Wrap Text
Second 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")
REGULATORY RELEASE
11 May 2015
Second Quarter 2015 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 2015 (unaudited).
Overview
We are pleased to report that the Company has been fatality free for eighteen months. Zero harm is indeed
achievable and we remain vigilant. However, the rolling 12 month average Lost Time Injury Frequency Rate (LTIFR)
for the 12 months to 31 March 2015 increased to 4.51 incidents per million man hours compared to 3.23 at 31
March 2014. To curb the increase in lost time injuries and high potential incidents an updated and focussed Safety
Improvement Plan has been developed.
Lonmin has successfully maintained the strong operational momentum built up since the strike. A total of 2.8
million tonnes was mined in the quarter, 2.2 million tonnes higher than the prior year period which was impacted
by strike action but broadly in-line with Q2 2013. Notably, saleable Platinum metal-in-concentrate was the highest
Q2 production since 2007 with output of 181,814 Platinum ounces. This was 146,388 platinum ounces higher than
the prior year period which was impacted by the strike and 0.7% higher than Q2 2013.
As expected, refined Platinum production of 122,480 ounces was impacted by the repairs to both the Number One
and Two furnaces. This represented an increase in refined Platinum production of 61,512 ounces compared to the
prior year period but a decrease of 68,149 ounces compared to Q2 2013. In process stocks were correspondingly
around 200,000 PGM ounces higher than planned due to the smelter outages. The furnace repairs were completed
during the quarter as scheduled and are now in full production and we expect to process the build-up in
concentrate stock by the end of the financial year.
Sales of 119,051 Platinum ounces were in-line with refined production.
Mining Operations
The Marikana underground mining operations produced 2.6 million tonnes during the second quarter, an increase
of 2.1 million tonnes on the prior year period and essentially flat on Q2 2013.
The ratio of UG2 reef ore mined to total mined reef was 75.8% in-line with expectations. This compares to 68.3% in
the prior year period which was distorted by the impact of the strike.
Production at Easterns was 533,000 tonnes which was 427,000 tonnes higher than the prior year period and
181,000 tonnes, or 51.6% higher than Q2 2013. Saffy shaft recorded an increase of 176,000 tonnes, or 72.3% on Q2
2013 demonstrating the continued good progress that we have made with our promised ramp up.
Production at Westerns was 978,000 tonnes, an increase of 796,000 tonnes on the prior year period and 49,000
tonnes, or 4.8% lower than Q2 2013. Rowland, our second largest shaft, increased production by 23,000 tonnes or,
5.4% on Q2 2013 reflecting the positive impact of management actions and the theory of constraints projects
1
launched at this shaft. Production from Newman shaft decreased by 48,000 tonnes, or 21.2% on Q2 2013 as a
result of this shaft nearing the end of its life with declining production levels. Hossy shaft increased production by
15.3% on Q2 2013 in line with our turnaround plan as the mechanised operations are phased out in favour of
hybrid mining. East 1 shaft, which is also reaching end of life saw a decrease in production of 62,000 tonnes, or
61.4% on Q2 2013. (East 1 has been reported under Westerns since Q4 2014 in-line with changes in management
structure).
Production at Karee was 1,056,000 tonnes, an increase of 857,000 tonnes on the prior year period but 154,000
tonnes, or 12.8% lower than Q2 2013 driven by an increase in Section 54 safety stoppages at K3, our biggest shaft.
4B/1B produced 403,000 tonnes, an increase of 330,000 tonnes on the strike impacted prior year period. This was
6.8% lower than Q2 2013 due to an increase in Section 54 safety stoppages and some geological challenges. We
had limited activity at K4 with 15,000 tonnes produced in line with our early preparations to set up this long life,
low cost project for start-up.
Production at E3, Pandora (100%) of 145,000 tonnes increased by 116,000 tonnes over the prior year period and
by 25,000 tonnes, or 21.2% on Q2 2013 as the mining footprint of this shaft was extended by another two levels.
Production from our depleting Merensky opencast operations of 52,000 tonnes was 25,000 tonnes, or 32.4% lower
than the prior year period as this operation is reaching the end of its life.
A total of 279,000 tonnes of production were lost mainly due to safety stoppages. This was significantly lower than
the prior year period where 2,515,000 tonnes were lost due to the protected five month wage strike. However, in
comparison to Q2 2013 this shows an increase in tonnes lost of almost 100%, or 139,000 tonnes and we continue
to focus on safety, training and rebuilding relationships.
Q2 2015 Q2 2014 Q2 2013
tonnes tonnes tonnes
Section 54 safety stoppages 222,000 15,000 82,000
Management induced safety stoppages 43,000 5,000 27,000
Industrial action 14,000 2,515,000 31,000
Total tonnes lost 279,000 2,535,000 140,000
Process Operations
Total tonnes milled in the quarter of 2.9 million tonnes were 2.4 million tonnes higher than the prior year period
and 1.7% higher than Q2 2013. This performance is especially pleasing as it was achieved utilising six out of our
seven Marikana concentrators as part of our measures to reduce costs.
