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LON
LOLMI
LON - Lonmin - Full Year Production Report and Guidance for 2008
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")
Full Year Production Report and Guidance for 2008
25 October 2007
Lonmin today announces its production report for the three months and twelve
months to 30 September 2007 (unaudited) and provides sales guidance for the
2008 financial year.
Q4 Production
Total tonnes mined for the fourth quarter at 3.5 million were down 8.6% on the
same period in 2006 and we produced 207,513 saleable ounces of Platinum in
concentrate a decline of 19.0% on the fourth quarter of 2006. The main reason
for this was the illegal industrial action by the National Union of Mineworkers
in August which affected both the Marikana and Pandora Joint Venture
operations.
The Process Division performed well during the quarter to deliver 262,280
ounces of refined Platinum broadly flat on last year in spite of the impact of
the strike on production at the Smelter and Base Metal Refinery. Final metal
sales for the fourth quarter were 315,945 ounces of Platinum and 592,525 ounces
of total PGMs.
2007 Production and Costs
Operationally 2007 was a challenging year for Lonmin. Overall we mined 14.0
million tonnes of ore a fall of 1.7% on 2006 after stripping out the effect of
the additional seven days in the prior year.
Our Marikana operations mined 12.8 million tonnes in the year a 2.0% decrease
on 2006 (after stripping out the effect of the additional seven days in the
prior year). Production was lower than expected as a result of both
industrial action and a longer than usual Christmas break. At Limpopo we
mined 0.8 million tonnes of ore, a decrease of 13.2% on 2006 as the operation
continued to be constrained by the lack of available developed ore and adverse
ground conditions. Attributable tonnes mined at Pandora rose in the year to
0.4 million versus 0.3 million in the prior year as we continued to increase
production from this ground.
We continued to ramp up production from our new mechanised shafts, Hossy and
Saffy, on the eastern side of our Marikana operations. These shafts are
performing well producing 461,000 tonnes in the year compared to 64,000 tonnes
in the 2006 financial year. During the year our opencast tonnes mined
increased by 6.3% to 1.9 million tonnes.
Milled head grade declined marginally during the year from 4.85 grams per tonne
to 4.80 grams per tonne as we ramped up the Marikana mechanised shafts,
processed more opencast ore than originally planned and sourced 25% more ore
than in 2006 from the eastern side of the Marikana property.
The concentrators produced a total of 869,832 saleable ounces of Platinum in
concentrate for the year down 9.9% on 2006 (after stripping out the effect of
the additional seven days in the prior year). Concentrator recoveries were
impacted by the blend of the feed mix including higher than anticipated
opencast tonnage, the lower head grade and the continued shortage of skilled
personnel.
The Process Division had a difficult start to the year with the shutdown of the
Number One furnace in December and its subsequent rebuild. The Division has
performed well since the restart of the Number One furnace at the end of April.
We have run both the Number One furnace and Merensky furnace since the end of
April and processed, through the Smelter, substantially all of the concentrate
inventories built up during the first half of the year. We also toll refined a
proportion of our concentrate which we could not store. Refined metal output
for the year was 695,842 ounces of Platinum, a decline of 12.9% on 2006 (after
stripping out the effect of the additional seven days in the prior year).
In order to improve operational efficiencies and consistency we have changed
our year end inventory management practices. This change has resulted in an
increase of around 65,000 Platinum ounces in metal in process at the year end,
predominantly within the Base Metal Refinery. We estimate that of this year
end stock around 19,000 ounces of Platinum should be released through the value
chain in the 2008 financial year.
Final metal sales for the year were 793,584 ounces of Platinum and 1,490,184
ounces of total PGMs, in line with our revised forecast following the August
strike. These sales included 93,609 ounces of Platinum which were toll refined
and 7,032 ounces of Platinum which were sold as concentrate or other part
processed products.
The reduction in production volumes as a result of the August strike has had an
impact on our full year unit costs and we are revising our Marikana C1 cost
guidance range because of this. Our guidance range for C1 costs net of base
metal credits for the 2007 financial year is between R3,250 to R3,350 per PGM
ounce sold for the Marikana operations. Our C1 guidance per PGM ounce sold for
Marikana and Limpopo combined remains within our previous range of R3,450 to
R3,550.
