Half Yearly Report

REGULATORY RELEASE

13 May 2013

2013 Interim Results

Lonmin Plc, (Lonmin or the Company), the world's third largest primary Platinum producer, today publishes its Interim Results for the period ended 31 March 2013.

Key Features

Safety is our number one priority:

o LTIFR of 3.66 incidents per million man hours compared to 4.69 in the prior year period

o Marikana operations - 6 million Fatality Free Shifts

o 1B/4B - 7 million Fatality Free Shifts

o Our record safety performance was negatively impacted by two fatalities at the start of H2 2013

Substantially exceeded Renewal Plan:

o Platinum sales of 326,142 ounces - up 2.4% on the prior year period

o Basket price (incl. by-product revenue) up 1.7% to US$1,252 per PGM ounce

o Rand unit cost contained at R8,648 per PGM ounce, up 5.8% on prior year period

o Underlying EBIT US$93 million, up from US$14 million in the prior year period

o Net cash - US$194 million vs. Net Debt US$421 million at September 2012

Strong half year operational performance:

o Tonnes produced at 5.7 million, down 1.8%

o Ore reserve position at 3.4 million centares, up 9.3%

o Saleable metal in concentrate, flat on prior year period

o Underground head grade increased to 4.63g/t from 4.48g/t

o Overall concentrator recoveries improved from 85.5% in prior year to 86.8%

o Incident at Number Two furnace mitigated through reduced scope of Number One furnace rebuild

Market outlook: 

o Rising costs force South African producer cuts

o Deficits in 2013 as South African supply shrinks

o Continuing deficits in 2014 to 2018

o Prices expected to rise on falling inventories

Guidance:

o Increasing guidance for Platinum metals in concentrate production from 680,000 ounces to in excess of 700,000 ounces

o Maintaining our sales guidance of 660,000 saleable Platinum ounces - near term smelter capacity constraints

o Unit cost per PGM ounce reduced from previous guidance of a 10% increase to below 8%

o Capex guidance of US$175 million maintained

Simon Scott, Acting Chief Executive Officer, said: "We are pleased to have maintained the momentum of the safe re-start and ramping up of production at our operations to deliver a strong operational and financial performance in the first half of our financial year. The successful refinancing of the business, the return to profitability during the period under review and the revised growth strategy and streamlined capital investment programme have allowed us to de-risk the balance sheet and it is pleasing to note that the business has generated positive free cash flows in Quarter Two. We expect to continue to build operational momentum in the second half of the financial year and we are increasing our metals in concentrate guidance from 680,000 ounces of Platinum to in excess of 700,000 saleable Platinum ounces."

Financial Highlights

Footnotes:

ENQUIRIES

Investors / Analysts:

Lonmin

Media:

Cardew Group

Brunswick - Johannesburg

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 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. Lonmin's mining operations extract ore from which the Process Division produces refined PGMs for delivery to customers. 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

Chief Executive Officer's Review

1. Introduction

I am pleased to report that we substantially exceeded our Renewal Plan to deliver a strong operational and financial performance in the first half of the 2013 financial year. The results reflect the successful execution of the operational plans we put in place for the safe re-start and ramping up of production following the labour unrest that preceded the period.

The six month period to 31 March 2013 which we are reporting on was marked by remarkable resilience and cohesiveness by the management team and all our employees.

·; We achieved industry safety records by setting new levels of safety across the whole Marikana operations. Our Lost Time Injury Frequency Rate (LTIFR) continued to improve, reaching 3.66 per million man hours worked. Regrettably, notwithstanding our industry leading performance in this area, two fatalities occurred at the start of the second half of the financial year;

·; We successfully delivered against our forecast of ramp up production established at the beginning of the financial year, and replenished our metal pipeline. We have delivered 366,059 ounces of Platinum in concentrate and achieved Platinum sales of 326,142 ounces during this period;

·; The combination of better than expected production volumes, a marginally better PGM price environment, a favourable ZAR/USD exchange rate and effective cost containment has resulted in operating profit of $90 million in the half year compared to $14 million in the prior period and profit before tax of $54 million compared to $18 million in 2012;

·; We successfully raised $767 million net of costs and foreign exchange movements from the Rights Issue, enabling us to de-risk the balance sheet. We used the proceeds to settle the bank debt as well as reduce the overall facilities from around $915 million to $615 million, based on 31 March 2013 exchange rates;

·; The combination of the Rights Issue and a good first half performance has resulted in a net cash balance of $194 million as at 31 March 2013. This is a significant shift from the net debt position Lonmin had at 30 September 2012 of $421 million. It is particularly pleasing to note that the business generated positive free cash flows after capex of $116.2 million in Quarter Two; and

·; Unit costs were well contained, increasing by 5.8% to R8, 648 per PGM ounce produced when compared against the prior year period and $73 million was spent on capital.

2. Safety

Regrettably since the end of the half year, we have had two fatalities resulting from fall of ground incidents at our Rowland and K3 shafts respectively. We extend our deepest condolences to the families of Mr David Macamo and Mr Elson Ngomane. The safety of our employees is our first consideration in all that we do and we continue to emphasise the importance of applying safe working methods throughout our operations.

Notwithstanding the two fatalities referred to above, our safety record during the first half year was again encouraging. We are pleased the Marikana operations achieved new industry safety records which included 6 million Fatality Free Shifts (FFS) and 17 million Fall of Ground Fatality Free shifts on 12 April and 19 April respectively, whilst the IB/4B and K3 shafts within our Karee Mining Division achieved 7 million FFS and 4 million FFS respectively. Our LTIFR at 3.66 per million man hours worked showed an improvement when compared to the prior year period of 4.69 per million man hours worked. The procedures we developed for a safe and sustainable start up during the ramp up period have been commended by the Regulator and are now being used as a standard across the industry.

