| Wed 14 Nov 2007, 9:00 | | LON - Lonmin Plc - Lonmin final results |
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LON
LOLMI
LON - Lonmin Plc - Lonmin final results
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")
Lonmin Final Results
14 November 2007
Addressing Operational Challenges
* A challenging year for Lonmin:
* Sales of 793,584 ounces of Platinum and 1,490,184 ounces of total PGMs
* EBIT of US$794 million down 5.7% on 2006
* Underlying earnings per share of 295.9 cents down 5.2% on 2006
* Safety performance continues to improve
* Mineral resources increased by 27.1% and mineral reserves by 9.2% year on
year enhanced by the completion of the pre-feasibility study at Limpopo and
the addition of Akanani
* Continued growth of mechanised shafts
* Senior operational team strengthened with appointment of new President,
Lonmin South Africa and new Executive Vice President, Mining
* Drilling at Akanani continues to confirm our view of the potential of the
project
* Final dividend of 60.0 cents per share an increase of 9.0% reflecting the
Board`s confidence in the fundamentals of Lonmin`s business
Financial highlights - Continuing
Operations 2007 2006 varianc
Year to 30 September e
Revenue US$m 1,941 1,855 4.6%
Underlying EBIT (i) US$m 796 830 (4.1)%
EBIT (ii) US$m 794 842 (5.7)%
Underlying profit before taxation US$m 811 827 (1.9)%
Profit before taxation US$m 705 633 11.4%
Underlying earnings per share cents 295.9 312.1 (5.2)%
(iii)
Earnings per share cents 205.1 219.5 (6.6)%
Dividend per share (in respect of cents 115.0 100.0 15.0%
the year) (iv)
Free cash flow per share cents 248.2 203.4 22.0%
Equity shareholders` funds US$m 1,968 1,089 -
Net debt US$m 375 458 -
Interest cover (v) x 27.4 23.1 -
Gearing (vi) % 15 27 -
NOTES ON HIGHLIGHTS
(i) Underlying EBIT is total operating profit adjusted for special items.
(ii) EBIT is total operating profit.
(ii) Underlying earnings per share are calculated on profit for the year
excluding movements in the fair value of the embedded derivative
associated with the convertible bond, exchange on tax balances, profit
on the sale of Marikana houses, pension settlement surplus, amounts
written off in respect of non core activities and, for 2006, an
adjustment to the interest capitalised in prior years.
(iv) The Board recommends a final dividend of 60.0 cents per share payable
on 8 February 2008 to shareholders on the register on 11 January 2008.
(v) Interest cover is calculated as Group operating profit excluding
exceptional items divided by net interest excluding exchange.
(vi) Gearing is calculated on the net borrowings attributable to the group
divided by the net borrowings attributable to the Group plus equity
shareholders` funds.
Commenting on the results, Brad Mills, Lonmin`s Chief Executive said:
"Over the last few years we have been modernising and transforming the Lonmin
business, while we build in long term growth. In 2007 although we have had many
successes, including achieving a market-leading safety performance, eliminating
our over reliance on the Number One furnace and increasing our mineral resources
by 27.1%, we have also encountered operational challenges and have made a number
of changes which will address these issues. For the 2008 financial year we are
currently forecasting sales of around 900,000 Platinum ounces. The fundamental
quality of our asset base is robust and we are confident that we can resolve the
issues we have faced to provide a solid foundation for long term growth. "
Enquiries:
Alex Shorland-Ball, Lonmin Plc +44 (0) 20 7201 6060
This press release is available on www.lonmin.com. A live webcast of the final
results` presentation starting at 09.30hrs (London) on 14 November 2007 can be
accessed through the Lonmin website. There will also be a web question facility
available during the presentation. An archived version of the presentation,
together with the presentation slides, will be available on the Lonmin website.
Chief Executive`s Comments
Introduction
Operationally, the 2007 financial year was a challenging one for Lonmin with a
significant shortfall against our original expectations for production. This
has been as a result of a number of factors in both the mining and processing
sides of our business. We have identified the problems and are well advanced in
addressing many of them.
Our Marikana Mining unit was impacted by the longer than usual Christmas break
and industrial action during the year. We have continued to ramp up production
from our new, fully mechanised, Hossy and Saffy shafts on the eastern side of
the Marikana property and these shafts are performing in line with our
expectations.
Our concentrators produced a total of 869,832 saleable ounces of Platinum and
1,637,481 saleable ounces of total PGMs in concentrate during the year.
Recoveries were impacted by the blend of the feed mix including higher than
anticipated opencast tonnage and lower head grade. They were also affected by a
continued shortage of skilled personnel. This led to a 3.5% decline in overall
concentrator recovery year-on-year from 80.8% to 77.3%. The inclusion of more
underground UG2 ore from the marginally lower grade eastern side of the Marikana
operations, as we continued to grow our mechanised operations in that area,
contributed to a decline in milled head grade from 4.85 grammes per tonne to
4.80 grammes per tonne (5PGE+Au). We have moved the management of the
concentrators into the Process Division and with the help of the Six Sigma team,
introduced a new model to optimise recoveries.
In the Process Division, the outage of our Number One furnace in December had a
major impact on our overall production and sales profile for the year. We have
addressed our historic reliance on the Number One furnace with the re-
commissioning of the Merensky furnace giving us an increase of 25% in our
installed smelting capacity year on year. The addition of new and experienced
management to the Process Division and our focus on operating discipline at the
Number One furnace have reduced the risk of further incidents with that vessel.
Despite the challenges, we have made significant progress in certain areas
during the year. Our safety performance has continued to improve. We have
strengthened our senior management team with the appointment of Alan Ferguson,
formerly with BOC, as Chief Financial Officer; Mahomed Seedat, formerly with BHP
Billiton as President, Lonmin South Africa; and Chris Sheppard, formerly with
Anglo Platinum, as Executive Vice President in charge of our mining operations.
The acquisition of the Akanani project on the Bushveld`s northern limb has added
significantly to our long term growth profile, whilst at Limpopo we have
significantly improved both our understanding of the resources and our
confidence in its longer term value.
Safety
We have continued to make good progress with our safety performance recording a
lost time injury frequency rate per million man hours worked for the year of
10.80, an improvement of 13.3% on the 2006 financial year. Our severity rate
has also fallen to 10.48 days versus 13.81 days in 2006, an improvement of
24.1%.
We regrettably suffered a total of three industrial fatalities at our operations
during the year.
Our focus at Marikana has been on promoting LTI free days and we achieved a
record 93 LTI free days this year in comparison to 37 in 2006. We have rolled
out the Incident Cause Analysis Methodology (ICAM) to cover all LTIs with the
relevant Mine Overseer presenting the investigation into each incident to the
senior operational team. We have introduced Safety Behaviour Observations
across the business and this has been successful in visibly showing the
commitment of all management to the safety of each Lonmin employee. In October
2007 we began a new mine wide safety campaign based on learning map technology
which is designed to help achieve our goal of an injury free workplace by 2010.
Marikana Mining
The Marikana Mining Division mined 12.8 million tonnes for the full year, a
decrease of 2.0% on the previous period after stripping out the effect of the
additional seven days of production which were included in last year`s figures
in order to align our production months with the calendar month. Of these
tonnes 11.2 million came from underground, down 2.4% from the 11.5 million
tonnes of underground mined in 2006, and 1.6 million from our opencast
operations, down 0.9% on the total for 2006.
Tonnage was below expectations as a result of the longer than usual Christmas
period and industrial action. In February we lost one day to a wildcat strike
and in August the operation was impacted by a 10 day illegal strike by the
National Union of Mineworkers ("NUM").
We continued with the ramp up of our fully mechanised Hossy and Saffy shafts
during the financial year. We have been pleased with the progress of these
shafts and they are confirming our views of the safety, productivity and cost
benefits of mechanisation. These shafts have increased production from 64,000
tonnes in 2006 to 461,000 tonnes this year or around 4% of our underground
Marikana ore. Our current expectation is that our mechanised operations will
produce around 17% of underground Marikana ore in the 2008 financial year.
Since the year end we have strengthened the mining team with the addition of
three new senior appointments. Chris Sheppard joined us on 1 October 2007 as
Executive Vice President, Mining with responsibility for all our mining
operations. In addition we have enhanced the Marikana mining team with the
appointment of Frank Russo-Bello formerly with AngloGold Ashanti, as Vice
President in charge of Conventional Mining and Dave Wright, formerly mine
manager at Rio Tinto`s Palabora mine as Vice President in charge of mechanised
mining. Both Frank and Dave report to Chris and joined us earlier this month.
Limpopo Mining
Our Limpopo operations produced 0.8 million tonnes mined during the 2007
financial year. Metal in concentrate production was 35,567 saleable ounces of
Platinum and 73,600 saleable ounces of total PGMs. This is lower than our
original expectations for the mine as we have continued to encounter difficult
ground conditions at Limpopo including an Iron Rich Ultramafic Pegmatite (IRUP)
in a section of the Merensky reef which was discovered during the later part of
the year. These issues have confirmed the need to concentrate on development to
ensure that we have sufficient flexibility to achieve sustainable production.
This focus will continue into 2008. We continue to evaluate our options for the
expansion of the Limpopo property following completion of extensive drilling on
the site which has further increased our confidence in the reserves and the
property`s longer term growth prospects.
