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LONMIN PLC - Second Quarter 2014 Production Report

Release Date: 12/05/2014 08:00
Code(s): LON     PDF:  
Wrap Text
Second Quarter 2014 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")

REGULATORY RELEASE

12 May 2014

Second Quarter 2014 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 2014 (unaudited).

Overview

Our performance in Quarter Two was impacted by the protected strike action in the South African Platinum sector
led by AMCU. Around 70% of Lonmin’s mining employees belong to AMCU. The strike commenced on 23 January
and since then there has only been limited production from contractor operations.

The rolling twelve month average Lost Time Injury Frequency Rate (LTIFR) for the twelve months to 31 March 2014,
improved to 3.23 incidents per million man hours compared to 3.66 at 31 March 2013 and reflects the reduced
hours of work as a result of the strike.

Mining Division

The Marikana underground mining operations produced 0.5 million tonnes during the second quarter, a decrease of
2.1 million tonnes or 81% on the prior year period due to the strike which impacted all underground shafts.

Production from our Merensky opencast operations of 77,000 tonnes was enabled by contract mining and was 42%
lower than the prior year period as this operation but has been scaled back due to the subdued price environment.
Pandora (100%) production decreased by 90,000 tonnes, or 75% on the prior year quarter due to the impact of the
strike.

In total, 2,535,000 tonnes of underground production were lost during the quarter, of which 2,515,000 tonnes were
lost due to industrial action, 15,000 tonnes related to Section 54 safety stoppages and an additional 5,000 tonnes to
management induced safety stoppages (MISS). This compared to a total of 140,000 tonnes lost in the prior year
period of which 82,000 tonnes were due to Section 54 safety stoppages, 27,000 tonnes were due to MISS and 31,000
tonnes were due to labour stoppages.

Process Division

Total tonnes milled in the quarter at 0.5 million tonnes were down 2.3 million tonnes on the prior year period or 82%
as the concentrating division was shut down due to the industrial action.

Underground milled head grade increased by 11% to 5.14 grammes per tonne (5PGE+Au) when compared to 4.62
grammes per tonne in the prior year period. This increase was due to the distorting effect of shutting down of the
plant. The overall milled head grade was 4.86 grammes per tonne, up 7% on the prior year period.




                                                         
Underground concentrator recoveries for the quarter increased by 1.0 percentage point to 87.8% when compared to
the prior year period. Overall concentrator recoveries for the quarter increased by 0.7 percentage points to 87.5%
when compared to the prior year.

Total PGMs and Platinum in concentrate for the quarter at 66,912 and 35,426 saleable ounces respectively were 80%
lower than the prior year period due to the shutdown of the plant as a result of the industrial action.

Total refined production for the first quarter at 60,968 ounces of saleable Platinum was down 68% when compared
against the prior year period. Due to the industrial action the refinery plants were shut down and the smelter idled.
Pipeline stocks have not been depleted to the same extent as in FY12. Total PGMs produced in the second quarter
were 158,462 ounces, a decrease of 57% on the prior year period.

Sales & Pricing

Sales for the quarter at 128,871 Platinum ounces were down 41% and PGM sales at 301,658 ounces were down 25%
as the sale of stocks held at the end of Quarter One in anticipation of the strike partly reduced the impact of the
lower refined production. The US dollar basket price (excluding base metal credits) at $967 per ounce during the
quarter was down 18% on the prior year period while the corresponding Rand basket price, R10,390 per ounce, was
only 1% lower than the prior year period on the back of Rand weakness.

Lonmin also publishes today, in a separate announcement, its interim Results for the half year ended 31 March 2014.

