| Tue 16 Jan 2007, 9:00 | | LON - Lonmin - Number One Furnace Update |
|
LON
LOLMI
LON - Lonmin - Number One Furnace Update
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")
Number One Furnace Update
Lonmin announces that it has completed a detailed design review and risk
assessment of the Number 1 furnace following the leak which occurred in
December 2006.
Based on this review, we have decided that the best result can be achieved
by completing a full rebuild of the Number 1 furnace to restore it to its
original design condition. Our internal risk assessment has been validated
by Hatch Engineering, who have indicated that the prior failures of the
furnace have fundamentally compromised the structural integrity of the
vessel and it is therefore not prudent to attempt to repair the furnace in
its current condition. The rebuild of the furnace, including furnace warm
up, will require around 80 days and should be complete around 11 March
2007. This complete rebuild will restore the integrity of the furnace and
should allow for normal smelting operations going forwards with only
scheduled maintenance shut downs.
In order to minimise the production and financial impact of the smelter
rebuild process we will run all three of our Pyromet furnaces for the
balance of this financial year. As a result of the decision to rebuild the
Number 1 furnace we have had to slow down the completion and re-
commissioning of the Merensky furnace. We are investigating the
possibility of running the Merensky furnace during the second half of the
financial year to further minimise production losses. The successful
running of the Merensky furnace in parallel with the Number 1 furnace and
Pyromet furnaces would depend on our ability both to mix an appropriate
feed blend for all three sets of furnaces and to manage gas cleaning within
the terms of our air quality permits. An engineering assessment is
currently underway to assess this option.
Our forecast for mine production in concentrate remains at around 1.02 to
1.04 million saleable ounces of Platinum. Based on our revised production
planning completed to date, we believe full year Platinum sales will be
between 980,000 to 1,000,000 ounces. These sales will consist of around
880,000 ounces of refined Platinum from Lonmin`s own metallurgical
facilities, around 90,000 ounces of toll refined Platinum and between
10,000 and 30,000 ounces of additional concentrate or semi refined Platinum
sales. This plan minimises the amount of lower margin third party tolling
that will occur during the year.
Sales for the first half of the 2007 financial year are now expected to be
between 300,000 to 310,000 Platinum ounces and between 680,000 to 690,000
Platinum ounces in the second half of the financial year. Upside to this
forecast may be available if we are able to run the Merensky furnace in
parallel with the Number 1 furnace during a portion of the second half of
our financial year.
Our preliminary estimate for the repair and extra metallurgical division
costs for the full year are US$6.5 million (R45 million). This, coupled
with the reduced level of throughput, has the impact of increasing our
estimate of full year C1 costs for Marikana own production to around R2,650
to R2,700 per PGM ounce sold.
Enquiries:
Alex Shorland-Ball +44 (0)207 201 6060 or
Vice President, +44 (0)7917 038 684
Investor Relations & Communications
Lonmin will be hosting an analyst conference call at 11.00 am UK time
(13.00 pm SA time) later today. Those wishing to take part should dial in
on the following numbers: Access number: +44 (0)20 8609 0205, UK Freephone
Number: 0800 358 2705, ZA Freephone Number: 0800 999 539 and Pin Code:
621126#
Date: 16/01/2007 09:00:02 Produced by the JSE SENS Department.