3. Production Performance

Introduction

Our production performance in the first half of the 2013 financial year has substantially exceeded our planned ramp up. We mined 5.7 million attributable tonnes, realised 366,059 ounces of Platinum in concentrate and sold 326,142 ounces of Platinum. Momentum was quickly established, with close to normal levels of attendance across the operations. The results and momentum established in the first three months of the financial year were however tempered by higher than anticipated Section 54 stoppages and management induced safety stoppages towards the end of the half year as well as intermittent labour disruptions. We continue to operate ahead of our Renewal Plan but slightly below the levels we consider ultimately acceptable.

Mining Division

The results of the successful ramp up were evident in the performance of our Mining Division. Total tonnes mined during the half year of 5.7 million tonnes, showed a decrease of 1.8% when compared to the 2012 half year production of 5.8 million tonnes. This is a commendable achievement given that mining operations had been suspended for six weeks by the strike when operations resumed in October 2012. Our Line of Sight programme is fully operational and our team effectiveness training to improve efficiencies is being implemented across the different shafts.

Total Marikana underground tonnes mined were 5.3 million, a decrease of 3.7% when compared to the first half of 2012. Karee's contribution of 2.4 million tonnes was 1.5% less than the prior year period as the outperformance by K3, our biggest shaft which maintained the momentum it established at the beginning of the ramp up, was offset by the loss in production from K4. This shaft was placed on care and maintenance in September 2012, having produced 47,000 tonnes in the first six months of last year.

Production at Middelkraal, comprising the Hossy and Saffy shafts, was up 52,000 tonnes representing a 5.4% increase from the prior year period as both shafts continued to increase production albeit at a lower than anticipated rate. The rate of production at these important shafts was impacted by Section 54 safety stoppages and management induced safety stoppages in the second half of the period under review as well as by the structural legacy issues which are a function of the change in the mining method from mechanised to conventional mining. Westerns' production decreased by 92,000 tonnes or 6.1% due to the planned depletion of ore reserves at Newman shaft. In addition, Rowland faced some infrastructural challenges around hoisting logistics as well as ore reserve availability. A pilot project around debottlenecking has commenced to address the hoisting constraints. Production at Easterns fell by 23.2% when compared with the prior year as E1 and E3 shafts approach the end of their life.

Underground production at Pandora, the joint venture which is managed by Lonmin, continues to increase at a steady rate and contributed 112,000 attributable tonnes, an increase of 6.9% when compared against the prior half year period. Lonmin purchases 100% of the ore from the joint venture and this ore contributed 19,095 saleable Platinum ounces and 36,360 saleable PGM ounces of metal in concentrate, a 22.3% and 22.8% increase respectively from the prior year period.

Our opencast Merensky operations delivered a total of 288,000 tonnes, an increase of 91,000 tonnes or 46.6% over the prior year period.

Ore reserve development

We have maintained our reserve position since the beginning of the current financial year and our immediately available ore reserves at Marikana at the end of the period were 3.4 million centares. This healthy level of reserves represents an average of 18 months of current production and supports our strategy as part of the Renewal Plan, of continuing to ensure we have sufficient immediately available ore reserves at Marikana. We continue to focus on ore reserve development across the operations.

Process Division

Concentrators

The concentrators had an equally good performance. They started up ten days after the mining operations in order to build required minimum stock levels whilst the Number One concentrator was taken down at the beginning of the financial year for a planned capacity upgrade. As a result total tonnes milled were 5.7 million, or 4.7% less than the prior year. This plant is expected to be back online in the fourth quarter of the 2013 financial year and it is anticipated that we will build up some stocks.

Underground milled head grade during the period increased by 3.3% to 4.63 grammes per tonne (5PGE + Au) compared to the prior year period, as a result of an increase in mined grade and ore mix. The opencast milled head grade also continued its upward trend, improving by 1.4% to 2.93 grammes per tonne. Overall, total milled head grade increased by 3.3% from the prior year period to 4.56 grammes per tonne benefitting from a 2.2% increase in mined UG2 and stabilised opencast production and grade. The recovery rates for both underground and opencast continued to improve gaining from the full benefit of the tailings treatment plants. The combination of improved recoveries and grades reduced the impact of capacity constraints and enabled us to yield 366,059 saleable Platinum ounces and 681,010 saleable PGM ounces of total metals in concentrate, which was a relatively flat performance when compared against the prior year but exceeded the Renewal Plan.

Smelters and Refineries

Total refined production for the six months to 31 March 2013 was 326,084 Platinum ounces and 620,282 PGM ounces, an increase of 7.1% and 3.1% respectively over the prior year period. The 2012 half year refined production was temporarily impacted by a smelting stock build up arising from abnormal levels of sulphur in the smelter feeds, which was subsequently reversed. The overall refining recovery rate which measures recoveries across the processing value chain increased from 81.3% in the prior year to a satisfactory 81.9%.

Following the successful start up the Number Two furnace in the second half of the 2012 financial year, the Company now has total installed smelting capacity of 35.5MW whilst the operational requirement at current production run rates is around 22MW. The Number One and Number Two furnaces, operated well throughout the first half of the year. The Number One furnace was shut down for its scheduled maintenance and the planned upgrade of the hearth, barrel and shell in April expected to be completed in approximately three months. This is the first time that the Number One furnace has been shut down, following its successful rebuild and subsequent re-commissioning in December 2010.

