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LON - Lonmin Plc - Second Quarter and First Half 2009

Release Date: 23/04/2009 08:12
Code(s): LON
Wrap Text

LON - Lonmin Plc - Second Quarter and First Half 2009 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") 23 April 2009 Lonmin Plc Second Quarter and First Half 2009 Production Report Lonmin Plc, ("Lonmin" or "the company"), the world`s third largest Platinum producer, today announces its production report for the three months and six months to 31 March 2009 (unaudited). Q209 Production Total tonnes mined for the second quarter of the 2009 financial year were 2.7 million, an 8% decline year-on-year. This was due to the planned closures of our Marikana opencast operations and our Baobab shaft at Limpopo. Our underground Marikana mining operations produced 2.6 million tonnes during the second quarter of the 2009 financial year, a 7% increase from the same period last year, when production was impacted by the Eskom power outage in January 2008. The increase in production from the prior year period was supported by an improved performance from our conventional operations, which was achieved despite the disruption caused by the significant restructuring programme being carried out during the period. Production at Saffy and Hossy shafts continued to ramp up, whilst underground ore reserve development at Marikana continued to improve. Our safety performance remained strong, with LTIFR at the end of 31 March 2009 improving 6% from the 2008 financial year. However, we regrettably suffered two fatalities during the quarter. Total tonnes milled in the quarter increased 2% year-on-year to 2.8 million tonnes, reflecting increased production from Marikana and Pandora underground mining operations, and exceeded total tonnes mined, due to the milling of some opencast stock piles in the period. The remainder of these opencast stock piles and the further opencast tonnes from Pandora will be processed during the second half of the 2009 financial year. The concentrators produced 164,909 saleable ounces of Platinum in concentrate for the quarter, a 5% increase from the second quarter in the 2008 financial year, reflecting increased production from underground Marikana operations and Pandora. Underground and overall concentrator recoveries improved to 81.4% and 80.6% respectively from the first quarter of the 2009 financial year, when underground and overall recoveries were 80.2% and 79.4% respectively. Overall milled head grade was up 2% year-on-year to 4.68 grammes per tonne (5PGE+Au), whilst underground milled head grade increased marginally to 4.69 grammes per tonne (5PGE+Au). Encouragingly, underground head grade improved 5% from the first quarter of the 2009 financial year, reflecting in part the impact of management actions taken to tackle the unplanned dilution identified in the first quarter of 2009. Refined production for the second quarter was 185,284 ounces of Platinum and 362,326 ounces of total PGMs, an increase of 45% and 41% respectively from the second quarter of the 2008 financial year. Metal sales during the second quarter of the 2009 financial year were 185,651 ounces of Platinum and 355,069 ounces of PGMs, increases of 30% and 26% respectively from the prior year period. This growth in refined production and sales partly reflected the improved contribution from our Marikana underground operations. Furthermore, the Process Division delivered an excellent performance during the second quarter and, ahead of our expectations, it processed the vast majority of the inventory built up during the planned re-build of the Number One furnace which tapped matte on 13 January 2009. Refined production and sales in the prior year period were more significantly impacted by a planned inspection and repair of the Number One furnace, following the Eskom power outage, which caused a build up of metal in process at that time. H109 Production Total tonnes mined during the first half of the 2009 financial year were 5.8 million tonnes, a 3% decline