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Q2 Production Report

13th May 2013 07:00

RNS Number : 5054E
Lonmin PLC
13 May 2013
 



 

 

 

 

 

 

 

 

 

REGULATORY RELEASE

 

 

13 May 2013

 

Q2 2013 Production Report

 

Lonmin Plc. (Lonmin or the Company), the world's third largest Platinum producer, today announces its production results for the quarter to 31 March 2013 (unaudited).

 

Overview

 

Our operations delivered a solid performance in the second quarter, exceeding our ramp up plan to produce Platinum metal in concentrate of 180,562 ounces and Platinum sales of 217,800 ounces. This performance, taken with the results and momentum established in the first quarter, has resulted in revised Platinum metal in concentrate and cost guidance for the full year which is contained in our Interim Results announcement also issued today.

 

Towards the end of Q2 we experienced the re-emergence of Section 54 safety stoppages and management induced safety stoppages as well as intermittent labour disruptions. Total tonnes mined were as a result 2.8 million tonnes, down 4.3% on the prior year period and 4.7% on Q1 2013.

 

Our rolling average Lost Time Injury Frequency Rate (LTIFR) for the quarter of 3.66 incidents per million man hours compared to 4.69 for Q2 2012 and 3.74 for Q1 2013. We experienced two fatalities in April 2013, this is unacceptable, and management is focused on embedding the behavioural competencies that underpinned the safety achievements recorded in the first half of the financial year.

 

Mining Division

 

Total tonnes mined in the second quarter of the 2013 financial year from our Marikana underground operations were 2.6 million, a decrease of 179,000 tonnes or 6.5% from the prior year period. The decrease was mainly a result of the anticipated ramp up in production following the Marikana events notwithstanding the ramp up exceeding expectations the resurgence of Section 54 safety stoppages (resulting in 62,000 tonnes of lost production) and labour disruptions.

 

Production at the Karee operations decreased by 38,000 tonnes or 3.0% on the prior year period as a result of the loss in production from Section 54 safety stoppages and machine breakdowns which constrained production in the UG2 area, as well as the planned non-contribution from K4, which added 25,000 tonnes in the prior year quarter. However, these difficulties were mitigated by the continued momentum at the K3 shaft.

 

Westerns production declined by 50,000 tonnes or 6.7% with 12,000 tonnes lost to labour disruptions. The balance was due to the planned continued depletion of reserves at Newman and ore reserve and infrastructure challenges at Rowland around hoisting logistics. A pilot project around de-bottlenecking has commenced to address the hoisting constraints and improve production at Rowland.

 

Middelkraal registered a 15,000 tonne or 3.0% decline due to a slight loss in traction at Saffy, partly as a result of the Section 54 safety stoppages and management induced safety stoppages that occurred during the quarter. Easterns declined by 76,000 tonnes of production or 26.8% when compared against the prior year period primarily due to losses from Section 54s at E2 and E3, which accounted for around 20,000 tonnes, as well as labour disruptions and the continued planned decline at E1.

 

Production at our Merensky opencast operations in the period was 133,000 tonnes, an increase of 55,000 tonnes or 69.7% when compared to the prior year period following interventions to stabilise grade and implement best practice methods to optimise production. The production from Pandora was flat at 51,000 tonnes.

 

The total lost production due to Section 54 safety stoppages, most of which was lost in March 2013, was 82,000 tonnes. This compares to 170,000 tonnes lost in the prior year period. An additional 27,000 tonnes of production was lost as a result of management induced safety stoppages, compared to 31,000 tonnes in the prior year, and a further 31,000 tonnes of production was lost mainly as a result of labour unrest at Westerns, Opencast operations and our JV.

 

A summary of the direct impact on production of Section 54 safety stoppages is detailed below.

 

Division

Q2 2013

Section 54 stoppages production impact

Q2 2012

Section 54 stoppages production impact

Tonnes

Tonnes

Karee

19,000

54,000

Westerns

Nil

45,000

Middelkraal

23,000

60,000

Easterns

20,000

Nil

Opencast and JV

20,000

11,000

Total

82,000

170,000

 

Process Division

 

Total tonnes milled in the second quarter were 2.8 million, a decrease of 4.8% from the prior year, due to building stocks after the Christmas break and the Number One UG2 concentrator being taken down at the start of the financial year for planned capacity upgrades. The UG2 concentrator is due to come back online in the fourth quarter of FY 2013. The capacity constraint was mitigated by higher milling rates and improved availability at the other plants.