Pandora Joint Venture
We continued to mine ore from the Pandora Joint Venture ground during the period
through our E3 shaft and UG2 opencast operations. Our share of Pandora`s
production was 0.1 million tonnes mined from underground (an increase of 28.0%
on 2006) and 0.3 million tonnes mined from opencast (an increase of 63.4% on
2006). Lonmin purchases 100% of the ore from the Pandora Joint Venture and this
ore contributed 52,479 saleable ounces of Platinum in concentrate and 98,133
saleable ounces of total PGMs in concentrate to our production, an increase of
53.5% on the prior year. In the short term we will continue to exploit E3 shaft
and the opencast operations.
The feasibility study for a stand alone Pandora project on a conventional basis,
which underpins the full value of the asset, is still work in progress and we
will be considering our options in consultation with our joint venture partners
in due course.
The Pandora Joint Venture contributed US$12 million of profit after tax for our
account in the financial year.
Concentrators
We produced a total of 869,832 saleable ounces of Platinum in concentrate for
the year, which was a fall of 9.9% on 2006, after stripping out the effect of
the additional seven days in 2006.
Milled head grade declined marginally during the year from 4.85 grammes per
tonne to 4.80 grammes per tonne (5PGE+Au) as we continued to grow the Marikana
mechanised shafts, processed more opencast ore and sourced 25% more ore than in
2006 from the eastern side of the Marikana property.
During the year the concentrators experienced a decline in recoveries as we
tried to manage the mix of feed including higher than anticipated opencast
tonnage, the lower head grade and the continued shortage of skilled personnel.
We are addressing this recovery issue and have moved the management of the
Concentrators into the Process Division to ensure the right focus on planning
and recoveries. We have also developed, with the help of our Six Sigma team, a
new model for the running of the concentrators which, we believe, will allow us
to improve recoveries as we manage more effectively the feed and mix across our
8 concentrators.
Process Division
On 18 December 2006 we had a burn through in the Number One furnace next to one
of the matte tap holes. The investigation that followed indicated that a full
rebuild of the furnace hearth was required. This was successfully completed
during the second quarter of our financial year and the furnace came back online
with its first matte tap on 30 April 2007.
We completed the re-commissioning of our Merensky furnace on 12 March 2007 when
we tapped matte for the first time. The addition of this vessel plus our three
Pyromets now gives us 40 megawatts of installed capacity. This is a 25%
increase on our 2006 installed capacity giving us surplus capacity in the
Smelter in relation to our current production and much greater flexibility in
this operation.
During the Number One furnace outage we made a decision to stockpile as much
concentrate as possible ahead of the Smelter for processing in the second half
of the year. A proportion of Concentrate which we did not have the room to
store was toll refined externally. Since 30 April 2007 we have run the Number
One furnace and the Merensky furnace and have consumed substantially all of
these concentrate stockpiles. The improved operational discipline introduced
by the new management team in the Process Division has been evident in the
performance of the Smelter.
At our Base Metal Refinery ("BMR") we continue to upgrade the facility to reach
our target throughput rate of 37 tonnes per day. The BMR performed well in the
second half of the year with throughput of 5,276 tonnes of matte.
The Precious Metal Refinery produced 695,842 ounces of Platinum and 1,289,857
ounces of total PGMs during the year, a decrease of 12.9% and 15.2% respectively
on 2006 after stripping out the effect of the additional seven days in the prior
year.
In order to improve operational efficiencies we have increased our year end
inventory by around 65,000 Platinum ounces, predominantly within the Base Metal
Refinery. We estimate that, of this year end stock, around 46,000 ounces of
Platinum will be added to our metal in process within the value chain to allow
us to achieve stable steady state operations and 19,000 ounces should be
released through the value chain in the 2008 financial year.
In total we received back 93,609 ounces of Platinum and 174,378 ounces of total
PGMs from toll treatment to give total metal sales for the period of 793,584
ounces of Platinum and 1,490,184 ounces of total PGMs.
Six Sigma
Our Six Sigma continuous improvement programme has delivered an additional R173
million of net EBIT benefit below the challenging target of R400 million we set
ourselves. We won, for the second year running, the Best Achievement of Six
Sigma in Manufacturing at the Global Six Sigma Awards.
We now have a total of 7 Master Black Belts and 28 Black Belts within the
programme and are progressing with the training of all our senior management
team as Green Belts. We are continuing to work to improve cycle times for
projects.
Costs and Capital Expenditure
Our C1 cost per ounce was significantly impacted by the lower production volumes
at R3,165 per PGM ounce sold for Marikana net of base metal credits. This is
29.7% higher than last year with lower volumes being a key driver of this. Our
C1 ounces reduced by 16%. The C1 cost per PGM ounce sold for Marikana and
Limpopo combined was R3,434 net of base metal credits. The base metal credit
per PGM ounce sold was R762.
In common with the rest of the South African mining industry we have continued
to experience cost pressures with substantial increases in the cost of power,
water and other key consumables starting to impact the business. The shortage
of, and difficulty in retaining, skilled labour has also increased the cost base
as we have had to stay competitive in our packages for certain key skills.
Our gross capital expenditure for the year was US$276 million which is lower
than forecast. Looking forward to 2008 we expect our capital spending to be
around US$400 to US$450 million. This will include some carry forward from
2007, spending at the Marikana operations on the completion of our K4 shaft and
sub decline projects at Rowland and K3 plus initial work on our planned next
generation of deeper shafts. At Limpopo we will continue to conduct work on our
expansion of this property to the east. For Akanani we have included around
US$20 million of capital to cover the planning stage on the project during 2008.
Attributable Mineral Resources and Reserves
Our directly attributable mineral resources increased by 27.1% versus 30
September 2006 primarily as a result of the addition of the Akanani resources
which added an additional 30.0 million ounces of PGMs (3PGE+Au). Attributable
reserves increased 9.2% to 51.3 million PGM ounces (3PGE+Au) with the completion
of our pre-feasibility study on the Limpopo expansion significantly enhancing
the Limpopo overall reserves. At Marikana the reserves and resources remained
relatively consistent year on year as we continued to replace mined tonnes with
further ore reserves. The table below sets out our reserves and resources as at
30 September 2007 versus the position at the end of 2006. The full reserves and
resources statement including all the accompanying notes can be found on our
website at www.lonmin.com.
Attributable Mineral Resources (Total Measured, Indicated and Inferred)
Area 30 September 2007 30 September 2006
Mt 3PGE+Au1 Pt Mt 3PGE+Au1 Pt
g/t Moz Moz g/t Moz Moz
Marikana 644.4 4.94 102.3 61.2 650.4 4.94 103.3 61.5
Limpopo2 178.8 4.19 24.1 12.1 124.6 4.72 18.9 9.5
Akanani 269.7 3.46 30.0 12.5 - - - -
Pandora 56.7 4.33 7.9 4.9 55.4 4.09 7.3 4.6
JV3
Loskop JV4 10.1 4.04 1.3 0.8 5.2 4.35 0.7 0.5
Total 1,159. 4.44 165.6 91.6 835.7 4.85 130.3 76.1
7
Attributable Mineral Reserves (Total Proved and Probable)
Area 30 September 2007 30 September 2006
Mt 3PGE+Au1 Pt Mt 3PGE+Au1 Pt
g/t Moz Moz g/t Moz Moz
Marikana 331. 4.18 44.5 26.6 334.9 4.14 44.6 26.6
4
Limpopo2 64.3 3.26 6.7 3.4 20.3 3.58 2.3 1.2
Pandora 0.30 4.55 0.04 0.03 - - - -
JV3
Total 396. 4.03 51.3 30.0 355.2 4.11 47.0 27.7
0
The Lonmin Mineral Resources and Reserves information was prepared on the
following basis:
1 3PGE+Au = Pt+Pd+Rh+Au (Loskop JV excludes Rh).
2 Limpopo includes Dwaalkop JV, in which Western Platinum Limited (82% owned
by Lonmin) has an interest of 50%.
3 Pandora JV: Eastern Platinum Limited (82% owned by Lonmin) has an
attributable interest of 42.5% in the Pandora Joint Venture with Anglo
Platinum, Mvelaphanda Resources and the Bapo Ba Mogale Mining Company.
4 Loskop JV: Western Platinum Limited (82% owned by Lonmin) has an
attributable interest of 50% in the Loskop Joint Venture with Boynton
Investments.
5 Incwala Resources owns 18% of both Western Platinum Limited and Eastern
Platinum Limited and 26% of Akanani.
6 All quoted Resources and Reserves include Lonmin`s attributable portion
only and the following percentages were applied to the total Mineral
Resource and Reserve for each property:
Area Marika Limpopo - Limpopo - Akanani Pandor Losko
na Dwaalkop JV Baobab, a p
Doornvlei,
Zebedelia
Lonmin 82% 41% 82% 74% 34.85% 41%
Attributa
ble
The 2006 Mineral Resources and Mineral Reserves have been re-stated in order to
reflect Lonmin`s portion only.
7 All figures are reported as metric tonnes (millions), grammes per tonne,
percent or troy ounces (millions).
8 All tabulated data have been rounded to one decimal place for tonnage and
content and two decimal places for grades.
9 Mineral Resources are inclusive of Mineral Reserves.
10 Mineral Resources are reported as "in situ" tonnes and grade and allow for
geological losses such as faults, dykes, potholes and Iron Rich Ultramafic
Pegmatite (IRUP).
11 Proved and Probable Mineral Reserves are reported as tonnes and grade
expected to be delivered to the mill, are inclusive of diluting materials
and allow for losses that may occur when the material is mined.