2008 Guidance
We currently anticipate sales for the 2008 financial year will be around
900,000 ounces of Platinum. We expect 2008 to be a year of consolidation as we
continue to grow our mechanised mining at Marikana with production increasing
from our Hossy and Saffy shafts. We currently forecast mechanised production
will account for around 17.0% of underground ore mined at Marikana by the end
of the 2008 financial year. The continued ramp up of our mechanised shafts
will contribute to the mix and grade impact we saw in 2007 continuing into 2008
with our growth in Marikana next year coming predominantly from the eastern
side of the operation. We are conducting a review of the ongoing viability of
our opencast pits given their impact on concentrator recoveries and increasing
costs but are currently planning for these pits to continue to contribute
during 2008. At Limpopo the emphasis on development will continue. In the
Process Division we will focus on improving recoveries across the value chain
in particular at the Concentrators.
We anticipate a challenging cost environment in 2008. South African inflation
in the mining sector for both operating costs and capital projects is
accelerating rapidly due to the combined impact of the mining boom,
construction boom, and 2010 World Cup infrastructure spend. The labour market
for all skills at artisan level and above is very competitive with overall
industry wage settlements increasing at double digit annual rates. Utility
costs are rising rapidly as are the costs of basic materials such as steel,
lubricants and fuel. These factors, plus the current stronger South African
Rand, will increase unit costs and put pressure on margins in 2008.
Commenting on the Full Year Production Report, Brad Mills, Chief Executive
said:
"2007 has been a difficult year for Lonmin. Although we have had many
successes, including achieving a market leading safety performance and
eliminating our over reliance on the Number One furnace, we have also
encountered challenges in the strength of our planning and forecasting systems
as well as operationally. We have made a number of changes to address these
issues. We are shifting the focus of all our planning and forecasting across
our value chain to ounces away from the historic tonnes focus of the mines. We
have considerably strengthened the senior operational team within Marikana
mining. The new management team at the Process Division is bedding down well
and we have moved responsibility for concentrator operations to the Process
Division to ensure the right focus on planning and recoveries. All capital
projects are now managed by our dedicated capital programme group to ensure the
right attention to project planning, scheduling and delivery. Lonmin remains
committed to growing its business in a value enhancing and socially responsible
way. The fundamental quality of our asset base is robust and we are confident
that we are resolving our operational issues as we build a solid foundation for
long term sustainable growth."
Enquiries:
Alex Shorland-Ball +44 (0) 20 7201 6060
Vice President, Investor Relations & Communications
3 months to 3 months to
30 September 30
September
2007 2006
Tonnes Marikana Underground 000 2,751 3,193
mined
Opencast 000 421 298
Total 000 3,172 3,491
Limpopo Underground 000 193 189
Opencast 000 0 0
