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LON - Lonmin - Q1 2011 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")
27 January 2011
Lonmin Plc
Q1 2011 Production Report
& Interim Management Statement
Lonmin Plc ("Lonmin" or the "Company") today announces its production report for
the quarter to 31 December 2010 (unaudited) and Interim Management Statement.
Overview
Our operational performance in the first quarter of 2011 demonstrates continued
progress in mining as both tonnes mined and milled increased over the prior year
period, together with further progress in production of metals in concentrate
due to continuing improvements in the recovery rate. Although our refined
production was affected by the scheduled rebuild of the Number One furnace, it
was somewhat mitigated by toll refining.
Mining
Total tonnes mined in the first quarter of the 2011 financial year from our
Marikana underground operations were 2.8 million, up 200,000 tonnes and
representing a 7.8% increase from the prior year period. This increase can be
attributed to a number of factors. Firstly, the Karee, Middelkraal and Easterns`
mining units all increased their production from the prior year period. Karee`s
operations increased production by 196,000 tonnes, with a significant
contribution from K3; Middelkraal`s production also increased by 59,000 tonnes
as production at Saffy continued to ramp up, whilst Easterns increased
production by 57,000 tonnes, with a notable contribution from the E2 shaft.
These increases were offset by a 113,000 tonnes fall in production at Westerns
during the quarter due to the planned decline at Newman. The decrease in Section
54 safety shutdowns also contributed to the higher production in the quarter,
when compared to the prior year period. Newman was the only shaft to have a
Section 54 shutdown and lost 21,000 tonnes in production during the quarter,
compared to the prior year losses by all operations of 84,000 tonnes.
Production at our opencast operations continued to ramp up in the quarter to
193,000 tonnes, whilst the production at Pandora increased marginally to 39,000
tonnes. Overall, total tonnes mined were 15% up at 3.0 million tonnes against
the prior year period.
Concentrators
Total tonnes milled in the quarter increased over the prior year period by
17.4%, or 452,000 tonnes to 3.0 million tonnes, with underground tonnes milled
increasing by 11% to 2.8 million tonnes when compared to the prior year period
and an increase of 172,000 tonnes being milled from opencast, compared to 61,000
tonnes in the prior year period.
Underground milled head grade was 4.55 grammes per tonne (5PGE+Au) for the
quarter, down 0.19 grammes per tonne from 4.74 grammes in the prior year period
and down 0.08 grammes per tonne from 4.63 grammes in quarter four of our prior
financial year respectively. This was due to poor ground conditions being
encountered at K3. The opencast milled head grade was at 2.24 grammes per tonne,
14.3% higher than the prior year period as the opencast milled in the prior year
period was from lower grade stock pile material.
Underground concentrator recoveries continued the positive trend and increased
from 84.5% to 85.1% when compared to the prior year period, whilst the opencast
recovery rate increased from 42.3% to 80.7% mainly as a result of the improved
grade of the opencast material milled in the current period.
Platinum in concentrate from the Marikana operations was 175,769 saleable
ounces, a 12.7% increase over the prior year period. In total the concentrators
produced 180,433 saleable ounces of Platinum in the quarter, an 11.5% increase
from prior year period.
Total Lonmin refined production of 81,982 ounces of Platinum was 26% less than
the prior year period as a result of the scheduled rebuild and modification of
the Number One furnace during the quarter which resulted in an increase in
Platinum and PGM concentrate stock. This was partially offset by 9,700 Platinum
ounces returned from toll refining such that total refined production was 91,682
ounces, 17.2% less than the prior year period. Total PGM production was at
240,366 ounces, down only 1.1% when compared to prior year. This is as a result
of the Other Platinum Metals (OPMs) returned from toll refining in the quarter,
for which the associated Platinum ounces were returned in September 2010.
Sales & Pricing
Platinum sales at 66,426 ounces were 39.1% less than the prior year period,
mainly because of the Number One furnace rebuild and also as a result of bad
weather affecting customer deliveries over the Christmas period in the northern
hemisphere. Total PGM sales decreased by 23.1% to 184,317 ounces.
The US dollar basket price improved considerably during the first quarter of the
2011 financial year with the basket price at $1,175 per ounce being 15.6% higher
than the prior year period. The increase in our South African Rand PGM basket
price was more moderate, at 6.5% due to a much stronger South African Rand
against the US dollar during the quarter when compared to the prior year period.
Number One Furnace
The rebuild and modification of the Number One furnace, was successfully
completed on schedule and the furnace was recommissioned in mid December 2010.
The three pyromet furnaces have operated throughout the period.
Wage Settlements
As announced on 13 January 2011, we reached agreement with the National Union of
Mineworkers (NUM) in terms of which employees will receive an 8% wage increase
backdated to 1 October 2010, as well as a once off payment of R850. We have now
concluded all of our wage negotiations.
Outlook
Our production performance during the first quarter of 2011 represents a solid
start to the year and supports our sales guidance of 750,000 ounces of Platinum.
We also maintain our capital expenditure guidance of around $380 million and
expect Rand unit costs to increase by less than the 8% wage settlement agreed
with the NUM.
