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First Quarter 2014 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")
REGULATORY RELEASE
30 January 2014
First Quarter 2014 Production Report & Interim Management Statement
Lonmin Plc (“Lonmin” or “the Company”), the world’s third largest Platinum producer, today announces its
production results for the three months to 31 December 2013 (unaudited) and Interim Management Statement for
the period from 1 October 2013 to today’s date.
Overview
Refined production increased by 45% to 196,249 saleable Platinum ounces compared to the prior year period and
sales were 134,804 Platinum ounces, an increase of 24%. These results benefited from a healthy closing pipeline
position at the end of September 2013 and continued improvement in recovery rates.
In the quarter, total attributable mining production was 2.6 million tonnes, a 10% decrease against Q1 2013 as the
operational momentum built in 2013 was significantly disrupted by a fatality and safety stoppages. In addition,
production from the opencast operations was also scaled down due to the subdued price environment. Low
productivity levels, directly linked to the tensions around the ongoing wage negotiations, further negatively
impacted output.
Total milled output in the quarter was 2.9 million tonnes in line with the prior year period as the healthy ore stock
piles ahead of the concentrators minimised the impact of the lower tonnes mined to produce metal in concentrate
of 179,691 Platinum ounces.
The rolling 12 month average Lost Time Injury Frequency Rate (LTIFR) for the 12 months to 31 December 2013
improved to 3.69 incidents per million man hours compared to 3.74 at 31 December 2012. Regrettably one of our
colleagues, Mr Siyabonga Sibango, was fatally injured on 26 October at E3 shaft and we extend our deepest
condolences to friends and family. This fatality and a rise in mine fatalities across the Rustenburg region has been
one of the drivers of the increase in the number of management induced safety stoppages and Section 54s
experienced in Q1 2014.
As part of our strategy to provide more detailed and structured disclosure we now report mined production on a
shaft by shaft basis. In addition and following the management restructuring in 2013, Hossy shaft is now reported as
part of the Western Mine and Saffy shaft as part of the Eastern mine, with Middelkraal management structure
removed.
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Mining Division
The Marikana underground mining operations produced 2.5 million tonnes during the first quarter, a decrease of 0.2
million tonnes or 7% on the prior year period.
Production at Karee was 1,052,000 tonnes, a decrease of 161,000 tonnes, or 13% on the prior year period driven by
an increase in Section 54 safety stoppages, management induced safety stoppages (MISS) and wage related
industrial relations issues.
Production at Westerns at 966,000 tonnes was broadly flat on the prior year period. Output from Rowland, our
second largest shaft, was 468,000 tonnes representing an increase of 7% or 30,000 tonnes compared to the prior
year period emphasising our strategy to improve asset utilisation from our big shafts. The work around the de-
bottlenecking project has continued to improve returns and the ore reserve position has improved since Q1 2013.
Hossy shaft produced 255,000 in line with the prior year period and Newman decreased by 47,000 tonnes, or 19%
compared to the prior year period as its planned decline continued.
Production at Easterns was 476,000 tonnes which was 5% lower than the prior year period driven by the planned
depletion of East 1 shaft as it approaches end of life. Despite the backdrop of high levels of Section 54 safety
stoppages Saffy shaft produced 315,000 an increase of 33,000, or 12% over the prior year period. The ramp up is
progressing well in line with strategy. We remain confident of the ramp up planned for 2014 as the additional crews
adapt to new conditions.
Production from our Merensky opencast operations of 78,000 tonnes was 50% lower than the prior year period as
this operation has been scaled back due to the subdued price environment. Pandora (100%) production decreased
by 17,000 tonnes, or 12% on the prior year period due to safety shut downs following the fatality at E3 shaft. The
Baobab shaft at Limpopo remains on care and maintenance with the concentrator being utilised by Anglo Platinum
to process ore from Mogalakwena mine.
