25th Oct 2007 07:01
Lonmin PLC25 October 2007 Lonmin Plc Full Year Production Report and Guidance for 2008 25 October 2007 Lonmin today announces its production report for the three months and twelvemonths to 30 September 2007 (unaudited) and provides sales guidance for the 2008financial year. Q4 Production Total tonnes mined for the fourth quarter at 3.5 million were down 8.6% on thesame period in 2006 and we produced 207,513 saleable ounces of Platinum inconcentrate a decline of 19.0% on the fourth quarter of 2006. The main reasonfor this was the illegal industrial action by the National Union of Mineworkersin August which affected both the Marikana and Pandora Joint Venture operations. The Process Division performed well during the quarter to deliver 262,280 ouncesof refined Platinum broadly flat on last year in spite of the impact of thestrike on production at the Smelter and Base Metal Refinery. Final metal salesfor the fourth quarter were 315,945 ounces of Platinum and 592,525 ounces oftotal PGMs. 2007 Production and Costs Operationally 2007 was a challenging year for Lonmin. Overall we mined 14.0million tonnes of ore a fall of 1.7% on 2006 after stripping out the effect ofthe additional seven days in the prior year. Our Marikana operations mined 12.8 million tonnes in the year a 2.0% decrease on2006 (after stripping out the effect of the additional seven days in the prioryear). Production was lower than expected as a result of both industrial actionand a longer than usual Christmas break. At Limpopo we mined 0.8 million tonnesof ore, a decrease of 13.2% on 2006 as the operation continued to be constrainedby the lack of available developed ore and adverse ground conditions.Attributable tonnes mined at Pandora rose in the year to 0.4 million versus 0.3million in the prior year as we continued to increase production from thisground. We continued to ramp up production from our new mechanised shafts, Hossy andSaffy, on the eastern side of our Marikana operations. These shafts areperforming well producing 461,000 tonnes in the year compared to 64,000 tonnesin the 2006 financial year. During the year our opencast tonnes mined increasedby 6.3% to 1.9 million tonnes. Milled head grade declined marginally during the year from 4.85 grams per tonneto 4.80 grams per tonne as we ramped up the Marikana mechanised shafts,processed more opencast ore than originally planned and sourced 25% more orethan in 2006 from the eastern side of the Marikana property. The concentrators produced a total of 869,832 saleable ounces of Platinum inconcentrate for the year down 9.9% on 2006 (after stripping out the effect ofthe additional seven days in the prior year). Concentrator recoveries wereimpacted by the blend of the feed mix including higher than anticipated opencasttonnage, the lower head grade and the continued shortage of skilled personnel. The Process Division had a difficult start to the year with the shutdown of theNumber One furnace in December and its subsequent rebuild. The Division hasperformed well since the restart of the Number One furnace at the end of April.We have run both the Number One furnace and Merensky furnace since the end ofApril and processed, through the Smelter, substantially all of the concentrateinventories built up during the first half of the year. We also toll refined aproportion of our concentrate which we could not store. Refined metal output forthe year was 695,842 ounces of Platinum, a decline of 12.9% on 2006 (afterstripping out the effect of the additional seven days in the prior year). In order to improve operational efficiencies and consistency we have changed ouryear end inventory management practices. This change has resulted in an increaseof around 65,000 Platinum ounces in metal in process at the year end,predominantly within the Base Metal Refinery. We estimate that of this year endstock around 19,000 ounces of Platinum should be