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First Quarter 2015 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")
First Quarter 2015 Production Report
Regulatory Release
29 January 2015
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 2014 (unaudited) and an update for the period from 1
October 2014 to today’s date.
Overview
We are pleased to report that the Company has been fatality free for the fourth quarter in succession following the
one fatality which occurred on 26 October 2013. The rolling 12 month average Lost Time Injury Frequency Rate
(LTIFR) for the 12 months to 31 December 2014 improved by 2.7% to 3.58 incidents per million man hours
compared to 3.69 at 31 December 2013.
Lonmin maintained the strong operational momentum that was built up in Q4 2014 by achieving the highest Q1
production from underground (including Pandora) since 2011. Total attributable tonnes mined in the quarter were
2.8 million tonnes, 7.2%, or 0.2 million tonnes higher than the prior year period. Employee attendance levels have
returned quickly to normal levels following the December 2014 holiday period.
Saleable metal-in-concentrate was the highest Q1 production since 2007 with output of 200,170 Platinum ounces.
This was 11.4%, or 20,479 ounces higher than the prior year period.
Refined Platinum production of 139,823 ounces was unfortunately impacted by the repairs to the Number One
furnace and decreased by 28.8%, or 56,426 ounces compared to the prior year period. We expect to process the
build-up in concentrate stock by the end of the financial year.
Sales of 146,890 Platinum ounces increased by 9.0%, or 12,086 ounces on the prior year period.
Mining Operations
The Marikana underground mining operations produced 2.7 million tonnes during the first quarter, an increase of
7.9%, or 0.2 million tonnes on the prior year period.
Production at Karee was 1,124,000 tonnes, an increase of 6.9%, or 72,000 tonnes on the prior year period. K3, our
biggest shaft, increased production by 8.2%, or 53,000 tonnes. We saw limited activity at K4 with 8,000 tonnes
produced.
Production at Westerns was 1,045,000 tonnes, an increase of 3.0%, or 30,000 tonnes on the prior year period.
Rowland, our second largest shaft, increased p ro ductio n by 1 .4 %. Newman shaft delivered a 9.0%
increase from the prior year period and Hossy shaft, which remains under review, pleasingly increased
production by 4.9%. East 1 shaft, which is reaching its end of life saw a decrease in production of 13,000 tonnes.
(East 1 has been reported under Westerns since Q4 2014 in-line with changes in management structure).
Production at Easterns was 523,000 tonnes which was 22.3%, or 95,000 tonnes higher than the prior year period.
Saffy shaft recorded an increase of 30.1%, or 95,000 tonnes over the prior year period demonstrating the
progress that we have made with our planned ramp up.
Production at Pandora (100%) increased by 30.5% over the prior year period. Production from our Merensky
opencast operations of 56,000 tonnes was 28.2% lower than the prior year period as this operation is reaching
the end of its life.
These results have been achieved with significantly reduced safety and industrial relations stoppages. Tonnes of
production lost due to safety and labour stoppages in the quarter totalled only 22,000 tonnes. This was 249,000
tonnes lower than the prior year period which was impacted by a fatality and tensions around the wage
negotiations.
Q1 2015 Q1 2014
tonnes tonnes
Section 54 safety stoppages 7,000 175,000
Management induced safety stoppages 13,000 19,000
Labour stoppages 2,000 77,000
Total tonnes lost 22,000 271,000
Process Operations
Total tonnes milled in the quarter increased by 9.5%, or 0.3 million tonnes to 3.1 million tonnes when compared
to the prior year. This was the highest Q1 volume milled in seven years and was achieved using six out of our
seven Marikana concentrators as part of our measures to reduce costs. Underground tonnes milled were 11.7%
or 318,000 tonnes higher than the prior year period and opencast tonnes milled decreased by 33.3%, or 46,000
tonnes.
Underground milled head grade increased slightly by 0.8% to 4.55 grammes per tonne (5PGE+Au) when compared
to the 4.51 grammes per tonne in the prior year period. The overall milled head grade was 4.50 grammes per
tonne, up 1.3% on the prior year period due to the aforementioned increase in the grade of underground ore and
the increase of underground ore in the mix.
Concentrator recoveries for the quarter were slightly lower than the prior year period at 87.1% largely due
to ore mix.
Total Platinum in concentrate for the quarter at 200,170 saleable ounces was 11.4% higher than the prior year
period. Total PGMs in concentrate were 381,804 saleable ounces which was 10.6% higher than the prior year
period.
As announced on 8 December 2014, the Number One furnace was safely stopped in early December following the
detection of a leak. We are making good progress with repairs to this furnace and the additional maintenance work
that was brought forward and we are on track to complete these within the scheduled three months. As
announced on 31 December 2014, the Number Two furnace was also safely stopped at the end of December
following the detection of electrode breaks. The repairs have been successfully made to the Number Two furnace
and the first matte tap was successfully made last week. The three smaller Pyromet furnaces were restarted in
early December to increase smelting capacity during this time. We expect to process the build-up of concentrate
by the end of Q4 2015.
