16th Jan 2007 07:00
Lonmin PLC16 January 2007 Lonmin PLC Number One Furnace Update Lonmin announces that it has completed a detailed design review and riskassessment of the Number 1 furnace following the leak which occurred in December2006. Based on this review, we have decided that the best result can be achieved bycompleting a full rebuild of the Number 1 furnace to restore it to its originaldesign condition. Our internal risk assessment has been validated by HatchEngineering, who have indicated that the prior failures of the furnace havefundamentally compromised the structural integrity of the vessel and it istherefore not prudent to attempt to repair the furnace in its current condition.The rebuild of the furnace, including furnace warm up, will require around 80days and should be complete around 11 March 2007. This complete rebuild willrestore the integrity of the furnace and should allow for normal smeltingoperations going forwards with only scheduled maintenance shut downs. In order to minimise the production and financial impact of the smelter rebuildprocess we will run all three of our Pyromet furnaces for the balance of thisfinancial year. As a result of the decision to rebuild the Number 1 furnace wehave had to slow down the completion and re-commissioning of the Merenskyfurnace. We are investigating the possibility of running the Merensky furnaceduring the second half of the financial year to further minimise productionlosses. The successful running of the Merensky furnace in parallel with theNumber 1 furnace and Pyromet furnaces would depend on our ability both to mix anappropriate feed blend for all three sets of furnaces and to manage gas cleaningwithin the terms of our air quality permits. An engineering assessment iscurrently underway to assess this option. Our forecast for mine production in concentrate remains at around 1.02 to 1.04million saleable ounces of Platinum. Based on our revised production planningcompleted to date, we believe full year Platinum sales will be between 980,000to 1,000,000 ounces. These sales will consist of around 880,000 ounces ofrefined Platinum from Lonmin's own metallurgical facilities, around 90,000ounces of toll refined Platinum and between 10,000 and 30,000 ounces ofadditional concentrate or semi refined Platinum sales. This plan minimises theamount 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 bebetween 300,000 to 310,000 Platinum ounces and between 680,000 to 690,000Platinum ounces in the second half of the financial year. Upside to thisforecast may be available if we are able to run the Merensky furnace in parallelwith the Number 1 furnace during a portion of the second half of our financialyear. Our preliminary estimate for the repair and extra metallurgical division costsfor the full year are US$6.5 million (R45 million). This, coupled with thereduced level of throughput, has the impact of increasing our estimate of fullyear C1 costs for Marikana own production to around R2,650 to R2,700 per PGMounce sold. Enquiries: Alex Shorland-Ball +44 (0)207 201 6060 orVice President, +44 (0)7917 038 684Investor Relations & Communications Lonmin will be hosting an analyst conference call at 11.00 am UK time (13:00 pmSA time) later today. Those wishing to take part should dial in on the followingnumbers: Access number: +44 (0)20 8609 0205, UK Freephone Number: 0800 358 2705,ZA Freephone Number: 0800 999 539 and Pin Code: 621126# This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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