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LONMIN PLC - Fourth Quarter 2014 Production Report

Release Date: 10/11/2014 09:00
Code(s): LON     PDF:  
Wrap Text
Fourth 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


10 November 2014

Fourth 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 30 September 2014. Lonmin also, publishes
today, in a separate announcement, its final results for the year ended 30 September 2014.

Overview

The rolling average Lost Time Injury Frequency Rate (LTIFR) for the 12 months to 30 September 2014
improved to 3.34 incidents per million man hours compared to 3.50 at 30 September 2013 and
reflects the reduced hours of work as a result of the strike.

Ramp up excellence

As announced on 8 October, Lonmin successfully achieved ramp up to full production earlier than
anticipated during August 2014.

Our successful ramp up was accelerated by earlier and stronger levels of employee attendance than
had been previously expected, a well-executed care and maintenance strategy during the strike
period as well as thorough planning and well controlled execution of the ramp up process. This
resulted, in a rapid, safe and efficient ramp up of our operations and plants. Excellent attendance
levels continued and Lonmin has experienced strong performance across all operations, to achieve
an impressive performance in the quarter, with 2.8 million tonnes being mined. Whilst this
represents a decline of 0.5 million tonnes on the prior year period when production was normal,
tonnes mined in August and September 2014 exceeded those mined in the same period in 2013.

In what has been a challenging year given the prolonged strike, we were able to achieve a milestone:
one year without a fatal accident. Our safety record showed another year on year improvement,
with our LTIFR decreasing by 4.6%. This is particularly pleasing as it takes into account the impact of
the strike, given the heightened safety risk when operations resume after a standstill.

Mining Division

Our Marikana underground mining operations produced 2.5 million tonnes during the fourth
quarter, a decline of 0.5 million tonnes or 15.3% less than the prior year period. Pandora production
was 127,000 tonnes, a decrease of 33,000 on the prior year period.

Production at Karee was down at 0.3 million tonnes, a 19.4% decline on the prior year period.
Similarly, production at Westerns declined by 0.2 million tonnes, a 16.0% drop against prior year
period. Production output from Rowland shaft decreased by 10.1% compared to prior year period,

                                                  1
and a 23.2% decline was realised from Newman, representing a decrease of 56,000 tonnes. Output
from Hossy was only marginally down by 3.1% when compared to the prior year period.

At Easterns production was in-line with the prior year period, down only 1.2% as the decrease in
volumes from East 2 and East 3 was off-set by increased production output from Saffy shaft where
our focus and commitment is bearing fruit. Saffy produced 48,000 tonnes more than the prior year
period, representing a 16.0% increase to the comparable period, despite the strike. Good
momentum has been achieved during the ramp up with Saffy achieving its best ever monthly output
of just under 163,000 tonnes in September.

A total of 830,000 tonnes of production were lost during the quarter, (compared to 165,000 tonnes
in the prior year period) of which 679,000 tonnes were due to the strike action, 91,000 tonnes
related to Section 54 safety stoppages, and 60,000 tonnes to Management Induced Safety
Stoppages (MISS).

Process Division

Total tonnes milled in the quarter decreased by 0.8 million or 25.4% to 2.3 million tonnes with
underground 27.4% lower than the prior year period and opencast up by 57.5% as it was largely
unaffected by the industrial action.

Underground milled head grade decreased by 4.0% to 4.37 grammes per tonne (% 5PGE + Au) when
compared to 4.55 grammes per tonne in the prior year period and is directly attributable to the ore
mix milled which was dictated by the strike. This remains within our expected range. The overall
milled head grade was 4.31 grammes per tonne, a decrease of 4.5% on the prior year period partly
due to the increase of lower grade opencast ore milled.

Underground and overall concentrator recoveries for the quarter decreased by 1.3 and 1.4
percentage points to 86.3% and 86.2% respectively when compared to prior year period.

Platinum in concentrate for the quarter was 141,624 saleable ounces, a 28.6% decrease on the prior
year period.

Total refined production for the quarter at 142,712 ounces of saleable Platinum, was down 47.5%
when compared against the prior year period whilst Platinum Group Metals (PGMs) produced in the
quarter were 256,400, a decrease of 48.0% on the prior year period. The fourth quarter of 2013
included the processing of a build-up of pipeline stock during the third quarter in 2013 following
downtime on the furnaces.