released through the valuechain in the 2008 financial year. Final metal sales for the year were 793,584 ounces of Platinum and 1,490,184ounces of total PGMs, in line with our revised forecast following the Auguststrike. These sales included 93,609 ounces of Platinum which were toll refinedand 7,032 ounces of Platinum which were sold as concentrate or other partprocessed products. The reduction in production volumes as a result of the August strike has had animpact on our full year unit costs and we are revising our Marikana C1 costguidance range because of this. Our guidance range for C1 costs net of basemetal credits for the 2007 financial year is between R3,250 to R3,350 per PGMounce sold for the Marikana operations. Our C1 guidance per PGM ounce sold forMarikana and Limpopo combined remains within our previous range of R3,450 toR3,550. 2008 Guidance We currently anticipate sales for the 2008 financial year will be around 900,000ounces of Platinum. We expect 2008 to be a year of consolidation as we continueto grow our mechanised mining at Marikana with production increasing from ourHossy and Saffy shafts. We currently forecast mechanised production will accountfor around 17.0% of underground ore mined at Marikana by the end of the 2008financial year. The continued ramp up of our mechanised shafts will contributeto the mix and grade impact we saw in 2007 continuing into 2008 with our growthin Marikana next year coming predominantly from the eastern side of theoperation. We are conducting a review of the ongoing viability of our opencastpits given their impact on concentrator recoveries and increasing costs but arecurrently planning for these pits to continue to contribute during 2008. AtLimpopo the emphasis on development will continue. In the Process Division wewill focus on improving recoveries across the value chain in particular at theConcentrators. We anticipate a challenging cost environment in 2008. South African inflation inthe mining sector for both operating costs and capital projects is acceleratingrapidly due to the combined impact of the mining boom, construction boom, and2010 World Cup infrastructure spend. The labour market for all skills at artisanlevel and above is very competitive with overall industry wage settlementsincreasing at double digit annual rates. Utility costs are rising rapidly as arethe costs of basic materials such as steel, lubricants and fuel. These factors,plus the current stronger South African Rand, will increase unit costs and putpressure on margins in 2008. Commenting on the Full Year Production Report, Brad Mills, Chief Executive said: "2007 has been a difficult year for Lonmin. Although we have had many successes,including achieving a market leading safety performance and eliminating our overreliance on the Number One furnace, we have also encountered challenges in thestrength of our planning and forecasting systems as well as operationally. Wehave made a number of changes to address these issues. We are shifting the focusof all our planning and forecasting across our value chain to ounces away fromthe historic tonnes focus of the mines. We have considerably strengthened thesenior operational team within Marikana mining. The new management team at theProcess Division is bedding down well and we have moved responsibility forconcentrator operations to the Process Division to ensure the right focus onplanning and recoveries. All capital projects are now managed by our dedicatedcapital programme group to ensure the right attention to project planning,scheduling and delivery. Lonmin remains committed to growing its business in avalue enhancing and socially responsible way. The fundamental quality of ourasset base is robust and we are confident that we are resolving our operationalissues as we build a solid foundation for long term sustainable growth." Enquiries: Alex Shorland-Ball +44 (0) 20 7201 6060Vice President, Investor