13th May 2013 07:00
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. |
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