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) 11 214 2000
Dani Cohen / Ravin Maharaj
3 3 months
months
to 31 to 31 Dec
Dec
2010 2009
Tonnes Marikana Karee1 kt 1,107 911
mined
Westerns1 kt 872 985
Middelkraal1 kt 482 422
Easterns1 kt 310 253
Underground kt 2,770 2,571
Opencast kt 193 -
Total kt 2,963 2,571
Pandora Underground kt 39 38
attributable2
Opencast kt - -
Total kt 39 38
Lonmin Platinum Underground kt 2,809 2,609
Opencast kt 193 -
Total kt 3,002 2,609
Tonnes Marikana Underground kt 2,740 2,447
milled3
Opencast kt 234 61
Total kt 2,973 2,508
Pandora4 Underground kt 75 89
Opencast kt - -
Total kt 75 89
Lonmin Platinum Underground kt 2,815 2,535
Head grade5 g/t 4.55 4.74
Recovery rate6 % 85.1% 84.5%
Opencast kt 234 61
Head grade5 g/t 2.24 1.96
Recovery rate6 % 80.7% 42.3%
Total kt 3,048 2,596
Head grade5 g/t 4.38
4.68
Recovery rate6 % 85.0% 84.0%
3 3
months months
to 31 to 31
Dec Dec
2010 2009
Metals in Marikana Platinum oz 175,769 156,025
concentrate
7
Palladium oz 82,759 72,596
Gold oz 4,459 3,361
Rhodium oz 23,352 21,678
Ruthenium oz 36,357 33,350
Iridium oz 7,997 7,281
Total PGMs oz 330,694 294,291
Nickel8 MT 884 661
Copper8 MT 570 417
Pandora3 Platinum oz 4,665 5,820
Palladium oz 2,177 2,745
Gold oz 32 40
Rhodium oz 714 911
Ruthenium oz 1,114 1,403
Iridium oz 183 231
Total PGMs oz 8,886 11,151
Nickel8 MT 8 9
Copper8 MT 4 5
Lonmin Platinum Platinum oz 180,433 161,845
Palladium oz 84,936 75,341
Gold oz 4,491 3,401
Rhodium oz 24,066 22,589
Ruthenium oz 37,472 34,754
Iridium oz 8,180 7,512
Total PGMs oz 339,579 305,442
Nickel8 MT 892 669
Copper8 MT 574 422
3 months 3 months
to 31 Dec to 31 Dec
2010 2009
Refined Lonmin refined Platinum oz 81,982 110,786
production metalproduction13
Palladium oz 42,744 70,967
Gold oz 2,545 3,408
Rhodium oz 14,279 21,564
Ruthenium oz 20,877 25,632
Iridium oz 4,643 9,921
Total PGMs oz 167,070 242,278
Toll refined Platinum oz 9,700 -
metal production
Palladium oz 35,545 -
Gold oz 2,028 -
Rhodium oz 10,179 324
Ruthenium oz 13,064 512
Iridium oz 2,780 -
Total PGMs oz 73,295 835
Total refined Platinum oz 91,682 110,786
PGMs
Palladium oz 78,289 70,967
Gold oz 4,573 3,408
Rhodium oz 24,459 21,888
Ruthenium oz 33,941 26,144
Iridium oz 7,424 9,921
Total PGMs oz 240,366 243,114
Base metals Nickel9 MT 923 668
Copper9 MT 488 378
3 months 3 months
to 31 Dec to 31 Dec
2010 2009
Sales Lonmin Platinum Platinum oz 66,426 109,044
Palladium oz 58,205 68,572
Gold oz 3,276 2,020
Rhodium oz 21,395 25,262
Ruthenium oz 30,163 25,511
Iridium oz 4,853 9,277
Total PGMs oz 184,317 239,685
Nickel9 MT 893 572
Copper9 MT 389 483
Chrome9 MT 113,108 184,035
Average Platinum $/oz 1,750 1,411
prices
Palladium $/oz 683 363
Gold $/oz 1,080 1,163
Rhodium $/oz 2,276 2,214
Ruthenium $/oz 163 118
Iridium $/oz 732 386
Dollar basket price excl. by-product $/oz 1,175 1,017
revenue11
Rand basket price excl. by-product R/oz 8,046 7,552
revenue11
Rand basket price incl. by-product R/oz 9,008 7,973
revenue12
Nickel9 $/MT 20,750 16,606
Copper9 $/MT 7,983 6,431
Chrome9 $/MT 26 2
Exchange Average rate for R/$
Rates period13 6.88 7.46
Closing rate R/$
6.61 7.37
Notes:
1 During 2010 we revised the management structure in mining into four
business units and we will report against these from now onwards.
Karee includes the shafts K3, 1B and 4B and will also include K4 once
production commences. Westerns comprises Rowland, Newman and ore
purchases from W1. Middelkraal represents Hossy and Saffy. Easterns
includes E1, E2 and E3.
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. Chrome is
produced in the form of chromite concentrate and volumes shown are in
the form of chromite.
10 Concentrate and others sales have been adjusted to a saleable ounce
basis using industry standard recovery rates.
11 Basket price of PGMs is based on the revenue generated in Rand and
Dollar from the actual PGMs (5PGE + Au) sold in the period based on
the appropriate Rand / Dollar exchange rate applicable for each sales
transaction.
12 As per note 11 but including revenue from base metals.
13 Exchange rates are calculated using the market average daily closing
rate over the course of the period.
Date: 27/01/2011 09:00:10 Supplied by www.sharenet.co.za
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