from 2008. This was due to the planned cessation of production at our Marikana opencast operations at the end of the first quarter of the 2009 financial year and production at our Baobab shaft at Limpopo being impacted by the winding down of the operation towards care and maintenance, as well as a 21 day wage related strike at Limpopo in the first quarter of the 2009 financial year. In the first six months of the 2009 financial year we mined a total of 5.3 million tonnes of ore from our core underground Marikana operations, an increase of 7% on the same period last year. This was due to an improved performance from our conventional sections with production rising in both the first and second quarters of the 2009 financial year from the same periods in 2008. Production from Saffy and Hossy shafts also increased during the first half of the 2009 financial year, from 2008. The concentrators produced a total of 338,142 saleable ounces of Platinum in concentrate in the first half of the 2009 financial year, a 3% year-on-year decline, mainly as a result of the planned operational changes at our Marikana opencast and Limpopo operations, as mentioned above. Overall concentrator recoveries improved during the first half of the 2009 financial year to 80.0% from 78.8% in the first half of 2008, partly due to reduced levels of low grade opencast stock piles being processed during the first half of the 2009 financial year compared to the prior year period. However, during the first half of the 2009 financial year, underground recoveries fell to 80.8%, from 81.5% in the first half of the 2008 financial year, partly as a result of undertaking extensive maintenance on some of our Marikana concentrators in the first quarter of the 2009 financial year. Overall milled head grade improved 2% year-on-year to 4.58 grammes per tonne (5PGE+Au), mainly due to higher levels of low grade opencast stock piles processed during the first half of the 2008 financial year which had an adverse impact on grade at that time. Underground milled head grade was 3% lower year-on-year at 4.57 grammes per tonne (5PGE+Au) as a result of an increased percentage of development ore coming from Hossy and Saffy and unplanned dilution on the UG2 reef horizon, as well as a lack of flexibility in face availability on the Merensky reef horizon, where some localised lower grade areas were encountered, particularly during the first quarter. However, management actions initiated to tackle the latter two issues have already started to have a positive impact, as evidenced by the sequential improvement in underground head grade delivered in the second quarter of the 2009 financial year. Total refined production for the first half of the 2009 financial year was 318,219 ounces of Platinum and 606,145 of total PGMs, both up 13% from the same period in 2008, partly reflecting the improvement from our core Marikana underground operations during the first half of the 2009 financial year. In addition, refined production during the first half of the 2008 financial year was adversely impacted by a build up of metal in process, partly due to the planned inspection and repair of the Number One furnace, following the Eskom power outage in January 2008. During the first half of the 2009 financial year, our Process Division delivered an excellent performance and processed the vast majority of the inventory built up during the planned re-build of the Number One furnace in the first quarter. Final metal sales for the first half of the 2009 financial year were 311,853 ounces of Platinum and 583,873 ounces of total PGMs, up 8% and 5% respectively on the same period in 2008. 