Wrap Text
LON - Lonmin Plc - Third quarter 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")
21 July 2011
Lonmin Plc
Third Quarter 2011 Production Report
& Interim Management Statement
Lonmin Plc, the world`s third largest Platinum producer, today announces its
production results for the three and nine months to 30 June 2011and interim
management statement (unaudited).
Overview
During the third quarter, momentum of the business was impacted by two
fatalities in April and the illegal industrial stoppage in May at the Karee
operations. We have since made good progress in restoring production and expect
to be back to normal operating levels by August. Considerable progress has been
made with the safety initiatives we embarked on. We continue to intensify our
focus on these initiatives and our LTIFR has fallen during the quarter from
5.4 at the half year to 5.1 as at 30 June 2011.
Year to date, our underground tonnage mined and milled is up on the comparable
prior year period and our metals in concentrate has also increased.
Third Quarter Production
Mining
Our underground operations at Marikana produced 2.4 million tonnes during the
third quarter of the 2011 financial year, a decrease of 8.1% from the third
quarter of the 2010 financial year. The decrease was across all the underground
mining operations. The overall reduction at Karee of 7.2%, when compared to
prior year quarter was due to the unprotected industrial action which resulted
in a loss of 258,000 tonnes of production. Production at Westerns, Middelkraal
and Easterns combined decreased by 8.5% against the prior year as challenging
ground conditions and mechanical breakdowns at Saffy and Hossy persisted and
the planned decline at Newman continued. The impact of Section 54 shut downs
was 132,000 tonnes in lost production during the quarter, mainly at our K3 and
E1 shafts where we experienced fatalities in April 2011. This compares to a
loss in production during the same period last year of around 109,000 tonnes.
Management induced safety stoppages, particularly following the fatalities
in April resulted in 44,000 tonnes of lost production.
Production at our Merensky opencast operations increased by 53.1% from the
prior year period as opencast production was ramping up at that time.
Overall, tonnes mined of 2.5 million for the quarter, reflected a decrease of
168,000 tonnes, equivalent to a 6.2% reduction against the prior year.
Concentrators, Smelting and Refining
Total tonnes milled in the quarter were flat year on year at 2.8 million with
the contribution from opencast contributing an additional 50,000 tonnes
offsetting the slightly reduced underground tonnes milled.
Underground milled head grade was down 0.13 grammes per tonne, or 2.7% to
4.48 grammes per tonne (5PGE+Au) when compared to 4.60 grammes per tonne in the
prior year period. This reflects the continued increase in the proportion of
Merensky ore in the underground ore mix and lower grade ore at our UG2
operations. The overall milled head grade was 4.37 grammes per tonne, a
decline of 3.9% when compared to the prior year period as it includes the
impact of increased contribution from the lower grade opencast ore.
Underground and overall concentrator recoveries were broadly flat when compared
with the prior year period reflecting a high performing and stable operating
environment at our concentrators. The opencast concentrator recoveries improved
by 2.0 percentage points
Platinum in concentrate from the Marikana operations and overall total Platinum
in concentrate was 158,490 and 164,212 ounces, respectively, a 3.0% and 3.2 %
decrease over the prior year quarter.
Total refined production for the third quarter was up 81.4% at 166,832 Platinum
ounces, when compared to the prior year period which was impacted by the down
time of the Number One Furnace during the prior year quarter.
Sales and Pricing
Platinum sales of 160,499 ounces were 74.5% higher than the prior year quarter,
as a result of the lower production in the prior year, resulting from the
Number One Furnace outage.
The US Dollar price basket, at US$1,303, was 11.1% higher than the prior year
quarter but 2.2 % lower than the second quarter. The corresponding Rand basket
price was however 0.1% lower than the prior year and 5.2% weaker when compared
to the second quarter.
Nine Month Production
Total tonnes mined during the first nine months of the 2011 financial year
were 8.4 million tonnes, an increase of 0.5 million tonnes or 6.3% from the
prior year period. This is firstly due to a significant increase in production
at the Karee operations in the first two quarters, which resulted in an increase
of 7.2% when compared to the prior year period. Secondly, Easterns increased
its production by 98,000 tonnes when compared against the prior year period and
the opencast operations contributed an additional 0.4 million tonnes. These
increases were partly offset by the fall in production at Westerns as Newman
continues to decline, together with mechanical breakdown and ground condition
challenges at Middelkraal`s Hossy and Saffy shafts, which have impacted ramp
up production. Section 54 shut downs during the nine month period resulted in
a loss of around 201,000 tonnes. This compares to around 258,000 tonnes for
the same period last year.
