prior year period. This reflects the lower level of
throughput from the mines as well as the slower than anticipated release of
metal in process across the Process Division. With no toll smelting in the
period, production through our own processing facilities increased by 9.0%
versus the 433,561 Platinum ounces processed in the first nine months of 2007.
Final metal sales for the nine months were 469,233 ounces of Platinum and
903,163 ounces of total PGMs, broadly flat on the prior year.
We mined a total of 9.2 million tonnes of ore in the first nine months of the
year, a decline of 13% on the prior year period. Our Marikana operations
contributed 8.5 million tonnes, a 12% decrease on the same period in 2007 with
underground operations contributing 7.5 million tonnes. As previously reported
underground production was principally impacted by safety related stoppages, the
Eskom four day power outage in January, high levels of absenteeism particularly
in the first half of the financial year and the slower than anticipated ramp up
of our mechanised shafts.
Underground milled head grade was 4.65 grammes per tonne (5PGE+Au), 6.0% lower
than the prior year partly as a result of ore mix issues including the increased
percentage of lower grade development ore from the Marikana mechanised
shafts.Opencast milled head grade was 3.51 grammes per tonne (5PGE+Au), a
decline of 22.0% on the prior year as we milled more oxidised shallow material
due to the short term reduced percentage of UG2 ore in the mix.
The concentrators produced a total of 531,812 saleable ounces of Platinum in
concentrate for the nine months down 20.0% on the first nine months of the 2007
financial year reflecting the lower levels of throughput from the mines and
lower opencast pit grades. Overall recoveries improved to 79.2% from 77.3% on
the same period in 2007 and underground recoveries were up at 81.8% versus 80.7%
last year.
2008 Sales Guidance
Since the half year, the Mining Division`s forecast for metals in concentrate
for the 2008 financial year has reduced by around 10,000 saleable ounces of
Platinum principally as a result of safety related shutdowns including section
54 shutdowns experienced in the third quarter.
On 17 July 2008, we shut down our Merensky furnace following a matte run out
through one of the tap holes. Investigations into the incident indicated that a
matte build up had caused some damage to the inside of the furnace walls and, to
ensure the safety of the vessel, we have elected to rebuild the furnace box. We
currently expect to tap matte again from this furnace on 15 September 2008. In
order to mitigate the impact of the shutdown and repairs on production, we have
increased the power levels and throughput in the Number One furnace and are
utilising two of our Pyromet furnaces.
This incident coupled with the seven day power down of the Number One furnace,
which we announced on 30 June 2008, will result in the deferral of around 10,000
to 15,000 ounces of Platinum sales from the 2008 financial year to the 2009
financial year. These incidents have also impacted our ability to release all
of the metal in process (both from closing stock at the end of the 2007
financial year and the build-up of additional stocks during the year) that we
anticipated would flow through our system before the end of the financial year.
As a result of the timing issues around the release of metal in process, we now
estimate that Platinum sales for the 2008 financial year will be around the
current market consensus of circa 725,000 ounces of Platinum.
Other than as described above, and as noted in the press release this morning in
respect of the pre-conditional offer by Xstrata, there have been no material
events or transactions affecting Lonmin, and there has been no significant
change in the financial position or performance of the Group since 31 March 2008
to the date of this report.
Enquiries:
Alex Shorland-Ball +44 (0) 20 7201 6060
Vice President, Investor Relations & Communications
Disclaimer on Forward Looking Statements
This release contains statements that are forward looking, including statements
relating to metallurgical production, mining operations, efficiency initiatives
and our expectations regarding 2008 sales. Forward-looking statements are not
based on historical facts, but rather on current expectations and projections
about future events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. Often, but not always,
