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LON - Lonmin Plc - Third Quarter 2010 Production Report & Interim Management

Release Date: 22/07/2010 08:00
Code(s): LON
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LON - Lonmin Plc - Third Quarter 2010 Production Report & Interim Management Statement 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") 22 July 2010 Lonmin Plc Third Quarter 2010 Production Report & Interim Management Statement Lonmin Plc, ("Lonmin" or "the company") today announces its production report and interim management statement for the three and nine months to 30 June 2010 (unaudited). Overview This quarter has seen us deliver increased output at our Marikana underground operations as we continue to see operational improvements. Year to date our underground tonnage is up on the comparable prior year period whilst metal in concentrate is at the same level as last year as the increased ounces from our underground operations have offset the impact of the operations closed last year. Q3 2010 Production Our underground mining operations at Marikana produced 2.6 million tonnes during the third quarter of the 2010 financial year, an increase of 10.2% from the third quarter of the 2009 financial year. This was mainly due to an increase in production during the quarter from Hossy and Saffy which continued to ramp up and increased production by 40.9%, to 0.5 million tonnes, over the prior year period. Sequentially output from those shafts increased by 11.7% quarter on quarter. The increase in the conventional mining tonnage was some 0.1 million tonnes or 4.8%. The impact of Section 54 shut downs was around 109,000 tonnes in lost production during the quarter mainly at our K3 shaft. This compares to a loss in production during the same period last year of around 160,000 tonnes. Pandora underground production showed a quarter on quarter increase of 10.3% and increased by 30.9% from the prior year period, whilst production at the Merensky opencast pit at Marikana has commenced and is beginning to ramp up. Total tonnes milled in the quarter were flat year on year, at 2.8 million tonnes but showed an increase of 9.8% from 2.5 million tonnes milled in the second quarter of the 2010 financial year. Platinum in concentrate from the Marikana operations was 163,311 saleable ounces during the third quarter of 2010, an increase of 16.3% from the prior year period and an increase of 5.6% quarter on quarter. This was due to achieving another excellent quarter of concentrator recoveries. In total, the concentrators produced 169,614 saleable ounces of Platinum in concentrate for the quarter, a 10.9 % increase from the third quarter of the prior year. Underground and overall concentrator recoveries increased to 85.1% and 85.0% from 80.5% and 79.0% respectively year on year. Sequentially recoveries have been very consistent at 84% to 85% with each quarter being much higher than the equivalent period last year. This improvement in our performance on a quarter by quarter basis is pleasing and demonstrates the success of the rigorous approach we have taken on batch milling the right ore through the appropriate concentrators, recognition of the importance of regular plant maintenance as well as the continued benefits from our concentrator optimisation programme. Our underground milled head grade increased marginally to 4.6 grammes per tonne (5PGE + Au) from 4.57 grammes per tonne in the prior year period whilst overall head grade increased by 4.1% year on year to 4.55 grammes per tonne (5PGE + Au). Underground milled head grade declined by 3.0% from 4.74 grammes per tonne quarter on quarter due to an increase in