| Thu 23 Jul 2009, 8:46 | | LON - Lonmin Plc - Third quarter 2009 production report & interim management |
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LON
LOLMI
LON - Lonmin Plc - Third quarter 2009 production report & interim management
statement
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")
23 July 2009
Third quarter 2009 production report & interim management statement
Lonmin Plc, ("Lonmin" or "the company") today announces its production report
and interim management statement for the three and nine months to 30 June 2009
(unaudited).
Introduction
This production report reflects management`s recent actions in eliminating non-
contributing ounces and reducing costs. The third quarter of the 2009 financial
year has borne the brunt of these actions but it is pleasing to note that,
despite the restructuring measures implemented, underground production for the
first nine months of the 2009 financial year exceeded that of 2008, with gross
operating costs also trending in a positive direction. Challenges remain to be
navigated, particularly in our smelting operations which will be a determining
factor in achieving our Platinum sales guidance for the 2009 financial year.
Q3 2009 Production
Total tonnes mined for the third quarter of the 2009 financial year were 2.4
million, a decline of 0.8 million from the third quarter of 2008. Of this
reduction, 0.4 million tonnes related to the planned closure of our Marikana
opencast operations and 0.1 million tonnes were due to the placing of our Baobab
shaft at Limpopo on to a care and maintenance basis.
Our underground Marikana mining operations produced 2.3 million tonnes during
the third quarter of the 2009 financial year, a 10% decrease from the same
period last year. A number of the causes of this decline were a consequence of
the impact of management actions. Firstly, production was affected by the
planned closure of a small uneconomic decline shaft and a further five
uneconomic half levels at Marikana during the third quarter of the 2009
financial year. Secondly, production was impacted, as expected, by disruption
relating to the restructuring programme which was completed at the end of March.
Also, the number of shifts available to work in the quarter was down 3% on the
prior year due to the timing of Easter and an additional public holiday, the
impact being exacerbated by absenteeism and annual leave around these holidays.
The final major factor was a marked increased in the incidence, severity and
impact of Section 54 shutdowns during the year. Lonmin`s focus on safety remains
undiminished, as evidenced by a 5% improvement in our Lost Time Injury Frequency
Rate during the third quarter of 2009, from the end of 2008. In the third
quarter of 2009, we lost some 160,000 tonnes due to Section 54 shutdowns,
compared to around 107,000 tonnes in the third quarter of 2008.
Tonnages from our mechanised and hybrid sections increased during the third
quarter of 2009 by 41% from the prior year period and by 7% from the previous
quarter with both Hossy and Saffy showing marked improvements.
Total tonnes milled in the quarter declined by 14% year-on-year to 2.8 million
tonnes and the concentrators produced 152,878 saleable ounces of Platinum in
concentrate for the quarter, a 17% decrease from the third quarter in the 2008
financial year. Total tonnes milled exceeded total tonnes mined due to the
milling of the majority of our remaining opencast stock-piles in the period.
Underground and overall concentrator recoveries declined to 80.5% and 79.0%
respectively from the second quarter of the 2009 financial year, when
underground and overall recoveries were 81.4% and 80.6% respectively. Overall
recoveries were impacted by the milling of low grade opencast stockpiles during
the period, whilst underground recoveries were affected by ore mix, a greater
proportion of development ore due to the continued ramp-up of Saffy and Hossy
shafts, the milling of IRUP material from K3 shaft and some plant maintenance
issues.
Underground milled head grade increased marginally to 4.57 grammes per tonne
(5PGE+Au) from the prior year period. However overall milled head grade declined
3% year-on-year to 4.37 grammes per tonne (5PGE+Au), as a result of the milling
of low grade opencast stockpiles during the quarter.
On 14 June 2009, we shut down our Number One furnace following a matte run out
and started up our Pyromet furnaces to mitigate any potential disruption to
production from this incident. Following the repair of the Number One furnace,
we tapped matte again on 15 July 2009. However, after this, slag leaks occurred
and we subsequently reduced power at the furnace to deal with the cause of these
leaks. The furnace is expected to tap matte again in the coming days and, in
order to preserve its integrity and maintain safe working practices, it will be
operated at reduced power until a re-design of the matte tap hole area can be
completed and a re-build initiated. This is currently planned for the first
quarter of the 2010 financial year.
This incident did not impact refined production in the third quarter of the 2009
financial year of 172,574 ounces of Platinum and 321,050 ounces of total PGMs, a
decrease of 8% and 13% respectively from the third quarter of the 2008 financial
year.
