30th Jan 2014 09:54
LONDON (Alliance News) - Lonmin PLC Thursday said its sales volumes and refined production increased in its first quarter, but announced a possible reduction in sales volume guidance due to strike action in South Africa.
Lonmin said that it had planned to maintain its guidance of sales volumes in excess of 750,000 platinum ounces and capital expenditure of around USD210 million, but that ongoing strike action has meant it will reassess its guidance and update the market in due course.
The major platinum miner said its refined production increased 45% to 196,249 saleable platinum ounces and sales volumes increased 24% to 134,804 platinum ounces during the three months ended December 31 compared from the prior-year period.
The company said its increased refined production and sales volumes was due to a healthy closing pipeline position at the end of September and continued improvement in recovery rates.
However, the company said its total attributable mining production was down 10% against the prior year period at 2.6 million tonnes as the operational momentum it built up in 2013 was significantly disrupted by the death of an employee, Siyabonga Sibango, at the company's E3 shaft in October and other safety stoppages.
The company also noted its production from opencast operations was significantly scaled down due to a subdued price environment, and low productivity levels, linked to tensions around ongoing wage negotiations, further hurt output.
The South African Association of Mineworkers and Construction Union platinum miners strike action began on January 23, seeking to achieve a ZAR12,500 minimum wage for entry-level workers and better working conditions.
In 2012, 34 miners were shot dead by police during an illegal strike backed by AMCU at Lonmin's Marikana mine. Ten other people, including miners, police officers and security guards, were killed in the preceding week.
This time, the strike is within a framework agreement signed by the government, unions and mining companies, a spokesman for Deputy President Kgalema Motlanthe was quoted by the South African Press Association as saying.
The company said that wage negotiations between AMCU and Lonmin, which started on Monday, are ongoing, and Lonmin said it remains committed to seeking a resolution to the action.
Lonmin said all of its operations are impacted by the strike, and losses are expected to be in the region of 3,100 mined platinum ounces per working day during the strike.
However, before the strikes were even announced, the Marikana underground mining operations produced 2.5 million tonnes during the first quarter, a decrease of 200,000 tonnes or 7% on the prior year period.
Lonmin shares were down 1.6% to 323.00 pence, putting it in the top ten FTSE 250 losers Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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