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LON - Lonmin Plc - Q2 2012 Production Report

Release Date: 14/05/2012 08:00
Code(s): LON
Wrap Text

LON - Lonmin Plc - Q2 2012 Production Report 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") 14 May 2012 Lonmin Plc Q2 2012 Production Report Lonmin Plc, (Lonmin or the Company), the world`s third largest Platinum producer, today announces its production results for the three months to 31 March 2012 (unaudited). Overview We made solid progress in our mining operational performance, with total tonnes mined flat at 2.9 million tonnes. This was achieved in spite of the continued impact of Section 54 notifications from the Department of Mineral Resources (DMR), which resulted in 170,000 tonnes of lost production. Our total Platinum metal in concentrate increased by 3.9% compared to the prior year period. The Refined Platinum production was however temporarily affected by a smelting stock build up due to an increase in sulphur in the feed to the Smelter. This occurred as a result of a greater percentage of Merensky ore being milled due to a series of Section 54 and internal safety stoppages that predominantly impacted our UG2 production. The Smelter is expected to operate at its normal levels in the third quarter as the ore mix returns to normal levels. The rate of stoppages reduced towards the end of the quarter as the benefits of dialogue around Section 54s with the DMR started to come through. Our Lost Time Injury Frequency Rate (LTIFR) for the quarter was 4.69 incidents per million man hours versus 4.67 for Q1 2012. Mining Division Total tonnes mined in the second quarter of 2012 from our Marikana underground operations were 2.8 million, an increase of 66,000 tonnes or 2.4% from the prior year period. This increase was in spite of the continued frequency and wide range of Section 54 safety reviews and stoppages that we experienced across all operations in the early part of the second quarter. Production at the Karee operations increased by 141,000, representing a 12.7% increase from the prior year period, whilst Middelkraal`s production was up 52,000 tonnes or 11.9%. This increase was offset by the continued decrease in production at Westerns of 106,000 tonnes or 12.5% on the prior year as the planned decline at Newman continues. Production at Easterns decreased by 21,000 tonnes or 6.8% when compared against the prior year, mainly due to community unrest and the consequent effect on our labour force. Production at our Merensky opencast operations in the period was 78,000 tonnes, a decrease of 65,000 tonnes when compared to the prior year period. This reflects the continued production slowdown that commenced in the first quarter as we focus on grade improvement. The production from Pandora increased by 7,000 tonnes to 51,000 tonnes. The total impact of the Section 54 shut downs was 170,000 tonnes in lost production across all operations, including joint ventures, of which 100,000 tonnes were lost in January 2012. The total lost production compares to 48,000 tonnes lost in the prior year period. An additional 31,000 tonnes of production was lost as a result of management induced safety stoppages and 39,000 tonnes of production was lost as a result of community and labour unrest at Easterns. A summary of the direct impact on production of Section 54 stoppages is detailed below. Division Section 54 stoppages production impact tonnes Karee 54,000 Westerns 45,000 Middelkraal 60,000 Easterns Nil Opencast and JV 11,000 Total 170,000 Process Division Total tonnes milled in the quarter were marginally up at 3.0 million, a 0.8% increase from the prior year. Underground tonnes milled increased by 177,000 tonnes, or 6.7%, to 2.8 million tonnes, but this was largely offset by the 154,000 tonnes reduction in opencast tonnes milled. Underground milled head grade was 4.46 grammes per tonne (5PGE+Au) down 0.11 grammes per tonne or 2.4% compared to the prior year period, as the proportion of Merensky mined continues to gradually increase. The overall milled head grade was 4.36 grammes per tonne, an improvement of 1.1% when compared to the prior year period. This was due to a lower proportion of higher grade opencast ore when compared to the prior year. The total head grade showed a decline of 2.5% from 4.47 grammes per tonne in the previous quarter as a result of the higher ratio of Merensky to UG2 in the mix. Underground and overall concentrator recoveries were satisfactory at 85.7% and 85.6% respectively, a decrease of 0.4 and 0.2 percentage points respectively when compared with the prior year period and a quarter on quarter improvement of 0.4 and 0.3 percentage points respectively. Platinum in concentrate from the Marikana operations was 173,564 saleable ounces, a 3.3% increase over the prior year period. In total the concentrators produced 181,172 saleable ounces of Platinum in the quarter, a 3.9% increase from the prior year period. This reflects the higher proportion of Merensky ore in the mix which contains a higher percentage of Platinum. Total refined production for