Sales & Pricing

Platinum sales for the quarter were down 47.2% to 152,270 ounces and PGM sales were down by
47.4% to 272,983 ounces. The US dollar basket price (including base metal credit) at $1,148 per
ounce during the quarter was 3.5% higher than the prior year period. The corresponding Rand
basket price including base metal credit increased by 10.2% compared to the prior year period on
the back of a weaker rand.



                                             - ENDS -


                                                2
ENQUIRIES

Investors / Analysts:
Lonmin
Tanya Chikanza                                         +27 11 218 8300 / +44 20 7201 6007
Floyd Sibandze                                         +27 11 218 8300

Media:
Cardew Group
Anthony Cardew / James Clark                           +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 producing assets 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. Lonmin's mining operations
extract ore from which the Process Division produces refined PGMs for delivery to customers.
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
                                                                            3 months    3 months
                                                                            to 30 Sep   to 30 Sep
                                                                                2014        2013
Tonnes mined   Marikana                   K3 shaft                    kt         677         851
                                          4B/1B shaft                 kt         403         489
                                          Karee                       kt       1 081       1 340
                                          Rowland shaft               kt         450         500
                                          Newman shaft                kt         187         244
                                          Hossy shaft                 kt         297         306
                                          W1 shaft                    Kt          34          50
                                                       1
                                          East 1 shaft                kt          32          90
                                          Westerns                    kt       1 000       1 190
                                          Saffy shaft                 kt         347         299
                                          East 2 shaft                kt          87         128
                                          East 3 shaft                Kt          11          24
                                          Easterns                    kt         445         450
                                          Underground                 kt       2 525       2 980
                                          Opencast                    kt         100         113
                                          Total                       kt       2 625       3 093
                                2
               Pandora (100%)             Underground                 kt         127         160
               Lonmin (100%)              Total tonnes mined (100%)   kt       2 752       3 253
                                          % tonnes mined from UG2
                                          reef (100%)                 %        74.1%       74.4%
               Lonmin (attributable)      Underground & Opencast      kt       2 679       3 161
Ounces         Lonmin excluding
     3                                    Pt ounces                   oz     157 331     192 277
mined          Pandora
               Pandora (100%)             Pt ounces                   oz       8 231      11 239
               Lonmin                     Pt ounces                   oz     165 562     203 516
               Lonmin excluding Pandora   PGM ounces                  oz     298 167     361 485
               Pandora (100%)             PGM ounces                  oz      16 262      21 647
               Lonmin                     PGM ounces                  oz     314 430     383 132
Tonnes         Marikana                   Underground                 kt       2 120       2 911
       4
milled                                    Opencast                    kt         117          74
                                          Total                       kt       2 237       2 985
                      5
               Pandora                    Underground                 kt         109         160
               Lonmin Platinum            Underground                 kt       2 228       3 071
                                                     6
                                          Head grade                  g/t       4.37        4.55
                                                       7
                                          Recovery rate                %       86.3%       87.6%
                                          Opencast                    kt         117          74
                                                        6
                                          Head grade                  g/t       3.16        2.93
                                                            7
                                          Recovery rate                %       85.3%       85.0%
                                          Total                       kt       2 345       3 145
                                                     6
                                          Head grade                  g/t       4.31        4.51
                                                       7
                                          Recovery rate                %       86.2%       87.6%




                                                                4
                                                              3 months    3 months
                                                              to 30 Sep   to 30 Sep
                                                                  2014        2013
Metals- in-     Marikana                Platinum         oz    133 507     186 332
            8
concentrate                             Palladium        oz     61 875      86 945
                                        Gold             oz      4 062       4 499
                                        Rhodium          oz     18 578      25 648
                                        Ruthenium        oz     30 724      38 329
                                        Iridium          oz      5 663       8 801
                                        Total PGMs       oz    254 410     350 554
                                             9
                                        Nickel           MT        790         950
                                                 9
                                        Copper           MT        485         607
                Pandora                 Platinum         oz      7 056      11 213
                                        Palladium        oz      3 361       5 345
                                        Gold             oz        (23)         86
                                        Rhodium          oz      1 217       1 812
                                        Ruthenium        oz      1 959       2 667
                                        Iridium          oz        388         479
                                        Total PGMs       oz     13 958      21 602
                                             9
                                        Nickel           MT         14          21
                                                 9
                                        Copper           MT          8          12
                Concentrate purchases   Platinum         oz      1 060         883
                                        Palladium        oz        301         272
                                        Gold             oz         (1)          5
                                        Rhodium          oz        126         109
                                        Ruthenium        oz        122         105
                                        Iridium          oz         48          45
                                        Total PGMs       oz      1 655       1 418
                                              9
                                        Nickel           MT           0          1
                                                9
                                        Copper           MT           0          1
                Lonmin Platinum         Platinum         oz    141 624     198 428
                                        Palladium        oz     65 537      92 562
                                        Gold             oz      4 038       4 589
                                        Rhodium          oz     19 921      27 569
                                        Ruthenium        oz     32 805      41 101
                                        Iridium          oz      6 099       9 325
                                        Total PGMs       oz    270 023     373 574
                                             9
                                        Nickel           MT        804         972
                                                 9
                                        Copper           MT        493         619