In total, 271,000 tonnes of underground production were lost during the quarter, of which 175,000 tonnes related to
Section 54 safety stoppages, 19,000 tonnes to MISS and an additional 77,000 tonnes were lost due to wage induced
labour disruptions. This compared to a total of 80,000 tonnes lost in the prior year period of which 19,000 tonnes
were due to Section 54 safety stoppages, 13,000 tonnes were due to MISS and 48,000 tonnes were due to labour
stoppages.
Process Division
Total tonnes milled in the quarter were flat on the prior year at 2.9 million tonnes with underground 63,000 tonnes,
or 2% lower than the prior year period and opencast up 48,000 tonnes, or 52%.
Underground milled head grade decreased slightly by 3% to 4.51 grammes per tonne (5PGE+Au) when compared to
4.64 grammes per tonne in the prior year period and remains within our expected grade range. The overall milled
head grade was 4.44 grammes per tonne.
Underground concentrator recoveries for the quarter increased by 1.1 percentage points to 87.9% when compared
to the prior year period. Overall concentrator recoveries for the quarter increased by 1.0 percentage point to 87.8%
when compared to the prior year.
Total PGMs in concentrate for the quarter was 345,259 saleable ounces which was flat on the prior year period.
Total Platinum in concentrate at 179,691 ounces was 3% lower than the prior year period.
Total refined production for the first quarter was up 45% to 196,249 ounces of saleable Platinum when compared
against the prior year period. This was a reflection of the healthy pipeline position at the beginning of the current
year and the low pipeline stock position at the beginning of the prior year as pipeline stocks had been depleted in
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September 2012 to protect liquidity. Total PGMs produced in the first quarter were 384,717 ounces, an increase of
54% on the prior year period.
Sales & Pricing
Sales for the quarter were up 24% to 134,804 Platinum ounces and PGM sales were up 35% to 245,755 ounces. The
US dollar basket price (excluding base metal credits) at $1,038 per ounce during the quarter was down 12% on the
prior year period while the corresponding Rand basket price (R10,538 per ounce) was 4% higher than the prior year
period on the back of Rand weakness.
Wage negotiation update
Our majority union, the Association of Mine Workers and Construction Union (AMCU) embarked upon protected
strike action on 23 January following the non-resolution of wage negotiations. Given the scale of the strikes across
the platinum sector and as part of the Government’s intervention, the CCMA, is facilitating wage negotiations
between AMCU and Lonmin, Anglo Platinum and Impala Platinum. These started on Monday 27 January 2014 and
are ongoing.
Lonmin remains committed to seeking a resolution to the wage negotiations in the interests of all stakeholders and
the sustainability of the business.
Black Economic Empowerment
We are making good progress towards achieving compliance with our BEE obligations under the Mining Charter by
31 December 2014. We intend doing this through share ownership schemes and through consultation with our
employees and communities on the details of the schemes. We are also in discussions with the Bapo ba Mogale tribe
regarding converting their royalty and their share in the Pandora operations into Lonmin equity. We plan to bring
the detailed proposals in this regard to shareholders later in the year once our discussions with the various
stakeholders involved are sufficiently advanced.
Pandora
We are pleased to announce that the mining rights at the Pandora mining operations were successfully converted to
New Order Mining Rights on 23 January 2014 which provides security of tenure for these mining operations for at
least the next 30 years.
Outlook
Before the start of the strike we would have maintained our guidance for the full year of sales in excess of 750,000
Platinum ounces, capital expenditure of around $210 million and the increase in the unit cost of production to be
less than the rate of wage inflation. This was despite lower than expected mining output in Q1 which has resulted in
lower ore stock piles ahead of the concentrators. However, due to the ongoing strike we will reassess our guidance
and update the market in due course.
All of our mining operations are at Marikana and therefore all are impacted by the strike. Losses are expected to be
in the region of 3,100 mined Platinum ounces per working day during the strike.
