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LON - Lonmin Plc - Annual Report and 2012 Annual General Meeting 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") 12 December 2011 Lonmin Plc ("Lonmin" or the "Company") Annual Report and 2012 Annual General Meeting On 14 November 2011 Lonmin announced its Final Results for the year ended 30 September 2011. The announcement made on that date included inter alia a condensed set of financial statements and a management report, as required by DTR 4.1. Lonmin has today posted to shareholders and, in accordance with LR 9.6.1 R, has submitted to the National Storage Mechanism, printed copies of the following documents: Annual Report and Accounts for the year ended 30 September 2011 Circular relating to the Annual General Meeting to be held on 26 January 2012 Forms of Proxy for shareholders on the UK and SA registers These documents will shortly be available for inspection on the National Storage Mechanism www.Hemscott.com/nsm.do. As required by DTR 6.3.5 R (3), the Company confirms that the Annual Report and the Circular relating to the Annual General Meeting are now available to view or download in pdf format from the Lonmin website, www.lonmin.com. The appendix to this announcement contains additional information which has been extracted from the Annual Report and Accounts for the year ended 30 September 2011 (the "Annual Report and Accounts") for the purposes of compliance with DTR 6.3.5 and should be read together with the Final Results Announcement, which can be downloaded from the Company`s website at www.lonmin.com. This announcement should be read in conjunction with and is not a substitute for reading the full Annual Report and Accounts. Together these constitute the information required by DTR 6.3.5. which is required to be communicated to the media in full unedited text through a Regulatory Information Service. Page and note references in the text below refer to page numbers and notes in the Annual Report and Accounts: A statement on the principal risks and uncertainties A statement on related party transactions The Directors` Responsibility Statement ENDS APPENDIX Lonmin`s Principal Risks and Uncertainties Lonmin`s principal risks are detailed below together with their potential impact and mitigating strategies. These risks have been ranked according to magnitude of potential impact before mitigating actions. These risks represent a snapshot of the Company`s risk profile at this time. They are not intended to represent an exhaustive list of all risks. As the macro environment changes and country and industry circumstances evolve, new risks may arise or recede or the rankings of these risks may change according to severity and probability of occurrence. For investors in Lonmin, the main risk to be aware of is that the Company is a focused producer of PGMs and therefore, while this allows for economies through specialisation, Lonmin does not benefit from commodity diversification. Further, since the commodities Lonmin mines are all from one geographic region, its performance is influenced by the political, social and economic factors that affect South Africa. This includes significant exposure to the US Dollar/Rand exchange rate. As such, volatility in metal prices and exchange rates can have a material impact on the financial performance of the Company, which can be both positive and negative. Principal Risk Impact Mitigation Failure of Could result Commitment from Board and senior management safety in a towards creating a safe culture throughout routines or catastrophic the Group. The Safety & Sustainability safety loss of life, Committee monitors the implementation of the strategy severely safety strategy on behalf of the Board. disrupt Processes in place for safe production
operations include: and have a Employee engagement strategy and safety material training standards, both of which are adverse monitored regularly;
effect on the Clearly defined safety protocols Group`s including safe behaviour observations in financial place; position. Regular third party audits and peer
reviews conducted; and Balanced scorecard measures incentivise appropriate safety behaviour. Resource A negative Ongoing dialogue with key stakeholders and Nationalism outcome as a government at all levels to understand and consequence address concerns. of resource nationalism,
which can take many different forms, could
have a material adverse effect on the
Group`s future operational performance
and financial position. Skills Lack of Processes for individual development shortages appropriate programmes, succession planning and scarce skills could skills allowances are in place. There is a negatively focus on bursaries, graduate development and impact upon mentorship. safety,
production and the ability to deliver
against targets. Non-delivery Could results We engage with all our stakeholders including of in the South African government. Targets are set Transformation deteriorating and monitored on a regular basis by the Exco, relationships the Safety & Sustainability Committee and the with Transformation Committee. The Balanced stakeholders Scorecard incentivises delivery against
and place certain targets. mineral rights at risk.
Access to Could impact Measurement of energy usage and energy saving secure energy, on the initiatives implemented. Load shedding and electricity ability to contractual agreements in place with Eskom and water run current (SA energy supplier). Likewise, measurement operations of water usage and water saving initiatives and deliver implemented. Plans aligned with long term future strategy. Electricity and water supplies expansion secured for key areas of the business. Active
plans. participation in relevant industry bodies. Failure to Shareholder Strong capital projects department built up deliver on value may not to implement long term capital plans. long term be optimised Borehole drilling, magnetic surveys and 3D capital plans over the long seismic surveys are conducted to ensure full term. understanding of the geology on Lonmin properties. Independent peer reviews of the long term plan are carried out. Balanced
Scorecard incentivises appropriate reserve development. US Dollar Significant Lonmin gathers market information from a metal price changes in number of sources to monitor market segments and currency the supply and trends in the industry. Longer term volatility and demand of volume contracts with key customers mitigate (specifically PGMs (e.g. if off-take risk. Historically there has been a US Dollar/ SA there is long term correlation between US Dollar/ SA Rand) product Rand and PGM basket price, although this can substitution dislocate over short periods. Current policy or supply is not to hedge. side
constraints) can create volatility in PGM prices
making long term planning difficult. Likewise,
significant fluctuations in exchange rates to
which the Group is exposed can also make
planning difficult and have a significant
effect on the Group`s financial position.
Access to cost The Group may Headroom and key covenants in banking lines effective not be able are constantly monitored through rolling cash funding to obtain flow forecasts. The current bank debt cost facilities were re-negotiated during the year
effective allowing greater flexibility. funding when required which could
impact the ability of the Group to meet its
liabilities as they fall due. Uncompetitive Could have a Lonmin has a clear understanding of its gross or unit material competitive position and required costs adverse productivity improvement plans are in place. effect on the Balanced Scorecard incentivises cost control. Group`s
competitive position. Poor employee Could result A full engagement strategy with the unions relations due in an and employees is in place, which is governed to internal unstable through a clearly defined Industrial and external workforce Relations structure. Recognition agreements factors that that severely are in place. could result disrupts in strike operations action and has a material adverse
effect on the Group`s financial position.
Poor community Civil unrest A full engagement strategy with community relations due could representatives, unions and employees is in to internal severely place.