Total 000 193 189
Pandora Underground 000 36 26
attributable
2
Opencast 000 53 73
Total 000 89 99
Lonmin Underground 000 2,980 3,408
Platinum
Opencast 000 474 371
#REF! Total 000 3,454 3,779
Tonnes Marikana Underground 000 2,801 3,244
milled
3
Opencast 000 391 337
Total 000 3,192 3,581
Limpopo Underground 000 186 202
Opencast 000 0 0
Total 000 186 202
Pandora4 Underground 000 85 62
Opencast 000 119 176
Total 000 204 238
Ore Underground 000 0 14
purchases5
Opencast 000 0 0
Total 000 0 14
Lonmin Underground 000 3,072 3,522
Platinum
Opencast 000 510 513
#REF! Total 000 3,582 4,035
12 months 12 months 12 months
to to to
30 30 30
September September September
Restated1
2007 2006 2006
Tonnes Marikana Underground 000 11,211 11,690 11,484
mined
Opencast 000 1,597 1,620 1,583
Total 000 12,808 13,310 13,067
Limpopo Underground 000 757 857 857
Opencast 000 0 14 14
Total 000 757 871 871
Pandora Underground 000 128 101 100
attributable
2
Opencast 000 286 176 175
Total 000 414 277 275
Lonmin Underground 000 12,096 12,648 12,441
Platinum
Opencast 000 1,883 1,810 1,772
#REF! Total 000 13,979 14,458 14,213
Tonnes Marikana Underground 000 11,216 11,707 11,502
milled
3
Opencast 000 1,469 1,895 1,854
Total 000 12,685 13,602 13,356
Limpopo Underground 000 781 887 887
Opencast 000 0 14 14
Total 000 781 901 901
Pandora4 Underground 000 301 238 236
Opencast 000 649 394 394
Total 000 950 632 630
Ore Underground 000 75 14 14
purchases5
Opencast 000 20 18 18
Total 000 95 32 32
Lonmin Underground 000 12,373 12,846 12,639
Platinum
Opencast 000 2,138 2,321 2,280
#REF! Total 000 14,511 15,167 14,919
Table continued
3 months 3 months
to to
30 30
September September
2007 2006
Metals in Marikana Platinum oz 188,194 232,619
concentrate
6
Palladium oz 84,859 105,726
Gold oz 5,180 10,453
Rhodium oz 25,251 29,225
Ruthenium oz 40,635 46,924
Iridium oz 11,688 10,127
#REF! Total oz 355,807 435,074
PGMs
Nickel7 MT 927 1,129
#REF! Copper7 MT 548 650
Limpopo Platinum oz 8,195 10,046
Palladium oz 5,483 7,641
Gold oz 714 700
Rhodium oz 814 2,444
Ruthenium oz 1,200 2,001
Iridium oz 195 539
Total oz 16,601 23,371
PGMs
Nickel7 MT 156 273
Copper7 MT 109 189
Pandora4 Platinum oz 11,080 12,821
Palladium oz 5,197 5,784
Gold oz 93 107
Rhodium oz 1,622 1,841
Ruthenium oz 2,399 2,781
Iridium oz 522 596
Total oz 20,913 23,930
PGMs
Nickel7 MT 13 28
Copper7 MT 7 10
Ore Platinum oz 44 605
purchases
5
Palladium oz 21 270
Gold oz 0 6
Rhodium oz 7 95
Ruthenium oz 11 158
Iridium oz 2 31
Total oz 85 1,165
PGMs
Nickel7 MT 3 2
Copper7 MT 1 1
Lonmin Platinum oz 207,513 256,091
Platinum
Palladium oz 95,560 119,421
#REF! Gold oz 5,987 11,266
Rhodium oz 27,694 33,605
Ruthenium oz 44,245 51,864
Iridium oz 12,407 11,293
#REF! Total oz 393,406 483,540
PGMs
Nickel7 MT 1,099 1,432
Copper7 MT 665 850
12 months 12 months 12 months
to to to
30 30 30
September September September
Restated1
2007 2006 2006
Metals in Marikana Platinum oz 778,049 897,494 881,068
concentrate
6
Palladium oz 354,037 402,566 395,180
Gold oz 21,578 28,654 28,284
Rhodium oz 102,906 115,664 113,411
Ruthenium oz 164,826 185,719 182,078
Iridium oz 37,317 38,420 37,676
#REF! Total PGMs oz 1,458,713 1,668,517 1,637,697
Nickel7 MT 3,802 4,228 4,160
#REF! Copper7 MT 2,259 2,499 2,459
Limpopo Platinum oz 35,567 48,640 48,640
Palladium oz 24,351 36,834 36,834
Gold oz 2,945 3,355 3,355
Rhodium oz 3,723 6,904 6,904