12 Mine tailings dams are excluded from the above Mineral Resource summary.
13 For economic studies and the determination of pay limits, an exchange rate
of R7.25/US$ and the following metal prices were assumed:
Metal Pt Pd Rh Ru Ir Au Metal Ni Cu
USD/Oz 1,27 350 4,00 530 410 680 USD/to 33, 6,
0 0 nne 000 60
0
14 Dilutions are quoted as waste tonnes/ore tonnes in percent.
15 Unless otherwise stated, the Lonmin Mineral Resources and Reserves
estimates were prepared or supervised by various Lonmin Competent Persons.
Markets
Most of the physical PGM markets, apart from Palladium, remained tight during
2007, as global demand for the metals from industrial applications, in
particular in the autocatalyst sector, continued to grow. Supply remained
constrained as the South African PGM industry, the world`s largest source of PGM
production, continued to face challenges such as skills shortages as well as
capital project cost and wage inflation.
The Platinum market remains tightly balanced and continues to be
supported by on-going demand growth for diesel autocatalysts, Platinum
jewellery in China and the continued use of the metal in industrial and
electronic applications. The Rhodium market remains tight due to strong
demand from the autocatalyst sector, which contributes around 89% of demand
for the metal, whilst supply remains constrained, as it continues to be produced
mainly as a by-product of South African Platinum production. The autocatalyst
sector remains the most important demand driver for Palladium although demand is
also being supported by the jewellery market.
South Africa remains the world`s dominant production source of other Platinum
group metals, in particular Ruthenium and Iridium. The country continues to be
critical in meeting the growing demand for the application of these metals in
new and innovative industrial manufacturing technologies.
Growth Profile
Our growth in the period to 2012 will come primarily from the development of our
mechanised shafts at Marikana and the completion of the Limpopo eastern
expansion. The combination of these, and the steady rate of production from our
deep shafts at Marikana will, we believe, allow us to reach production of around
1.2 million ounces of Platinum in 2012. This target and the detailed plans to
reach it will be fully reviewed in the next few months by the new mining team.
Marikana
At Marikana we will continue the conversion to mechanised mining with Saffy and
Hossy reaching full production in 2011 and 2012 respectively. Our K4 mechanised
shaft on the western side of the Marikana property will come into production
late in 2009 and at full production, which we anticipate will be around 5 years
later, is planned to contribute an additional 180,000 Platinum ounces. These
large new shafts, plus the extension of K3 and Rowland shafts, will offset the
decline of a number of smaller, shallow shafts which are expected to deplete
over the next few years.
Limpopo
Our existing Limpopo operations at Baobab shaft encountered an area of adverse
ground around an IRUP body during 2007. This event resulted in a loss of ore
reserves and to address this situation, we are focusing on development work
through the IRUP body to ensure we can sustain our targeted production levels in
the future.
We completed a pre-feasibility study on the Limpopo expansion project in March
this year confirming our view that the project could be developed as a fully
mechanised mine. We have undertaken further work on the project since the
completion of this study to look at the potential for a larger project on the
property. Permitting for this project is underway. This new work will also
look at short term opportunities to make optimal use of our existing
concentrator capacity at Limpopo including the possibility of accessing ore from
the expansion to the east where the reef is closer to the surface.
Akanani
In the second half of the year we continued drilling at the Akanani project
(which is on the northern limb of the Bushveld complex) to increase our
confidence in the mineral resource. The drilling in the southern section has
continued to confirm the continuity of the mineralisation and the consistency of
the grades and thickness. The results of the P2 in-fill drill holes completed
since our interim announcement are set out below and show a weighted mean width
of 20.88 metres at a grade of 6.06 grammes per tonne (3PGE+Au). Once the infill
drilling programme is completed we will publish an updated mineral resources
statement for the property. Work has commenced on mine design for high volume
mechanised mining at Akanani looking at options which could range from 400,000
to 1 million tonnes hoisted per month.
Borehole Drilled 3PGE+Au Cu Ni
width (g/t) (%) (%)
(metres)
ZF015 13.27 2.62 0.16 0.25
ZF043* 25.60 5.51 0.17 0.36
ZF044* 35.98 9.64 0.17 0.34
ZF045 28.00 2.51 0.14 0.22
ZF046 11.74 8.31 0.21 0.40
ZF047 0.97 4.08 0.03 0.26
ZF049 30.64 6.25 0.12 0.24
Weighted 20.88 6.06 0.15 0.30
Mean
* Average of two intersections
In addition to the P2 section of the Platreef we continue to believe that the P1
mineralisation has significant selective mining potential which has been
confirmed by our drilling of the P1 section of the reef to date. Recent drill
holes indicated a width in this section of the reef of between 16.5 to 38.4
metres at grades of between 3.16 to 5.11 grammes per tonne (3 PGE+AU).
Borehole From To Drilled 3PGE+Au Cu Ni
width (g/t) (%) (%)
(metres)
ZF044 1226.87 1264.56 37.69 3.16 0.09 0.14
ZF044 1282.52 1301.91 19.39 5.09 0.11 0.20
ZF044_ED1 1317.13 1333.59 16.46 4.41 0.18 0.27
ZF045 976.14 1014.51 38.37 5.11 0.20 0.31
ZF046 1018.46 1041.52 23.06 4.17 0.13 0.23
At the time of our acquisition of the project, the Platreef mineralisation had
only been drilled along 3 km of strike in the southern section of the property.
Since February a further fourteen drill holes have been completed along
approximately six kilometres of strike in the northern portion of the asset.
These drill holes indicate that the promising mineralisation continues along the
entire nine kilometres of strike at the property. Set out below are the results
of the 6 drill holes completed since our interim announcement in May 2007:
Borehole Drilled 3PGE+Au Cu Ni
width (g/t) (%) (%)
(metres)
MO009 7.56 5.78 0.07 0.18
MO013 1.92 3.08 0.18 0.31
MO014 26.27 1.99 0.10 0.17
MO016 0.86 4.62 0.05 0.08
MO019 3.45 2.66 0.04 0.06
MO020 24.34 3.07 0.09 0.16
New Order Mining Licence
A fundamental part of security of tenure for mining in South Africa is the
conversion of Old Order Mining Rights to New Order Mining Rights, under the
country`s mining legislation effective 1 April 2004.
In October 2006, we achieved conversion of our Marikana mining rights. These
give us the right to mine at Marikana for 30 years, with an option to renew the
licence for an additional 30 years.
The table below lays out the status of licensing for our major projects:
Project Current Current Status of Effective
Rights/Permits Conversion BEE
Ownership
Marikana New Order Mining Converted 18%
Rights
Limpopo - Baobab Old Order Mining Application for 18%
shaft Right conversion of Old Order
Mining Right submitted
in March 2007.
Limpopo - Expansion Converted Application for New 59%
(Dwaalkop) Prospecting Order Mining Rights to
Right which is be submitted in
currently November 2007.
subject to a
Renewal
Application
Limpopo - Expansion Old Order Mining Application for 18%
(Doornvlei) Right conversion of Old Order
Mining Right being
drafted with submission
anticipated in first
quarter of 2008.
Pandora Joint Old Order Mining Application for 15%
Venture Right conversion of Old Order
Mining Right submitted
in 2006. Processing
ongoing due to
amendments made to
initial documents
submitted.
Akanani Converted Application for New 26%
Prospecting Order Mining Right will
Right be made following
completion of pre-
feasability study
Dividend
The Board has recommended a final dividend of 60.0 cents per share, an increase
of 9.0% on the final dividend last year, reflecting the Board`s confidence in
the fundamentals of Lonmin`s business. This gives a full year dividend in
respect of the year of 115.0 cents per share up 15.0% on 2006.
Outlook and 2008 Guidance
We currently anticipate sales for the 2008 financial year will be around 900,000
ounces of Platinum. 2008 will be a year of consolidation as we continue to grow
our mechanised mining at Marikana with forecast production increasing from our
mechanised operations to around 17% of underground ore mined at Marikana. The
continuing ramp-up of our mechanised Hossy and Saffy shafts will contribute to
the mix and grade impact we saw in 2007 continuing into 2008 with our growth at
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. However, we 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 with a strong focus on
our Concentrators.
We expect the current challenging cost environment will continue 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 in 2008. We are currently forecasting that our
C1 costs before base metal credits for the 2008 financial year will be 15% ahead
of the R4,196 in 2007 and base metal credits per PGM ounce sold will be in line
with that recorded in 2007.
The contribution of Lonmin employees, contractors and community members during
the last year is highly valued and their hard work and dedication is greatly
appreciated.
The markets for Platinum and our other key metals continue to look robust and we
have added further growth to our portfolio with the acquisition of Akanani. We
are taking actions to address the operational issues we have encountered in the
last twelve months and are confident that this work will strengthen the company
and build a solid foundation for our long term growth plans.
Bradford A Mills
Chief Executive
14 November 2007
Financial Review
Introduction
The financial information presented has been prepared on the same basis and
using the same accounting policies as those used to prepare the financial
statements for the year ended 30 September 2006.