Total tonnes milled during the nine months of the 2011 financial year increased
by 10.9% to 8.8 million tonnes when compared to the same period in the prior
year as a result of milling opencast stockpiles and an increase in mining
production. The total milled head grade however, fell by 6.4% to 4.35 grammes
per tonne (5PGE+Au) when compared to the prior year period. This is as a result
of the fall in underground head grade and the increase of lower grade Merensky
ore, some of which is from opencast mining. Overall concentrator recoveries
improved in the nine month period to 85.2% from 84.6% in the prior year period,
with marked improvements in the opencast recoveries. The concentrators produced
a total of 519,075 saleable ounces of Platinum in concentrate in the nine
months, representing a 5.6% year on year increase.
Total refined production in the nine months of the 2011 financial year was
483,665 Platinum ounces and 982,387 PGM ounces, an increase of 26.0% and
25.7% respectively when compared to the prior year period. The increase
reflects the impact of the Number One Furnace incidents in the prior year
period.
Final metal sales for the nine months were 478,804 ounces of Platinum and
973,695 ounces of PGMs, an increase of 24.7% and 23.9% respectively, year on
year.
Outlook
Since the resumption of normal operations at Karee we have made steady progress
giving us confidence that absent further safety stoppages and external strike
actions impacting our operations, we will achieve our adjusted full year
guidance of sales of around 720,000 Platinum ounces for the current financial
year. As described in our Guidance Update on 10 June 2011, unit costs were
negatively impacted by the Karee disruption. We are now able to clarify the
impact of the resultant reduced production on our unit costs and are
consequently increasing our guidance from an annual increase of around 8%
to around an 11% increase in unit costs for the full 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 / Emma Crawshaw
Financial Dynamics +27 (0) 11 214 2402
Dani Cohen / Sue Vey
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2011 2010 2011 2010
Tonnes Marikana Karee1 kt 901 971 3,115 2,907
mined
Westerns kt 794 852 2,519 2,696
1
Middelkr kt 436 496 1,355 1,362
aal1
Easterns kt 246 265 860 762
1
Undergro kt 2,376 2,584 7,849 7,726
und
Opencast kt 129 84 465 91
Total kt 2,505 2,668 8,314 7,817
Pandora Undergro kt 38 43 121 120
attributabl und
e2
Lonmin Undergro kt 2,414 2,626 7,970 7,846
und
Platinum Opencast kt 129 84 465 91
Total kt 2,543 2,711 8,434 7,937
% UG2 % 74.1% 76.0% 72.9% 77.0%
Tonnes Marikana Undergro kt 2,560 2,614 7,835 7,513
milled3 und
Opencast kt 118 68 668 129
Total kt 2,678 2,682 8,503 7,642
Pandora4 Undergro kt 92 99 268 265
und
Lonmin Undergro kt 2,652 2,712 8,103 7,779
Platinum und
Head g/ 4.48 4.60 4.53 4.69
grade5 t
Recovery % 85.0% 85.1% 85.4% 84.7%
rate6
Opencast kt 118 68 668 129
Head g/ 2.07 2.51 2.17 2.25
grade5 t
Recovery % 80.9% 78.9% 81.6% 63.8%
rate6
Total kt 2,770 2,780 8,771 7,908
Head g/ 4.37 4.35 4.65
grade5 t 4.55
Recovery % 84.9% 85.0% 85.2% 84.6%
rate6
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2011 2010 2011 2010
Metals Marikana Platinum oz 158,490 163,311 502,279 473,914
in
concentr
ate7
Palladium oz 73,553 76,922 234,971 222,097
Gold oz 3,875 4,067 13,008 10,557
Rhodium oz 20,940 22,350 65,923 66,152