 

Underground milled head grade in the quarter was 4.62 grammes per tonne (5PGE+Au), up 0.16 grammes per tonne or 3.5% compared to the prior year period. The opencast grade was 2.89 grammes per tonne, a 7.8% improvement on the prior year period. The overall milled head grade was 4.54 grammes per tonne, an increase of 4.1% when compared to the prior year period, benefitting from a 1.6% increase in mined UG2 as well as our continued focus on quality factors and stabilising opencast production and grade.

 

Underground and overall concentrator recoveries reached 86.8% in the quarter, an improvement of 1.4% or 1.2 percentage points when compared to the second quarter of the 2012 financial year.

 

Platinum metal in concentrate from the Marikana operations for the quarter was 170,830 saleable ounces, a decrease of 1.6% compared to the prior year period. Including Pandora and concentrate purchases, the concentrators produced 180,562 saleable ounces of Platinum in total for the quarter, a slight decrease of 0.3% when compared to the prior year period. The decrease in tonnes milled due to the planned upgrade of our Number One UG2 concentrator was offset by improved grades and recoveries.

 

Total refined production for the quarter was 190,629 ounces of saleable Platinum, largely flat on the prior year period, with 370,671 ounces of Platinum Group Metals (PGMs) produced in the quarter up 4.2% on the prior year period.

 

Sales & Pricing

 

Sales for the second quarter of the 2013 financial year were 217,800 Platinum ounces and 404,176 PGM ounces with Platinum sales being 3.4% lower than the prior year period and PGMs 3.5% lower.

 

The US dollar basket price including base metal revenue at $1,244 per PGM ounce was 1.3% higher than the prior year quarter. The corresponding Rand basket price at ZAR 11,109 was 17.4% higher than the prior year period driven by the weaker rand.

 

Lonmin also publishes today, in a separate announcement, its Interim Results for the half year ended 31 March 2013.

 

-ENDS-

 

ENQUIRIES

 

Investors / Analysts:

Lonmin

Tanya Chikanza (Head of Investor Relations)

+27 11 218 8358 /

+44 20 7201 6007

Ruli Diseko (Investor Relations Manager)

+27 11 218 8300

 

Media:

Cardew Group

James Clark / Alexandra Stoneham

+44 20 7930 0777

Sue Vey

+27 72 644 9777

 

Brunswick - Johannesburg

Tshepo Mophiring

 

+27 11 502 7400 /

+27 82 887 4124

 

 

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

 

 

3 months

3 months

to 31 Mar

to 31 Mar

2013

2012

Tonnes mined

Marikana

Karee1

kt

1 210

1 248

Westerns1

kt

697

747

Middelkraal1

kt

475

489

Easterns1

kt

208

284

Underground

kt

2 590

2 769

Opencast

kt

133

78

Total

kt

2 722

2 847

Pandora attributable2

Underground

kt

51

51

Lonmin Platinum

Underground

kt

2 641

2 819

Opencast

kt

133

78

Total

kt

2 773

2 898

% UG2

%

72.5%

71.3%

Tonnes milled3

Marikana

Underground

kt

2 592

2 713

Opencast

kt

121

162

Total

kt

2 713

2 875

Pandora4

Underground

kt

120

100

Lonmin Platinum

Underground

kt

2 711

2 813

Head grade5

g/t

4.62

4.46

Recovery rate6

%

86.8%

85.7%

Opencast

kt

121

162

Head grade5

g/t

2.89

2.68

Recovery rate6

%

85.8%

84.6%

Total

kt

2 833

2 975

Head grade5

g/t

4.54

4.36

Recovery rate6

%

86.8%

85.6%

 

 