Unfortunately, a collapse of the Number Two furnace roof occurred at the end of April which resulted in its shut down. Our preliminary assessments indicate that it will take around 50 days to repair the roof. Pieces of castable refractory in the roof of the furnace failed, impacting on the roof's integrity. The furnace was stopped in a controlled manner and drained. The preliminary investigation has revealed that the reliability of the off-gas system led to an operating environment that caused the refractory roof support to fail. As part of the repairs underway both the off-gas system and the roof design are being reviewed to implement changes to prevent a reoccurrence. In the meantime we have decided to reduce the scope of the rebuild of the Number One furnace and bring it back online as soon as possible, in order to mitigate the operational impact of the unplanned stoppage on Number Two furnace. We are making good progress with the rebuild and expect the Number One to be re-commissioned around mid June 2013.

Whilst the incident at the Number Two furnace is unfortunate, we are now benefitting from previous investment in additional furnace capacity which provides us with welcome flexibility. The benefit of the reduced shut down to the Number One furnace means that risks around significant concentrate stocks, over and above our current storage capacity, as well as significant challenges around capacity to our downstream BMR processing capacity are mitigated. We do however expect that there may be some stock build up in the second half of the year, but will assess the situation at the time.

Platinum sales for the half year at 326,142 ounces were 2.4% higher than the prior year period, whilst the 586,753 PGM ounces achieved during the period, were 3.6% lower than the prior year period.

Production statistics for Quarter Two of the year can be found in a separate announcement published today.

4. Cost management

Gross and Unit costs

Management continued to focus on operational efficiency and containment of operational costs in what remains a challenging environment for the industry. Our gross Rand operating costs increased by around 8% from R5.8 billion to R6.3 billion mainly as a result of wage increases and inflation, offset by stringent cost containment measures and the efficiency improvements from the total cost of ownership project described below. The effect of these factors and improved grades and recoveries resulted in the unit cost increase being limited to 5.8% from R8, 172 to R8, 648 per PGM ounce produced.

Management restructuring

At the end of 2012 we announced two initiatives aimed at cutting costs and increasing efficiencies. We have made significant progress in our review of the operational management structure and are in the process of finalising separation agreements with the affected employees. In doing so, we have been working closely with affected employees and their respective trade unions, where applicable, as required by South African Labour legislation, to consult on ways to minimise the impact of the restructuring.

Approximately 150 managerial positions, representing around 20% of the management complement will become redundant enabling annualised cost savings of around R200 million from the 2014 financial year, and making for a more streamlined and efficient structure. The review and restructuring has been designed in such a way as to minimise risk whilst positioning us to respond promptly to more favourable market conditions as they arise.

Total cost of ownership

Our initiative to deliver R100 million in procurement savings per year by implementing structures, processes and systems to fully benefit from a Total Cost of Ownership approach is progressing well, with savings of R61 million realised to date. We remain on course to achieve that full benefit for the 2013 financial year.

Stock levels

Although stocks of in-process materials were largely depleted by September 2012, we have successfully replenished these in the half year such that closing stock of contained PGMs was around 128, 000 ounces higher at 31 March 2013 than the 2012 financial year end.

5. Balance Sheet management

Cash and Net debt

Net cash as at 31 March 2013 was $194 million as a result of the Rights Issue, the better than anticipated ramp up of production and the improved Rand basket price. In addition, the Rand denominated facilities and the US Dollar bank facilities were repaid. For the full six months under review, the business had free cash flow of $70 million excluding working capital movements, a significant portion of which relates to the re-stocking of the processing pipeline.

Capital expenditure

We have been successful in managing our capital expenditure in the first half of the year and capital spend to date is $73 million. The spend to date has been mainly on ore reserve development and infrastructure at Hossy and Saffy, community projects and on the refurbishment of the Number One Concentrator plant.

6. Employee Relationships

The union membership profile in the platinum industry has evolved over the last few months and Lonmin is no exception to this change. At Lonmin, the Association of Mining and Construction Union (AMCU) is now the largest union, representing 70% of Lonmin's Category 4-9 employees. The National Union of Mineworkers (NUM) now represents approximately 20% of our Category 4-9 employees. We currently have an interim organisational agreement with AMCU which is valid until a new recognition agreement is finalised.

We commenced a process of negotiating a new recognition dispensation at the beginning of the calendar year, with a view to establishing an all-inclusive recognition agreement that provides appropriate representation to all the unions and associations representing our employees. Considerable focus and attention has been given to discussions with all unions around the benefits of such an approach in particular that an inclusive approach enables all unions to remain at the discussion table irrespective of any future changes in membership that may occur.

AMCU has referred the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA). We welcome this development as a process facilitated by the CCMA presents an opportunity to reach an agreement.

We will fully participate in this process and remain committed to seeking a negotiated outcome which is fair to all stakeholders.

7. Key initiatives of the Renewal Plan

At the Annual General Meeting in January this year our Board announced five key initiatives around employee relations, empowerment, migrant and local labour, better use of invested capital and infrastructure and housing and accommodation. The initiatives are aimed at rebuilding trust with employees and employees' representatives and maximising the creation of value for all stakeholders. In doing so we believe we will enhance the long-term wealth creation and investment potential of the Company. As part of this initiative, project teams have been established. A summary of each project and progress to date is outlined below.

·; Employee relations - we aim to develop a sustainable employee relations framework, structure and system that adds value to the business. Our initial focus has been on the renegotiation of the union recognition dispensation with appropriate representation for all the unions and associations having the support of a significant proportion of our employee base. The progress made on this initiative is highlighted in Section 6 above. We have also established a task team to review our recruitment model with a view to identifying ways of addressing the imbalance between local and migrant labour in a manner which seeks to identify and manage possible broader social consequences.

