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LON
LOLMI
LON - Lonmin Plc - Third Quarter 2010 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")
22 July 2010
Lonmin Plc
Third Quarter 2010 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 2010
(unaudited).
Overview
This quarter has seen us deliver increased output at our Marikana underground
operations as we continue to see operational improvements. Year to date our
underground tonnage is up on the comparable prior year period whilst metal in
concentrate is at the same level as last year as the increased ounces from our
underground operations have offset the impact of the operations closed last
year.
Q3 2010 Production
Our underground mining operations at Marikana produced 2.6 million tonnes during
the third quarter of the 2010 financial year, an increase of 10.2% from the
third quarter of the 2009 financial year. This was mainly due to an increase in
production during the quarter from Hossy and Saffy which continued to ramp up
and increased production by 40.9%, to 0.5 million tonnes, over the prior year
period. Sequentially output from those shafts increased by 11.7% quarter on
quarter. The increase in the conventional mining tonnage was some 0.1 million
tonnes or 4.8%. The impact of Section 54 shut downs was around 109,000 tonnes in
lost production during the quarter mainly at our K3 shaft. This compares to a
loss in production during the same period last year of around 160,000 tonnes.
Pandora underground production showed a quarter on quarter increase of 10.3% and
increased by 30.9% from the prior year period, whilst production at the Merensky
opencast pit at Marikana has commenced and is beginning to ramp up.
Total tonnes milled in the quarter were flat year on year, at 2.8 million tonnes
but showed an increase of 9.8% from 2.5 million tonnes milled in the second
quarter of the 2010 financial year. Platinum in concentrate from the Marikana
operations was 163,311 saleable ounces during the third quarter of 2010, an
increase of 16.3% from the prior year period and an increase of 5.6% quarter on
quarter. This was due to achieving another excellent quarter of concentrator
recoveries. In total, the concentrators produced 169,614 saleable ounces of
Platinum in concentrate for the quarter, a 10.9 % increase from the third
quarter of the prior year.
Underground and overall concentrator recoveries increased to 85.1% and 85.0%
from 80.5% and 79.0% respectively year on year. Sequentially recoveries have
been very consistent at 84% to 85% with each quarter being much higher than the
equivalent period last year. This improvement in our performance on a quarter by
quarter basis is pleasing and demonstrates the success of the rigorous approach
we have taken on batch milling the right ore through the appropriate
concentrators, recognition of the importance of regular plant maintenance as
well as the continued benefits from our concentrator optimisation programme.
Our underground milled head grade increased marginally to 4.6 grammes per tonne
(5PGE + Au) from 4.57 grammes per tonne in the prior year period whilst overall
head grade increased by 4.1% year on year to 4.55 grammes per tonne (5PGE + Au).
Underground milled head grade declined by 3.0% from 4.74 grammes per tonne
quarter on quarter due to an increase in the percentage of Merensky ore milled
and some lower grade development ore arising from our UG2 operations.
As previously announced, the Number one furnace suffered a setback in May 2010
during its recommissioning following a matte run out on 30 March 2010. Following
its repair, the Number one furnace was recommissioned and has been performing
steadily for over one month now. The Pyromet furnaces, which have around 40% of
the Number one furnace capacity, have been operating since 30 March 2010.
The Number one furnace incident has impacted refined metal production and metal
sales in the third quarter of the 2010 financial year. Consequently total
refined production in the third quarter of the 2010 financial year was 91,952
ounces of Platinum and 194,234 ounces of PGMs, a decrease of 46.7% and 39.5%
respectively from the third quarter of the 2009 financial year.
Metal sales during the third quarter of the 2010 financial year also decreased
significantly from the prior year to 91,952 ounces of Platinum and 192,507
ounces of PGMs.
Nine Month Production
Total tonnes mined during the first nine months of the 2010 financial year were
7.9 million tonnes, a decrease of 0.2 million tonnes from
2009, reflecting the closure in 2009 of the opencast and Limpopo operations.
