| Thu 5 Feb 2004, 13:54 | | AGM STATEMENT |
|
Lonmin Plc - AGM STATEMENT
Lonmin Plc
("Lonmin")
(Incorporated in England)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
ISIN code: GB0031192486
Share code: LON
Issuer code: LOLMI
AGM STATEMENT
Speaking at today"s Annual General Meeting Lonmin Chairman Sir John Craven said:
"The Company performed exceptionally well in the year to 30th September 2003 and
current trading continues to be broadly in line with the Board"s expectations.
You will remember that just after Christmas 2002 we suffered an explosion in the
new smelter that had only recently been commissioned. This could have been a
major setback but management and staff threw enormous energy into dealing with
the situation and the final out-turn for the year was one of record production,
though of course we had to rely to an extent upon tolling arrangements with our
neighbour, Impala, to process excess concentrate.
"The smelter has now been recommissioned and is operating satisfactorily. We
took advantage of the period during which it was out of commission to introduce
a number of major improvements, which will I am sure stand us in good stead for
the future.
"Safety always ranks highest on our agenda and I am pleased to report that we
had an exceptionally good year in this regard. All three mines achieved
millionaire status (one million fatality free shifts worked) with both Western
and Eastern Platinum achieving double millionaire status, and Karee Mine
achieving millionaire status twice. Western Platinum Mine also became the first
of our mines to complete a financial year without a fatality and shortly after
year end recorded 3 million fatality free man shifts.
"Early in the year we announced agreement to sell our 27% interest in Ashanti to
AngloGold. This was subject to a number of conditions precedent, of which
perhaps the most important was the agreement of the Government of Ghana, which
is the second largest shareholder in Ashanti. I am pleased to report that this
consent has been given and the Ghanaian Parliament is expected to consider the
issue shortly. We believe that this transaction will be completed in the next
few months at which point Lonmin will hold approximately 3.8% in the enlarged
AngloGold Ashanti. As those of you who have been shareholders for a long time
will know, Ashanti has been an important component of the Lonmin group for many
years and we are delighted that it now becomes a part of the largest gold
producer in the world, and the most important pan-African mining business. The
importance of Ashanti is reflected in the proposed name of the combined group,
which will be known as AngloGold Ashanti.
"Sam Jonah, who joined Lonmin in 1969, is currently the longest serving director
having been appointed to the Board in 1992. Sam is currently Chief Executive
Officer of Ashanti and will become President of AngloGold Ashanti on completion
and at that stage will step down from our Board. I am sure that the
shareholders wish to join my colleagues and myself in thanking him for his
enormous contribution to the Group over the past 35 years.
"We announced in September 2003 that we had reached agreement in principle with
Impala Platinum, which owns 27.1% of the share capital of both Eastern Platinum
and Western Platinum (which we refer to together as Lonplats) whereby Impala
will dispose of its entire shareholding in Lonplats. Of this, Lonmin will take
one third increasing our shareholding in Lonplats to 82%. The remaining 18% of
Lonplats will be acquired by a new company, Incwala Resources, the current
intention for which is that it will be HDSA (or Historically Disadvantaged South
African) controlled from inception.
"Incwala will be developed as a diversified mining company built upon its
initial stake in Lonplats. The intention is ultimately to list Incwala on the
Johannesburg Stock Exchange.
"This is a ground-breaking transaction which, when successfully completed, will
not only position Lonplats favourably towards qualifying for a New Order Mining
Licence under the Mining Charter but also remove a major strategic impediment
for Lonmin. Agreements made many years ago contained clauses which severely
constrained the ability of the Board of Lonmin to pursue strategic alternatives
in the best interests of its shareholders. The discussions with Impala, the
banks and prospective HDSA investors have been ongoing and are proceeding well.
We anticipate that the arrangements concerning the Impala stake in Lonplats and
the formation of Incwala will be completed by some time in April.
"I am pleased to be able to tell you that earlier this morning an announcement
was made to the effect that Mr Brad Mills, currently President and Chief
Executive of the Base Metals Division of BHP Billiton Limited and a member of
that company"s Executive Committee, has agreed to join us as Chief Executive.
We expect that this appointment will take effect not later than 1st May 2004 and
at that time it is our intention to appoint Mr Mills a director of the Company.
"Ed Haslam, who has served Lonmin in various capacities for 23 years, the last
three of which as Chief Executive of the group, had signified his intention to
step down on reaching retirement age in April 2004. Ed has given excellent
service to the Company bringing enormous experience on every aspect of our
activities, and I should like on your behalf and on behalf of myself and my
Board colleagues to thank him for his contribution. Perhaps the most eloquent
testimony of the success of his tenure is that over a five year period to 31st
December 2003 the TSR (or Total Shareholder Return) of Lonmin has been 309%,
which places us 17th or in the top 5% in the FTSE 350 Index, at which level we
rank well ahead of almost all our competitors in the natural resources sector.
"Brad Mills, a US citizen, has spent the last 25 years of his career in the
natural resources industry working in a wide variety of capacities including
worldwide exploration, ore body development, operational management, strategy,
planning, technology and organisational design. Prior to joining BHP Billiton
he was an officer of two successful North American public companies, Magma
Copper Company and Echo Bay Mines. Brad has considerable exposure to South
Africa having played a key role as BHP"s Chief Strategic Officer in the merger
with and integration of Billiton.
"This appointment marks a new chapter in the affairs of the Company. The
experience and knowledge that Brad will bring to the Company"s affairs will
accelerate the strategic review that the Board announced in mid-2003. While
Lonplats is an exceptional asset and business in probably the most exciting
sector of the mining industry and while our management is arguably the best of
breed there is a concentration of risk inherent in the present business model.
The Company is dependent on a single suite of metals, a single mining complex
and smelting technology. Like all companies in the South African mining
industry we are exposed to the volatility of the South African Rand. This
affects us more than most in that all our operations are in South Africa so that
our cost base is almost wholly in Rand, which has been one of the strongest
currencies in the world for the last 18 months. Our revenues are denominated
wholly in US dollars and, of course, we account and report in US dollars.
"We believe it is our duty as a Board to explore any steps we might take to
reduce the concentration of risk in the business
"One of the priorities of Brad Mills on his arrival will be to conduct a full
review of our corporate strategy. It may well be that he and the Board will
conclude that our pure platinum plan, which I know is popular amongst many of
our shareholders, is the best way forward for the foreseeable future. No plans
exist, I can assure you, for any diversification at this stage but we cannot
ignore the fact that, through the cycle, the market ascribes a higher value to
mining activities that are diversified both in terms of sector within the
industry and geography and it may be that the best way forward to protect and
enhance shareholder value - and the future dividend stream - will be by some
measure of diversification."
Investor enquiries:
Lonmin Plc Sir John Craven, Chairman + 44 (0)20 7201 6000
John Robinson, Finance Director
CardewChancery Anthony Cardew + 44 (0)20 7930 0777
Olivia Gallimore
Johannesburg
5 February 2004
Sponsor
Cazenove South Africa (Pty) Limited
Date: 05/02/2004 01:05:10 PM Produced by the JSE SENS Department