·; Employee value proposition - we aim to take a holistic approach to our employees as we seek to understand and address the social and economic issues they face. We have identified key needs, such as the need for financial literacy, where we have implemented a pilot financial wellbeing programme and completed preliminary studies on the way forward. We are also evaluating Employee Share Ownership Plans.

·; Employee value proposition - Shift Configuration Project - the overall objective of this project is to establish a balance between economic value for the business and a socio-economic value proposition for our employees. This project team is looking at the viability of alternative shift and leave patterns in which operations can continue to run profitability while enabling employees to return home more frequently than has been possible in the past.

The process will involve identifying the optimum mine and shift cycles, establishing the costs and then developing an operational model to create a mutually beneficial environment for both Lonmin and its employees.

·; Community value proposition and the new Social Labour Plan (SLP) programme - our aim is to identify sustainable development measures that will create value for the Greater Lonmin Community (GLC) and integrate these into our SLP. Our preliminary work has involved identifying all relevant stakeholders and gathering data to enable us to identify the potential development areas. We are also looking at Community ownership trusts as highlighted in Section 8 below.

·; Housing settlement initiatives - our aim is to develop and implement an integrated and sustainable human settlement strategy which is compliant with our licence to operate requirements and consistent with our commitment to adequate accommodation, safety and wellbeing of our employees. Our programme of building and converting hostels is continuing and we expect to complete the conversion of all our hostels to decent and affordable family or single accommodation units by December 2014. In addition, we are evaluating other ways to improve employees' living conditions and are creating programmes to deliver on these commitments. We have launched a comprehensive analysis of the employees who are impacted as this will provide us with some insight into their requirements and enable us to assess the associated costs. Our aim is to partner with all levels of Government, local Government, and other stakeholders and explorative discussions with government and other potential partners are ongoing.

We are committed to the substantive change we believe is required and we have made a good start. We have not yet given any commitment on expenditure, benefits or timeline on some of these projects as the necessary research and consultation with relevant stakeholders has not been concluded. What is clear to us however, is that close collaboration with other stakeholders is required if we are to succeed with these initiatives and we are seeking to do so from the outset.

8. Equity

The Company continues to look at the different options that are available to increasing its Historically Disadvantaged South Africans' ownership from 18% to 26% by December 2014, as required by the Mining Charter. In order to achieve compliance, the Company may wish to facilitate the creation of trusts for the benefit of current and future employees, and separately for members of the GLC, to which new shares could be allotted for their sole economic benefit. The timeline with respect to the implementation of the employee scheme will be predicated on resolution of the discussions around the implementation of the union recognition agreement.

The discussions and timeline in the previously announced proposed transaction between Lonmin and Shanduka, our Black Economic Empowerment partner around the Limpopo asset have been extended by a year to 31 January 2015 in order to allow more time to complete the feasibility review, secure funding and obtain all necessary approvals.

9. Market

PGM prices

PGM prices improved marginally in the six months ended 31 March 2013, compared to the prior year period. Platinum strengthened by 2.0% from an average of $1,568 per ounce in the first half of the 2012 financial year to $1,615 in the first half of the 2013 financial year and palladium increased by 6.0 % from $655 per ounce to $695, whilst Rhodium fell by 23.5% from $1,526 to $1,167 per ounce.

Future demand for platinum grows

The light duty autocatalyst sector is forecast to grow by 2% to 83 million cars in 2013 up from 81.5 million in 2012. While China and South America are forecasting growth in excess of 5% these are offset by the more moderate 3% growth in the US and contraction of 4.4% in Japan and the dramatic decline of 8.8% in Europe. However, from 2014 onwards LMC Automotive forecasts an annual growth rate in excess of 5% through to 2017. Growing vehicle volumes, combined with tightening emission legislation will ensure long-term demand growth, while the planned introduction of Euro 6 legislation in 2014 should provide a demand boost in the short-term. The relatively new non-road diesel sector has already started to contribute to demand in the auto sector and may become more important in the medium-term as growing economies such as China and India commence implementing more stringent emissions standards for non-road applications.

Electric vehicles appear less likely to displace the internal combustion engine as technical challenges and consumer confidence hampers full scale adoption. However, there is growing interest, albeit in the longer-term, in fuel cells vehicles, which favour platinum. In addition, stationary fuel cells are also gaining market share offering an alternative to nuclear energy, especially in the Asian region.

The main driver for jewellery demand is still China, where demand has remained firm this year. However, the combination of strong economic growth, urbanisation and rising per capita income should be positive for long term jewellery demand in that region.

The ETF market appears to have matured, with demand best described as "sticky" as changes in fund holdings have been quite small despite large price swings. The platinum ETF market has also proven to be more resilient than palladium in the current cycle.

PGM supply-demand estimates

While this is a fluid situation with information emerging all the time, we expect the platinum market to be in deficit of around 200,000 ounces in 2013, largely due to the supply disruptions in late 2012, rising costs and resultant cutbacks. We expect deficits to deepen in the subsequent years as supply constraints persist and demand recovers. However, platinum stocks excluding ETF holdings are estimated at around six months of supply and it may take more than a year to be drawn down in various parts of the value chain.

The palladium market deficits are expected to be larger, and may exceed 1 million ounces for a few years as Russian exports are reportedly drying up and palladium continues to benefit from substituting platinum in autocatalysts. Palladium stocks are estimated at around 10 million ounces and will therefore take even longer than platinum stocks to be drawn down to critical levels. The implication of this is that palladium will remain competitive against platinum for several years.