forward-looking statements may be identified by the use of forward-looking words
such as "plans", "expects" or "does not expect", "is expected", "is subject to",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could", "should",
"would", "might" or "will" be taken, occur or be achieved. Such statements are
qualified in their entirety by the inherent risks and uncertainties surrounding
future expectations. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Lonmin, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding Lonmin`s present and future business
strategies and the environment in which Lonmin will operate in the future. Among
the important factors that could cause Lonmin`s actual results, performance or
achievements to differ materially from those in the forward-looking statements
include, among others, levels of actual production during any period, levels of
demand and market prices, the ability to produce and transport products
profitably, the impact of foreign currency exchange rates on market prices and
operating costs, interest rates, operational problems, industry trends, labour
relations, political uncertainty and economic conditions in relevant areas of
the world, the actions of competitors and activities by governmental authorities
such as changes in taxation or regulation. Other than in accordance with its
legal or regulatory obligations (including under the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Services Authority), Lonmin
is not under any obligation and Lonmin expressly disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
3 3 9 months 9
months months to 30 months
to 30 to 30 June to 30
June June June
2008 2007 2008 2007
Tonnes Marikana Underground - 000 2,291 2,694 6,640 8,038
mined conventional
Underground - 000 305 186 857 422
M&A1
Underground - 000 2,596 2,880 7,497 8,460
total
Opencast 000 370 472 994 1,176
Total 000 2,966 3,352 8,491 9,636
Limpopo Underground 000 138 174 402 564
Opencast 000 0 0 0 0
Total 000 138 174 402 564
Pandora Underground 000 28 32 96 92
attributa
ble2
Opencast 000 77 82 178 232
Total 000 105 114 273 324
Lonmin Underground 000 2,762 3,086 7,995 9,115
Platinum
Opencast 000 447 554 1,172 1,408
ERROR Total 000 3,208 3,640 9,166 10,524
Tonnes Marikana Underground 000 2,622 2,834 7,466 8,415
milled3
Opencast 000 198 340 917 1,078
Total 000 2,820 3,173 8,383 9,493
Limpopo Underground 000 199 198 405 595
Opencast 000 0 0 0 0
Total 000 199 198 405 595
Pandora4 Underground 000 66 75 225 217
Opencast 000 147 194 338 530
Total 000 212 270 563 747
Ore Underground 000 0 3 0 75
purchases
5
Opencast 000 0 20 30 20
Total 000 0 23 30 95
Lonmin Underground 000 2,887 3,110 8,097 9,300
Platinum
Head grade6 g/t 4.54 4.94 4.65 4.96
Recovery rate7 % 82.4% 79.3% 81.8% 80.7%
Opencast 000 344 554 1,286 1,629
Head grade6 g/t 4.41 4.77 3.51 4.49
Recovery rate7 % 58.5% 54.0% 57.4% 55.3%
Total 000 3,231 3,665 9,382 10,929
Head grade6 g/t 4.52 4.92 4.50 4.89
Recovery rate7 % 79.9% 75.6% 79.2% 77.3%
3 months 3 months 9 months 9 months
to 30 to 30 to 30 to 30
June June June June
2008 Restated8 2008 Restated
8
2007 2007
Metals Marikana Platinum oz 165,757 192,751 485,300 589,855
in
conce-
ntrate9
Palladium oz 76,299 87,986 222,773 269,178
Gold oz 4,231 5,367 12,753 16,397
Rhodium oz 22,686 25,510 66,014 77,656
Ruthenium oz 35,236 40,237 101,915 124,191
Iridium oz 7,704 8,346 21,649 25,629
Total PGMs oz 311,913 360,196 910,404 1,102,90
6
Nickel10 MT 772 959 2,265 2,875
Copper10 MT 474 557 1,381 1,711
Limpopo Platinum oz 7,594 8,613 16,183 27,372
Palladium oz 6,357 5,784 12,850 18,867
Gold oz 460 783 1,080 2,231
Rhodium oz 990 953 1,884 2,908
Ruthenium oz 1,426 1,516 2,728 4,569
Iridium oz 315 327 589 1,049
Total PGMs oz 17,141 17,975 35,314 56,996
Nickel10 MT 146 180 321 596
Copper10 MT 109 119 228 404
Pandora4 Platinum oz 11,569 15,799 29,392 41,399
Palladium oz 5,236 7,223 13,384 19,219
Gold oz 96 142 229 368
Rhodium oz 1,583 2,110 4,061 5,817
Ruthenium oz 2,315 3,012 5,991 8,523
Iridium oz 421 695 1,036 1,893
Total PGMs oz 21,220 28,981 54,095 77,219
Nickel10 MT 13 18 38 48
Copper10 MT 7 9 18 26
Ore Platinum oz 0 1,018 937 3,693
purchases
5
Palladium oz 0 476 793 1,709
Gold oz 0 9 74 46
Rhodium oz 0 110 83 526
Ruthenium oz 0 128 107 798
Iridium oz 0 40 25 177
Total PGMs oz 0 1,782 2,019 6,949
Nickel10 MT 0 2 16 18
Copper10 MT 0 1 11 9
Lonmin Platinum oz 184,919 218,182 531,812 662,318
Platinum
Palladium oz 87,893 101,468 249,800 308,973