2009 Sales Guidance We maintain our sales guidance for the 2009 financial year of around 700,000 Platinum ounces. Platinum sales in the first half of the 2009 financial year were around 45% of the full year Platinum sales target for our core Marikana operations, which we first published in November 2008, and this was ahead of our initial expectations for the period. The key driver of this was the performance of the Process Division, where metal in process inventory was drawn down faster than had been expected following the Number One furnace re-build during the first quarter of the 2009 financial year. For the second half of the 2009 financial year, management will be focused on minimising the possible disruption resulting from the execution of our significant restructuring programme, particularly as crews are redeployed around the Marikana property, and the closure of a small uneconomic decline shaft and a further five uneconomic half levels at Marikana as part of this restructuring programme. In addition, the continuing ramp up of Saffy shaft is a key area of focus. It is anticipated that any impact of these factors on production and sales will be compensated for by the normalising of metal in process inventory from the Process Division. Update on restructuring Further to our announcement on 24 February 2009, we have now essentially completed a major restructuring exercise at our Marikana and Limpopo operations. Further details, including expected annual cost savings and one- off costs, will be disclosed at our Interim Results on 11 May 2009. Debt re-financing We have completed a $575m debt re-financing package, comprising a $250m revolving credit facility and a $150m amortising term loan both maturing in November 2012 in the UK and a $175m revolving credit facility in South Africa, maturing in November 2010. This re-financing significantly lengthens the tenure of the company`s banking facilities. ENQUIRIES: Investors / Analysts: Rob Gurner +44 (0) 207 201 6050 Head of Investor Relations Media: Cardew Group +44 (0) 207 930 0777 Anthony Cardew / Rupert Pittman Financial Dynamics +27 (0) 21 487 9000 Dani Cohen / Ravin Maharaj
3 3 6 months 6 months months to months to to 31st to 31st 31st March 31st
March March March 2009 2008 2009 2008 Tonnes Marikana Undergrou 000 2,184 2,174 4,487 4,349 mined nd - conventio nal Undergrou 000 400 252 771 552 nd - M&A1
Undergrou 000 2,584 2,426 5,258 4,901 nd - total Opencast 000 13 255 229 624
Total 000 2,598 2,681 5,488 5,525 Limpopo Undergrou 000 0 126 87 264 nd Opencast 000 0 0 0 0
Total 000 0 126 87 264 Pandora Undergrou 000 37 34 71 68 attri nd butable2
Opencast 000 41 54 110 101 Total 000 78 88 181 169 Lonmin Undergrou 000 2,621 2,586 5,417 5,233 Platinum nd
Opencast 000 55 309 339 725 ERROR Total 000 2,676 2,895 5,756 5,958 Tonnes Marikana Undergrou 000 2,462 2,335 5,124 4,844 milled3 nd Opencast 000 78 157 194 719 Total 000 2,540 2,491 5,319 5,563 Limpopo Undergrou 000 0 78 92 207
nd Opencast 000 0 0 0 0 Total 000 0 78 92 207 Pandora4 Undergrou 000 88 78 168 159
nd Opencast 000 126 64 251 192 Total 000 214 142 419 351 Ore Undergrou 000 0 0 0 0
purchases5 nd Opencast 000 0 0 0 30 Total 000 0 0 0 30 Lonmin Undergrou 000 2,550 2,491 5,384 5,210
Platinum nd Head g/t 4.69 4.68 4.57 4.72 grade6 Recovery % 81.4% 81.5% 80.8% 81.5%
rate7 Opencast 000 205 221 445 941 Head g/t 4.61 3.62 4.68 3.18 grade6
Recovery % 71.3% 54.6% 70.6% 56.8% rate7 Total 000 2,754 2,711 5,829 6,151 Head g/t 4.68 4.59 4.58 4.48
grade6 Recovery % 80.6% 79.8% 80.0% 78.8% rate7 3 3 6 6
months months months months to 31st to 31st to 31st to 31st March March March March 2009 2008 2009 2008
Metals in Marikana Platinum oz 151,168 147,414 308,617 319,543 concentrate 8 Palladium oz 70,285 67,814 143,110 146,474
Gold oz 3,444 3,851 7,057 8,522 Rhodium oz 21,191 20,092 43,000 43,328 Ruthenium oz 32,617 30,828 66,454 66,680 Iridium oz 7,110 6,573 14,520 13,945
Total oz 285,815 276,572 582,759 598,492 PGMs Nickel9 MT 642 685 1,321 1,493 Copper9 MT 405 413 825 906
Limpopo Platinum oz 0 3,062 3,770 8,589 Palladium oz 0 2,618 3,331 6,493 Gold oz 0 213 243 620 Rhodium oz 0 357 487 894
Ruthenium oz 0 498 688 1,302 Iridium oz 0 116 159 274 Total oz 0 6,864 8,679 18,172 PGMs
Nickel9 MT 0 67 76 175 Copper9 MT 0 46 54 120 Pandora4 Platinum oz 13,742 6,698 25,754 17,825 Palladium oz 6,194 3,075 11,601 8,148
Gold oz 110 50 202 133 Rhodium oz 1,909 962 3,566 2,478 Ruthenium oz 2,789 1,413 5,216 3,676 Iridium oz 515 239 971 615