During the period we mined 7.7 million tonnes from the Marikana underground
operations, an increase of 1.6% in the nine month period of the 2010 financial
year, when compared against the same period in 2009. The impact of Section 54s
shut downs on the nine month period in 2010 financial year has been a loss of
around 258,000 tonnes. This compares to around 316,000 tonnes for the same
period last year.
Total tonnes milled during the first nine months of the 2010 financial year
declined by 8.2% to 7.9 million tonnes when compared to the same period in the
prior year due to the impact of the closure of Limpopo and opencast during 2009.
Marikana underground tonnes milled were marginally up on last year. The
concentrators produced a total of 491,478 saleable ounces of Platinum in
concentrate in the nine months, a marginal year on year increase. Overall
concentrator recoveries improved significantly during the first nine months of
the 2010 financial year, to 84.6% from 79.7% in the same period in 2009.
During the nine month period to 30 June 2010 underground head grade improved by
2.7% to 4.69 grammes per tonne (5PGE + Au) as a result of cleaner mining and
less development ore particularly at Hossy and Saffy.
Total refined production for the first nine months of the 2010 financial year
was 383,873 ounces of Platinum and 781,385 ounces of total PGMs, a decrease of
21.8% and 15.7% respectively when compared to the same period in 2009. This
reflects the impact of the Number 1 furnace incidents.
Final metal sales for the nine months were 383,874 ounces of Platinum and
786,036 ounces of total PGMs, a decrease of 21.7% and 13.6% respectively.
Overall
During the quarter Shanduka purchased 50.03% of Incwala, our Black Economic
Empowerment partner and Lonmin provided a loan to Shanduka of to help facilitate
this transaction. The resultant cash outflow of approximately GBP150 million was
fully funded by a placing undertaken on 10 May 2010.
The quarter by quarter improvement in underground mining tonnes when compared to
last year gives us confidence that, absent material safety stoppages, we will
have a strong quarter four, well up on last year. This combined with good
concentrator recoveries should lead to a material increase in underground metal
in concentrate output when compared to last year, indicating the turnaround in
Lonmin`s mining division is well underway. In addition our opencast operation
will continue to ramp up and in total we fully expect metal in concentrate to
exceed last years level.
As stated in our announcement of 24 May we have decided to toll refine and sell
some part processed Platinum ounces due to the need to rundown concentrate
stockpiles given that the smelter will be down in November/December for a
redesign and rebuild. On this basis, we continue to expect to meet our sales
target of 700,000 Platinum ounces. The cost of the toll refining and selling in
process inventory is expected to be around $17.5 million. The incremental cost
incurred does not form part of our cost guidance for the year.
ENQUIRIES:
Investors / Analysts:
Tanya Chikanza +44 (0) 207 201 6007
Head of Investor Relations
Media:
Cardew Group +44 (0) 207 930 0777
Rupert Pittman/Jamie Milton