Refined production was much higher than metal in concentrate production in the
period due in the main to a concerted effort to drive down metal-in-process
inventories. Metal sales during the third quarter of the 2009 financial year
decreased marginally from the prior year period to 178,494 ounces of Platinum
and 326,239 ounces of PGMs.
Nine Month Production
Total tonnes mined during the first nine months of the 2009 financial year were
8.2 million tonnes, a 1.0 million decline from 2008. Of this reduction, 0.8
million tonnes related to the planned closure of our Marikana opencast
operations and 0.3 million tonnes were due to the placing of our Baobab shaft at
Limpopo on care and maintenance during the first half of the 2009 financial
year.
In the first nine months of the 2009 financial year we mined a total of 7.6
million tonnes of ore from our underground Marikana operations, an increase of
1% on the same period last year. This was due to production from our mechanised
and hybrid shafts increasing by 40% year-on-year during the first nine months of
the 2009 financial year.
The concentrators produced a total of 491,019 saleable ounces of Platinum in
concentrate in the nine months, an 8% year-on-year decline, mainly as a result
of the planned production stoppages at our Marikana opencast and Limpopo
operations, as mentioned above. Overall concentrator recoveries improved during
the first nine months of the 2009 financial year to 79.7%, from 79.2% in the
same period in 2008, due to the milling of less oxidised opencast ore from
deeper pits during the first nine months of the 2009 financial year compared to
the prior year period. However, during the first nine months of the 2009
financial year, underground recoveries fell to 80.7%, from 81.8% in the same
period of the 2008 financial year, mainly as a result of undertaking extensive
maintenance on some of our Marikana concentrators in the first quarter of the
2009 financial year and due to the issues noted above. Despite this we are
making good progress on improving our technical expertise in this area and we
continue to target improvements in recoveries.
Underground milled head grade was 2% lower year-on-year at 4.57 grammes per
tonne (5PGE+Au) as a result of an increased proportion of development ore coming
from Hossy and Saffy and unplanned dilution on the UG2 reef horizon, as well as
a lack of flexibility in face availability on the Merensky reef horizon, where
some localised lower grade areas were encountered, particularly during the first
quarter of the year. Overall milled head grade increased marginally year-on-year
to 4.51 grammes per tonne (5PGE+Au).
Total refined production for the first nine months of the 2009 financial year
was 490,794 ounces of Platinum and 927,194 of total PGMs, up 4% and 2%
respectively from the same period in 2008. Final metal sales for the nine months
were 490,347 ounces of Platinum and 910,112 ounces of total PGMs, up 4% and 1%
respectively on the same period in 2008.
2009 Sales Guidance
On 24 June 2009 we announced the Number One furnace shutdown was expected to
impact our ability to fully refine a portion of the concentrate inventory built
up during the period of this shutdown by the end of the 2009 financial year.
Consequently, as disclosed at that time, we estimate that there could be an
increase in metal in process of up to 20,000 ounces of Platinum at 30 September
2009.
As a result of actions taken during the year, progress was made at our Mining
business, however it continues to face a number of challenges. In particular the
frequency of industry-wide safety-related Section 54 mine closures remains a
significant risk factor in the production of Platinum Group Metals.
Despite these factors, we still expect to achieve sales for the 2009 financial
year of between 680,000 and 700,000 ounces of Platinum. This result is dependent
on the selling of metal-in-process inventory and on how the Number One furnace
performs during the fourth quarter of the year.
Whilst the US dollar PGM pricing environment during the third quarter of the
2009 financial year improved somewhat the short term outlook for PGM pricing
continues to be difficult to predict. The South African Rand strengthened
significantly against the US dollar during the third quarter, negatively
impacting on our dollar costs. The financial position of the company has however
benefited in the period from the extensive restructuring exercise completed in
March and we remain on track to meet our gross cost guidance. Also the
successful rights issue which resulted in an inflow in June of $458 million net
of expenses has significantly reduced our net debt and the gearing of the
business.