- ENDS -
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ENQUIRIES
Investors / Analysts:
Lonmin
Tanya Chikanza (Head of Investor Relations) +27 11 218 8358 /
+44 20 7201 6007
Media:
Cardew Group
James Clark / Emma Crawshaw +44 20 7930 0777
Sue Vey +27 72 644 9777
Sponsor:
J.P. Morgan Equities South Africa (Pty) Ltd
Notes to editors
Lonmin, which is listed on both the London Stock Exchange and the Johannesburg Stock Exchange, is one of the
world's largest primary producers of PGMs. These metals are essential for many industrial applications, especially
catalytic converters for internal combustion engine emissions, as well as their widespread use in jewellery.
Lonmin's operations are situated in the Bushveld Igneous Complex in South Africa, where nearly 80% of known
global PGM resources are found.
The Company creates value for shareholders through mining, refining and marketing PGMs and has a vertically
integrated operational structure - from mine to market. Underpinning the operations is the Shared Services function
which provides high quality levels of support and infrastructure across the operations.
For further information please visit our website: http://www.lonmin.com
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3 months 3 months
to 31 Dec to 31 Dec
2013 2012
Tonnes mined Marikana K3 shaft kt 646 743
K4 shaft kt 0 4
4B/1B shaft kt 406 466
Karee kt 1,052 1,213
Rowland shaft kt 468 438
Newman shaft kt 202 249
Hossy kt 255 260
W1 shaft kt 41 33
Westerns kt 966 980
Saffy shaft kt 315 282
East 1 shaft kt 49 98
East 2 shaft kt 103 96
East 3 shaft Kt 10 25
Easterns kt 476 501
Underground kt 2,494 2,694
Opencast kt 78 155
Total kt 2,572 2,849
1
Pandora (100%) Underground kt 126 143
2
Limpopo Underground kt 4 0
Lonmin (100%) Total tonnes mined (100%) kt 2,703 2,992
% tonnes mined from UG2 reef (100%) % 75.7 73.4
Lonmin (attributable) Underground & Opencast kt 2,630 2,910
3
Ounces mined Lonmin excluding Pandora Pt ounces oz 160,723 179,323
Pandora (100%) Pt ounces oz 9,017 10,088
Limpopo Pt ounces oz 167 0
Lonmin Pt ounces oz 169,907 189,411
Lonmin excluding Pandora PGM ounces oz 308,221 332,827
Pandora (100%) PGM ounces oz 17,748 19,240
Limpopo PGM ounces oz 239 0
Lonmin PGM ounces oz 326,209 352,066
4
Tonnes milled Marikana Underground kt 2,575 2,646
Opencast kt 139 91
Total kt 2,715 2,737
5
Pandora Underground kt 126 146
6
Limpopo Underground kt 27 0
Lonmin Platinum Underground kt 2,729 2,792
7
Head grade g/t 4.51 4.64
8
Recovery rate % 87.9% 86.8%
Opencast kt 139 91
7
Head grade g/t 3.09 2.98
8
Recovery rate % 84.2% 84.8%
Total kt 2,868 2,883
7
Head grade g/t 4.44 4.59
8
Recovery rate % 87.8% 86.8%
5
3 months 3 months
to 31 Dec to 31 Dec
2013 2012
Metals in Marikana Platinum oz 168,820 174,253
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concentrate Palladium oz 78,277 79,273
Gold oz 3,902 4,238
Rhodium oz 24,680 23,097
Ruthenium oz 39,907 35,441
Iridium oz 8,268 7,824
Total PGMs oz 323,855 324,126
10
Nickel MT 837 856
10
Copper MT 528 547
Pandora Platinum oz 8,966 10,336
Palladium oz 4,242 4,770
Gold oz 56 77
Rhodium oz 1,528 1,615
Ruthenium oz 2,441 2,456
Iridium oz 404 433
Total PGMs oz 17,638 19,687
10
Nickel MT 16 17
10
Copper MT 9 10
Limpopo Platinum oz 1,121 0
Palladium oz 974 0
Gold oz 93 0
Rhodium oz 114 0
Ruthenium oz 161 0
Iridium oz 44 0
Total PGMs oz 2,508 0
10
Nickel MT 27 0
10
Copper MT 19 0