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
Jun Jun Jun Jun
2010 2009 2010 2009
Tonnes Marikana Underground - 000 2,584 2,344 7,726 7,602
mined total
Underground - 000 2,088 1,992 6,364 6,646
conventional
Underground - 000 496 352 1,362 956
Hossy &
Saffy1
Opencast 000 84 4 91 234
Total 000 2,668 2,348 7,817 7,836
Limpopo Underground 000 - - - 87
Total 000 - - - 87
Pandora Underground 000 43 33 120 104
attributa
ble2
Opencast 000 - 38 - 148
Total 000 43 70 120 252
Lonmin Underground 000 2,626 2,377 7,846 7,794
Platinum
Opencast 000 84 42 91 381
Total 000 2,711 2,419 7,937 8,175
Tonnes Marikana Underground 000 2,614 2,348 7,513 7,472
milled3
Opencast 000 68 243 129 438
Total 000 2,682 2,591 7,642 7,910
Limpopo Underground 000 - - - 92
Total 000 - - - 92
Pandora4 Underground 000 99 77 265 245
Opencast 000 - 121 - 372
Total 000 99 198 265 617
Lonmin Underground 000 2,712 2,425 7,779 7,809
Platinum
Head grade5 g/t 4.60 4.57 4.69 4.57
Recovery % 85.1% 80.5% 84.7% 80.7%
rate6
Opencast 000 68 365 129 810
Head grade5 g/t 2.51 3.03 2.25 3.94
Recovery % 78.9% 63.8% 63.8% 68.2%
rate6
Total 000 2,780 2,789 7,908 8,618
Head grade5 g/t 4.55 4.37 4.65 4.51
Recovery % 85.0% 79.0% 84.6% 79.7%
rate6
3 3 9 9
month months months months
s
to 30 to 30 to 30 to 30
Jun Jun Jun Jun
2010 2009 2010 2009
Metals in Marikan Platinum oz 163,3 140,42 473,91 449,04
concentra a 11 2 4 0
te7
Palladium oz 76,92 65,050 222,09 208,16
2 7 0
Gold oz 4,067 3,557 10,557 10,615
Rhodium oz 22,35 19,473 66,152 62,473
0
Ruthenium oz 35,25 29,993 102,15 96,447
9 2
Iridium oz 7,683 6,526 22,318 21,045
Total PGMs oz 309,5 265,02 897,19 847,78
92 1 0 0
Nickel8 MT 809 626 2,085 1,946
Copper8 MT 493 402 1,288 1,227
Limpopo Platinum oz - - - 3,770
Palladium oz - - - 3,331
Gold oz - - - 243
Rhodium oz - - - 487
Ruthenium oz - - - 688
Iridium oz - - - 159
Total PGMs oz - - - 8,679
Nickel8 MT - - - 76
Copper8 MT - - - 54
Pandora Platinum oz 6,303 12,455 17,564 38,209
3
Palladium oz 2,991 5,548 8,267 17,149
Gold oz 44 91 121 294
Rhodium oz 987 1,755 2,769 5,320
Ruthenium oz 1,533 2,585 4,225 7,802
Iridium oz 257 499 712 1,470
Total PGMs oz 12,11 22,934 33,658 70,244
3
Nickel8 MT 10 12 27 37
Copper8 MT 6 8 15 22
Lonmin Platinum oz 169,6 152,87 491,47 491,01
Platinu 14 8 8 9
m
Palladium oz 79,91 70,598 230,36 228,64
3 4 0
Gold oz 4,110 3,649 10,678 11,152
Rhodium oz 23,33 21,228 68,920 68,281
6
Ruthenium oz 36,79 32,578 106,37 104,93
2 7 6
Iridium oz 7,941 7,025 23,030 22,675
Total PGMs oz 321,7 287,95 930,84 926,70
06 5 8 3
Nickel8 MT 819 638 2,111 2,059
Copper8 MT 499 410 1,303 1,303
3 3 9 9
month months months months
s
to 30 to 30 to 30 to 30
Jun Jun Jun Jun
2010 2009 2010 2009
Metallurg Lonmin Platinum oz 91,92 172,13 383,67 490,04
y refined 8 6 0 0
Metal
Product
ion12
Palladium oz 57,23 79,164 207,52 226,55
0 2 7
Gold oz 3,080 5,202 10,517 13,849
Rhodium oz 16,82 20,062 59,769 64,750
3
Ruthenium oz 19,62 37,821 92,370 110,77
1 3
Iridium oz 3,899 5,589 24,321 18,068
Total PGMs oz 192,5 319,97 778,16 924,03
81 4 9 7
Toll Platinum oz 25 438 204 754
refined
metal
product
ion
Palladium oz 26 206 89 206
Gold oz - 10 - 10
Rhodium oz 1 422 810 994
Ruthenium oz 1,242 - 1,754 1,009
Iridium oz 360 - 360 184
Total PGMs oz 1,654 1,076 3,216 3,157
Total Platinum oz 91,95 172,57 383,87 490,79