Underground milled head grade at 4.59 grammes per tonne (5PGE+Au) was 10.7% lower than the prior year period
of 5.14 grammes per tonnes but the prior year period was distorted by the effect of shutting down the plant due to
the strike. Compared to Q2 2013 the underground head grade was down 0.6%. The overall milled head grade was
4.53 grammes per tonne, down 6.7% on the prior year period but essentially flat on Q2 2013.
Concentrator recoveries for the quarter were industry leading at 86.8%.
Significantly, total Platinum-in-concentrate for the quarter at 181,814 saleable ounces was 146,388 ounces higher
than the prior year period and the highest Q2 since Q2 2007. Total PGMs in concentrate were 351,258 saleable
ounces which was 284,347 ounces higher than the prior year period and also the highest Q2 since Q2 2007.
As announced on 10 March the repairs to the Number One furnace and the additional maintenance work that was
brought forward were completed within schedule and all our furnaces are operating at normal production levels.
We expect to process the build-up of concentrate by the end of Q4 2015. We intend to take down the Number
2
Two furnace in Q4 for scheduled refractory brick replacement and some design upgrades on the roof and off-gas
system.
Total refined Platinum production for the second quarter of 122,480 ounces was impacted by the smelter
shutdowns. Whilst this was 61,512 ounces higher than the prior year period, this was down 68,149 ounces, or
35.7% on Q2 2013. Total PGMs produced in the second quarter were 236,328 ounces, an increase of 49.1% on the
prior year period.
Sales & Pricing
Platinum sales for the quarter of 119,051 ounces were in-line with refined production. This was a decrease of 9,820
ounces, or 7.6% on the prior year period when saleable metal stocks built up in anticipation of the strike were sold.
PGM sales of 240,322 ounces were down 61,336 ounces, or 20.3%. The build-up of concentrate stock ahead of the
smelters is anticipated to unwind in H2 as we have the processing capacity to refine the accumulated material.
The weak price environment continued during the second quarter resulting in a US dollar basket price (including
base metal revenue) of $936 per ounce. This is 7.3% lower than the prior year period while the corresponding Rand
basket price of R11,007 per ounce was 1.5% higher than the prior year period impacted by the Rand weakness. The
average Rand to Dollar exchange rate was 11.74 compared to 10.82 for the prior year period.
Lonmin also publishes today, in a separate announcement, its Interim Results for the half year ended 31 March
2015.
- ENDS -
ENQUIRIES
Investors / Analysts:
Lonmin
Tanya Chikanza (Head of Investor Relations) +44 20 7201 6007 / +27 11 218 8358
Media:
Cardew Group
Anthony Cardew / James Clark +44 207 930 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 located.
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
3 months 3 months 3 months
to 31 Mar to 31 Mar to 31 Mar
2015 2014 2013
Tonnes mined Marikana Saffy shaft kt 420 72 244
East 2 shaft kt 99 32 86
East 3 shaft Kt 14 2 21
Easterns kt 533 106 351
Rowland shaft kt 452 85 429
Newman shaft kt 179 37 227
Hossy shaft kt 266 40 231
W1 shaft kt 42 13 40
East 1 shaft 1 kt 39 8 100
Westerns kt 978 182 1,028
K3 shaft kt 638 126 778
K4 shaft kt 15 - -
4B/1B shaft kt 403 73 433
Karee kt 1,056 199 1,210
Underground kt 2,567 487 2,590
Opencast kt 52 77 133
Total kt 2,619 564 2,722
Pandora (100%)2 Underground kt 145 29 120
Limpopo3 Underground kt - 5 -
Lonmin (100%) Total tonnes mined (100%) kt 2,764 598 2,842
% tonnes mined from UG2
% 75.8 68.3 73.2
reef (100%)
Lonmin (attributable) Underground & Opencast kt 2,692 581 2,773
4
Ounces mined Lonmin excluding
Pt ounces oz 163,188 38,161 171,170
Pandora
Pandora (100%) Pt ounces oz 9,786 2,355 8,776
Limpopo Pt ounces oz - 192 -
Lonmin Pt ounces oz 172,974 40,708 179,946
Lonmin excluding Pandora PGM ounces oz 314,401 72,335 318,056
Pandora (100%) PGM ounces oz 19,439 4,618 16,697
