First Quarter 2014 Production Report & IMS

REGULATORY RELEASE

30 January 2014

First Quarter 2014 Production Report & Interim Management Statement

Lonmin Plc ("Lonmin" or "the Company"), the world's third largest Platinum producer, today announces its production results for the three months to 31 December 2013 (unaudited) and Interim Management Statement for the period from 1 October 2013 to today's date.

Overview

Refined production increased by 45% to 196,249 saleable Platinum ounces compared to the prior year period and sales were 134,804 Platinum ounces, an increase of 24%. These results benefited from a healthy closing pipeline position at the end of September 2013 and continued improvement in recovery rates.

In the quarter, total attributable mining production was 2.6 million tonnes, a 10% decrease against Q1 2013 as the operational momentum built in 2013 was significantly disrupted by a fatality and safety stoppages. In addition, production from the opencast operations was also scaled down due to the subdued price environment. Low productivity levels, directly linked to the tensions around the ongoing wage negotiations, further negatively impacted output.

Total milled output in the quarter was 2.9 million tonnes in line with the prior year period as the healthy ore stock piles ahead of the concentrators minimised the impact of the lower tonnes mined to produce metal in concentrate of 179,691 Platinum ounces.

The rolling 12 month average Lost Time Injury Frequency Rate (LTIFR) for the 12 months to 31 December 2013 improved to 3.69 incidents per million man hours compared to 3.74 at 31 December 2012. Regrettably one of our colleagues, Mr Siyabonga Sibango,was fatally injured on 26 October at E3 shaft and we extend our deepest condolences to friends and family. This fatality and a rise in mine fatalities across the Rustenburg region has been one of the drivers of the increase in the number of management induced safety stoppages and Section 54s experienced in Q1 2014.

As part of our strategy to provide more detailed and structured disclosure we now report mined production on a shaft by shaft basis. In addition and following the management restructuring in 2013, Hossy shaft is now reported as part of the Western Mine and Saffy shaft as part of the Eastern mine, with Middelkraal management structure removed.

Mining Division

The Marikana underground mining operations produced 2.5 million tonnes during the first quarter, a decrease of 0.2 million tonnes or 7% on the prior year period.

Production at Karee was 1,052,000 tonnes, a decrease of 161,000 tonnes, or 13% on the prior year period driven by an increase in Section 54 safety stoppages, management induced safety stoppages (MISS) and wage related industrial relations issues.

Production at Westerns at 966,000 tonnes was broadly flat on the prior year period. Output from Rowland, our second largest shaft, was 468,000 tonnes representing an increase of 7% or 30,000 tonnes compared to the prior year period emphasising our strategy to improve asset utilisation from our big shafts. The work around the de-bottlenecking project has continued to improve returns and the ore reserve position has improved since Q1 2013.Hossy shaft produced 255,000 in line with the prior year period and Newman decreased by 47,000 tonnes, or 19% compared to the prior year period as its planned decline continued.

Production at Easterns was 476,000 tonnes which was 5% lower than the prior year period driven by the planned depletion of East 1 shaft as it approaches end of life. Despite the backdrop of high levels of Section 54 safety stoppages Saffy shaft produced 315,000 an increase of 33,000, or 12% over the prior year period. The ramp up is progressing well in line with strategy. We remain confident of the ramp up planned for 2014 as the additional crews adapt to new conditions.

Production from our Merensky opencast operations of 78,000 tonnes was 50% lower than the prior year period as this operation has been scaled back due to the subdued price environment. Pandora (100%) production decreased by 17,000 tonnes, or 12% on the prior year period due to safety shut downs following the fatality at E3 shaft. The Baobab shaft at Limpopo remains on care and maintenance with the concentrator being utilised by Anglo Platinum to process ore from Mogalakwena mine.

In total, 271,000 tonnes of underground production were lost during the quarter, of which 175,000 tonnes related to Section 54 safety stoppages, 19,000 tonnes to MISS and an additional 77,000 tonnes were lost due to wage induced labour disruptions. This compared to a total of 80,000 tonnes lost in the prior year period of which 19,000 tonnes were due to Section 54 safety stoppages, 13,000 tonnes were due to MISS and 48,000 tonnes were due to labour stoppages.

Process Division

Total tonnes milled in the quarter were flat on the prior year at 2.9 million tonnes with underground 63,000 tonnes, or 2% lower than the prior year period and opencast up 48,000 tonnes, or 52%.

Underground milled head grade decreased slightly by 3% to 4.51 grammes per tonne (5PGE+Au) when compared to 4.64 grammes per tonne in the prior year period and remains within our expected grade range. The overall milled head grade was 4.44 grammes per tonne.

Underground concentrator recoveries for the quarter increased by 1.1 percentage points to 87.9% when compared to the prior year period. Overall concentrator recoveries for the quarter increased by 1.0 percentage point to 87.8% when compared to the prior year.

