Q1 Production Report & IMS

26 January 2012

Lonmin Plc

Q1 2012 Production Report

& Interim Management Statement

Lonmin Plc ("Lonmin" or the "Company") today announces its production report for the quarter to 31 December 2011 (unaudited)and Interim Management Statement for the period from 1 October 2011 to today's date.

Overview

Platinum metal in concentrate and refined Platinum production increased by 3.5% and 24.3% respectively on a year on year basis. These results benefited from a healthy opening ore stock position at the end of September 2011 and consistent metallurgical recovery rates. Our mining performance in the first quarter of 2012 was however severely impacted by the increase in the Section 54 safety stoppages from the Department of Mineral Resources (DMR) that were experienced industry wide. Whilst total tonnes mined reduced by 110,000 tonnes on an underlying year on year basis, the impact of the Section 54 stoppages resulted in 177,000 tonnes of lost production.

We regretfully report that Mr Albino Moises Cuna was fatally injured on 9 December at E2 Shaft while clearing a blocked ore chute. Until that date, Lonmin had been fatality free since 12 April, reflecting a 6 million fatality free shift period of 8 months. Our Lost Time Injury Frequency Rate (LTIFR) for the quarter was 4.67 incidents per million man hours versus 4.71 for Q4 2011 and 4.92 for Q1 2011.

Mining Division

Our underground operations at Marikana produced 2.7 million tonnes during the first quarter of the 2012 financial year, a decrease of 50,000 tonnes or 1.8% on Q1 2011. Our overall focus during the quarter was on safely improving our production and moving down the cost curve. Our efforts however have been significantly affected by the increased frequency and wide range of Section 54 safety reviews and stoppages that have been experienced across all our operations when compared to the prior year period. In addition the number of days it has taken to have a Section 54 lifted has increased from an average of 2 to 5 days. A summary of the direct impact on production of Section 54 stoppages is detailed below.

Looking specifically at how our four mining divisions contributed to the quarter's total production over and above the impact of Section 54 stoppages set out above, total tonnes mined at Karee were up 104,000 tonnes, representing a 9.4% increase from the prior year period. This increase was however offset by a decrease in production at Westerns of 110,000 tonnes equivalent to 12.7% on the prior year as the planned decline at Newman continued. In addition production at Easterns decreased by 38,000 tonnes or 12.2% as a result of the fatality at E2, and illegal social unrest around the Easterns operations. Production at Middelkraal was broadly flat when compared to the prior year period as the influence of poor ground conditions on two sections of Saffy hampered the anticipated ramp up of production at Saffy. The total impact of the Section 54 shut downs was 177,000 tonnes in lost production across all the operations (including joint ventures) compared to the prior year period losses of 21,000 tonnes. An additional 30,000 tonnes of production was lost as a result of the Company's support of the National Union of Mineworkers (NUM) industry safety march on 4 October and the community and social labour unrest we experienced in December which continued into the new calendar year.

Production at our Merensky opencast operations in the period was 118,000 tonnes, a decrease of 75,000 tonnes when compared to Q1 2011. This reflects continued slowdown in production of higher cost tonnes in order to optimise the grade which has improved by 48% when compared to prior year period, whilst Pandora production increased by 15,000 tonnes to 54,000 tonnes in line with its expected ramp up.

Process Division

Total tonnes milled in the quarter were flat at 3.0 million from the prior year as the increase in underground tonnes milled of 132,000 tonnes or 4.7% was more than offset by a 157,000 tonnes reduction in opencast tonnes.

Underground milled head grade was 4.50 grammes per tonne (5PGE+Au), down 0.05 grammes per tonne or 1.2% compared to the prior year period, reflecting the continued gradual increase in Merensky at our operations. The overall milled head grade was 4.47 grammes per tonne, an improvement of 2.2% when compared to the prior year period. This was due to the combination of higher grade and lower proportion of opencast ore when compared to the prior year.

Underground and overall concentrator recoveries were both 85.3%, an improvement of 0.1 and 0.3 percentage points respectively when compared with the prior year period and reflects the effectiveness of the mining approach on opencast.

Platinum in concentrate from the Marikana operations was 178,131 saleable ounces, a 1.3% increase over the prior year period. In total the concentrators produced 186,725 saleable ounces of Platinum in the quarter, a 3.5% increase from the prior year period. This reflects the higher proportion of Merensky ore in the mix which contained a higher percentage of Platinum.

Total refined production for the quarter was 113,950 ounces of saleable Platinum, an increase from the prior year of 24.3%. The significant increase in saleable Platinum against the prior year reflects the normalisation of the operations following the rebuild and modification of the Number One furnace which occurred in the prior year period. Total Platinum Group Metals (PGMs) production for the quarter was 245,950 ounces of PGMs, an increase of 2.3% from the prior year respectively.

Sales & Pricing

Platinum sales at 92,863 ounces were 39.8% higher than the prior year period as a result of increased production and stock movement in the quarter. In addition bad weather affected customer deliveries and impacted sales in the prior year period. Total PGMs sales increased by 2.9% to 189,590 ounces.

Chrome sales have more than doubled when compared to the prior year period as production at the chrome plants gains momentum.

The US dollar basket price at $1,136 during the first quarter was 3.3% less than the prior year quarter. The corresponding Rand basket price was 14.4% higher than the prior year period.

Wage Settlements

As announced on 5 December 2011, we reached a two year wage agreement with our unions which resulted in an overall aggregated wage increase of around 8.5 % for each of year 1 and year 2. The increase is effective from 1 October 2011 and is in line with industry wage settlements.

Joint Venture Earn In

In December 2011, Lonmin achieved its sole funded exploration 'earn-in' milestone of $32 million on the Vale Joint Venture (JV), giving Lonmin the exclusive right to a 50% interest in any PGM deposit on a JV property on which a development decision is made. Vale and Lonmin will now jointly fund the agreed 2012 PGM exploration programme on an equal basis, including the Denison open pit feasibility studies.

Outlook

Safety remains our priority and we continue to work cooperatively with the DMR and our Union representative bodies in this area. During the first quarter of our financial year our industry has been subject to an uncharacteristically high level of safety inspections from the DMR, with a resultant increase in Section 54 notices. This has had an adverse effect on production and in our opinion increases safety risk as operating momentum is interrupted. However, we have highlighted to the DMR the need to work together to establish a more appropriate mechanism that enables safety improvement without increasing the risk to safe and sustainable operations.

Our production performance to date still supports our sales guidance for the current year of 750,000 ounces of Platinum. We also maintain our guidance for unit costs to increase by the aggregate wage settlement of 8.5% agreed with our unions. However Platinum sales and unit costs will be adversely impacted should the current trend of production losses from safety persist.

- ENDS -

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