ENQUIRIES:
Investors / Analysts:
Rob Gurner +44 (0) 207 201 6050
Head of Investor Relations
Media:
Cardew Group +44 (0) 207 930 0777
Anthony Cardew / Rupert Pittman
Financial Dynamics +27 (0) 21 487 9000
Dani Cohen / Ravin Maharaj
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2009 2008 2009 2008
Tonnes Marika Underground 000 1,915 2,291 6,403 6,640
mined na -
conventiona
l
Underground 000 429 305 1,200 857
- M&A1
Underground 000 2,344 2,596 7,602 7,497
- total
Opencast 000 4 370 234 994
Total 000 2,348 2,966 7,836 8,491
Limpop Underground 000 0 138 87 402
o
Opencast 000 0 0 0 0
Total 000 0 138 87 402
Pandor Underground 000 33 28 104 96
a
attrib
utable
2
Opencast 000 38 77 148 178
Total 000 70 105 252 273
Lonmin Underground 000 2,377 2,762 7,794 7,995
Platin
um
Opencast 000 42 447 381 1,172
Total 000 2,419 3,208 8,175 9,166
Tonnes Marika Underground 000 2,348 2,622 7,472 7,466
milled3 na
Opencast 000 243 198 438 917
Total 000 2,591 2,820 7,910 8,383
Limpop Underground 000 0 199 92 405
o
Opencast 000 0 0 0 0
Total 000 0 199 92 405
Pandor Underground 000 77 66 245 225
a4
Opencast 000 121 147 372 338
Total 000 198 212 617 563
Ore Underground 000 0 0 0 0
purcha
ses5
Opencast 000 0 0 0 30
Total 000 0 0 0 30
Lonmin Underground 000 2,425 2,887 7,809 8,097
Platin
um
Head grade6 g/t 4.57 4.54 4.57 4.65
Recovery % 80.5% 82.4% 80.7% 81.8%
rate7
Opencast 000 365 344 810 1,286
Head grade6 g/t 3.03 4.41 3.94 3.51
Recovery % 63.8% 58.5% 68.2% 57.4%
rate7
Total 000 2,789 3,231 8,618 9,382
Head grade6 g/t 4.37
4.52 4.51 4.50
Recovery % 79.0% 79.9% 79.7% 79.2%
rate7
3 3 9 9 months
months months months
to 30 to 30 to 30 to 30
June June June June
2009 2008 2009 2008
Metals in Marikan Platinum oz 140,422 165,757 449,040 485,300
concentrate8 a
Palladiu oz 65,050 76,299 208,160 222,773
m
Gold oz 3,557 4,231 10,615 12,753
Rhodium oz 19,473 22,686 62,473 66,014
Rutheniu oz 29,993 35,236 96,447 101,915
m
Iridium oz 6,526 7,704 21,046 21,649
Total oz 265,021 311,913 847,780 910,404
PGMs
Nickel9 MT 626 772 1,946 2,265
Copper9 MT 402 474 1,227 1,381
Limpopo Platinum oz 0 7,594 3,770 16,183
Palladiu oz 0 6,357 3,331 12,850
m
Gold oz 0 460 243 1,080
Rhodium oz 0 990 487 1,884
Rutheniu oz 0 1,426 688 2,728
m
Iridium oz 0 315 159 589
Total oz 0 17,141 8,679 35,314
PGMs
Nickel9 MT 0 146 76 321
Copper9 MT 0 109 54 228
Pandora Platinum oz 12,455 11,569 38,209 29,392
4
Palladiu oz 5,548 5,236 17,149 13,384
m
Gold oz 91 96 294 229
Rhodium oz 1,755 1,583 5,320 4,061
Rutheniu oz 2,585 2,315 7,802 5,991
m
Iridium oz 499 421 1,470 1,036
Total oz 22,934 21,220 70,244 54,095
PGMs
Nickel9 MT 12 13 37 38
Copper9 MT 8 7 22 18
Ore Platinum oz 0 0 0 937
purchas
es5
Palladiu oz 0 0 0 793
m
Gold oz 0 0 0 74
Rhodium oz 0 0 0 83
Rutheniu oz 0 0 0 107
m
Iridium oz 0 0 0 25
Total oz 0 0 0 2,019
PGMs
Nickel9 MT 0 0 0 16
Copper9 MT 0 0 0 11
Lonmin Platinum oz 152,878 184,919 491,019 531,812
Platinu
m
Palladiu oz 70,598 87,893 228,640 249,800
m
Gold oz 3,649 4,787 11,152 14,136
Rhodium oz 21,228 25,259 68,281 72,042
Rutheniu oz 32,578 38,977 104,936 110,742
m
Iridium oz 7,025 8,440 22,675 23,299
Total oz 287,956 350,274 926,703 1,001,830
PGMs
Nickel9 MT 638 931 2,059 2,641
Copper9 MT 410 590 1,303 1,637
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2009 2008 2009 2008
Metallu Lonmin Platinum oz 172,136 188,350 490,040 470,999