Analysis of results
Income Statement
A comparison of the 2007 total operating profit with the prior year is set out
below:
$m
Total operating profit - 2006 842
Less profit on sale of houses - 2006 (special) (12)
Underlying operating profit - 2006 830
PGM price 345
PGM volume (303)
PGM mix (28)
Base metals 52
Cost changes (after foreign exchange benefit) (100)
Underlying operating profit - 2007 796
Sale of houses, pension refund and impairment (2)
loss - 2007 (special)
Total operating profit - 2007 794
The 2006 total operating profit of $842 million benefited from $12 million of
gains arising on the disposal of company housing and therefore underlying
operating profit for 2006 was $830 million. The metal markets have continued to
strengthen in 2007 for both PGMs and base metals. The average price per PGM
ounce has increased 23% to $1,196 per ounce resulting in an additional $345
million of profit generated. This year has however been a challenging one in
terms of production for a number of reasons including the Number One furnace
being out of action for quarter two, lower concentrator recoveries and
industrial action towards the end of the year. In addition a decision was taken
not to sell semi-finished product at the year end as part of a strategy to
achieve more steady state production flows. As a result of these factors PGM
sales were down by nearly 309,000 ounces and operating profit was adversely
affected by $303 million. In addition the PGM mix was unfavourable with the
proportion of highly priced Rhodium ounces falling from 7.5% to 7.0% of the
ounces sold. Base metal revenues were up $52 million entirely driven by Nickel
for which volume was up 15% and price up 47%. After other cost changes of $100
million, which are explained in more detail below, the resulting underlying
operating profit was $796 million, down 4% on the prior year. Total operating
profit for 2007 was $794 million after allowing for a number of small special
gains and losses.
Other cost changes (increase) / decrease:
$m
Safety, health, environment and community (28)
Exploration, development and marketing (16)
Shared services and support functions (19)
Productive costs (67)
Toll fees (18)
Royalties (7)
Share based payments (18)
Depreciation and amortisation (6)
Foreign exchange 79
(100)
We recognise the vital role we have in caring for our employees both within the
work environment and in the wider community and have spent an incremental $28
million this year. Safety has remained a major area of focus and we have
invested in both training programmes and equipment. We have run a major AIDs /
HIV testing programme and nearly 14,000 employees have been tested and know
their status. The anti-retroviral programme to support employees has been
extended and the general medical scheme has been improved. The company has also
developed a major learning programme to improve basic educational skills,
including literacy, of the workforce. In 2007 on average some 500 employees were
enrolled on the course and this is expanding to 750 in 2008.
The business has also been strengthened in the year through other forward-
looking investments. Our exploration expenditure has increased by more than 50%.
We have also increased our marketing spend with particular focus in the
jewellery sector and we are investing in development programmes with pre-
feasibility projects for metallurgical expansion and Limpopo.
Costs of shared services and other functions which support the business have
also been increased this year. In part this reflects recognition that these
areas need to be expanded to cope with a more complex environment. IT costs for
example have increased reflecting the costs of operating new ERP and
metallurgical systems. The Human Capital function is being expanded to enhance
capabilities in areas such as labour welfare and labour relations. The Group
also recognised in the year that strategic and production planning needed to be
enhanced and is developing and broadening this function.
Productive costs increased by some $67 million in the period. This principally
arose from inflationary pressures in the mining sector in South Africa, however,
some other factors were at play. Opencast contracting costs increased driven by
increases in UG2 ore content and ore transport costs increased due to the
production shifts across the property. Also the business experienced higher
levels of labour absenteeism which necessitated increased staff numbers and
resulted in lower productivity.
A number of other specific areas impacted costs. Outside toll-refining was
utilised to process some 12% of our metallurgical production as a direct result
of the smelter burn through and this resulted in some $18 million of charges.
The increase in profits derived from the Eastern side of the property due to
higher tonnes mined has lead to an increase in royalties of $7 million.
Furthermore, the cost of share based payments increased by $18 million driven by
a number of factors including the impact of the GBP11 increase in share price on
cash-settled schemes, the impact of accelerated vesting and the new co-
investment plan.
Foreign exchange has been a strong positive factor with costs benefiting $79
million due to an 8% weaker Rand against the Dollar in 2007. The Rand has
however appreciated considerably at the start of 2008 and, if continued, this
will have a significantly adverse effect on 2008 reported costs in Dollar terms.
The C1 cost per PGM ounce sold net of by-product credits on own production from
the Marikana operations amounted to R3,165 for 2007 compared with R2,441 for
2006, an increase of 30% despite the benefit of improved base metal credits (up
from R400/oz to R762/oz). Rand costs incurred on C1 ounces increased by 13%. The
C1 cost per ounce increased significantly due to high levels of fixed costs
being spread over fewer ounces as sales of C1 ounces fell by 18%. Further
details of unit costs analysis can be found in the operating statistics table
within the Annual Review.
Summary of net finance costs
2007 2006
$m $m
Net interest charges (29) (36)
Capitalised interest 23 16
Prior years capitalised - 21
interest adjustment
Movement in fair value of embedded (104) (227)
derivative of convertible bond
Other 3 (2)
Net finance expenses (107) (228)
Net interest charges have fallen by $7 million due to a lower average net debt
versus the prior year and therefore interest cover has strengthened to 27.4
times (2006 - 23.1 times). Capitalised interest for the period has increased to
$23 million of which $13 million relates to the acquisition funding of the
Akanani asset. A key change in the year has been the redemption of the
convertible bond following the notice issued by the company in November 2006.
Movements in fair value of the embedded derivative have been recognised to the
point of conversion resulting in a lower charge at $104 million in the period.
Net finance expenses in 2007 were therefore $107 million compared with $228
million in 2006.
Profit before tax amounted to $705 million in 2007 compared with $633 million in
2006 reflecting the operating profit decrease of $48 million which was more than
offset by the improvement in net finance expenses.
The 2007 tax charge was $297 million compared with $202 million in 2006. The
corporate tax rate in South Africa has remained at 29% during the year. The
effective tax rate, excluding the effects of exchange and special items, was 31%
compared with 34% last year. The key reason for the reduction is the overseas
taxes on dividends which fell by $29 million reflecting lower levels of
dividends remitted in the year by subsidiaries. This is largely a timing
difference which is expected to reverse in 2008 although the rate on such
remissions has been reduced from 12.5% to 10.0% with effect from 1 October 2007.
The overall tax charge includes a debit of $51 million on the translation
adjustment of the current and deferred tax balances resulting from the 12%
appreciation of the closing Rand/Dollar exchange rates at the respective year
ends.
Profit for the year attributable to equity shareholders amounted to $314 million
(2006 - $313 million) and earnings per share were 205.1 cents compared with
219.5 cents in 2006. Underlying earnings per share, being earnings excluding
special items, amounted to 295.9 cents (2006 - 312.1 cents).
Balance sheet
A reconciliation of the movement in equity shareholders` funds is given below.
$m
Equity shareholders` funds - 2006 1,089
Total recognised income 392
Conversion of the convertible bond 587
Other share issues 70
Dividends (171)
Other 1
Equity shareholders` funds - 2007 1,968
Equity interests were $1,968 million at 30 September 2007 compared with $1,089
million at 30 September 2006. The total recognised income attributable to equity
shareholders of Lonmin Plc for the year was $392 million. The conversion of the
convertible bond into equity generated $216 million of share capital and share
premium as well as the reversal of $371 million of fair value adjustments
previously charged to the income statement. Further share capital and premium of
$70 million was generated by the issuance of shares under option schemes for $33
million and through an equity investment by the IFC. Dividend payments in the
period totalled $171 million made up of $85 million for the 2006 final and $86
million for the 2007 interim dividend.
On 26 January 2007 the Group acquired 94% of AfriOre Limited with a compulsory
acquisition of the remaining shares by 16 February 2007. Total consideration
paid was $413 million against net assets acquired under Group accounting
policies of $15 million. This has therefore resulted in the recognition of $611
million of exploration and evaluation assets, $73 million of goodwill, a
deferred tax liability of $173 million and the minority interest share of the
fair value uplift of $113 million as required by IFRS.
Net debt amounted to $375 million at 30 September 2007 with the components being
bank loans of $596 million offset by cash net of overdrafts of $221 million.
Net debt has reduced in the period from $458 million with the net cash outflows
of $137 million being offset by the bond conversion.
Gearing was 15% compared with 27% at 30 September 2006, calculated on net
borrowings attributable to the Group divided by those attributable net
borrowings and the equity interests outstanding at the balance sheet date.
Cash flow
The following table summarises the main components of the cash flow during the
year:
2007 2006
$m $m
Operating profit 794 842
Depreciation and 87 81
amortisation
Change in working capital 81 (202)
Other 21 1
Cash flow from operations 983 722
Interest and finance costs (25) (31)
Tax (266) (185)
Trading cash flow 692 506
Capital expenditure (276) (182)
Proceeds from assets held 5 28
for sale
Dividends paid to minority (41) (62)
Free cash flow 380 290
Acquisitions (393) (14)
Financial investments (21) (36)
Shares issued 68 15
Equity dividends paid (171) (124)
Cash inflow / (outflow) (137) 131
Opening net debt (458) (585)
Bond conversion 213 -
Exchange 7 (4)
Closing net debt (375) (458)
Trading cash flow (cents 354.9c
per share) 452.0c
Free cash flow (cents per 203.4c
share) 248.2c
Despite the fall in operating profit cash flow from operations for 2007 was $983
million, a 36% increase on last year`s figure of $722 million. This was mainly
due to an inflow on working capital of $81 million compared with an outflow of
$202 million last year. The large outflow in 2006 was as a result of an
increase of $249 million in debtors due to concentrate sales at the end of the
year. During this year there has been a $58 million decrease in debtors. After
interest and finance costs of $25 million and tax payments of $266 million,
trading cash flow amounted to $692 million in 2007 against $506 million in 2006,
with trading cash flow per share of 452.0 cents in 2007 against 354.9 cents in
2006.
Capital expenditure of $276 million was incurred during the year, up $94 million
on the prior year. This was, however, lower than the $300 million expected and
most of this shortfall relates to timing differences which will flow into 2008.