The rhodium market is also expected to move into deficit from 2013 onward on the back of the South African platinum production cutbacks, recovering auto and industrial demand and its low price. Stocks are difficult to estimate in the rhodium market which subdues optimism around future price increases.

South Africa producer cash cost curve

Data from the Chamber of Mines shows that South African platinum industry costs have risen by 14% per year on average since 2007, largely driven by higher wages, electricity and raw material costs. Our view is that whereas companies' costs were more differentiated in the past, the cost curve has flattened as companies are increasingly being impacted by factors affecting the industry as a whole, such as challenging labour relations, tougher safety and regulatory issues, electricity constraints and escalating costs. Lonmin has continued to improve its relative position on the South African cost curve in spite of the challenging environment.

Platinum and palladium recycling

South African platinum supply dropped by almost 400,000 ounces in 2012 and is expected to grow by only 2 to 3% per annum over the next few years. While recycling is expected to partially fill that gap, with anticipated growth of perhaps up to 5% to 10% per year, it may still not be sufficient to make up for the primary supply losses.

A growth of 5% in palladium recycling per year is anticipated. This is slower than that of the platinum recycling market due to the fact that the spent catalysts now coming into the recycle market hold higher platinum than palladium loadings. This should leave the palladium market in deficits of over a million ounces.

10. Farlam Commission

The Commission is currently focused on Phase 1 of its enquiry into the events that led to the tragedy on 16 August 2012. Lonmin fully supports the objectives of the Commission.

11. Outlook for the year

We have delivered a solid performance in this period, exceeding the targets under our Renewal Plan and this positions us well for the remainder of the year. However, wage negotiations will commence in the middle of the calendar year (the existing agreement expires at the end of September 2013) and we anticipate significant challenge in this process as we seek to manage our relationships with the unions that represent our employees. We plan to continue building operational momentum in the second half of the financial year and, absent any abnormal disruptions associated with Section 54 stoppages and labour disruptions, we are increasing our guidance of Platinum metals in concentrate production from 680,000 ounces to in excess of 700,000 ounces. In view of the constraints around smelting capacity during Quarter Three resulting from the Number Two furnace incident, we are maintaining our sales guidance of 660,000 saleable Platinum ounces. This implies a stock build up in the second half of the financial year, which we will address in the most commercially advantageous manner. We will continue to manage costs in the second half of the year such that the corresponding unit cost increase per PGM ounce produced for the year is now expected to reduce from our previous guidance of a 10% increase to below 8%.

Our guidance for the full 2013 financial year capex spend remains at $175 million, most of which will be spent on the Hossy, Saffy shafts as well as the Number One furnace.

12. Management and Board update

On 2 April, Phuti Mahanyele joined the Board as a representative of Shanduka. This follows Cyril Ramaphosa's retirement from the Board which we announced on 31 January 2013. We are grateful for Cyril's commitment and wise contributions to the Company over the years and welcome Phuti who brings a wealth of executive experience, knowledge and skills to our boardroom, and in particular has a deep insight into the needs of 21st century South Africa which we value greatly.

On 2 April, we announced that Ben Magara would be Lonmin's next Chief Executive Officer. Ben will be joining Lonmin on 1 July 2013. We welcome Ben and look forward to working with him in continuing to rebuild this Company. I will move back into my Chief Financial Officer role with effect from that date. I am confident that whilst much still needs to be done to restore Lonmin to its full potential, we are making steady progress in the right direction.

13. Employee contribution

Finally I would like to express my gratitude to all our employees, contractors and community members for their support and commitment to delivering an encouraging performance in the first half of 2013.

Simon Scott

Acting Chief Executive Officer

10 May 2013

Financial Review

Overview

The financial performance for the six months ended 31 March 2013 was underpinned by a better than anticipated production ramp up following the production stoppage of August and September 2012, a focus on cost containment assisted by the weakening Rand, as well as the strengthening of our financial position after a successful refinancing.

The Group undertook a successful Rights Issue which was completed in December 2012. The Rights Issue was fully subscribed with just below 97% of the take up coming from existing shareholders and the remainder from the rump placement. Total net proceeds of $767 million after costs and foreign exchange movements were raised. In addition, the terms of our debt facilities were revised in conjunction with the successful Rights Issue. Details of the amendments to debt facilities are included below. This refinancing has resulted in a robust balance sheet with significantly improved funding flexibility.

The rapid production ramp up during the period allowed us to replenish the metal in process pipeline which had been depleted in order to protect liquidity in September 2012 with refined Platinum production exceeding that of the comparative prior period by 7.1%. However PGM sales volumes were slightly lower compared to 2012 given lower opening stocks. The PGM pricing environment improved marginally which partially mitigated the effect of lower sales volumes but the net result was slightly lower revenue for the six months ended 31 March 2013 compared to the 2012 period.

The Rand was significantly weaker during the period under review resulting in favourable exchange impacts. These, coupled with positive stock movements as a result of the metal in process replenishment, offset cost escalations yielding significantly improved profitability for the six months ended 31 March 2013. Profit for the year attributable to equity shareholders amounted to $66 million (2012 - loss of $24 million) and the earnings per share were 13.3 cents compared to a loss per share of 6.3 cents in 2012 (note that the prior period loss per share has been recalculated, in accordance with accounting standards, to take into account the effects of the Rights Issue referred to above).

In summary, the successful refinancing of the business, the return to profitability during the period under review and the revised growth strategy and streamlined capital investment programme have allowed us to repay all debt and end the period in a net cash position of $194 million. It is particularly pleasing to note that the business has generated positive free cash flows in Quarter Two. For the full six months under review, the business was free cash flow positive if we exclude working capital movements of which a significant portion relates to the re-stocking of the processing pipeline. The challenge ahead is to continue to generate free cash flow in a testing operational and market environment characterised by difficult labour relations and weakening metal prices.