Total refined Platinum production for the first quarter was impacted by the smelter shutdowns and was down
28.8% to 139,823 ounces when compared against the prior year period. Total PGMs produced in the first quarter
were 265,128 ounces, a decrease of 31.1% on the prior year period.
Sales & Pricing
Platinum sales for the quarter at 146,890 ounces were up 9.0%, or 12,086 ounces on the prior year period and
PGM sales were up 11.7% to 274,425 ounces. The US dollar basket price (including base metal revenue) at $1,033
per ounce during the quarter was down 7.1% on the prior year period while the corresponding Rand basket price
(R11,488 per ounce) was 1.7% higher than the prior year period impacted by the Rand weakness.
Completion of Black Economic Empowerment transaction
As announced on 26 November 2014, we successfully completed the three BEE transactions in the
quarter thus achieving the target of 26% BEE ownership. At the end of the quarter the Bapo ba Mogale
Traditional Community were shareholders in the Company and held 3.3%. Through an Employee Share Ownership
Plan our employees held 3.8% and through a Community Share Ownership Trust the local communities on the
western portion of our Marikana operations held 0.9%. All three transactions collectively provided the additional
8% equity empowerment which Lonmin required to achieve the 26% effective BEE equity.
Outlook and Guidance
Because of low dollar metal prices and short to medium term uncertainty around platinum prices we will reduce our
expected capital expenditure for 2015 from $250 million to $185 million and will keep this under review. Despite the
revised capital expenditure for 2015 we reiterate our production guidance for the year.
As previously anticipated we expect our net borrowings to be higher at the end of March as a direct result of the
lower sales volume in H1 which will unwind in H2. We are confident of managing our working capital requirements
through cost conservation measures and capital discipline to keep borrowings and debt covenants well within our
committed debt facilities.
We are disappointed that the repairs and maintenance to both our main furnaces necessitated by the shutdowns
have overlapped and caused a temporary bottleneck in our processing operations. Following the repairs to the
Number Two furnace that we built in 2012, we have sufficient smelting capacity during 2015 to overcome this
obstacle and we anticipate processing the current build-up in concentrate stock during the financial year. We are
making good progress towards achieving the target of more than R2 billion value benefits over three years through
the freezing of general recruitment, natural attrition and reduction of contractors as we redeploy some employees
to areas previously worked on by contractors. This, combined with our focus on efficiencies has resulted in a
quarter on quarter mining productivity improvement of 8%. Our mining operations continue to perform well and
consequently we are maintaining our guidance for the full year of sales of around 730,000 Platinum ounces.
Additionally we are managing our costs so as to maintain our guidance for the unit cost of production
of around R10,800 per PGM ounce.
ENQUIRIES
Investors / Analysts:
Lonmin
Tanya Chikanza (Head of Investor Relations) +44 20 7201 6007 / +27 11 218 8358
Floyd Sibandze (Manager: Investor Relations) +27 11 218 8381
Media:
Cardew Group
Anthony Cardew / James Clark +44 20 7930 0777
Sue Vey +27 60 523 7953
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 Dec to 31 Dec
2014 2013
Tonnes mined Marikana K3 shaft kt 699 646
K4 shaft kt 8 -
4B/1B shaft kt 418 406
Karee kt 1,124 1,052
Rowland shaft kt 474 468
Newman shaft kt 220 202
Hossy kt 267 255
W1 shaft kt 47 41
East 1 shaft 1 kt 35 49
Westerns kt 1,045 1,015
Saffy shaft kt 410 315
East 2 shaft kt 95 103
East 3 shaft Kt 18 10
Easterns kt 523 428
Underground kt 2,692 2,494
Opencast kt 56 78
Total kt 2,748 2,572
Pandora (100%)2 Underground kt 165 126
Limpopo3 Underground kt - 4
Lonmin (100%) Total tonnes mined (100%) kt 2,913 2,703
% tonnes mined from UG2 reef
% 76.5 75.7
(100%)
Lonmin (attributable) Underground & Opencast kt 2,821 2,630
4
Ounces mined Lonmin excluding
Pt ounces oz 175,357 160,723
Pandora
Pandora (100%) Pt ounces oz 11,329 9,017
Limpopo Pt ounces oz - 167
Lonmin Pt ounces oz 186,686 169,907
Lonmin excluding Pandora PGM ounces oz 334,417 308,221
Pandora (100%) PGM ounces oz 22,172 17,748