Free cash flow amounted to $380 million with free cash flow per share at 248.2
cents (2006 - 203.4 cents). Acquisitions of $393 million in 2007 represented
the purchase of AfriOre Limited as described above net of $20 million cash
acquired. Proceeds from shares issued were up $53 million as, in addition to
shares issued in respect of share schemes, a $35 million equity investment was
made by the IFC which was at a 5% discount to market price. After equity
dividends paid of $171 million, the cash outflow during 2007 was $137 million
and net debt amounted to $375 million at 30 September 2007.
Dividends
As dividends are now accounted for on a cash basis under IFRS the dividend shown
in the accounts represents the 2006 final of 55 cents and the 2007 interim of 55
cents making a total of 110 cents for the year. In addition the Board
recommends a final 2007 dividend of 60 cents (2006 - 55 cents).
Financial risk management
The Group`s functional currency remains the US Dollar and the share capital of
the Company is based in US Dollars.
The Group`s business is mining and it does not undertake trading activity in
financial instruments.
Interest rate risk
Monetary assets and liabilities are subject to the risk of movements in interest
rates. The borrowings at 30 September 2007 comprised $296 million of borrowings
in the UK, of which $237 million was drawn under an acquisition facility on the
purchase of AfriOre, and in South Africa a long-term bank loan of $300 million
was drawn together with an overdraft of $1 million. Cash deposits represented
balances of $12 million in the UK and $210 million in South Africa.
Liquidity risk
Liquidity risk measures the risk that the Group may not be able to meet its
liabilities as they fall due and, therefore, its ability to continue trading.
The Group`s policy on overall liquidity is to ensure that there are sufficient
committed facilities in place which, when combined with available cash
resources, are sufficient to meet the funding requirements in the foreseeable
future. At the 2007 year end the Group had $1,450 million of committed
facilities in place of which $596 million were drawn down.
Foreign currency risk
Foreign currency risk arises when movements in exchange rates, particularly the
US Dollar against the South African Rand, affect the transactions the Group
enters into, reported profits and net assets. Most of the Group`s operations
are based in South Africa and the majority of the revenue stream is in US
Dollars. However the bulk of the Group`s costs, and taxes, are in Rand. Most of
the cash held in South Africa is in US Dollars and is normally remitted to the
UK on a regular basis. Short-term working capital facilities required in South
Africa are drawn primarily in US Dollars.
Fluctuations in the Rand to US Dollar exchange rate can have a significant
impact on the Group`s results. A strengthening of the Rand against the US
Dollar has an adverse effect on profits due to the majority of costs being
denominated in Rand. The approximate effect on the Group`s results of a 10%
movement in the Rand to US Dollar 2007 year average exchange rate would be as
follows:
EBIT +/- $83m
Profit for +/- $48m
the year
EPS (cents) +/- 31.4c
These sensitivities are based on 2007 prices, costs and volumes and assume all
other variables remain constant. They are estimated calculations only.
Commodity price risk
Commodities are traded on worldwide commodities markets and are subject to price
fluctuations. Therefore the prices obtained are dependent upon the prevailing
market prices. Any change in prices will have a direct effect on the Group`s
trading results. Forward sales are undertaken where the Board determines that
it is in the Group`s interest to hedge a proportion of future cash flows. The
Group has undertaken a limited number of forwards on Nickel and Copper by-
product sales as disclosed in note 21 to the financial statements.
The approximate effects on the Group`s results of a 10% movement in the 2007
year average market prices for Platinum (Pt), Palladium (Pd), Rhodium (Rh) and
Nickel (Ni) would be as follows:
Pt Pd Rh Ni
EBIT +/- $96m +/- $12m +/- $60m +/- $14m
Profit for +/- $56m +/- $7m +/- $35m +/- $8m
the year
EPS (cents) +/- 36.5c +/- 4.6c +/- 22.7c +/- 5.4c
The above sensitivities are based on 2007 volumes and assume all other variables
remain constant. They are estimated calculations only.
Fiscal risk
Changes in governmental fiscal policy in the territories in which the Group
operates will impact on Group profitability. In South Africa the Government has
been drafting and debating a Royalty Bill which will come into effect on 1 May
2009. As currently drafted this Bill would see a royalty based on revenue with a
rate of 3% for refined Platinum group metals.
Alan Ferguson
Chief Financial Officer
14 November 2007
Operating Statistics - 5 Year Review
2007 2006 2005 2004 2003
Uni Restat Restat Restat Restat
ts ed ed ed ed
Tonnes
mined
Marikana Undergrou 000 11,211 11,484 10,921 11,053 11,450
nd
Opencast 000 1,597 1,583 2,653 2,730 2,880
Limpopo Undergrou 000 757 857 212 N/A N/A
nd
Opencast 000 - 14 - N/A N/A
Pandora attributable2 Undergrou 000 128 100 54 7 N/A
nd
Opencast 000 286 175 - - N/A
Lonmin Platinum Undergrou 000 12,096 12,441 11,187 11,060 11,450
nd
Opencast 000 1,883 1,772 2,653 2,730 2,880
Total 000 13,979 14,213 13,840 13,790 14,330
% tonnes mined from % 72.0 71.2 74.3 82.4 81.6
UG2 reef
Tonnes milled3
Marikana Undergrou 000 11,216 11,502 10,975 11,103 11,418
nd
Opencast 000 1,469 1,854 2,444 3,283 2,790
Limpopo Undergrou 000 781 887 214 n/a n/a
nd
Opencast 000 - 14 n/a n/a n/a
Pandora4 Undergrou 000 301 236 127 18 n/a
nd
Opencast 000 649 394 - - n/a
Ore Purchases5 Undergrou 000 75 14 - - -
nd
Opencast 000 20 18 - - -
Lonmin Platinum Undergrou 000 12,373 12,639 11,316 11,121 11,418
nd
Opencast 000 2,138 2,280 2,444 3,283 2,790
Total 000 14,511 14,919 13,760 14,404 14,208
Milled head grade
Marikana Undergrou g/t 4.98 5.00 4.98 5.00 5.00
nd
Opencast g/t 4.11 4.25 4.88 4.86 4.95
Limpopo Undergrou g/t 3.50 4.09 3.84 n/a n/a
nd
Opencast g/t - 3.29 n/a n/a n/a
Pandora Undergrou g/t 4.88 5.05 4.54 4.89 n/a
nd
Opencast g/t 5.33 4.92 n/a n/a n/a
Ore Purchases Undergrou g/t 3.92 3.92 n/a n/a n/a
nd
Opencast g/t 5.16 4.14 n/a n/a n/a
Lonmin Platinum Undergrou g/t 4.88 4.94 4.95 5.00 5.00
nd
Opencast g/t 4.39 4.36 4.88 4.86 4.95
Total g/t 4.80 4.85 4.94 4.97 4.99
Metals in
concentrate6
Lonmin Platinum Platinum oz 869,83 964,95 908,97 n/c n/c
2 8 2
Palladium oz 404,53 447,89 397,54 n/c n/c
5 4 6
Gold oz 25,030 31,973 22,269 n/c n/c
Rhodium oz 114,60 125,37 115,43 n/c n/c
1 9 6
Ruthenium oz 182,32 198,49 187,96 n/c n/c
6 1 7
Iridium oz 41,157 41,284 38,465 n/c n/c
Total oz 1,637, 1,809, 1,670, n/c n/c
PGMs 481 979 655
Nickel7 mt 4,636 5,120 4,042 n/c n/c
Copper7 mt 2,814 3,104 2,498 n/c n/c
Uni 2007 2006 2005 2004 2003
ts Restated Restate Restate Restate
d d d
Metallurgical
production
Lonmin refined metal
production
Platinum oz 695,842 799,070 796,082 771,913 831,936
Palladium oz 318,758 369,859 348,681 334,371 377,982
Gold oz 20,485 20,955 17,059 13,828 14,012
Rhodium oz 88,469 115,453 87,632 79,877 121,334
Ruthenium oz 135,873 174,639 172,610 144,004 184,470
Iridium oz 30,430 40,836 25,110 27,204 31,763
Total PGMs oz 1,289,857 1,520,812 1,447,1 1,371,1 1,561,4
74 97 97
Toll refined metal
production
Platinum oz 93,609 - 46,354 61,909 100,931
Palladium oz 43,274 - 21,115 24,334 39,436
Gold oz - - 731 411 (592)
Rhodium oz 12,966 - 7,133 10,135 19,180
Ruthenium oz 20,439 - 11,524 20,436 32,245
Iridium oz 4,090 - 2,263 3,338 5,060
Total PGMs oz 174,378 - 89,120 120,563 196,260
Total refined PGMs
Platinum oz 789,451 799,070 842,436 833,822 932,867
Palladium oz 362,032 369,859 369,796 358,705 417,418
Gold oz 20,485 20,955 17,790 14,239 13,420
Rhodium oz 101,435 115,453 94,765 90,012 140,514
Ruthenium oz 156,312 174,639 184,134 164,440 216,715
Iridium oz 34,520 40,836 27,373 30,542 36,823
Total PGMs oz 1,464,235 1,520,812 1,536,2 1,491,7 1,757,7
94 60 57
Base metals
Nickel8 mt 4,522 4,342 4,187 3,098 3,876
Copper8 mt 2,466 2,452 2,547 1,965 2,284
Capital expenditure Rm 1,923 1,207 1,180 1,230 1,294
$m 276 182 190 187 162
Uni 2007 2006 2005 2004 2003
ts Restated Restat Restated Restated
ed
Sales
Refined metal sales
Platinum oz 786,552 803,471 838,85 858,211 903,077
9
Palladium oz 362,077 373,303 364,08 366,988 405,073
0
Gold oz 24,449 22,133 18,122 18,498 17,557
Rhodium oz 102,916 116,281 93,453 103,641 131,752
Ruthenium oz 162,853 179,557 183,37 192,635 231,131
2
Iridium oz 37,858 38,092 26,676 36,390 39,797
Total PGMs oz 1,476,70 1,532,837 1,524, 1,576,36 1,728,387
5 562 3
Concentrate and
other9
Platinum oz 7,032 136,183 71,396 80,032 -
Palladium oz 3,232 61,110 37,003 36,999 -
Gold oz 201 4,641 2,362 2,887 -
Rhodium oz 1,008 15,965 21,552 20,312 -
Ruthenium oz 1,942 26,137 20,517 25,814 -
Iridium oz 64 5,291 2,548 4,163 -
Total PGMs oz 13,479 249,327 155,37 170,207 -