3 months

to 31 Mar

2013

3 months

to 31 Mar

2012

Metals in concentrate7

Marikana

Platinum

oz

170 830

173 564

Palladium

oz

76 816

78 763

Gold

oz

4 582

4 918

Rhodium

oz

22 411

21 875

Ruthenium

oz

34 691

33 674

Iridium

oz

8 299

7 271

Total PGMs

oz

317 628

320 065

Nickel8

MT

900

973

Copper8

MT

582

621

Pandora4

Platinum

oz

8 759

7 014

Palladium

oz

3 985

3 238

Gold

oz

66

53

Rhodium

oz

1 378

1 080

Ruthenium

oz

2 082

1 642

Iridium

oz

403

270

Total PGMs

oz

16 673

13 297

Nickel8

MT

15

11

Copper8

MT

8

6

Concentrate

Platinum

oz

973

594

purchases

Palladium

oz

302

226

Gold

oz

3

2

Rhodium

oz

95

75

Ruthenium

oz

102

90

Iridium

oz

42

29

Total PGMs

oz

1 516

1 016

Nickel

MT

0

0

Copper

MT

0

0

Lonmin Platinum

Platinum

oz

180 562

181 172

Palladium

oz

81 103

82 227

Gold

oz

4 651

4 973

Rhodium

oz

23 883

23 030

Ruthenium

oz

36 874

35 406

Iridium

oz

8 745

7 570

Total PGMs

oz

335 817

334 378

Nickel8

MT

915

984

Copper8

MT

590

627

 

 

3 months

3 months

to 31 Mar

to 31 Mar

2013

2012

Refined production

Lonmin refined metal production

Platinum

oz

189 356

172 089

Palladium

oz

85 339

77 683

Gold

oz

5 489

4 873

Rhodium

oz

29 496

31 723

Ruthenium

oz

50 860

41 005

Iridium

oz

4 252

7 385

Total PGMs

oz

364 792

334 759

Toll refined metal production

Platinum

oz

1 273

18 289

Palladium

oz

184

66

Gold

oz

20

(2)

Rhodium

oz

28

82

Ruthenium

oz

3 728

1 979

Iridium

oz

646

417

Total PGMs

oz

5 879

20 831

Total refined PGMs

Platinum

oz

190 629

190 379

Palladium

oz

85 523

77 749

Gold

oz

5 509

4 871

Rhodium

oz

29 524

31 805

Ruthenium

oz

54 588

42 983

Iridium

oz

4 898

7 803

Total PGMs

oz

370 671

355 590

Base metals

Nickel9

MT

883

915

Copper9

MT

563

533

3 months

3 months

to 31 Mar

to 31 Mar

2013 - Act

2012 - Act

Sales

Refined metal sales

Platinum

oz

217 800

225 539

Palladium

oz

96 703

96 061

Gold

oz

5 937

5 715

Rhodium

oz

29 107

30 785

Ruthenium

oz

47 356

53 227

Iridium

oz

7 273

7 661

Total PGMs

oz

404 176

418 988

Nickel9

MT

995

1 002

Copper9

MT

823

549

Chrome9

MT

373 459

334 827

 

 

3 months

to 31 Mar

2013

3 months

to 31 Mar

2012

Average prices

Platinum

$/oz

1 609

1 583

Palladium

$/oz

734

673

Gold

$/oz

1 537

1 676

Rhodium

$/oz

1 197

1 410

Ruthenium

$/oz

74

94

Iridium

$/oz

998

1 041

$ basket excl. by-product revenue10

$/oz

1 178

1 164

$ basket incl. by-product revenue11

$/oz

1 244

1 228

R basket excl. by-product revenue10

R/oz

10 527

9 010

R basket incl. by-product revenue11

R/oz

11 109

9 466

Nickel9

$/MT

14 106

16 718

Copper9

$/MT

7 528

7 582

Chrome9

$/MT

17

17

ExchangeRates

Average rate for period12 

R/$

8.91

7.74

Closing rate

R/$

9.22

7.65

 

Notes:

1

Karee includes the shafts K3, K4 (currently on care and maintenance), 1B and 4B. Westerns comprises Rowland, Newman and ore purchases from W1. Middelkraal represents Hossy and Saffy. Easterns includes E1, E2 and E3.

2

Pandora attributable tonnes mined represents 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

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). 

6

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

7

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

8

Corresponds to contained base metals in concentrate.

9

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.

10

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.

11

As per note 10 but including revenue from base metals.

12

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

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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