the percentage of Merensky ore milled and some lower grade development ore arising from our UG2 operations. As previously announced, the Number one furnace suffered a setback in May 2010 during its recommissioning following a matte run out on 30 March 2010. Following its repair, the Number one furnace was recommissioned and has been performing steadily for over one month now. The Pyromet furnaces, which have around 40% of the Number one furnace capacity, have been operating since 30 March 2010. The Number one furnace incident has impacted refined metal production and metal sales in the third quarter of the 2010 financial year. Consequently total refined production in the third quarter of the 2010 financial year was 91,952 ounces of Platinum and 194,234 ounces of PGMs, a decrease of 46.7% and 39.5% respectively from the third quarter of the 2009 financial year. Metal sales during the third quarter of the 2010 financial year also decreased significantly from the prior year to 91,952 ounces of Platinum and 192,507 ounces of PGMs. Nine Month Production Total tonnes mined during the first nine months of the 2010 financial year were 7.9 million tonnes, a decrease of 0.2 million tonnes from 2009, reflecting the closure in 2009 of the opencast and Limpopo operations. During the period we mined 7.7 million tonnes from the Marikana underground operations, an increase of 1.6% in the nine month period of the 2010 financial year, when compared against the same period in 2009. The impact of Section 54s shut downs on the nine month period in 2010 financial year has been a loss of around 258,000 tonnes. This compares to around 316,000 tonnes for the same period last year. Total tonnes milled during the first nine months of the 2010 financial year declined by 8.2% to 7.9 million tonnes when compared to the same period in the prior year due to the impact of the closure of Limpopo and opencast during 2009. Marikana underground tonnes milled were marginally up on last year. The concentrators produced a total of 491,478 saleable ounces of Platinum in concentrate in the nine months, a marginal year on year increase. Overall concentrator recoveries improved significantly during the first nine months of the 2010 financial year, to 84.6% from 79.7% in the same period in 2009. During the nine month period to 30 June 2010 underground head grade improved by 2.7% to 4.69 grammes per tonne (5PGE + Au) as a result of cleaner mining and less development ore particularly at Hossy and Saffy. Total refined production for the first nine months of the 2010 financial year was 383,873 ounces of Platinum and 781,385 ounces of total PGMs, a decrease of 21.8% and 15.7% respectively when compared to the same period in 2009. This reflects the impact of the Number 1 furnace incidents. Final metal sales for the nine months were 383,874 ounces of Platinum and 786,036 ounces of total PGMs, a decrease of 21.7% and 13.6% respectively. Overall During the quarter Shanduka purchased 50.03% of Incwala, our Black Economic Empowerment partner and Lonmin provided a loan to Shanduka of to help facilitate this transaction. The resultant cash outflow of approximately GBP150 million was fully funded by a placing undertaken on 10 May 2010. The quarter by quarter improvement in underground mining tonnes when compared to last year gives us confidence that, absent material safety stoppages, we will have a strong quarter four, well up on last year. This combined with good concentrator recoveries should lead to a material increase in underground metal in concentrate output when compared to last year, indicating the turnaround in Lonmin`s mining division is well underway. In addition our