Gold oz 4,787 6,301 14,136 19,041
Rhodium oz 25,259 28,683 72,042 86,907
Ruthenium oz 38,977 44,893 110,742 138,082
Iridium oz 8,440 9,407 23,299 28,749
Total PGMs oz 350,274 408,935 1,001,83 1,244,07
0 1
Nickel10 MT 931 1,159 2,641 3,537
Copper10 MT 590 685 1,637 2,151
3 months 3 months 9 months 9 months
to 30 to 30 to 30 to 30
June June June June
2008 2007 2008 2007
Meta- Lonmin Platinum oz 188,350 174,128 470,999 433,561
llurgy refined
Metal
Productio
n
Palladium oz 91,871 77,402 220,011 193,983
Gold oz 5,213 5,720 14,775 13,275
Rhodium oz 25,932 21,972 68,369 52,991
Ruthenium oz 46,539 40,855 109,302 83,443
Iridium oz 11,669 6,694 22,246 19,533
Total PGMs oz 369,574 326,772 905,702 796,786
Toll Platinum oz 0 60,910 0 84,782
refined
metal
productio
n
Palladium oz 0 24,795 0 35,658
Gold oz 0 0 0 0
Rhodium oz 0 8,038 0 11,485
Ruthenium oz 0 13,331 0 18,740
Iridium oz 0 2,637 0 3,700
Total PGMs oz 0 109,712 0 154,365
Total Platinum oz 188,350 235,037 470,999 518,344
refined
PGMs
Palladium oz 91,871 102,198 220,011 229,641
Gold oz 5,213 5,720 14,775 13,275
Rhodium oz 25,932 30,010 68,369 64,476
Ruthenium oz 46,539 54,187 109,302 102,183
Iridium oz 11,669 9,332 22,246 23,233
Total PGMs oz 369,574 436,484 905,702 951,152
Base Nickel11 MT 960 1,502 2,282 3,106
metals
Copper11 MT 567 755 1,361 1,580
Sales Refined Platinum oz 179,803 202,096 464,533 475,287
Metal
Sales
Palladium oz 82,775 83,436 216,765 208,320
Gold oz 5,228 7,320 14,436 14,880
Rhodium oz 22,545 29,089 66,082 66,259
Ruthenium oz 44,704 46,684 110,644 103,176
Iridium oz 9,945 11,556 21,665 25,537
Total PGMs oz 345,000 380,181 894,127 893,459
Concentra Platinum oz 467 1,103 4,700 2,352
te and
other12
Palladium oz 189 613 2,022 1,109
Gold oz 10 (1,912) 107 125
Rhodium oz 71 157 829 203
Ruthenium oz 120 258 1,110 348
Iridium oz 30 42 270 64
Total PGMs oz 887 261 9,037 4,201
Lonmin Platinum oz 180,270 203,199 469,233 477,639
Platinum
Palladium oz 82,964 84,049 218,787 209,429
Gold oz 5,238 5,408 14,543 15,005
Rhodium oz 22,616 29,246 66,911 66,462
Ruthenium oz 44,824 46,942 111,754 103,524
Iridium oz 9,975 11,598 21,935 25,601
Total PGMs oz 345,887 380,442 903,163 897,660
Nickel11 MT 966 864 2,182 3,096
Copper11 MT 546 626 1,351 1,400
3 3 months 9 months 9 months
months to 30 to 30 to 30
to 30 June June June
June
2008 2007 2008 2007
Prices Average Platinum $/ 1,994 1,264 1,738 1,171
oz
Palladium $/ 437 362 412 340
oz
Gold $/ 883 662 864 624
oz
Rhodium $/ 9,350 6,028 7,874 5,631
oz
Ruthenium $/ 308 558 391 420
oz
Iridium $/ 405 413 416 402
oz
Basket price of $/ 1,820 1,309 1,658 1,190
PGMs13 oz
Nickel11 $/ 22,940 34,523 25,333 27,706
MT
Copper11 $/ 7,909 7,285 7,330 6,883
MT
Exchange Average rate for period R/ 7.76 7.07 7.34 7.20
Rates $
Closing R/ 7.85 7.01 7.85 7.01
rate $
Notes:
1 M&A comprises ore produced by our ultra low profile mechanised equipment.
2 JV attributable tonnes mined includes Lonmin`s share (42.5%) of the total
tonnes mined on the Pandora joint venture.
3 Tonnes milled excludes slag milling.
4 Lonmin purchases 100% of the ore produced by the Pandora joint venture for
onward processing which is included in downstream operating statistics.
5 Relates to the tonnes milled and derived metal in concentrate from third-
party ore purchases.
6 Head Grade is the grammes per tonne (5PGE + Au) value contained in the
tonnes milled and fed into the concentrator from the mines (excludes slag
milled).
7 Recovery rate in the concentrators is the total content produced divided by
the total content milled (excluding slag)
8 The metals in concentrate numbers for the prior year have been restated to
adjust for a measurement error, discovered during the fourth quarter in the
prior year, which occured at one of our concentrators during the 2007
financial year.
9 Metals in concentrate includes slag and have been calculated at industry
standard downstream processing losses.
1 Corresponds to contained base metals in concentrate.
0
1 Nickel is produced and sold as nickel sulphate crystals or solution and the
1 volumes shown correspond to contained metal. Copper is produced as refined
product but typically at LME grade C.
1 Concentrate and other sales have been adjusted to a saleable ounces basis
2 using standard industry recovery rates.
1 Basket price of PGMs is based on the revenue generated from the actual PGMs
3 sold in the period.
Date: 06/08/2008 17:55:01 Supplied by www.sharenet.co.za
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