8
Lonmin Platinum
Platinum oz 793,584 939,654 910,25 938,243 903,077
5
Palladium oz 365,309 434,413 401,08 403,987 405,073
3
Gold oz 24,650 26,774 20,484 21,385 17,557
Rhodium oz 103,924 132,246 115,00 123,953 131,752
5
Ruthenium oz 164,795 205,694 203,88 218,449 231,131
9
Iridium oz 37,922 43,383 29,224 40,553 39,797
Total PGMs oz 1,490,18 1,782,164 1,679, 1,746,57 1,728,387
4 940 0
Nickel mt 5,308 4,604 3,892 4,017 3,132
Copper mt 2,474 2,974 2,481 2,070 2,196
Average Prices
Platinum $/o 1,213 1,091 852 818 645
z
Palladium $/o 339 300 185 228 212
z
Gold $/o 647 571 425 402 346
z
Rhodium $/o 5,757 3,971 1,684 762 529
z
Ruthenium $/o 404 134 66 46 32
z
Iridium $/o 402 233 153 132 87
z
Basket price of PGMs $/o 1,196 972 668 590 451
z
Nickel $/M 26,461 17,975 12,527 11,444 6,812
T
Copper $/M 6,971 7,882 3,168 2,261 1,526
T
Unit 2007 2006 2005 2004 2003
s Restat Resta Restate Restate
ed ted d d
Cost per PGM ounce
sold
Group:
Mining - Marikana R/oz 2,306 1,700 1,606 1,422 n/c
Mining - Limpopo R/oz 4,463 3,740 3,587 - n/c
Mining (weighted R/oz 2,430 1,827 1,636 1,422 n/c
average)
Concentrating - R/oz 470 330 283 274 n/c
Marikana
Concentrating - R/oz 1,506 847 814 - n/c
Limpopo
Concentrating R/oz 526 361 291 274 n/c
(weighted average)
Process division R/oz 600 406 269 242 n/c
Shared business R/oz 612 463 345 316 n/c
services
Stock movement R/oz 28 (9) 14 165 n/c
C1 cost per PGM ounce
sold R/oz 4,196 3,048 2,555 2,419 n/c
before base metal
credits
Base metal credits R/oz (762) (242) (233) n/c
(400)
C1 cost per PGM ounce
sold R/oz 3,434 2,648 2,313 2,186 n/c
after base metal
credits
Amortisation R/oz 360 272 252 232 n/c
Other EBIT items R/oz - - (28) - n/c
C2 costs per PGM ounce R/oz 3,794 2,920 2,537 2,418 n/c
sold
Pandora Mining cost:
C1 Pandora mining cost (in 2,453 1,195 n/c n/c n/c
joint venture) R/oz
Pandora JV cost/ounce to
Lonmin 4,225 3,110 n/c n/c n/c
(adjusting Lonmin share of
profit) R/oz
Exchange
Rates
Average rate for
period10
SA Rand R/$ 7.14 6.63 6.28 6.60 7.90
Sterlin GBP/ 0.51 0.55 0.54 0.56 0.62
g $
Closing rate
SA Rand R/$ 6.83 7.77 6.36 6.48 6.97
Sterlin GBP/ 0.50 0.53 0.57 0.55 0.60
g $
Footnotes:
1 2006 comprised an additional 7 days mining performance for WPL and EPL
arising on the change of basis to report on a calendar month. The data has
been restated to remove these extra days and restate on a like for like
basis.
2 Pandora attributable tonnes mined includes Lonmin`s share (42.5%) of the
total tonnes mined on the Pandora joint venture. Prior years have been
restated.
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 changed from the previously reported
definition of full contained metal to adjust for industry standard
downstream processing losses. Prior years have been restated.
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. Prior years have been restated.
10 Exchange rates are based on the weighted average rates applicable over the
course of the year on revenue between Rand and US$.
N/A Not applicable
N/C Not calculated
Consolidated income statement
for the year ended 30 September
Specia Specia
2007 l 2007 2006 l 2006
Underlyi items Total Underly items Tota
Continuing operations Not ngi (note $m ingi (note l
e $m 3) $m 3) $m
$m $m
Revenue 2 1,941 - 1,941 1,855 - 1,85
5
EBITDA ii 883 (2) 881 911 12 923
Depreciation and - (87) (81) - (81)
amortisation (87)
Operating profit /(loss) 2 796 (2) 794 830 12 842
iii
Finance income 4 25 - 25 12 - 12
Finance expenses 4 (28) (104) (132) (34) (206)
(240
)
Share of profit of
associate and 18 - 18 19 - 19
joint venture
Profit / (loss) before 811 (106) 705 827 (194) 633
taxation 5 (255) (42) (297) (280) 78 (202
Income tax expense iv )
Profit / (loss) for the 556 (148) 408 547 (116) 431
year
Attributable to:
Equity shareholders of 453 (139) 314 445 (132) 313
Lonmin Plc 103 (9) 94 102 16 118
Minority interest
Earnings per share 6 295.9c 205.1c 312.1c 219.
5c
Diluted earnings per 6 293.4c 203.3c 307.7c 216.
sharev 4c
Dividends paid per share 7 110.0c 87.0
c
Consolidated statement of recognised income and expense
for the year ended 30 September
2007 2006
Total Tota
Note $m l
$m
Profit for the year 408 431
Change in fair value of available for sale financial 111 46
assets
Net of changes in fair value of cash flow hedges (8) (4)
Losses on settled cash flow hedges released to the 20 -
income statement
Deferred tax on items taken directly to the statement (32) -
recognised income and expense
Actuarial losses on post retirement benefit plan (11) (6)
Total recognised income for the year 488 467
Attributable to:
Equity shareholders of Lonmin Plc 9 392 350
Minority interest 9 96 117
9 488 467
Footnotes:
i Underlying earnings are calculated on profit for the year excluding
movements in the fair value of the embedded derivative associated with the
convertible bond, exchange on tax balances, profit on the sale of Marikana
houses, pension settlement surplus, impairment losses in respect of non
core investments and, for 2006, an adjustment to the interest capitalised
in prior years.
ii EBITDA is operating profit before depreciation and amortisation.
iii Operating profit is defined as revenue less operating expenses before net
finance costs and before share of profit of associate and joint venture.
iv The income tax expense substantially relates to overseas taxation ($6
million income relates to the UK) and includes exchange losses of $51
million (2006 - gains of $82 million) as disclosed in note 5.
v The calculation of diluted EPS includes adjustments for the movements in
fair value on the embedded derivative within the convertible bond subject
to the limitation under IAS 33 - Earnings Per Share, that this cannot
thereby create a figure exceeding basic EPS.
Consolidated balance sheet
as at 30 September
2007 2006
Not $m $m
e
Non-current assets
Goodwill 186 113
Intangible assets 936 328
Property, plant and equipment 1,673 1,463
Investment in associate and joint venture 131 113
Financial assets:
- Available for sale financial assets 226 98
- Other receivables 22 19
Employee benefits - 6
3,174 2,140
Current assets
Inventories 186 135
Trade and other receivables 338 396
Assets classified as held for sale 7 6
Tax recoverable 3 3
Financial assets:
- Derivative financial instruments 8 -
Cash and cash equivalents 222 61
764 601
Current liabilities
Bank overdraft (1) (18)
Trade and other payables (286) (209)
Financial liabilities:
- Interest bearing loans and borrowings (237) -
- Derivative financial instruments - (4)
Tax payable (40) (91)
(564) (322)
Net current assets 200 279
Non-current liabilities
Employee benefits (24) (7)
Financial liabilities:
- Interest bearing loans and borrowings (359) (499)
- Derivative financial instruments - (268)
Deferred tax liabilities (585) (294)
Provisions (46) (39)
(1,014) (1,107)
Net assets 2,360 1,312
Capital and reserves
Share capital 9 156 143
Share premium 9 299 26
Other reserves 9 96 84
Retained earnings 9 1,417 836
Attributable to equity shareholders of 9 1,968 1,089
Lonmin Plc
Attributable to minority interest 9 392 223
Total equity 9 2,360 1,312
Consolidated cash flow statement
for the year ended 30 September
2007 2006
Note $m $m
Profit for the year 408 431
Taxation 5 297 202
Finance income 4 (25) (12)
Finance expenses 4 132 240
Share of profit after tax of (18) (19)
associate and joint venture
Depreciation and amortisation 87 81
Change in inventories (51) (25)
Change in trade and other 58 (249)
receivables
Change in trade and other payables 70 74
Change in provisions 4 (2)
Profit on sale of assets held for (1) (12)
sale
Share based payments 24 11
Other non cash charges (2) 2
Cash flow from operations 983 722
Interest received 16 1
Interest paid (41) (32)
Tax paid (266) (185)
Cash flow from operating activities 692 506
Cash flow from investing activities
Acquisition of subsidiaries (net of 10 (393) (14)
cash acquired)
Purchase of intangible asset (6) (21)
Purchase of property, plant and (270) (161)
equipment
Proceeds from available for sale 51 -
financial assets
Purchase of available for sale (72) (36)
financial assets
Proceeds from disposal of assets 5 28
held for sale
Cash used in investing activities (685) (204)
Cash flow from financing activities
Equity dividends paid to Lonmin (171) (124)
shareholders
Dividends paid to minority (41) (62)
Proceeds from current borrowings 237 -
Repayment of current borrowings - (86)
Proceeds from non-current borrowings 71 288
Repayment of non-current borrowings - (296)
Issue of ordinary share capital 68 15
Cash used in financing activities 164 (265)
Increase in cash and cash 171 37
equivalents
Opening cash and cash equivalents 8 43 10
Effect of exchange rate changes 7 (4)
Closing cash and cash equivalents 8 221 43
1 Basis of preparation
The financial information presented has been prepared on the basis of
International Financial Reporting Standards (IFRSs) as adopted by the EU as
disclosed in note 1 to the financial statements.