Income Statement

The $79 million movement between the underlying operating profit of $93 million for the six months ended 31 March 2013 and that of $14 million for the six months ended 31 March 2012 is analysed below.

Revenue

Total revenue for the six months ended 31 March 2013 decreased by $16 million from the six months ended 31 March 2012 to $735 million.

As noted in the overview the PGM pricing environment improved only marginally over the prior period and the impact on the average prices achieved on the key metals sold is shown below:

The US Dollar PGM basket price (excluding by-products) increased by 2% contributing $5 million to the revenue movement. It should be noted that whilst the US Dollar basket price has increased by only 2% over the 2012 comparable period, in Rand terms the basket price (excluding by-products) increased by 15% impacted by the significantly weaker Rand.

While Platinum sales volume exceeded that achieved in the 2012 comparative period, PGM sales volume for the six months to 31 March 2013 at 586,753 ounces was down 4% on the six months to 31 March 2012. This highlights significantly better than anticipated production ramp up performance following last year's stoppage. The decline in PGM volumes had a negative contribution of $25 million. However, the mix of metals sold resulted in a positive impact of $8 million mainly due to the higher proportion of Platinum and Palladium arising from metal-in-process inventory timing differences. Base metal revenue was down $4 million due to a combination of volume and price movements.

Operating Costs

Total underlying costs in US Dollar terms decreased by $95 million with the impact of cost escalations being offset by a combination of positive foreign exchange movements and a build-up of stock in process as the production pipeline was replenished following its depletion towards the end of the previous financial year as a result of the production stoppage in August and September. A track of these changes is shown in the table below:

Marikana underground mining costs increased in the period by $31 million or 7%, mainly due to wages and electricity costs escalating at rates above average CPI. This was partially offset by the 4% decrease in production in the period. Marikana opencast mining costs increased by $19 million or 155% largely driven by a 47% increase in production as well as escalations in contractual rates and other costs.

Concentrator and processing costs remained flat compared to the prior year period, as cost escalation effects were offset by the continued focus on cost containment, lower milling production as well as lower operating costs due to the stoppage of the Number One UG2 concentrator for planned upgrade.

Overheads increased by $6 million or 7% largely due to cost escalation effects.

Ore purchases increased by $8 million or 25% on the back of increased volumes of ore purchased.

The six months under review saw a replenishment of stock in process following last year's pipeline depletion. This has resulted in a $79 million positive impact on operating profit, excluding exchange impacts, arising from metal stock movements.

The Rand weakened considerably against the US Dollar during the period under review averaging ZAR8.79 to USD1 compared to an average of ZAR7.91 to USD1 in the 2012 period resulting in a $95 million positive impact on operating costs.

Depreciation and amortisation increased by $17 million over the 2012 period. Depreciation is calculated on a units of production basis, spreading costs in relation to proved and probable reserves. The increase in depreciation is largely as a result of increased opencast production and the relatively shorter life cycle of opencast pits at current production levels.

Cost per PGM Ounce

The C1 cost per PGM ounce produced for the six months to 31 March 2013 was R8,648. This was an increase of 5.8% compared to the same period in 2012. This exceptional achievement can be ascribed to continued focus on cost containment, increased grades and improved recoveries as a result of our emphasis on quality production all of which mitigated the impact of higher than inflation increases in the wage bill, diesel and electricity tariffs.

Further details of unit costs can be found in the Operating Statistics.

Special Operating Costs

Residual strike related costs arising from the Events at Marikana continue to be incurred. For the six months ended 31 March 2013, these costs totalled $2 million and largely consisted of communication costs relating to reputational rebuild as well as costs related to the ongoing Farlam Commission. In addition $1 million has been spent to date on the management restructuring exercise currently underway. There were no special operating costs incurred for the six months ended 31 March 2012.

Net Finance Costs

The total net finance costs of $39 million for the six months ended 31 March 2013 represent a $48 million adverse movement compared to the total net finance income of $9 million for the six months ended 31 March 2012.

Net bank interest and fees increased from $11 million to $14 million for the six months ended 31 March 2013 largely as a result of the unwinding of previously unamortised bank fees on settlement of the original loan facilities as discussed below. Interest totalling $9 million was capitalised to assets (2012 - $10 million).

The Historically Disadvantaged South Africans (HDSA) receivable, being the Sterling loan to Shanduka Resources (Proprietary) Limited (Shanduka), decreased by $15 million during the period to 31 March 2013 representing adverse exchange movements of $23 million partially offset by accrued interest of $8 million. This compares to favourable exchange movements of $10 million and accrued interest of $8 million in the period to 31 March 2012.

In order to minimise the risk of the exposure to currency fluctuations on the Rand and Sterling proceeds expected, the Group entered into forward exchange contracts in synchronisation with the Rights Issue process. The Dollar weakened over the offer period resulting in the Rand and Sterling proceeds received and translated at prevailing spot rates being more than that due under the forward exchange contracts. This resulted in the recognition of exchange losses under hedging arrangements of $11 million which was partially offset by a $1 million exchange gain on retranslation of advance proceeds of the Rights Issue.

The interest rate swap entered into in 2011 to hedge against interest rate fluctuations was unwound after the funds raised from the Rights Issue were used to settle the underlying bank debt. The net impact of releasing balance sheet amounts related to the hedging instrument as well as the unwinding fees incurred on early settlement was a $7 million charge to the income statement during the period under review.