Relations & Communications 3 months 3 months to 12 months 12 months 12 months to to to to 30 30 30 30 30 September September September September September Restated1 2007 2006 2007 2006 2006 Tonnes Marikana Underground 000 2,751 3,193 11,211 11,690 11,484mined Opencast 000 421 298 1,597 1,620 1,583 Total 000 3,172 3,491 12,808 13,310 13,067 Limpopo Underground 000 193 189 757 857 857 Opencast 000 0 0 0 14 14 Total 000 193 189 757 871 871 Pandora Underground 000 36 26 128 101 100 attributable2 Opencast 000 53 73 286 176 175 Total 000 89 99 414 277 275 Lonmin Underground 000 2,980 3,408 12,096 12,648 12,441 Platinum Opencast 000 474 371 1,883 1,810 1,772 Total 000 3,454 3,779 13,979 14,458 14,213Tonnes Marikana Underground 000 2,801 3,244 11,216 11,707 11,502milled3 Opencast 000 391 337 1,469 1,895 1,854 Total 000 3,192 3,581 12,685 13,602 13,356 Limpopo Underground 000 186 202 781 887 887 Opencast 000 0 0 0 14 14 Total 000 186 202 781 901 901 Pandora4 Underground 000 85 62 301 238 236 Opencast 000 119 176 649 394 394 Total 000 204 238 950 632 630 Ore Underground 000 0 14 75 14 14 purchases5 Opencast 000 0 0 20 18 18 Total 000 0 14 95 32 32 Lonmin Underground 000 3,072 3,522 12,373 12,846 12,639 Platinum Opencast 000 510 513 2,138 2,321 2,280 Total 000 3,582 4,035 14,511 15,167 14,919 3 months 3 months to 12 months 12 months 12 months to to to to 30 30 30 30 30 September September September September September Restated1 2007 2006 2007 2006 2006 Metals in Marikana Platinum oz 188,194 232,619 778,049 897,494 881,068concentrate6 Palladium oz 84,859 105,726 354,037 402,566 395,180 Gold oz 5,180 10,453 21,578 28,654 28,284 Rhodium oz 25,251 29,225 102,906 115,664 113,411 Ruthenium oz 40,635 46,924 164,826 185,719 182,078 Iridium oz 11,688 10,127 37,317 38,420 37,676 Total oz 355,807 435,074 1,458,713 1,668,517 1,637,697 PGMs Nickel7 MT 927 1,129 3,802 4,228 4,160 Copper7 MT 548 650 2,259 2,499 2,459 Limpopo Platinum oz 8,195 10,046 35,567 48,640 48,640 Palladium oz 5,483 7,641 24,351 36,834 36,834 Gold oz 714 700 2,945 3,355 3,355 Rhodium oz 814 2,444 3,723 6,904 6,904 Ruthenium oz 1,200 2,001 5,769 8,704 8,704 Iridium oz 195 539 1,245 1,973 1,973 Total oz 16,601 23,371 73,600 106,410 106,410 PGMs Nickel7 MT 156 273 752 915 915 Copper7 MT 109 189 513 621 621 Pandora4 Platinum oz 11,080 12,821 52,479 34,279 34,125 Palladium oz 5,197 5,784 24,417 15,537 15,463 Gold oz 93 107 461 303 302 Rhodium oz 1,622 1,841 7,439 4,975 4,949 Ruthenium oz 2,399 2,781 10,922 7,547 7,507 Iridium oz 522 596 2,415 1,603 1,595 Total oz 20,913 23,930 98,133 64,244 63,941 PGMs Nickel7 MT 13 28 61 41 41 Copper7 MT 7 10 32 22 22 Ore Platinum oz 44 605 3,737 1,125 1,125 purchases5 Palladium oz 21 270 1,730 417 417 Gold oz 0 6 46 32 32 Rhodium oz 7 95 533 115 115 Ruthenium oz 11 158 809 202 202 Iridium oz 2 31 180 40 40 Total oz 85 1,165 7,035 1,931 1,931 PGMs Nickel7 MT 3 2 21 4 4 Copper7 MT 1 1 10 2 2 Lonmin Platinum oz 207,513 256,091 869,832 981,538 964,958 Platinum Palladium oz 95,560 119,421 404,535 455,354 447,894 Gold oz 5,987 11,266 25,030 32,344 31,973 Rhodium oz 27,694 33,605 114,601 127,658 125,379 Ruthenium oz 44,245 51,864 182,326 202,172 198,491 Iridium oz 12,407 11,293 41,157 42,036 41,284 Total oz 393,406 483,540 1,637,481 1,841,102 1,809,979 PGMs Nickel7 MT 1,099 1,432 4,636 5,188 5,120 Copper7 MT 665 850 2,814 3,144 3,104 3 months 3 months to 12 months to 12 months 12 months to to to 30 30 30 30 30 September September September September September Restated1 2007 2006 2007 2006 2006 Metallurgy Lonmin Platinum oz 262,280 262,973 695,842 799,070 799,070 refined Palladium oz 124,774 124,964 318,758 369,859 369,859 Metal Gold oz 7,210 7,598 20,485 20,955 20,955 Production Rhodium oz 35,478 35,093 88,469 115,453 115,453 Ruthenium oz 52,430 52,143 135,873 174,639 174,639 Iridium oz 10,897 15,056 30,430 40,836 40,836 Total oz 493,069 497,827 1,289,857 1,520,812 1,520,812 PGMs Toll