2 Segmental analysis
The Group`s primary operating segment is the mining of platinum group
metals. The majority of the Group`s operations are based in South Africa.
2007
Exploratio
Platinum Corporat n Total
Analysis by business group $m e and $m
$m evaluation
$m
Revenue - external sales 1,941 - - 1,941
Operating profit 880 (63) (23) 794
Segment total assets 3,211 41 686 3,938
Segment total liabilities (1,066) (339) (173) (1,57
8)
Capital expenditurei 353 - 19 372
Depreciation and 87 - - 87
amortisation
Share of profit associate 18 - - 18
and JV
2006 - restatedii
Exploratio
Platinum Corporat n Total
Analysis by business group $m e and $m
$m evaluation
$m
Revenue - external sales 1,855 - - 1,855
Operating profit 912 (56) (14) 842
Segment total assets 2,680 61 - 2,741
Segment total liabilities (931) (498) - (1,42
9)
Capital expenditurei 232 1 - 233
Depreciation and 81 - - 81
amortisation
Share of profit of 19 - - 19
associate and JV
2007
South Africa UK Other Total
Analysis by geographical $m $m $m $m
location
Revenue - external sales 1,941 - - 1,941
Segment total assets 3,867 41 30 3,938
Capital expenditurei 372 - - 372
2006 - restatedii
South Africa UK Other Total
Analysis by geographical $m $m $m $m
location
Revenue - external sales 1,855 - - 1,855
Segment total assets 2,667 55 18 2,741
Capital expenditurei 232 1 - 233
Footnotes:
i Capital expenditure includes additions to plant, property and equipment,
intangible assets and goodwill in accordance with IAS 14 - Segment
reporting.
ii 2006 analysis has been restated as certain inter-segment charges had not
been eliminated.
Revenue by destination is analysed by geographical area below:
2007 2006
$m $m
The Americas 419 435
Asia 705 518
Europe 314 291
South Africa 482 602
Zimbabwe 21 9
1,941 1,855
3 Special Items
`Special items` are those items of financial performance that the Group believes
should be separately disclosed on the face of the income statement to assist in
the understanding of the financial performance achieved by the Group and for
consistency with prior years.
2007 2006
$m $m
EBITDA
- Sale of housesi 1 12
- Pensions refundii 2 -
- Impairment lossiii (5) -
Finance costs
- Calculation of capitalised interest from - 21
prior yearsiv
- Movement in fair value of embedded (104) (227)
derivativev
Loss on special items before taxation (106) (194)
Taxation related to special items (note 5) (42) 78
Special loss before minority interest (148) (116)
Minority interest 9 (16)
Special loss for the year attributable to (139) (132)
equity shareholders of Lonmin Plc
(i) Sale of houses: a substantial number of our employees are accommodated in
hostels and married quarters. We are selling houses to employees to
encourage home-ownership. Any profits or losses from such sales at fair
value are not deemed to represent underlying earnings.
(ii) In February 2006 the Group made a payment into the SUITS pension
scheme based on estimates at the time. These payments were charged to
the income statement. On finalisation of the settlement Lonmin was
refunded $3 million. This has been offset by a $1 million provision
for the purchase of additional benefits for members of the scheme
which was paid in October 2007.
(iii) The Group has carried out a review of non-mining investments in the
year resulting in a $5 million impairment charge to the income
statement.
(iv) Capitalised interest in 2006 represents an adjustment to the interest
capitalised in previous years.
(v) The bond contained an embedded derivative which, because of the cash
settlement option, was held at fair value with movements in fair value
taken to the income statement. Fluctuations in fair value were mainly
due to share price and were not considered underlying so were reported
as special. The bond has now been fully redeemed with the movement
reported as special representing the movement from the last year end
to the date of redemption.
4 Net finance costs
2007 2006
$m $m
Finance income: 25 12
Interest receivable 16 2
Expected return on defined benefit pension 8 8
scheme assets
Movement in fair value of non-current other 1 2
receivables
Finance expenses: (28) (34)
On bank loans and overdrafts (40) (35)
Bank fees (5) (3)
Capitalised interest 23 16
Discounting on provisions (3) (2)
Unwind of discounting on convertible bond (3) -
Interest costs of defined benefit pension (7) (6)
scheme liabilities
Exchange differences on net debt 7 (4)
Special items: (104) (206)
Prior years capitalised interest (note 3) - 21
Movement in fair values of derivative (104) (227)
financial instruments (note 3)
Total finance expenses (132) (240)
Net finance costs (107) (228)
Interest expenses incurred have been capitalised on a Group basis to the extent
that there is an appropriate qualifying asset.
5. Taxation
2007 2006
$m $m
United Kingdom:
Current tax expense at 30% (2006 - 30%) 42 122
Less amount of the benefit arising from double (42) (122)
tax relief available
Total UK tax expense - -
Overseas:
Current tax expense at 29% (2006 - 29%) 200 259
Corporate tax expense 186 217
Tax on dividends remitted 14 43
Prior year items - (1)
Deferred tax expense 55 21
Origination and reversal of temporary differences 55 21
Special items - UK and overseas (note 3)` 42 (78)
Deferred tax on sale of houses - 4
Utilisation of losses from prior years to offset (9) -
deferred tax liability
Exchange on current taxation 10 (15)
Exchange on deferred taxation 41 (67)
Actual tax charge 297 202
Tax charge excluding special items (note 3) 255 280
Effective tax rate 42% 32%
Effective tax rate excluding special items (note 31% 34%
3)
A reconciliation of the standard tax charge to
the tax charge was as follows:
2007 2007 2006 2006
$m $m
Tax charge at standard tax rate 29% 204 29% 184
Overseas taxes on dividends remitted by 2% 14 7% 43
subsidiary companies
Special items as defined above 6% 42 (13)% (82)
Tax effect of movements in the fair 4% 31 10% 66
values of financial instruments
Tax effect of capitalised interest - - (1)% (6)
adjustment (note 3)
Tax effect of other timing differences 1% 6 - (3)
Actual tax charge 42% 297 32% 202
The Group`s primary operations are based in South Africa. Therefore, the
relevant standard tax rate for the Group was the South African statutory tax
rate of 29% (2006 - 29%). The secondary tax rate of the dividends remitted by
South African companies was 12.5% (2006 - 12.5%).
The Group holds a number of available for sale assets which are marked to
market. The value of these investments has increased significantly in the
period resulting in the recognition of unrealised gains through the statement of
recognised income and expense. This has resulted in the recognition of an
associated deferred tax liability except to the extent that there are available
losses which, in the opinion of the Directors, can be utilised to offset against
such gains. In these cases a credit is recognised in the income statement as a
special item reflecting the associated tax benefit. $6 million of the credit in
the year related to UK taxation.
The Group holds both current and deferred tax balances in Rand which is not the
functional currency of the Group. Given the volatility of the Rand to US$
exchange rate the revaluation of such tax balances can cause significant
variations in the tax charge and therefore profitability. Consequently the
Directors feel that such foreign exchange impacts should be treated as a special
item.
6. Earnings per share
Earnings per share have been calculated on the profit attributable to equity
shareholders amounting to $314 million (2006 - $313 million) using a weighted
average number of 153,097,437 ordinary shares in issue (2006 - 142,594,539
ordinary shares).
Diluted earnings per share are based on the weighted average number of ordinary
shares in issue adjusted by dilutive outstanding share options and shares issued
on conversion of the convertible bonds. Shares issued on conversion of the
convertible bonds were anti-dilutive in the current and prior year and have been
excluded from diluted earnings per share in accordance with IAS 33 - Earnings
Per Share.