refined 2 4 3 4
PGMs
Palladium oz 57,25 79,370 207,61 226,76
6 1 3
Gold oz 3,080 5,212 10,517 13,859
Rhodium oz 16,82 20,484 60,578 65,745
4
Ruthenium oz 20,86 37,821 94,124 111,78
4 2
Iridium oz 4,259 5,589 24,681 18,252
Total PGMs oz 194,2 321,05 781,38 927,19
34 0 5 4
Base Nickel9 MT 560 764 2,110 2,395
metals
Copper9 MT 274 438 1,178 1,517
Sales Refined Platinum oz 91,95 178,48 383,87 492,15
Metal 2 6 4 7
Sales
Palladium oz 54,11 79,150 204,46 226,33
3 8 4
Gold oz 2,718 4,049 10,131 13,368
Rhodium oz 16,14 20,809 63,447 59,548
6
Ruthenium oz 22,34 37,970 98,219 105,47
8 1
Iridium oz 5,231 5,760 25,898 18,260
Total PGMs oz 192,5 326,22 786,03 915,13
07 5 6 7
Concent Platinum oz - 8 - (1,810
rate )
and
other10
Palladium oz - 4 - (3,218
)
Gold oz - - - -
Rhodium oz - 1 - 1
Ruthenium oz - 2 - 2
Iridium oz - - - -
Total PGMs oz - 14 - (5,025
)
Lonmin Platinum oz 91,95 178,49 383,87 490,34
Platinu 2 4 4 7
m
Palladium oz 54,11 79,154 204,46 223,11
3 8 7
Gold oz 2,718 4,049 10,131 13,368
Rhodium oz 16,14 20,810 63,447 59,549
6
Ruthenium oz 22,34 37,972 98,219 105,47
8 3
Iridium oz 5,231 5,760 25,898 18,260
Total PGMs oz 192,5 326,23 786,03 910,11
07 9 6 2
Nickel9 MT 410 986 1,795 2,354
Copper9 MT 282 362 1,288 1,268
3 3 9 9
month months months months
s
to 30 to 30 to 30 to 30
Jun Jun Jun Jun
2010 2009 2010 2009
Average Platinu $/o 1,595 1,148 1,514 1,020
prices m z
Palladi $/o 481 234 422 207
um z
Gold $/o 1,136 927 1,128 888
z
Rhodium $/o 2,592 1,354 2,398 1,546
z
Rutheni $/o 214 70 168 104
um z
Iridium $/o 614 388 460 391
z
Basket price of $/o 1,172 798 1,093 735
PGMs11 z
Basket price of R/o 8,884 6,592 8,203 6,844
PGMs11 z
Nickel9 $/M 22,00 12,839 17,249 14,514
T 2
Copper9 $/M 7,244 7,075 6,598 6,351
T
Exchange Average rate for R/$ 7.53 8.43 7.49 9.41
Rates period13
Closing R/$ 7.66 7.72 7.66 7.72
rate
Notes:
1. Hossy and Saffy are replacement/growth shafts in ramp up. Hossy is
fully mechanised whilst Saffy has conventional stoping but
mechanised development. In previous production reports this
section showed all M&A/Hybrid mining. All comparatives have been
restated.
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. 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).
6. Recovery rate in the concentrators is the total content produced
divided by the total content milled (excluding slag).
7. Metals in concentrate include metal derived from slag processing
and have been calculated at industry standard downstream
processing losses to present produced saleable ounces.
8. Corresponds to contained base metals in concentrate.
9. 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.
10. Concentrate and others sales essentially relates to BMR
concentrate and BMR/PMR residues.
11. Basket price of PGMs is based on the revenue generated from the
actual PGMs (5PGE + Au) sold in the period.
12. Lonmin refined metal production and sales include an estimated
3koz saleable ounces of Platinum produced from toll refining third
party concentrate in Q3 (2009 - nil).
13. Exchange rates are calculated using the market average daily
closing rate over the course of the period.
Date: 22/07/2010 08:00:06 Produced by the JSE SENS Department.
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