Total oz 25,259 12,436 47,310 32,875 PGMs Nickel9 MT 13 10 25 25 Copper9 MT 8 4 15 11
Ore Platinum oz 0 104 0 937 purchases5 Palladium oz 0 (141) 0 793 Gold oz 0 (13) 0 74 Rhodium oz 0 25 0 83
Ruthenium oz 0 57 0 107 Iridium oz 0 10 0 25 Total oz 0 42 0 2,019 PGMs
Nickel9 MT 0 4 0 16 Copper9 MT 0 2 0 11 Lonmin Platinum oz 164,909 157,277 338,142 346,894 Platinum
Palladium oz 76,479 73,366 158,042 161,908 Gold oz 3,554 4,101 7,503 9,349 Rhodium oz 23,100 21,436 47,053 46,783 Ruthenium oz 35,406 32,796 72,358 71,765
Iridium oz 7,625 6,938 15,649 14,859 Total oz 311,074 295,914 638,748 651,558 PGMs Nickel9 MT 655 766 1,422 1,709
Copper9 MT 412 465 894 1,048 3 3 6 6 months months months months
to 31st to 31st to 31st to 31st March March March March 2009 2008 2009 2008 Metallurgy Lonmin Platinum oz 184,969 128,124 317,904 282,650 refined metal production Palladium oz 86,637 65,956 147,393 128,140
Gold oz 5,151 6,042 8,647 9,563 Rhodium oz 25,939 21,179 44,688 42,437 Ruthenium oz 47,614 31,232 72,952 62,763 Iridium oz 9,935 5,284 12,479 10,577
Total oz 360,245 257,816 604,063 536,128 PGMs Toll Platinum oz 315 0 315 0 refined
metal production Palladium oz 0 0 0 0 Gold oz 0 0 0 0
Rhodium oz 573 0 573 0 Ruthenium oz 1,009 0 1,009 0 Iridium oz 184 0 184 0 Total oz 2,081 0 2,081 0
PGMs Total Platinum oz 185,284 128,124 318,219 282,650 refined PGMs
Palladium oz 86,637 65,956 147,393 128,140 Gold oz 5,151 6,042 8,647 9,563 Rhodium oz 26,512 21,179 45,261 42,437 Ruthenium oz 48,623 31,232 73,961 62,763
Iridium oz 10,119 5,284 12,663 10,577 Total oz 362,326 257,816 606,145 536,128 PGMs Base Nickel10 MT 869 508 1,632 1,323
metals Copper10 MT 579 286 1,079 795 Sales Refined Platinum oz 187,250 140,875 313,671 284,731 metal
sales Palladium oz 92,439 70,662 147,184 133,991 Gold oz 5,940 4,916 9,318 9,208 Rhodium oz 21,636 21,818 38,739 43,537
Ruthenium oz 41,833 33,374 67,501 65,941 Iridium oz 9,392 6,088 12,500 11,720 Total oz 358,490 277,732 588,913 549,127 PGMs
Concentrate Platinum oz (1,600) 2,478 (1,818) 4,233 and other11 Palladium oz (1,822) 1,095 (3,222) 1,833 Gold oz 0 55 0 97
Rhodium oz 0 534 0 758 Ruthenium oz 0 628 0 990 Iridium oz 0 137 0 240 Total oz (3,421) 4,926 (5,039) 8,150
PGMs Lonmin Platinum oz 185,651 143,352 311,853 288,963 Platinum Palladium oz 90,617 71,756 143,962 135,823
Gold oz 5,940 4,971 9,318 9,305 Rhodium oz 21,636 22,352 38,739 44,295 Ruthenium oz 41,833 34,002 67,501 66,931 Iridium oz 9,392 6,225 12,500 11,960
Total oz 355,069 282,658 583,873 557,277 PGMs Nickel10 MT 693 413 1,368 1,216 Copper10 MT 503 376 907 805
3 3 6 6 months months months months to 31st to 31st to 31st to 31st
March March March March 2009 2008 2009 2008 Prices Average Platinum $/o 991 1,734 947 1,578 z
Palladium $/o 195 431 192 396 z Gold $/o 901 908 871 853 z
Rhodium $/o 1,099 7,853 1,650 7,121 z Ruthenium $/o 47 407 124 446 z
Iridium $/o 384 428 393 424 z Basket $/o 666 1,684 699 1,558 price of z
PGMs12 Nickel10 $/M 16,285 23,374 15,721 27,235 T Copper10 $/M 6,953 8,042 6,062 6,936
T Exchange Average rate for R/$ 9.90 7.52 9.91 7.14 Rates period Closing rate R/$ 9.49 8.08 9.49 8.08 Notes: 1 M&A comprises ore produced by our fully mechanised shafts and from Saffy shaft, which is being transitioned to hybrid mining. 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 Metals in concentrate includes slag and have been calculated at industry standard downstream processing losses. 9 Corresponds to contained base metals in concentrate.
10 Nickel is produced and sold as nickel sulphate crystals or solution and the volumes shown correspond to contained metal. Copper is produced as refined product but typically at LME grade C.
11 Concentrate and other sales have been adjusted to a saleable ounces basis using standard industry recovery rates. 12 Basket price of PGMs is based on the revenue generated from the actual PGMs sold in the period. Date: 23/04/2009 08:12:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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