2007 2006
Profit Per Profit Per
for Number share for Number of share
the of amount the shares amount
year shares cents year cents
$m $m
Basic EPS 314 153,097, 205.1 313 142,594,539 219.5
437
Share option - 1,324,64 (1.8) - 2,021,331 (3.1)
schemes 2
Diluted EPS 314 154,422, 203.3 313 144,615,870 216.4
079
2007 2006
Profit Per Profit Per
for Number share for Number of share
the of amount the shares amount
year shares cents year cents
$m $m
Underlying EPS 453 153,097, 295.9 445 142,594,539 312.1
437
Share options - 1,324,64 (2.5) - 2,021,331 (4.4)
schemes 2
Diluted 453 154,422, 293.4 445 144,615,870 307.7
underlying EPS 079
Underlying earnings per share has been presented as the Directors consider it to
give a fairer reflection of the underlying results of the business. Underlying
earnings per share are based on the profit attributable to equity shareholders
adjusted to exclude special items (as defined in note 3) as follows:
2007 2006
Profit Per Profit Per
for Number of share for Number of share
the shares amount the shares amount
year cents year cents
$m $m
Basic EPS 314 153,097,437 205.1 313 142,594,539 219.5
Special items 139 - 90.8 132 - 92.6
(note 3)
Underlying 453 153,097,437 295.9 445 142,594,539 312.1
EPS
7 Dividends
2007 2006
Cents per Cents
$m share $m per
share
Prior year final dividend, paid 85 55.0 60 42.0
in the year
Interim dividend, paid in the 86 55.0 64 45.0
year
Total dividend paid in the year 171 110.0 124 87.0
Interim dividend, paid in the 55.0 45.0
year
Proposed final dividend for the 60.0 55.0
year
Total dividend in respect of 115.0 100.0
the year
8 Net debt as defined by the Group
As at As at
1 Subsidiar Non- 30
October y Cash flow cash September
2006 acquired $m movemen 2007
$m $m ts $m
$m
Cash and cash 61 20 134 7 222
equivalents
Overdrafts (18) - 17 - (1)
43 20 151 7 221
Current borrowings - - (237) - (237)
Non-current borrowings (288) - (71) - (359)
Convertible bonds (213) - - 213 -
Net debt as defined by (458) 20 (157) 220 (375)
the Group
As at As at
1 Subsidiar Non- 30
October y Cash flow cash September
2005 acquired $m movemen 2006
$m $m ts $m
$m
Cash and cash 11 - 54 (4) 61
equivalents
Overdrafts (1) - (17) - (18)
10 - 37 (4) 43
Current borrowings (86) - 86 - -
Non-current borrowings (296) - 8 - (288)
Convertible bonds (213) - - - (213)
Net debt as defined by (585) - 131 (4) (458)
the Group
Net debt as defined by the Group comprises cash and cash equivalents, bank
overdrafts repayable on demand, interest bearing loans and borrowings and
convertible bonds grossed up for capitalised fees.
On 15 November 2006 Lonmin Plc gave notice to force redemption of all
outstanding convertible bonds at their principle amount. This led to the
issuance of 10,576,944 shares and a reduction in net debt as defined by the
Group of $213 million.
9 Total Equity
Equity Shareholders` funds
Called Share
up premi Other Retai Minor Total
share um reser ned Tot ity equit
capital accou ves earni al inter y
$m nt $m ngs $m ests $m
$m $m $m
At 1 October 2006 143 26 84 836 1,0 223 1,312
89
Total recognised income and - - 12 380 392 96 488
expense
Dividends - - - (171) (17 (41) (212)
1)
Conversion of the 11 205 - - 216 - 216
convertible bondi
Embedded derivative - - - 371 371 - 371
movementii
Deferred tax on share base - - - (3) (3) (1) (4)
payments
Other - - - 4 4 2 6
Shares issued on exercise of 1 32 - - 33 - 33
share optionsiii
Shares issued under the IFC 1 36 - - 37 - 37
option agreementiv
Minority interest arising on - - - - - 113 113
business acquisition
At 30 September 2007 156 299 96 1,417 1,9 392 2,360
68
At 1 October 2005 142 12 88 596 838 166 1,004
Total recognised income and - - (4) 354 350 117 467
expense
Buy out of minority - - - - - 1 1
interests in Messina
Dividends - - - (124) (12 (62) (186)
4)
Deferred tax on share - - - 7 7 1 8
options
Other - - - 3 3 - 3
Shares issued on exercise of 1 14 - - 15 - 15
share options
At 30 September 2006 143 26 84 836 1,0 223 1,312
89
i. In November 2006 the Company issued notice regarding the redemption of all
outstanding convertible bonds. Conversion of the bond resulted in the
issuance of 10,576,944 shares with an associated nominal share capital of
$11million and the recognition of $205 million share premium.
ii. As explained in note 3, the convertible bond contained an embedded
derivative, movements in the fair value of which were recognised through
the income statement. On conversion of the bond the embedded derivative
was released with a corresponding credit taken directly to equity.
iii. During the year 1,876,433 share options were exercised (2006 -
850,301) on which $33 million of cash was received (2006 - $15
million).
iv. During the year 586,730 share options were exercised under the
International Finance Corporation option agreement. As the shares were
issued at a discount only $35 million of cash was received.
Other reserves represent the capital redemption reserve of $88 million
(2006 - $88 million) and a hedging reserve asset of $8 million (2006 - $4
million liability). The movement in the year represents the movement on
the hedging reserve.
Minority interests represent an 18% shareholding in Eastern Platinum
Limited, Western Platinum Limited and Messina Limited throughout the year
and, from 1 February 2007 a 26% shareholding in Akanani Mining (Pty)
Limited.
10 Business combinations
On 26 January 2007 the Group acquired 94% of AfriOre Limited. This increased to
96.5% on 8 February 2007 and to 100% on 16 February 2007. AfriOre`s primary
asset is a 74% stake in the Akanani PGM deposit. The acquisition was accounted
for with an effective date of 1 February 2007 using the acquisition method of
accounting. Since its acquisition AfriOre has only incurred exploration and
evaluation expenditure which has been capitalised in accordance with the Group`s
accounting policy.
The assets and liabilities of AfriOre Limited and the provisional fair values
attributed to these were as follows:
Provisional Provisional
Book value Accounting fair value fair value
on policy adjustment 2007
acquisition adjustment $m $m
$m $m
Intangible assets 13 (13) 611 611
Trade and other (5) - -
payables (5)
Cash and cash 20 - - 20
equivalents
Deferred tax - - (173)
liability (173)
Total assets of 28 (13) 438 453
acquired entity
Minority interest (113)
Provisional fair 340
value of assets
acquired
Goodwill 73
Consideration paid 413
The fair value exercise has, in accordance with IFRS 3 - Business Combinations,
recognised the assets of the AfriOre Limited Group at the fair value they would
carry if they held tax benefits. This has resulted in the need to recognise a
deferred liability of $173 million which in turn has caused the creation of a
goodwill balance of $73 million.
The fair values assigned have been determined provisionally which is in
accordance with IFRS 3 - Business Combinations.
A final review of fair values will be undertaken prior to 1 February 2008.
The total consideration paid for the acquisition of AfriOre Limited amounted to
$413 million comprising cash consideration of $409 million, and expenses on the
transaction of $4 million, all paid in the year. Cash acquired with the entity
amounted to $20 million resulting in a net consideration paid of $393 million.
The acquisition has had no material impact on the operating results of the Group
for the period. If the acquisition had taken place at the beginning of the
period it is estimated that some $10 million of exploration and evaluation costs
would have been incurred. In accordance with the Group`s policy for exploration
and evaluation expenditure this would have been capitalised and the impact on
the income statement would have been $nil.
11 Statutory Disclosure
The financial information set out above is taken from, but does not constitute,
the Company`s statutory accounts for the years ended 30 September 2007 and 2006.
The statutory accounts for the financial year ended 30 September 2006 have been
delivered, and statutory accounts for 2007 will be delivered, to the Registrar
of Companies. The Auditors have made unqualified reports on those accounts and
such reports did not contain a statement under Section 237 (2) or (3) of the
Companies Act 1985.
Copies of the 2007 Lonmin Accounts will be posted to shareholders and will be
available at the Company`s registered office before the end of November 2007.
12. Final Dividend Timetable
The Board of Lonmin Plc has recommended a final dividend for the year ended 30
September 2007 of 60.0 US cents per share.
The dividend timetable in respect of this dividend, assuming shareholder
approval at the AGM, is as follows:
Last day to trade cum div
SA Friday 4 January 2008
UK Tuesday 8 January 2008
Shares commence trading ex div
SA Monday 7 January 2008
UK Wednesday 9 January 2008
Dividend record date
Friday 11 January 2008
Last date for receipt of new applications to participate in Dividend Re-
investment Plan
SA Friday 25 January 2008
UK Friday 25 January 2008
Dividend payment date
Friday 8 February 2008
No transfers between the UK principle register and the SA branch register will
be permitted from the date on which the US$/Rand exchange rate is announced to
the record date, both dates inclusive (i.e. last date to transfer Thursday 27
December 2007).
The SA branch register will be closed for the purpose of trades
(dematerialisation and rematerialisation) from Monday 7 January 2008 to Friday
11 January 2008, both dates inclusive.
The dividend will be paid:-
In Rand to shareholders on the SA branch register calculated at the Rand to US
Dollar exchange rate on Friday 28 December 2007, which rate will be announced on
that day.
In Sterling to share holders domiciled in the UK (unless they elect to received
US Dollar dividends) calculated at the US Dollar to sterling exchange rate on
Friday 18 January 2008, which rate will be announced on that day.
In US Dollars to all other overseas share holders (unless they elect to receive
Sterling dividends or have mandated their US dividends to a UK bank or
participate in TAPS).
Elections to receive an alternative currency (Dollars or Sterling) should
compromise a signed request to Lloyds TSB Registers to be received by 17:00 on
11 January 2008.
13. Annual General Meeting
The 2008 Annual General Meeting will be held on Thursday 24 January 2008 at the
Queen Elizabeth II Conference Centre, Board Sanctuary, Westminster, London SW1P
3EE
14. Availability of this report
This report is available on the Lonmin website (www.lonmin.com)
Date: 14/11/2007 09:00:16 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
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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,
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