opencast operation will continue to ramp up and in total we fully expect metal in concentrate to exceed last years level. As stated in our announcement of 24 May we have decided to toll refine and sell some part processed Platinum ounces due to the need to rundown concentrate stockpiles given that the smelter will be down in November/December for a redesign and rebuild. On this basis, we continue to expect to meet our sales target of 700,000 Platinum ounces. The cost of the toll refining and selling in process inventory is expected to be around $17.5 million. The incremental cost incurred does not form part of our cost guidance for the year. ENQUIRIES: Investors / Analysts: Tanya Chikanza +44 (0) 207 201 6007 Head of Investor Relations Media: Cardew Group +44 (0) 207 930 0777 Rupert Pittman/Jamie Milton Financial Dynamics +27 (0) 21 487 9000 Dani Cohen / Ravin Maharaj 3 3 9 9
months months months months to 30 to 30 to 30 to 30 Jun Jun Jun Jun 2010 2009 2010 2009
Tonnes Marikana Underground - 000 2,584 2,344 7,726 7,602 mined total Underground - 000 2,088 1,992 6,364 6,646 conventional
Underground - 000 496 352 1,362 956 Hossy & Saffy1
Opencast 000 84 4 91 234 Total 000 2,668 2,348 7,817 7,836 Limpopo Underground 000 - - - 87 Total 000 - - - 87
Pandora Underground 000 43 33 120 104 attributa ble2 Opencast 000 - 38 - 148
Total 000 43 70 120 252 Lonmin Underground 000 2,626 2,377 7,846 7,794 Platinum Opencast 000 84 42 91 381
Total 000 2,711 2,419 7,937 8,175 Tonnes Marikana Underground 000 2,614 2,348 7,513 7,472 milled3 Opencast 000 68 243 129 438 Total 000 2,682 2,591 7,642 7,910 Limpopo Underground 000 - - - 92 Total 000 - - - 92
Pandora4 Underground 000 99 77 265 245 Opencast 000 - 121 - 372 Total 000 99 198 265 617 Lonmin Underground 000 2,712 2,425 7,779 7,809
Platinum Head grade5 g/t 4.60 4.57 4.69 4.57 Recovery % 85.1% 80.5% 84.7% 80.7% rate6
Opencast 000 68 365 129 810 Head grade5 g/t 2.51 3.03 2.25 3.94 Recovery % 78.9% 63.8% 63.8% 68.2% rate6
Total 000 2,780 2,789 7,908 8,618 Head grade5 g/t 4.55 4.37 4.65 4.51 Recovery % 85.0% 79.0% 84.6% 79.7% rate6
3 3 9 9 month months months months s to 30 to 30 to 30 to 30
Jun Jun Jun Jun 2010 2009 2010 2009 Metals in Marikan Platinum oz 163,3 140,42 473,91 449,04 concentra a 11 2 4 0 te7 Palladium oz 76,92 65,050 222,09 208,16 2 7 0 Gold oz 4,067 3,557 10,557 10,615
Rhodium oz 22,35 19,473 66,152 62,473 0 Ruthenium oz 35,25 29,993 102,15 96,447 9 2
Iridium oz 7,683 6,526 22,318 21,045 Total PGMs oz 309,5 265,02 897,19 847,78 92 1 0 0 Nickel8 MT 809 626 2,085 1,946
Copper8 MT 493 402 1,288 1,227 Limpopo Platinum oz - - - 3,770 Palladium oz - - - 3,331 Gold oz - - - 243
Rhodium oz - - - 487 Ruthenium oz - - - 688 Iridium oz - - - 159 Total PGMs oz - - - 8,679
Nickel8 MT - - - 76 Copper8 MT - - - 54 Pandora Platinum oz 6,303 12,455 17,564 38,209 3
Palladium oz 2,991 5,548 8,267 17,149 Gold oz 44 91 121 294 Rhodium oz 987 1,755 2,769 5,320 Ruthenium oz 1,533 2,585 4,225 7,802
Iridium oz 257 499 712 1,470 Total PGMs oz 12,11 22,934 33,658 70,244 3 Nickel8 MT 10 12 27 37
Copper8 MT 6 8 15 22 Lonmin Platinum oz 169,6 152,87 491,47 491,01 Platinu 14 8 8 9 m
Palladium oz 79,91 70,598 230,36 228,64 3 4 0 Gold oz 4,110 3,649 10,678 11,152 Rhodium oz 23,33 21,228 68,920 68,281
6 Ruthenium oz 36,79 32,578 106,37 104,93 2 7 6 Iridium oz 7,941 7,025 23,030 22,675
Total PGMs oz 321,7 287,95 930,84 926,70 06 5 8 3 Nickel8 MT 819 638 2,111 2,059 Copper8 MT 499 410 1,303 1,303
3 3 9 9 month months months months s to 30 to 30 to 30 to 30
Jun Jun Jun Jun 2010 2009 2010 2009 Metallurg Lonmin Platinum oz 91,92 172,13 383,67 490,04 y refined 8 6 0 0 Metal Product ion12 Palladium oz 57,23 79,164 207,52 226,55