Ruthenium oz 5,769 8,704 8,704
Iridium oz 1,245 1,973 1,973
Total PGMs oz 73,600 106,410 106,410
Nickel7 MT 752 915 915
Copper7 MT 513 621 621
Pandora4 Platinum oz 52,479 34,279 34,125
Palladium oz 24,417 15,537 15,463
Gold oz 461 303 302
Rhodium oz 7,439 4,975 4,949
Ruthenium oz 10,922 7,547 7,507
Iridium oz 2,415 1,603 1,595
Total PGMs oz 98,133 64,244 63,941
Nickel7 MT 61 41 41
Copper7 MT 32 22 22
Ore Platinum oz 3,737 1,125 1,125
purchases5
Palladium oz 1,730 417 417
Gold oz 46 32 32
Rhodium oz 533 115 115
Ruthenium oz 809 202 202
Iridium oz 180 40 40
Total PGMs oz 7,035 1,931 1,931
Nickel7 MT 21 4 4
Copper7 MT 10 2 2
Lonmin Platinum oz 869,832 981,538 964,958
Platinum
Palladium oz 404,535 455,354 447,894
#REF! Gold oz 25,030 32,344 31,973
Rhodium oz 114,601 127,658 125,379
Ruthenium oz 182,326 202,172 198,491
Iridium oz 41,157 42,036 41,284
#REF! Total PGMs oz 1,637,481 1,841,102 1,809,979
Nickel7 MT 4,636 5,188 5,120
Copper7 MT 2,814 3,144 3,104
Table Continued
3 months to 3 months to
30 September 30 September
2007 2006
Metallurgy Lonmin Platinum oz 262,280 262,973
refined
Metal
Production
Palladium oz 124,774 124,964
Gold oz 7,210 7,598
Rhodium oz 35,478 35,093
Ruthenium oz 52,430 52,143
Iridium oz 10,897 15,056
Total oz 493,069 497,827
PGMs
Toll Platinum oz 8,827 0
refined
Metal
production
Palladium oz 7,617 0
Gold oz 0 0
Rhodium oz 1,481 0
Ruthenium oz 1,698 0
Iridium oz 389 0
Total oz 20,012 0
PGMs
Total Platinum oz 271,107 262,973
Refined
PGMs
Palladium oz 132,391 124,964
Gold oz 7,210 7,598
Rhodium oz 36,959 35,093
Ruthenium oz 54,128 52,143
Iridium oz 11,286 15,056
Total oz 513,081 497,827
PGMs
Base metals Nickel8 MT 1,417 1,251
Copper8 MT 885 840
Sales Refined Platinum oz 311,265 272,765
Metal
Sales
Palladium oz 153,757 130,200
Gold oz 9,570 6,516
Rhodium oz 36,656 32,068
Ruthenium oz 59,677 47,914
Iridium oz 12,321 13,237
Total oz 583,246 502,700
PGMs
Concentrate Platinum oz 4,680 97,547
and other9
Palladium oz 2,123 46,391
Gold oz 76 3,074
Rhodium oz 806 11,592
Ruthenium oz 1,594 19,313
Iridium oz 0 3,818
Total oz 9,279 181,735
PGMs
Lonmin Platinum oz 315,945 370,312
Platinum
Palladium oz 155,880 176,591
Gold oz 9,646 9,590
Rhodium oz 37,462 43,660
Ruthenium oz 61,271 67,227
Iridium oz 12,321 17,055
Total oz 592,525 684,435
PGMs
Nickel8 MT 2,211 1,401
Copper8 MT 1,075 1,069
Table continued
12 months 12 months 12 months
to to to
30 30 30
September September September
Restated1
2007 2006 2006
Metallurgy Lonmin Platinum oz 799,070 695,842 799,070
refined
Metal
Production
Palladium oz 318,758 369,859 369,859
Gold oz 20,485 20,955 20,955
Rhodium oz 88,469 115,453 115,453
Ruthenium oz 135,873 174,639 174,639
Iridium oz 30,430 40,836 40,836
Total PGMs oz 1,289,857 1,520,812 1,520,812
Toll Platinum oz 93,609 0 0
refined
Metal
production
Palladium oz 43,274 0 0
Gold oz 0 0 0
Rhodium oz 12,966 0 0
Ruthenium oz 20,439 0 0
Iridium oz 4,090 0 0
Total PGMs oz 174,378 0 0
Total Platinum oz 789,451 799,070 799,070
Refined
PGMs
Palladium oz 362,032 369,859 369,859
Gold oz 20,485 20,955 20,955
Rhodium oz 101,435 115,453 115,453
Ruthenium oz 156,312 174,639 174,639
Iridium oz 34,520 40,836 40,836
Total PGMs oz 1,464,235 1,520,812 1,520,812
Base metals Nickel8 MT 4,522 4,342 4,342
Copper8 MT 2,466 2,452 2,452
Sales Refined Platinum oz 786,552 803,471 803,471
Metal
Sales
Palladium oz 362,077 373,303 373,303