Taxation

Reported tax for the current six month period was a credit of $34 million compared to a charge of $52 million in the 2012 period. The underlying tax charge of $13 million in the 2013 period becomes a $34 million tax credit after taking into account $47 million exchange gains on the retranslation of Rand denominated deferred tax liabilities. These gains are treated as special. In the prior year comparative period these exchange impacts had an adverse effect of $26 million on the tax charge.

Cash Generation and Net Cash / (Debt)

The following table summarises the main components of the cash flow during the period:

Cash flow utilised in operations in the six months ended 31 March 2013 at $60 million reflects a $190 million decrease from the same period in 2012. This was largely as a result of working capital movements, a significant portion of which can be attributed to the replenishment of the metal in process pipeline following last year's production stoppage ($121 million). For the six months under review, the business was free cash flow positive to the tune of $70 million if we exclude these working capital movements. It is worth noting that the business has generated positive free cash flows of $116 million in Quarter Two. It should also be noted that 2012 working capital movements included proceeds from the gold prepaid sale amounting to $107 million.

Trading cash outflow for the six months to 31 March 2013 amounted to $85 million (2012 - inflow of $110 million). The cash flow on interest and finance costs increased by $11 million largely as a result of amendment fees for the revised facilities and the costs of unwinding the interest rate swap. Tax payments represent provisional corporate tax payments. The trading cash outflow per share was 17.2 cents for the six months ended 31 March 2013 against an inflow of 28.9 cents for 2012.

Capital expenditure cash flow at $73 million was $124 million below the prior period reflecting our revised growth strategy and capital investment programme. In Mining the expenditure incurred was focused on operating developments at Hossy and Saffy shafts, investment in sub-declines at K3 and stay-in-business capital. In the Process Division spend largely focused on the UG2 concentrator upgrade, enhancing smelting capacity and maintenance.

The Group undertook a successful Rights Issue which was completed in December 2012 and raised total net proceeds of $767 million after costs and foreign exchange charges. The proceeds of the Rights Issue were utilised to settle debt resulting in a net cash position at 31 March 2013 of $194 million compared to a net debt position of $421 million at 30 September 2012.

Key Financial Risks

The Group faces many risks in the operation of its business. The Group's strategy takes into account known risks, but risks will exist of which we are currently unaware. This financial review focuses on financial risk management.

Financial Risk Management

The main financial risks faced by the Group relate to the availability of funds to meet business needs (liquidity risk), the risk of default by counterparties to financial transactions (credit risk), fluctuations in interest and foreign exchange rates and commodity prices (market risk). Factors which are outside the control of management which can have a significant impact on the business remain, specifically, volatility in the Rand / US Dollar exchange rate and PGM commodity prices.

These are the critical factors to consider when addressing the issue of whether the Group is a Going Concern.

Liquidity Risk

The policy on liquidity is to ensure that the Group has sufficient funds to facilitate all ongoing operations. The Group funds its operations through a mixture of equity funding and borrowings. The Group's philosophy is to maintain an appropriately low level of financial gearing given the exposure of the business to fluctuations in PGM commodity prices and the Rand / US Dollar exchange rate. We ordinarily seek to fund capital requirements from equity.

As part of the annual budgeting and long-term planning process, the Group's cash flow forecast is reviewed and approved by the Board. The cash flow forecast is amended for any material changes identified during the year, for example material acquisitions and disposals or changes in production forecasts. Where funding requirements are identified from the cash flow forecast, appropriate measures are taken to ensure these requirements can be satisfied. Factors taken into consideration are:

·; the size and nature of the requirement;

·; preferred sources of finance applying key criteria of cost, commitment, availability, security / covenant conditions;

·; recommended counterparties, fees and market conditions; and

·; covenants, guarantees and other financial commitments.

During the period under review, the Group revised its debt facilities on the back of the successful Rights Issue. The amended US Dollar Facilities and amended Rand Facilities came into effect in December 2012. The proceeds of the Rights Issue were used to repay the Group's indebtedness under the original facilities, including (i) the repayment in full of amounts outstanding (amounting to $300 million plus accrued interest and applicable break fees) under the US Dollar Term Loan, which facility was cancelled; and (ii) the repayment of amounts outstanding under the US Dollar Revolving Credit Facility; and (iii) the repayment of amounts outstanding under the Rand Facilities Agreements.

The remaining facilities are summarised as follows:

·; Revolving Credit Facility of $400 million at a Lonmin Plc level; and

·; Three bilateral facilities of R660 million each at a Western Platinum Limited (WPL) level.

The principal amendments to each of the original agreements were to remove the net debt/EBITDA and EBITDA/net interest covenants and to substitute these with the following financial covenants:

·; consolidated tangible net worth will not be less than $2,250 million;

·; consolidated net debt will not exceed 25% of consolidated tangible net worth; and

·; if:

o in respect of the amended US Dollar Facilities Agreement, the aggregate amount of outstanding loans exceeds $75 million at any time during the last six months of any test period; or

o in respect of both the amended US Dollar Facilities Agreement and the amended Rand Facilities Agreements, consolidated net debt exceeds $300 million as of the last day of any test period,

the capital expenditure of the Group must not exceed the limits set out in the table below, provided that, if 110% of budgeted capital expenditure for any test period ending on or after 30 September 2013 is lower than the capital expenditure limit set out in the table below for that test period, then the capital expenditure limit for that test period shall be equal to 110% of such budgeted capital expenditure.