Concentrate purchases Platinum oz 783 907
Palladium oz 241 246
Gold oz 4 3
Rhodium oz 92 91
Ruthenium oz 96 96
Iridium oz 42 37
Total PGMs oz 1,259 1,379
10
Nickel MT 0 1
10
Copper MT 0 0
Lonmin Platinum Platinum oz 179,691 185,497
Palladium oz 83,735 84,290
Gold oz 4,055 4,317
Rhodium oz 26,415 24,803
Ruthenium oz 42,605 37,992
Iridium oz 8,759 8,295
Total PGMs oz 345,259 345,193
10
Nickel MT 880 874
10
Copper MT 557 557
6
3 months 3 months
to 31 Dec to 31 Dec
2013 2012
Refined Lonmin refined metal Platinum oz 196,249 135,364
production production Palladium oz 92,985 60,625
Gold oz 4,124 3,560
Rhodium oz 27,293 6,251
Ruthenium oz 46,505 31,327
Iridium oz 11,407 8,601
Total PGMs oz 378,562 245,727
Toll refined metal Platinum oz - 91
production Palladium oz 770 128
Gold oz 61 252
Rhodium oz 822 1,688
Ruthenium oz 4,312 1,457
Iridium oz 190 267
Total PGMs oz 6,155 3,883
Total refined PGMs Platinum oz 196,249 135,455
Palladium oz 93,755 60,753
Gold oz 4,185 3,812
Rhodium oz 28,115 7,939
Ruthenium oz 50,817 32,784
Iridium oz 11,597 8,868
Total PGMs oz 384,717 294,610
11
Base metals Nickel MT 1,053 768
11
Copper MT 595 467
Sales Refined metal sales Platinum oz 134,804 108,342
Palladium oz 47,921 44,071
Gold oz 2,800 2,400
Rhodium oz 23,927 4,362
Ruthenium oz 27,042 19,061
Iridium oz 9,262 4,341
Total PGMs oz 245,755 182,576
11
Nickel MT 673 692
11
Copper MT 503 201
11
Chrome MT 388,822 277,552
7
3 months 3 months
to 31 Dec to 31 Dec
2013 2012
Average prices Platinum $/oz 1,393 1,575
Palladium $/oz 724 666
Gold $/oz 1,510 1,509
Rhodium $/oz 937 1,184
Ruthenium $/oz 53 82
Iridium $/oz 489 1,016
12
$ basket excl. by-product revenue $/oz 1,038 1,176
13
$ basket incl. by-product revenue $/oz 1,112 1,268
12
R basket excl. by-product revenue R/oz 10,538 10,152
13
R basket incl. by-product revenue R/oz 11,299 10,886
11
Nickel $/MT 11,464 14,296
11
Copper $/MT 6,771 7,239
11
Chrome $/MT 18 19
14
Exchange rates Average rate for period R/$ 10.12 8.67
Closing rate R/$ 10.44 8.45
Notes:
1 - Pandora underground tonnes mined represents 100% of the total tonnes mined on the Pandora joint venture of which 42.5%
is attributable to Lonmin.
2 - Limpopo underground tonnes mined represents low grade development tonnes whilst in care and maintenance.
3 - Ounces mined have been calculated at achieved concentrator recoveries and as from 2014 with Lonmin standard
downstream processing losses to present produced saleable ounces.
4 - Tonnes milled excludes slag milling.
5 - Lonmin purchases 100% of the ore produced by the Pandora joint venture for onward processing which is included in
downstream operating statistics.
6 - Limpopo tonnes milled represents low grade development tonnes milled.
7 - 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).
8 - Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag).
9 - Metals in concentrate include metal derived from slag processing and as from 2014 have been calculated at Lonmin standard
downstream processing losses to present produced saleable ounces.
10 - Corresponds to contained base metals in concentrate.
11 - 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.
12 - 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.
13 - As per note 12 but including revenue from base metals.
14 - Exchange rates are calculated using the market average daily closing rate over the course of the period.
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