                                                      - ENDS –

ENQUIRIES

Investors / Analysts:
Lonmin
Tanya Chikanza (Head of Investor Relations)        +27 11 218 8358 /
                                                   +44 20 7201 6007
Floyd Sibandze (Investor Relations Manager)        +27 11 218 8373 /
                                                   +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


                                                         
                                                                                           3 months     3 months
                                                                                           to 31 Mar    to 31 Mar
                                                                                                2014         2013
                               
Tonnes mined        Marikana    1              K3 shaft                              kt          126          778
                                               4B/1B shaft                           kt            73         433
                                               Karee                                 kt           199       1,210
                                               Rowland shaft                         kt            85         429
                                               Newman shaft                          kt            37         227
                                               Hossy shaft                           kt            40         231
                                               W1 shaft                              kt            13           40
                                               Westerns                              kt           174          927
                                               Saffy shaft                           kt            72          244
                                               East 1 shaft                          kt             8         100
                                               East 2 shaft                          kt            32           86
                                               East 3 shaft                          Kt             2           21
                                               Easterns                              kt           114          452
                                               Underground                           kt           487       2,590
                                               Opencast                              kt            77          133
                                               Total                                 kt           564       2,722
                                     
                    Pandora (100%)  2          Underground                           kt            29          120
                            
                    Limpopo  3                 Underground                           kt             5            0
                    Lonmin (100%)              Total tonnes mined (100%)             kt           598       2,842
                                               % tonnes mined from UG2 reef (100%)   %           68.3         73.2
                    Lonmin (attributable)      Underground & Opencast                kt          581        2,773
                
Ounces mined    4   Lonmin excluding Pandora   Pt ounces                             oz       38,161      171,170
                    Pandora (100%)             Pt ounces                             oz        2,355        8,776
                    Limpopo                    Pt ounces                             oz          192             0
                    Lonmin                     Pt ounces                             oz       40,708      179,946

                    Lonmin excluding Pandora   PGM ounces                            oz       72,335     318,056
                    Pandora (100%)             PGM ounces                            oz        4,618      16,697
                    Limpopo                    PGM ounces                            oz          564           0
                    Lonmin                     PGM ounces                            oz       77,517     334,753
                
Tonnes milled 5     Marikana                   Underground                           kt          407       2,592
                                               Opencast                              kt           69         121
                                               Total                                 kt          476       2,713
                           
                    Pandora 6                  Underground                           kt           25         120
                    Lonmin Platinum            Underground                           kt          432       2,711
                                                          
                                               Head grade 7                          g/t        5.14        4.62
                                                             
                                               Recovery rate 8                        %        87.8%       86.8%
                                               Opencast                              kt           69         121
                                                          
                                               Head grade 7                          g/t        3.09        2.89
                                                             
                                               Recovery rate 8                         %        84.4%       85.8%
                                               Total                                 kt          500       2,833
                                                          
                                               Head grade 7                           g/t        4.86        4.54
                                                             
                                               Recovery rate  8                       %        87.5%       86.8%




                                                           
                                                              3 months    3 months
                                                              to 31 Mar   to 31 Mar
                                                                   2014        2013
Metals in       Marikana                Platinum         oz      32,545     170,830
            
concentrate 9                           Palladium        oz      15,159      76,816
                                        Gold             oz         992       4,582
                                        Rhodium          oz       4,355      22,411
                                        Ruthenium        oz       7,126      34,691
                                        Iridium          oz       1,403       8,299
                                        Total PGMs       oz      61,579     317,628
                                              
                                        Nickel 10        MT         204         900
                                                
                                        Copper 10        MT         139         582
                Pandora                 Platinum         oz       2,022       8,759
                                        Palladium        oz         961       3,985
                                        Gold             oz          18          66
                                        Rhodium          oz         338       1,378
                                        Ruthenium        oz         534       2,082
                                        Iridium          oz          84         403
                                        Total PGMs       oz       3,957      16,673
                                              
                                        Nickel 10        MT           3          15
                                                
                                        Copper 10        MT           2           8
                Concentrate purchases   Platinum         oz         859         973
                                        Palladium        oz         241         302
                                        Gold             oz           5           3
                                        Rhodium          oz         106          95
                                        Ruthenium        oz         116         102
                                        Iridium          oz          49          42
                                        Total PGMs       oz       1,375       1,516
                                              