                                                     5
                                                            3 months    3 months
                                                            to 30 Sep   to 30 Sep
                                                                2014        2013
Refined      Lonmin refined metal   Platinum           oz    140 698     271 773
production   production             Palladium          oz     65 164     122 904
                                    Gold               oz      4 438       7 081
                                    Rhodium            oz      7 136      21 651
                                    Ruthenium          oz     35 455      61 982
                                    Iridium            oz      1 001       6 286
                                    Total PGMs         oz    253 892     491 677
             Toll refined metal     Platinum           oz      2 014           -
             production             Palladium          oz        242           -
                                    Gold               oz         15           -
                                    Rhodium            oz        207           -
                                    Ruthenium          oz          -       1 333
                                    Iridium            oz         30         100
                                    Total PGMs         oz      2 508       1 433
             Total refined PGMs     Platinum           oz    142 712     271 773
                                    Palladium          oz     65 406     122 904
                                    Gold               oz      4 453       7 081
                                    Rhodium            oz      7 342      21 651
                                    Ruthenium          oz     35 455      63 315
                                    Iridium            oz      1 031       6 386
                                    Total PGMs         oz    256 400     493 110
             Base metals                 10
                                    Nickel             MT        858       1 224
                                             10
                                    Copper             MT        609         776
Sales        Refined metal sales    Platinum           oz    152 270     288 280
                                    Palladium          oz     65 049     122 951
                                    Gold               oz      6 600       5 885
                                    Rhodium            oz      8 100      25 108
                                    Ruthenium          oz     38 604      68 611
                                    Iridium            oz      2 360       8 387
                                    Total PGMs         oz    272 983     519 222
                                         10
                                    Nickel             MT        839       1 246
                                             10
                                    Copper             MT        643         845
                                              10
                                    Chrome             MT    242 779     378 361




                                                   6
                                                                              3 months            3 months
                                                                              to 30 Sep           to 30 Sep
                                                                                  2014                2013
Average prices   Platinum                                     $/oz                1 400               1 443
                 Palladium                                    $/oz                  851                 718
                 Gold                                         $/oz                1 508               1 475
                 Rhodium                                      $/oz                1 283                 975
                 Ruthenium                                    $/oz                   58                  70
                 Iridium                                      $/oz                  610                 841
                                                   11
                 $ basket excl. by-product revenue            $/oz                1 072               1 058
                                                     11
                 R basket excl. by-product revenue            R/oz              11 375               10 556
                       10
                 Nickel                                       $/MT              15 284               11 242
                          10
                 Copper                                       $/MT                6 710               6 827
                            10
                 Chrome                                       $/MT                   16                  18
                                                   12
                 $ basket incl. by-product revenue            $/oz                1 148               1 110
                                                     12
                 R basket incl. by-product revenue            R/oz              12 196               11 070
                                         13
Exchange rates   Average rate for period                      R/$                10.76                 9.95
                 Closing rate                                 R/$                11.29                 9.99

Notes:
    1. East 1 shaft is now reported under Westerns in-line with changes in management structure. Prior
        years have been adjusted accordingly.
    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. Ounces mined have been calculated at achieved concentrator recoveries and as from 2014 with
        Lonmin standard downstream processing recoveries to present produced saleable ounces.
    4. Tonnes milled exclude 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. 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).
    7. Recovery rate in the concentrators is the total content produced divided by the total content milled
        (excluding slag).
    8. As from 2014, metals-in-concentrate are calculated at Lonmin standard downstream processing
        recoveries to present produced saleable ounces.
    9. Corresponds to contained base metals in concentrate.
    10. 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.
    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.




                                                          7

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