0 2 7 Gold oz 3,080 5,202 10,517 13,849 Rhodium oz 16,82 20,062 59,769 64,750 3
Ruthenium oz 19,62 37,821 92,370 110,77 1 3 Iridium oz 3,899 5,589 24,321 18,068 Total PGMs oz 192,5 319,97 778,16 924,03
81 4 9 7 Toll Platinum oz 25 438 204 754 refined metal
product ion Palladium oz 26 206 89 206 Gold oz - 10 - 10
Rhodium oz 1 422 810 994 Ruthenium oz 1,242 - 1,754 1,009 Iridium oz 360 - 360 184 Total PGMs oz 1,654 1,076 3,216 3,157
Total Platinum oz 91,95 172,57 383,87 490,79 refined 2 4 3 4 PGMs Palladium oz 57,25 79,370 207,61 226,76
6 1 3 Gold oz 3,080 5,212 10,517 13,859 Rhodium oz 16,82 20,484 60,578 65,745 4
Ruthenium oz 20,86 37,821 94,124 111,78 4 2 Iridium oz 4,259 5,589 24,681 18,252 Total PGMs oz 194,2 321,05 781,38 927,19
34 0 5 4 Base Nickel9 MT 560 764 2,110 2,395 metals Copper9 MT 274 438 1,178 1,517
Sales Refined Platinum oz 91,95 178,48 383,87 492,15 Metal 2 6 4 7 Sales
Palladium oz 54,11 79,150 204,46 226,33 3 8 4 Gold oz 2,718 4,049 10,131 13,368 Rhodium oz 16,14 20,809 63,447 59,548
6 Ruthenium oz 22,34 37,970 98,219 105,47 8 1 Iridium oz 5,231 5,760 25,898 18,260
Total PGMs oz 192,5 326,22 786,03 915,13 07 5 6 7 Concent Platinum oz - 8 - (1,810 rate )
and other10 Palladium oz - 4 - (3,218 )
Gold oz - - - - Rhodium oz - 1 - 1 Ruthenium oz - 2 - 2 Iridium oz - - - -
Total PGMs oz - 14 - (5,025 ) Lonmin Platinum oz 91,95 178,49 383,87 490,34 Platinu 2 4 4 7
m Palladium oz 54,11 79,154 204,46 223,11 3 8 7 Gold oz 2,718 4,049 10,131 13,368
Rhodium oz 16,14 20,810 63,447 59,549 6 Ruthenium oz 22,34 37,972 98,219 105,47 8 3
Iridium oz 5,231 5,760 25,898 18,260 Total PGMs oz 192,5 326,23 786,03 910,11 07 9 6 2 Nickel9 MT 410 986 1,795 2,354
Copper9 MT 282 362 1,288 1,268 3 3 9 9 month months months months s
to 30 to 30 to 30 to 30 Jun Jun Jun Jun 2010 2009 2010 2009 Average Platinu $/o 1,595 1,148 1,514 1,020 prices m z Palladi $/o 481 234 422 207 um z Gold $/o 1,136 927 1,128 888
z Rhodium $/o 2,592 1,354 2,398 1,546 z Rutheni $/o 214 70 168 104
um z Iridium $/o 614 388 460 391 z Basket price of $/o 1,172 798 1,093 735
PGMs11 z Basket price of R/o 8,884 6,592 8,203 6,844 PGMs11 z Nickel9 $/M 22,00 12,839 17,249 14,514
T 2 Copper9 $/M 7,244 7,075 6,598 6,351 T
Exchange Average rate for R/$ 7.53 8.43 7.49 9.41 Rates period13 Closing R/$ 7.66 7.72 7.66 7.72 rate
Notes: 1. Hossy and Saffy are replacement/growth shafts in ramp up. Hossy is fully mechanised whilst Saffy has conventional stoping but mechanised development. In previous production reports this section showed all M&A/Hybrid mining. All comparatives have been restated.
2. Pandora 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. 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). 6. Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag).
7. Metals in concentrate include metal derived from slag processing and have been calculated at industry standard downstream processing losses to present produced saleable ounces.
8. Corresponds to contained base metals in concentrate. 9. 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. 10. Concentrate and others sales essentially relates to BMR concentrate and BMR/PMR residues. 11. Basket price of PGMs is based on the revenue generated from the actual PGMs (5PGE + Au) sold in the period. 12. Lonmin refined metal production and sales include an estimated 3koz saleable ounces of Platinum produced from toll refining third party concentrate in Q3 (2009 - nil). 13. Exchange rates are calculated using the market average daily closing rate over the course of the period. Date: 22/07/2010 08:00:06 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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