Ruthenium oz 33,164 35,259 104,255 102,152
Iridium oz 7,088 7,683 22,652 22,318
Total PGMs oz 297,110 309,592 943,088 897,190
Nickel8 MT 762 809 2,567 2,085
Copper8 MT 479 493 1,626 1,288
Pandora4 Platinum oz 5,722 6,303 16,796 17,564
Palladium oz 2,683 2,991 7,862 8,267
Gold oz 39 44 115 121
Rhodium oz 868 987 2,557 2,769
Ruthenium oz 1,386 1,533 4,040 4,225
Iridium oz 226 257 664 712
Total PGMs oz 10,924 12,113 32,035 33,658
Nickel8 MT 9 10 27 27
Copper8 MT 5 6 15 15
Lonmin Platinum oz 164,212 169,614 519,075 491,478
Platinum
Palladium oz 76,236 79,913 242,833 230,364
Gold oz 3,913 4,110 13,123 10,678
Rhodium oz 21,808 23,336 68,480 68,920
Ruthenium oz 34,551 36,792 108,295 106,377
Iridium oz 7,314 7,941 23,316 23,030
Total PGMs oz 308,034 321,706 975,123 930,848
Nickel8 MT 771 819 2,594 2,111
Copper8 MT 485 499 1,641 1,303
3 months 3 months 9 months 9 months
to 30 to 30 to 30 to 30
June June June June
2011 - 2010 - 2011 - 2010 -
Act Act Act Act
Refined Lonmin Platinum oz 166,021 91,928 446,999 383,670
product refined
ion Metal
production
Palladiu oz 76,086 57,230 214,473 207,522
m
Gold oz 4,291 3,080 10,955 10,517
Rhodium oz 14,560 16,823 53,084 59,769
Rutheniu oz 37,183 19,621 109,589 92,370
m
Iridium oz 1,641 3,899 15,052 24,321
Total oz 299,782 192,581 850,153 778,169
PGMs
Toll Platinum oz 812 25 36,665 204
refined
Metal
production
Palladiu oz 449 26 49,084 89
m
Gold oz 13 - 2,879 -
Rhodium oz 130 1 14,022 810
Rutheniu oz 408 1,242 24,408 1,754
m
Iridium oz 86 360 5,177 360
Total oz 1,898 1,654 132,235 3,216
PGMs
Total Platinum oz 166,832 91,952 483,665 383,873
refined
PGMs
Palladiu oz 76,535 57,256 263,557 207,611
m
Gold oz 4,303 3,080 13,833 10,517
Rhodium oz 14,690 16,824 67,106 60,578
Rutheniu oz 37,591 20,864 133,997 94,124
m
Iridium oz 1,727 4,259 20,229 24,681
Total oz 301,679 194,234 982,387 781,385
PGMs
Base Nickel9 MT 914 560 3,027 2,110
metals
Copper9 MT 560 274 1,775 1,178
Sales Lonmin Platinum oz 160,499 91,952 478,804 383,874
Platinum
Palladiu oz 64,573 54,113 254,104 204,468
m
Gold oz 3,812 2,718 12,449 10,131
Rhodium oz 14,547 16,146 69,353 63,447
Rutheniu oz 43,008 22,348 134,781 98,219
m
Iridium oz 7,700 5,231 24,203 25,898
Total oz 294,138 192,507 973,695 786,036
PGMs
Nickel9 MT 890 410 3,001 1,795
Copper9 MT 486 282 1,563 1,288
Chrome9 MT 173,608 166,697 415,354 506,224
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2011 - 2010 - 2011 - 2010 -
Act Act Act Act
Average Platinum $/o 1,764 1,595 1,772 1,514
prices z
Palladium $/o 754 481 755 422
z
Gold $/o 1,524 1,136 1,247 1,128
z
Rhodium $/o 2,082 2,592 2,290 2,398
z
Ruthenium $/o 172 214 170 168
z
Iridium $/o 1,023 614 898 460
z
$ basket excl. by- $/o 1,303 1,172 1,294 1,093
product revenue11 z
R basket excl. by- R/o 8,872 8,884 8,954 8,203
product revenue11 z
R basket incl. by- R/o 9,533 9,328 9,593 8,594
product revenue12 z
Nickel9 $/M 21,677 22,002 22,074 17,249
T
Copper9 $/M 8,927 7,244 8,784 6,598
T
Chrome9 $/M 36 2 30 2
T
Exchang Average rate for R/$
eRates period13 6.77 7.53 6.85 7.49
Closing R/$
rate 6.76 7.66 6.76 7.66
Notes:
1 The management structure in mining is comprised of four business
units. 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 other 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: 21/07/2011 08:00:45 Supplied by www.sharenet.co.za
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