Gold oz 24,449 22,133 22,133
Rhodium oz 102,916 116,281 116,281
Ruthenium oz 162,853 179,557 179,557
Iridium oz 37,858 38,092 38,092
Total PGMs oz 1,476,705 1,532,837 1,532,837
Concentrate Platinum oz 7,032 144,027 136,183
and other9
Palladium oz 3,232 66,902 61,110
Gold oz 201 4,852 4,641
Rhodium oz 1,008 16,867 15,965
Ruthenium oz 1,942 27,975 26,137
Iridium oz 64 5,520 5,291
Total PGMs oz 13,479 266,143 249,327
Lonmin Platinum oz 793,584 947,498 939,654
Platinum
Palladium oz 365,309 440,205 434,413
Gold oz 24,650 26,985 26,774
Rhodium oz 103,924 133,148 132,246
Ruthenium oz 164,795 207,532 205,694
Iridium oz 37,922 43,612 43,383
Total PGMs oz 1,490,184 1,798,980 1,782,164
Nickel8 MT 5,308 4,604 4,604
Copper8 MT 2,474 2,974 2,974
Table continued
3 months to 3 months
30 September to 30
September
2007 2006
Prices Average Platinum $/oz 1,275 1,182
Palladiu $/oz 338 314
m
Gold $/oz 682 603
Rhodium $/oz 5,981 4,600
Rutheniu $/oz 377 192
m
Iridium $/oz 402 227
Basket $/oz 1,205 1,048
price of
PGMs
Nickel8 $/MT 24,718 30,665
Copper8 $/MT 7,087 12,428
Exchange Average rate for R/$ 7.04 7.14
Rates period
Closing R/$ 6.83 7.77
rate
Table continued
12 months 12 months 12 months to
to to 30 30 September
30 September
September
Restated1
2007 2006 2006
Prices Average Platinum $/oz 1,213 1,091 1,091
Palladium $/oz 339 300 300
Gold $/oz 647 571 571
Rhodium $/oz 5,757 3,971 3,971
Ruthenium $/oz 404 134 134
Iridium $/oz 402 233 233
Basket $/oz 1,196 972 972
price of
PGMs
Nickel8 $/MT 26,461 17,975 17,975
Copper8 $/MT 6,971 7,882 7,882
Exchange Average rate for R/$ 6.63 7.14 6.63
Rates period
Closing R/$ 6.83 7.77 7.77
rate
Notes:
1 The year to September 2006 comprised an additional 7 days mining
performance for Western Platinum Limited and Eastern Platinum Limited
arising on the change of basis to report on a calendar month. This column
shows the data restated on a like for like basis.
2 JV attributable tonnes mined includes Lonmin`s share (42.5%) of the total
tonnes mined on the Pandora joint venture.
3 Tonnes milled excludes slag milling.
4 Lonmin purchases 100% of the ore produced by the Pandora joint venture for
onward processing which is included in downstream operating statistics.
5 Relates to the tonnes milled and derived metal in concentrate from third-
party ore purchases.
6 Metals in concentrate have been calculated at industry standard downstream
processing losses. The metals in concentrate numbers for the first,
second and third quarters of the 2007 financial year have been restated to
adjust for a measurement error, discovered during the fourth quarter,
which occurred at one of our concentrators. This has the impact of
reducing the first quarter metals in concentrate produced by 1,259 ounces
of Platinum and 2,549 ounces of total PGMs, second quarter metals in
concentrate produced by 5,498 ounces of Platinum and 10,863 ounces of
total PGMs and the third quarter metals in concentrate produced by 296
ounces of Platinum and 604 ounces of total PGMs.
7 Corresponds to contained base metals in concentrate.
8 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.
9 Concentrate and other sales have been adjusted to a saleable ounces basis
using standard industry recovery rates.
Date: 25/10/2007 08:21:56 Produced by the JSE SENS Department.
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