                                        Nickel 10        MT           0           0
                                                
                                        Copper  10       MT           0           0
                Lonmin Platinum         Platinum         oz      35,426     180,562
                                        Palladium        oz      16,360      81,103
                                        Gold             oz       1,014       4,651
                                        Rhodium          oz       4,800      23,883
                                        Ruthenium        oz       7,776      36,874
                                        Iridium          oz       1,536       8,745
                                        Total PGMs       oz      66,912     335,817
                                               
                                        Nickel 10        MT         207         915
                                                
                                        Copper 10        MT         142         590




                                                     
                                                           3 months    3 months
                                                           to 31 Mar   to 31 Mar
                                                                2014        2013
Refined      Lonmin refined metal   Platinum          oz      60,417     189,356
production   production             Palladium         oz      35,298      85,339
                                    Gold              oz       2,236       5,489
                                    Rhodium           oz      35,660      29,496
                                    Ruthenium         oz      15,481      50,860
                                    Iridium           oz       7,410       4,252
                                    Total PGMs        oz     156,503     364,792
             Toll refined metal     Platinum          oz         551       1,273
             production             Palladium         oz         240         184
                                    Gold              oz          12          20
                                    Rhodium           oz          73          28
                                    Ruthenium         oz         171       3,728
                                    Iridium           oz         911         646
                                    Total PGMs        oz       1,959       5,879
             Total refined PGMs     Platinum          oz      60,968     190,629
                                    Palladium         oz      35,538      85,523
                                    Gold              oz       2,248       5,509
                                    Rhodium           oz      35,734      29,524
                                    Ruthenium         oz      15,652      54,588
                                    Iridium           oz       8,321       4,898
                                    Total PGMs        oz     158,462     370,671
                                          
             Base metals            Nickel  11        MT         258         883
                                            
                                    Copper  11        MT         169         563
Sales        Refined metal sales    Platinum          oz     128,871     217,800
                                    Palladium         oz      88,652      96,703
                                    Gold              oz       3,700       5,937
                                    Rhodium           oz      30,066      29,107
                                    Ruthenium         oz      39,788      47,356
                                    Iridium           oz      10,581       7,273
                                    Total PGMs        oz     301,658     404,176
                                          
                                    Nickel  11        MT         664         995
                                            
                                    Copper  11        MT         301         823
                                             
                                    Chrome  11        MT     116,279     373,459




                                                  
                                                                                3 months       3 months
                                                                                to 31 Mar      to 31 Mar
                                                                                     2014           2013
Average prices       Platinum                                       $/oz            1,408          1,609
                     Palladium                                      $/oz              741            734
                     Gold                                           $/oz            1,510          1,537
                     Rhodium                                        $/oz            1,056          1,197
                     Ruthenium                                      $/oz               55              74
                     Iridium                                        $/oz              492            998
                                                        
                     $ basket excl. by-product revenue 12           $/oz              967          1,178
                                                       
                     $ basket incl. by-product revenue 13           $/oz            1,010          1,244
                                                        
                     R basket excl. by-product revenue 12           R/oz           10,390         10,527
                                                       
                     R basket incl. by-product revenue 13           R/oz           10,845         11,109
                           
                     Nickel  11                                     $/MT           11,681         14,106
                             
                     Copper  11                                     $/MT            7,087          7,528
                              
                     Chrome  11                                     $/MT               23              17
                                             
Exchange rates       Average rate for period  14                     R/$            10.82            8.91
                     Closing rate                                    R/$            10.54            9.22

Notes:
1 Following the management restructuring in 2013 the mining structure was reconfigured into three divisions and we now
  report production on a shaft by shaft basis.
2 Pandora underground tonnes mined represents 100% of the total tonnes mined on the Pandora joint venture of which 42.5%
  is attributable to Lonmin.
3 Limpopo underground tonnes mined represents low grade development tonnes whilst on care and maintenance.
4 Ounces mined have been calculated at achieved concentrator recoveries and as from 2014 with Lonmin standard
  downstream processing losses to present produced saleable ounces.
5 Tonnes milled excludes slag milling.
6 Lonmin purchases 100% of the ore produced by the Pandora joint venture for onward processing which is included in
  downstream operating statistics.
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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