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LONMIN PLC - Second Quarter 2015 Production Report

Release Date: 11/05/2015 08:00
Code(s): LON     PDF:  
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.




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