Limpopo PGM ounces oz - 564 -
Lonmin PGM ounces oz 333,841 77,517 334,753
Tonnes milled 5 Marikana Underground kt 2,621 407 2,592
Opencast kt 114 69 121
Total kt 2,735 476 2,713
Pandora 6 Underground kt 145 25 120
Lonmin Platinum Underground kt 2,766 432 2,711
Head grade7 g/t 4.59 5.14 4.62
Recovery rate8 % 86.8% 87.8% 86.8%
Opencast kt 114 69 121
Head grade7 g/t 3.13 3.09 2.89
Recovery rate8 % 85.3% 84.4% 85.8%
Total kt 2,880 500 2,833
Head grade7 g/t 4.53 4.86 4.54
Recovery rate8 % 86.8% 87.5% 86.8%
4
3 months 3 months 3 months
to 31 Mar to 31 Mar to 31 Mar
2015 2014 2013
Metals-in- Marikana Platinum oz 170,434 32,545 170,830
concentrate9 Palladium oz 79,370 15,159 76,816
Gold oz 4,008 992 4,582
Rhodium oz 25,519 4,355 22,411
Ruthenium oz 41,736 7,126 34,691
Iridium oz 8,078 1,403 8,299
Total PGMs oz 329,144 61,579 317,628
Nickel 10 MT 829 204 900
Copper 10 MT 514 139 582
Pandora Platinum oz 9,785 2,022 8,759
Palladium oz 4,598 961 3,985
Gold oz 38 18 66
Rhodium oz 1,703 338 1,378
Ruthenium oz 2,784 534 2,082
Iridium oz 530 84 403
Total PGMs oz 19,438 3,957 16,673
Nickel 10 MT 19 3 15
Copper 10 MT 9 2 8
Concentrate purchases Platinum oz 1,595 859 973
Palladium oz 506 241 302
Gold oz 3 5 3
Rhodium oz 204 106 95
Ruthenium oz 283 116 102
Iridium oz 85 49 42
Total PGMs oz 2,676 1,375 1,516
Nickel 10 MT 1 0 -
Copper 10 MT 1 0 -
Lonmin Platinum Platinum oz 181,814 35,426 180,562
Palladium oz 84,474 16,360 81,103
Gold oz 4,049 1,014 4,651
Rhodium oz 27,425 4,800 23,883
Ruthenium oz 44,803 7,776 36,874
Iridium oz 8,693 1,536 8,745
Total PGMs oz 351,258 66,912 335,817
Nickel 10 MT 849 207 915
Copper 10 MT 523 142 590
5
3 months 3 months 3 months
to 31 Mar to 31 Mar to 31 Mar
2015 2014 2013
Refined Lonmin refined metal Platinum oz 122,094 60,417 189,356
production production Palladium oz 56,638 35,298 85,339
Gold oz 3,015 2,236 5,489
Rhodium oz 17,954 35,660 29,496
Ruthenium oz 28,400 15,481 50,860
Iridium oz 7,554 7,410 4,252
Total PGMs oz 235,655 156,503 364,792
Toll refined metal Platinum oz 385 551 1,273
production Palladium oz 185 240 184
Gold oz 9 12 20
Rhodium oz 26 73 28
Ruthenium oz 57 171 3,728
Iridium oz 11 911 646
Total PGMs oz 673 1,959 5,879
Total refined PGMs Platinum oz 122,480 60,968 190,629
Palladium oz 56,822 35,538 85,523
Gold oz 3,024 2,248 5,509
Rhodium oz 17,980 35,734 29,524
Ruthenium oz 28,456 15,652 54,588
Iridium oz 7,565 8,321 4,898
Total PGMs oz 236,328 158,462 370,671
Base metals Nickel 11 MT 697 258 883
Copper 11 MT 394 169 563
Sales Refined metal sales Platinum oz 119,051 128,871 217,800
Palladium oz 56,411 88,652 96,703
Gold oz 1,850 3,700 5,937
Rhodium oz 14,075 30,066 29,107
Ruthenium oz 40,265 39,788 47,356
Iridium oz 8,670 10,581 7,273
Total PGMs oz 240,322 301,658 404,176
Nickel 11 MT 669 664 995
Copper 11 MT 382 301 823
Chrome 11 MT 399,906 116,279 373,459
6
3 months 3 months 3 months
to 31 Mar to 31 Mar to 31 Mar
2015 2014 2013
Average prices Platinum $/oz 1,156 1,408 1,609
Palladium $/oz 781 741 734
Gold $/oz 1,505 1,510 1,537
Rhodium $/oz 1,163 1,056 1,197
Ruthenium $/oz 52 55 74
Iridium $/oz 560 492 998
$ basket excl. by-product revenue 12 $/oz 864 967 1,178
$ basket incl. by-product revenue 13 $/oz 936 1,010 1,244
R basket excl. by-product revenue 12 R/oz 10,176 10,390 10,527
R basket incl. by-product revenue 13 R/oz 11,007 10,845 11,109
Nickel 11 $/MT 11,739 11,681 14,106
Copper 11 $/MT 5,628 7,087 7,528
Chrome 11 $/MT 18 23 17
Exchange rates Average rate for period 14 R/$ 11.74 10.82 8.91
Closing rate R/$ 12.13 10.54 9.22
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 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 have been calculated at Lonmin standard downstream processing recoveries 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 13 but including revenue from base metals.
14 Exchange rates are calculated using the market average daily closing rate over the course of the period.
7
Date: 11/05/2015 08:00:00 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.