Limpopo PGM ounces oz - 239
Lonmin PGM ounces oz 356,589 326,209
Tonnes milled 5 Marikana Underground kt 2,864 2,575
Opencast kt 93 139
Total kt 2,957 2,715
Pandora 6 Underground kt 183 126
Limpopo 7 Underground kt - 27
Lonmin Platinum Underground kt 3,047 2,729
Head grade8 g/t 4.55 4.51
Recovery rate9 % 87.2% 87.9%
Opencast kt 93 139
Head grade8 g/t 3.01 3.09
Recovery rate9 % 85.0% 84.2%
Total kt 3,140 2,868
Head grade8 g/t 4.50 4.44
Recovery rate9 % 87.1% 87.8%
3 months 3 months
to 31 Dec to 31 Dec
2014 2013
Metals-in- Marikana Platinum oz 186,092 168,820
concentrate10 Palladium oz 84,817 78,277
Gold oz 4,406 3,902
Rhodium oz 27,348 24,680
Ruthenium oz 43,655 39,907
Iridium oz 8,448 8,268
Total PGMs oz 354,765 323,855
Nickel 11 MT 960 837
Copper 11 MT 592 528
Pandora Platinum oz 12,425 8,966
Palladium oz 5,700 4,242
Gold oz 43 56
Rhodium oz 2,116 1,528
Ruthenium oz 3,404 2,441
Iridium oz 644 404
Total PGMs oz 24,332 17,638
Nickel 11 MT 28 16
Copper 11 MT 12 9
Limpopo Platinum oz - 1,121
Palladium oz - 974
Gold oz - 93
Rhodium oz - 114
Ruthenium oz - 161
Iridium oz - 44
Total PGMs oz - 2,508
Nickel 11 MT - 27
Copper 11 MT - 19
Concentrate purchases Platinum oz 1,653 783
Palladium oz 490 241
Gold oz 7 4
Rhodium oz 210 92
Ruthenium oz 262 96
Iridium oz 84 42
Total PGMs oz 2,707 1,259
Nickel 11 MT 1 0
Copper 11 MT 1 0
Lonmin Platinum Platinum oz 200,170 179,691
Palladium oz 91,007 83,735
Gold oz 4,456 4,055
Rhodium oz 29,674 26,415
Ruthenium oz 47,320 42,605
Iridium oz 9,177 8,759
Total PGMs oz 381,804 345,259
Nickel 11 MT 989 880
Copper 11 MT 605 557
3 months 3 months
to 31 Dec to 31 Dec
2014 2013
Refined production Lonmin refined metal Platinum oz 139,712 196,249
production Palladium oz 63,443 92,985
Gold oz 3,654 4,124
Rhodium oz 18,944 27,293
Ruthenium oz 32,522 46,505
Iridium oz 4,349 11,407
Total PGMs oz 262,625 378,562
Toll refined metal Platinum oz 111 -
production Palladium oz 1 770
Gold oz - 61
Rhodium oz - 822
Ruthenium oz 1,889 4,312
Iridium oz 502 190
Total PGMs oz 2,503 6,155
Total refined PGMs Platinum oz 139,823 196,249
Palladium oz 63,444 93,755
Gold oz 3,655 4,185
Rhodium oz 18,944 28,115
Ruthenium oz 34,411 50,817
Iridium oz 4,851 11,597
Total PGMs oz 265,128 384,717
Base metals Nickel 12 MT 660 1,053
Copper 12 MT 392 595
Sales Refined metal sales Platinum oz 146,890 134,804
Palladium oz 67,836 47,921
Gold oz 5,200 2,800
Rhodium oz 17,114 23,927
Ruthenium oz 33,335 27,042
Iridium oz 4,050 9,262
Total PGMs oz 274,425 245,755
Nickel 12 MT 832 673
Copper 12 MT 402 503
Chrome 12 MT 367,507 388,822
3 months 3 months
to 31 Dec to 31 Dec
2014 2013
Average prices Platinum $/oz 1,213 1,393
Palladium $/oz 787 724
Gold $/oz 1,512 1,510
Rhodium $/oz 1,199 937
Ruthenium $/oz 52 53
Iridium $/oz 509 489
$ basket excl. by-product revenue 13 $/oz 961 1,038
$ basket incl. by-product revenue 14 $/oz 1,033 1,112
R basket excl. by-product revenue 13 R/oz 10,689 10,538
R basket incl. by-product revenue 14 R/oz 11,488 11,299
Nickel 12 $/MT 12,683 11,464
Copper 12 $/MT 6,517 6,771
Chrome 12 $/MT 18 18
Exchange rates Average rate for period 15 R/$ 11.22 10.12
Closing rate R/$ 11.56 10.44
Notes:
1 East 1 shaft is now reported under Westerns in-line with changes in management structure. Prior periods 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%
for October and November 2014 and 50% thereafter is attributable to Lonmin.
3 Limpopo underground tonnes mined represents low grade development tonnes mined whilst on care and maintenance.
4 Ounces mined have been calculated at achieved concentrator recoveries and with Lonmin standard downstream processing
recoveries 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 Limpopo tonnes milled represents low grade development tonnes milled.
8 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).
9 Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag).
10 Metals-in-concentrate have been calculated at Lonmin standard downstream processing recoveries to present produced
saleable ounces.
11 Corresponds to contained base metals-in-concentrate.
12 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.
13 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.
14 As per note 13 but including revenue from base metals.
15 Exchange rates are calculated using the market average daily closing rate over the course of the period.
Date: 29/01/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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