the quarter was 190,379 ounces of saleable Platinum, a decrease from the prior year of 15.4%. This decrease is due firstly to metal inventory in progress being temporarily affected by the increase of sulphur in the feed to the Smelter and secondly, the prior year refined production was significantly higher as operations normalised following the rebuild and modification of the Number One furnace in quarter one of 2011. Total Platinum Group Metals (PGMs) production for the quarter was 355,590 ounces, a decrease of 19.2% from the prior year. Sales & Pricing Platinum sales at 225,539 ounces were 10.5% lower than the prior year period as a result of the production constraints highlighted above and stock movement in the quarter. Total PGMs sales decreased by 15.4% to 418,988 ounces. Chrome sales have more than doubled when compared to the prior year period as production at the chrome plants gains momentum. The US dollar basket price at $1,164 during the quarter was 12.6% less than the prior year quarter. The corresponding Rand basket price was 3.5% lower than the prior year period. Lonmin also publishes today, in a separate announcement, its interim results for the half year ending 31 March 2012. ENQUIRIES: Investors / Analysts: Tanya Chikanza +44 (0) 207 201 6007 Head of Investor Relations Ruli Diseko +44 (0) 207 201 6000 Investor Relations Manager Media: Cardew Group +44 (0) 207 930 0777 James Clark/Emma Crawshaw Inzalo Communications +27 (0) 11 646 9992 Gillian Findlay/Bridget von Holdt 3 months 3 months
to 31 Mar to 31 Mar 2012 2011
LTIFR 4.69 4.67 Tonnes Marikana Karee1 kt 1 248 1 107 mined Westerns1 kt 747 853
Middelkraal kt 489 437 1 Easterns1 kt 284 305 Underground kt 2 769 2 703
Opencast kt 78 143 Total kt 2 847 2 846 Pandora Underground kt 51 44 attributable2
Lonmin Underground kt 2 819 2 746 Platinum Opencast kt 78 143 Total kt 2 898 2 890
% UG2 % 71.3% 72.5% Tonnes Marikana Underground kt 2 713 2 536 milled3 Opencast kt 162 316 Total kt 2 875 2 852 Pandora4 Underground kt 100 101 Lonmin Underground kt 2 813 2 636
Platinum Head grade5 g/t 4.46 4.57 Recovery % 85.7% 86.0% rate6
Opencast kt 162 316 Head grade5 g/t 2.68 2.16 Recovery % 84.6% 82.7% rate6
Total kt 2 975 2 952 Head grade5 g/t 4.36 4.31 Recovery % 85.6% 85.9% rate6
3 months 3 months to 31 Mar to 31 Mar 2012 2011
Metals in Marikana Platinum oz 173 564 168 020 concentrate 7 Palladium oz 78 763 78 660 Gold oz 4 918 4 674 Rhodium oz 21 875 21 630 Ruthenium oz 33 674 34 734
Iridium oz 7 271 7 566 Total oz 320 065 315 284 PGMs Nickel8 MT 973 921
Copper8 MT 621 576 Pandora4 Platinum oz 7 014 6 410 Palladium oz 3 238 3 001 Gold oz 53 45
Rhodium oz 1 080 975 Ruthenium oz 1 642 1 539 Iridium oz 270 255 Total oz 13 297 12 225
PGMs Nickel8 MT 11 10 Copper8 MT 6 6 Concentrate Platinum oz 594 -
purchases Palladium oz 226 - Gold oz 2 - Rhodium oz 75 - Ruthenium oz 90 -
Iridium oz 29 - Total oz 1 016 - PGMs Nickel MT 0 -
Copper MT 0 - Lonmin Platinum oz 181 172 174 430 Platinum Palladium oz 82 227 81 661
Gold oz 4 973 4 719 Rhodium oz 23 030 22 605 Ruthenium oz 35 406 36 273 Iridium oz 7 570 7 822
Total oz 334 378 327 509 PGMs Nickel8 MT 984 931 Copper8 MT 627 582
3 months 3 months to 31 Mar to 31 Mar 2012 2011
Refined Lonmin refined Platinum oz 172 089 198 998 production metal production Palladium oz 77 683 95 643 Gold oz 4 873 4 119 Rhodium oz 31 723 24 245 Ruthenium oz 41 005 51 530
Iridium oz 7 385 8 768 Total oz 334 759 383 302 PGMs Toll refined Platinum oz 18 289 26 154 metal production Palladium oz 66 13 090 Gold oz (2) 839
Rhodium oz 82 3 713 Ruthenium oz 1 979 10 935 Iridium oz 417 2 311 Total oz 20 831 57 042
PGMs Total refined Platinum oz 190 379 225 152 PGMs Palladium oz 77 749 108 733
Gold oz 4 871 4 958 Rhodium oz 31 805 27 958 Ruthenium oz 42 983 62 465 Iridium oz 7 803 11 078
Total oz 355 590 440 344 PGMs Base metals Nickel9 MT 915 1 190 Copper9 MT 533 726
3 months 3 months to 31 Mar to 31 Mar 2012 2011 Sales Refined Platinum oz 225 539 251 880 metal sales Palladium oz 96 061 131 326 Gold oz 5 715 5 362 Rhodium oz 30 785 33 412
Ruthenium oz 53 227 61 610 Iridium oz 7 661 11 650 Total oz 418 988 495 240 PGMs
Nickel9 MT 1 002 1 217 Copper9 MT 549 688 Chrome9 MT 334 827 128 638
Average Platinum $/oz 1 583 1 784 prices Palladium $/oz 673 788 Gold $/oz 1 676 1 153 Rhodium $/oz 1 410 2 390 Ruthenium $/oz 94 173 Iridium $/oz 1 041 885 $ basket excl. by- $/oz 1 164 1 332 product revenue11 R basket excl. by- R/oz 9 010 9 341 product revenue11 R basket incl. by- R/oz 9 466 9 852 product revenue12 Nickel9 $/MT 16 718 23 336 Copper9 $/MT 7 582 9 137 Chrome9 $/MT 17 26 Exchange Average rate for R/$ 7.74 6.98 Rates period13 Closing rate R/$ 7.65 6.77 Notes: 1 Karee includes the shafts K3, 1B and 4B and K4. Westerns comprises Rowland, Newman and ore purchases from W1. Middlekraal represents Hossy and Saffy. Easterns includes E1, E2 and E3. 2 Pandora attributable tonnes mined represents 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: 14/05/2012 08:00:09 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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