Test Period Capital expenditure limit (ZAR)

1 October 2012 to 31 March 2013 (inclusive) 800,000,000

1 October 2012 to 30 September 2013 (inclusive) 1,600,000,000

1 April 2013 to 31 March 2014 (inclusive) 1,800,000,000

1 October 2013 to 30 September 2014 (inclusive) 2,000,000,000

1 April 2014 to 31 March 2015 (inclusive) 3,000,000,000

1 October 2014 to 30 September 2015 (inclusive) 4,000,000,000

1 April 2015 to 31 March 2016 (inclusive) 4,000,000,000

1 October 2015 to 30 September 2016 (inclusive) 4,000,000,000

Credit Risk

Banking Counterparties

Banking counterparty credit risk is managed by spreading financial transactions across an approved list of counterparties of high credit quality. Banking counterparties are approved by the Board and consist of the ten banks that participate in Lonmin's bank debt facilities. These counterparties comprise: BNP Paribas S.A., Citigroup Global Markets Limited, FirstRand Bank Limited, HSBC Bank Plc, Investec Bank Limited, J.P. Morgan Limited, Lloyds TSB Bank Plc, The Royal Bank of Scotland N.V., The Standard Bank of South Africa Limited and Standard Chartered Bank.

Trade Receivables

The Group is exposed to significant trade receivable credit risk through the sale of PGMs to a limited group of customers.

This risk is managed as follows:

·; aged analysis is performed on trade receivable balances and reviewed on a monthly basis;

·; credit ratings are obtained on any new customers and the credit ratings of existing customers are monitored on an ongoing basis;

·; credit limits are set for customers; and

·; trigger points and escalation procedures are clearly defined.

It should be noted that a significant portion of Lonmin's revenue is from two key customers. However, both of these customers have strong investment grade ratings and their payment terms are very short, thereby reducing trade receivable credit risk significantly.

HDSA Receivables

HDSA receivables are secured on the HDSA's shareholding in Incwala Resources (Pty) Limited.

Interest Rate Risk

Given that all debt has been repaid, this risk is not considered to be high at this point in time. The interest position is kept under constant review in conjunction with the liquidity policy outlined above and the future funding requirements of the business.

Foreign Currency Risk

The Group's operations are predominantly based in South Africa and the majority of the revenue stream is in US Dollars. However, the bulk of the Group's operating costs and taxes are paid in Rand. Most of the cash received in South Africa is in US Dollars. Most of the Group's funding sources are in US Dollars.

The Group's reporting currency is the US Dollar and the share capital of the Company is based in US Dollars.

During the period under review Lonmin did not undertake any foreign currency hedging except in respect of the Rights Issue proceeds as mentioned above. Therefore fluctuations in the Rand to US Dollar exchange rate can have a significant impact on the Group's results.

The approximate effects on the Group's results of a 10% movement in the Rand to US Dollar based on the 2013 average exchange rate would be as follows:

These sensitivities are based on 2013 prices, costs and volumes and assume all other variables remain constant. They are estimated calculations only.

Commodity Price Risk

Our policy is not to hedge commodity price exposure on PGMs, excluding gold, and therefore any change in prices will have a direct effect on the Group's trading results.

For base metals and gold, hedging is undertaken where the Board determines that it is in the Group's interest to hedge a proportion of future cash flows. The policy allows Lonmin to hedge up to a maximum of 75% of the future cash flows from the sale of these products looking forward over the next 12 to 24 months. The Group did not undertake any hedging of base metals under this authority in the period under review and no forward contracts were in place in respect of base metals at the end of the period.

In respect of gold, Lonmin entered into a prepaid sale of 75% of its current gold production for the next 54 months in March 2012. In terms of this contract Lonmin will deliver 70,700 ounces of gold over the period with delivery on a quarterly basis and in return received an upfront payment of $107 million. The upfront receipt was accounted for as deferred revenue on our balance sheet and is being released to profit and loss as deliveries take place at an average price of $1,510/oz delivered.

The approximate effects on the Group's results of a 10% movement in the 2013 average metal prices achieved for Platinum (Pt) ($1,598 per ounce), Palladium (Pd) ($713 per ounce) and Rhodium (Rh) ($1,196 per ounce) would be as follows:

These sensitivities are based on 2013 costs and volumes and assume all other variables remain constant. They are estimated calculations only.

Contingent Liabilities

The Group provided third party guarantees to Eskom as security to cover estimated electricity accounts for three months.At 31 March 2013 these guarantees amounted to $11 million (2012 - $6 million).

Simon Scott

Acting Chief Executive Officer and Chief Financial Officer

Operating Statistics

Operating Statistics (continued)

Operating Statistics (continued)

Footnotes:

Footnotes:

Responsibility statement of the directors in respect of the interim financial report

We confirm that to the best of our knowledge:

·; the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, and

·; the interim management report includes a fair review of the information required by:

(a) DTR4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Roger Phillimore Simon Scott

Chairman Chief Financial Officer

10 May 2013

INDEPENDENT REVIEW REPORT TO LONMIN PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2013 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules (the DTR) of the UK's Financial Conduct Authority (the UK FCA). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Robert M. Seale

for and on behalf of KPMG Audit Plc

Chartered Accountants

15 Canada Square

London E14 5GL

10 May 2013

Consolidated income statement

for the 6 months to 31 March 2013

Footnotes:

Consolidated statement of comprehensive income

for the 6 months to 31 March 2013

Footnote:

Consolidated statement of financial position

as at 31 March 2013

Consolidated statement of changes in equity

for the 6 months to 31 March 2013

Consolidated statement of changes in equity (continued)

for the 6 months to 31 March 2013

Footnotes:

Consolidated statement of cash flows

for the 6 months to 31 March 2013