Platinum oz 8,827 0 93,609 0 0 refined Palladium oz 7,617 0 43,274 0 0 metal Gold oz 0 0 0 0 0 production Rhodium oz 1,481 0 12,966 0 0 Ruthenium oz 1,698 0 20,439 0 0 Iridium oz 389 0 4,090 0 0 Total oz 20,012 0 174,378 0 0 PGMs Total Platinum oz 271,107 262,973 789,451 799,070 799,070 refined Palladium oz 132,391 124,964 362,032 369,859 369,859 PGMs Gold oz 7,210 7,598 20,485 20,955 20,955 Rhodium oz 36,959 35,093 101,435 115,453 115,453 Ruthenium oz 54,128 52,143 156,312 174,639 174,639 Iridium oz 11,286 15,056 34,520 40,836 40,836 Total oz 513,081 497,827 1,464,235 1,520,812 1,520,812 PGMs Base metals Nickel8 MT 1,417 1,251 4,522 4,342 4,342 Copper8 MT 885 840 2,466 2,452 2,452 Sales Refined Platinum oz 311,265 272,765 786,552 803,471 803,471 Metal Palladium oz 153,757 130,200 362,077 373,303 373,303 Sales Gold oz 9,570 6,516 24,449 22,133 22,133 Rhodium oz 36,656 32,068 102,916 116,281 116,281 Ruthenium oz 59,677 47,914 162,853 179,557 179,557 Iridium oz 12,321 13,237 37,858 38,092 38,092 Total oz 583,246 502,700 1,476,705 1,532,837 1,532,837 PGMs Concentrate Platinum oz 4,680 97,547 7,032 144,027 136,183 and other9 Palladium oz 2,123 46,391 3,232 66,902 61,110 Gold oz 76 3,074 201 4,852 4,641 Rhodium oz 806 11,592 1,008 16,867 15,965 Ruthenium oz 1,594 19,313 1,942 27,975 26,137 Iridium oz 0 3,818 64 5,520 5,291 Total oz 9,279 181,735 13,479 266,143 249,327 PGMs Lonmin Platinum oz 315,945 370,312 793,584 947,498 939,654 Platinum Palladium oz 155,880 176,591 365,309 440,205 434,413 Gold oz 9,646 9,590 24,650 26,985 26,774 Rhodium oz 37,462 43,660 103,924 133,148 132,246 Ruthenium oz 61,271 67,227 164,795 207,532 205,694 Iridium oz 12,321 17,055 37,922 43,612 43,383 Total oz 592,525 684,435 1,490,184 1,798,980 1,782,164 PGMs Nickel8 MT 2,211 1,401 5,308 4,604 4,604 Copper8 MT 1,075 1,069 2,474 2,974 2,974 3 months 3 months 12 months 12 months 12 months to to to to to 30 30 30 30 30 September September September September September Restated1 2007 2006 2007 2006 2006 Prices Average Platinum $/oz 1,275 1,182 1,213 1,091 1,091 Palladium $/oz 338 314 339 300 300 Gold $/oz 682 603 647 571 571 Rhodium $/oz 5,981 4,600 5,757 3,971 3,971 Ruthenium $/oz 377 192 404 134 134 Iridium $/oz 402 227 402 233 233 Basket price of $/oz 1,205 1,048 1,196 972 972 PGMs Nickel8 $/MT 24,718 30,665 26,461 17,975 17,975 Copper8 $/MT 7,087 12,428 6,971 7,882 7,882 Exchange Average rate for period R/$ 7.04 7.14 7.14 6.63 6.63Rates Closing R/$ 6.83 7.77 6.83 7.77 7.77 rate Notes: 1 The year to September 2006 comprised an additional 7 days mining performance for Western Platinum Limited and Eastern Platinum Limited arising on the change of basis to report on a calendar month. This column shows the data restated on a like for like basis. 2 JV 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 Relates to the tonnes milled and derived metal in concentrate from third-party ore purchases. 6 Metals in concentrate have been calculated at industry standard downstream processing losses. The metals in concentrate numbers for the first, second and third quarters of the 2007 financial year have been restated to adjust for a measurement error, discovered during the fourth quarter, which occurred at one of our concentrators. This has the impact of reducing the first quarter metals in concentrate produced by 1,259 ounces of Platinum and 2,549 ounces of total PGMs, second quarter metals in concentrate produced by 5,498 ounces of Platinum and 10,863 ounces of total PGMs and the third quarter metals in concentrate produced by 296 ounces of Platinum and 604 ounces of total PGMs. 7 Corresponds to contained base metals in concentrate. 8 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. 9 Concentrate and other sales have been adjusted to a saleable ounces basis using standard industry recovery rates. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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