Total PGMs in concentrate for the quarter was 345,259 saleable ounces which was flat on the prior year period. Total Platinum in concentrate at 179,691 ounces was 3% lower than the prior year period.

Total refined production for the first quarter was up 45% to 196,249 ounces of saleable Platinum when compared against the prior year period. This was a reflection of the healthy pipeline position at the beginning of the current year and the low pipeline stock position at the beginning of the prior year as pipeline stocks had been depleted in September 2012 to protect liquidity. Total PGMs produced in the first quarter were 384,717 ounces, an increase of 54% on the prior year period.

Sales & Pricing

Sales for the quarter were up 24% to 134,804 Platinum ounces and PGM sales were up 35% to 245,755 ounces. The US dollar basket price (excluding base metal credits) at $1,038 per ounce during the quarter was down 12% on the prior year period while the corresponding Rand basket price (R10,538 per ounce) was 4% higher than the prior year period on the back of Rand weakness.

Wage negotiation update

Our majority union, the Association of Mine Workers and Construction Union (AMCU) embarked upon protected strike action on 23 January following the non-resolution of wage negotiations. Given the scale of the strikes across the platinum sector and as part of the Government's intervention, the CCMA, is facilitating wage negotiations between AMCU and Lonmin, Anglo Platinum and Impala Platinum. These started on Monday 27 January 2014 and are ongoing.

Lonmin remains committed to seeking a resolution to the wage negotiations in the interests of all stakeholders and the sustainability of the business.

Black Economic Empowerment

We are making good progress towards achieving compliance with our BEE obligations under the Mining Charter by 31 December 2014. We intend doing this through share ownership schemes and through consultation with our employees and communities on the details of the schemes. We are also in discussions with the Bapo ba Mogale tribe regarding converting their royalty and their share in the Pandora operations into Lonmin equity. We plan to bring the detailed proposals in this regard to shareholders later in the year once our discussions with the various stakeholders involved are sufficiently advanced. 

Pandora

We are pleased to announce that the mining rights at the Pandora mining operations were successfully converted to New Order Mining Rights on 23 January 2014 which provides security of tenure for these mining operations for at least the next 30 years.

Outlook

Before the start of the strike we would have maintained our guidance for the full year of sales in excess of 750,000 Platinum ounces, capital expenditure of around $210 million and the increase in the unit cost of production to be less than the rate of wage inflation. This was despite lower than expected mining output in Q1 which has resulted in lower ore stock piles ahead of the concentrators. However, due to the ongoing strike we will reassess our guidance and update the market in due course.

All of our mining operations are at Marikana and therefore all are impacted by the strike. Losses are expected to be in the region of 3,100 mined Platinum ounces per working day during the strike.

- ENDS -

ENQUIRIES

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Notes to editors

Lonmin, which is listed on both the London Stock Exchange and the Johannesburg Stock Exchange, is one of the world's largest primary producers of PGMs. These metals are essential for many industrial applications, especially catalytic converters for internal combustion engine emissions, as well as their widespread use in jewellery.

Lonmin's operations are situated in the Bushveld Igneous Complex in South Africa, where nearly 80% of known global PGM resources are found.

The Company creates value for shareholders through mining, refining and marketing PGMs and has a vertically integrated operational structure - from mine to market. Underpinning the operations is the Shared Services function which provides high quality levels of support and infrastructure across the operations.

For further information please visit our website: http://www.lonmin.com

Notes:

1 Pandora underground tonnes mined represents 100% of the total tonnes mined on the Pandora joint venture of which 42.5% is attributable to Lonmin.

2 Limpopo underground tonnes mined represents low grade development tonnes whilst in care and maintenance.

3 Ounces mined have been calculated at achieved concentrator recoveries and as from 2014 with Lonmin standard downstream processing losses to present produced saleable ounces.

4 Tonnes milled excludes slag milling.

5 Lonmin purchases 100% of the ore produced by the Pandora joint venture for onward processing which is included in downstream operating statistics.

6 Limpopo tonnes milled represents low grade development tonnes milled.

7 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).

8 Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag).

9 Metals in concentrate include metal derived from slag processing and as from 2014 have been calculated at Lonmin standard downstream processing losses to present produced saleable ounces.

10 Corresponds to contained base metals in concentrate.

11 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. Chrome is produced in the form of chromite concentrate and volumes shown are in the form of chromite.

12 Basket price of PGMs is based on the revenue generated in Rand and Dollar from the actual PGMs (5PGE + Au) sold in the period based on the appropriate Rand / Dollar exchange rate applicable for each sales transaction.

13 As per note 12 but including revenue from base metals.

14 Exchange rates are calculated using the market average daily closing rate over the course of the period.