rgy refined
Metal
Production
Palladium oz 79,164 91,871 226,557 220,011
Gold oz 5,202 5,213 13,849 14,775
Rhodium oz 20,062 25,932 64,750 68,369
Ruthenium oz 37,821 46,539 110,773 109,302
Iridium oz 5,589 11,669 18,068 22,246
Total PGMs oz 319,974 369,574 924,037 905,702
Toll Platinum oz 438 0 754 0
refined
metal
production
Palladium oz 206 0 206 0
Gold oz 10 0 10 0
Rhodium oz 422 0 994 0
Ruthenium oz 0 0 1,009 0
Iridium oz 0 0 184 0
Total PGMs oz 1,076 0 3,157 0
Total Platinum oz 172,574 188,350 490,794 470,999
refined
PGMs
Palladium oz 79,370 91,871 226,763 220,011
Gold oz 5,212 5,213 13,859 14,775
Rhodium oz 20,484 25,932 65,745 68,369
Ruthenium oz 37,821 46,539 111,782 109,302
Iridium oz 5,589 11,669 18,252 22,246
Total PGMs oz 321,050 369,574 927,194 905,702
Base Nickel10 MT 764 960 2,395 2,282
metals
Copper10 MT 438 567 1,517 1,361
Sales Refined Platinum oz 178,486 179,803 492,157 464,533
Metal
Sales
Palladium oz 79,150 82,775 226,334 216,765
Gold oz 4,049 5,228 13,368 14,436
Rhodium oz 20,809 22,545 59,548 66,082
Ruthenium oz 37,970 44,704 105,471 110,644
Iridium oz 5,760 9,945 18,260 21,665
Total PGMs oz 326,225 345,000 915,137 894,127
Concentrat Platinum oz 8 467 (1,810) 4,700
e and
other11
Palladium oz 4 189 (3,218) 2,022
Gold oz 0 10 0 107
Rhodium oz 1 71 1 829
Ruthenium oz 2 120 2 1,110
Iridium oz 0 30 0 270
Total PGMs oz 14 887 (5,025) 9,037
Lonmin Platinum oz 178,494 180,270 490,347 469,233
Platinum
Palladium oz 79,154 82,964 223,117 218,787
Gold oz 4,049 5,238 13,368 14,543
Rhodium oz 20,810 22,616 59,549 66,911
Ruthenium oz 37,972 44,824 105,473 111,754
Iridium oz 5,760 9,975 18,260 21,935
Total PGMs oz 326,239 345,887 910,112 903,163
Nickel10 MT 986 966 2,354 2,182
Copper10 MT 362 546 1,268 1,351
3 3 9 9
months months months months
to 30 to 30 to 30 to 30
June June June June
2009 2008 2009 2008
Prices Average Platinum $/oz 1,148 1,994 1,020 1,738
Palladium $/oz 234 437 207 412
Gold $/oz 927 883 888 864
Rhodium $/oz 1,354 9,350 1,546 7,874
Ruthenium $/oz 70 308 104 391
Iridium $/oz 388 405 391 416
Basket $/oz 798 1,820 735 1,658
price of
PGMs12
Nickel10 $/MT 12,839 22,940 14,514 25,333
Copper10 $/MT 7,075 7,909 6,351 7,330
Exchange Average rate for R/$
Rates period 8.43 7.76 9.41 7.34
Closing rate R/$
7.72 7.85 7.72 7.85
Notes:
1 M&A comprises ore produced by our fully mechanised shafts and from Saffy
shaft, which is being transitioned to hybrid mining.
2 Pandora 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 Head Grade is the grammes per tonne (5PGE + Au) value contained in the
tonnes milled and fed into the concentrator from the mines (excludes slag
milled).
7 Recovery rate in the concentrators is the total content produced divided
by the total content milled (excluding slag)
8 Metals in concentrate include slag and have been calculated at industry
standard downstream processing losses.
9 Corresponds to contained base metals in concentrate.
10 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.
11 Concentrate and others sales essentially relates to BMR concentrate and
BMR/PMR residues.
12 Basket price of PGMs is based on the revenue generated from the actual
PGMs (5PGE + Au) sold in the period.
Date: 23/07/2009 08:46:12 Produced by the JSE SENS Department.
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