Mining giant Lonmin releases 2013 interim results

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Lonmin Plc, the world’s third largest primary Platinum producer, on 13 May 2013 published its Interim Results for the period ended 31 March 2013.

Key Features

Safety is our number one priority:

  • LTIFR of 3.66 incidents per million man hours compared to 4.69 in the prior year period
  • Marikana operations – 6 million Fatality Free Shifts
  • 1B/4B – 7 million Fatality Free Shifts
  • Our record safety performance was negatively impacted by two fatalities at the start of H2 2013

Substantially exceeded Renewal Plan:

  • Platinum sales of 326,142 ounces – up 2.4% on the prior year period
  • Basket price (incl. by-product revenue) up 1.7% to US$1,252 per PGM ounce
  • Rand unit cost contained at R8,648 per PGM ounce, up 5.8% on prior year period
  • Underlying EBIT US$93 million, up from US$14 million in the prior year period
  • Net cash – US$194 million vs. Net Debt US$421 million at September 2012

Strong half year operational performance:

  • Tonnes produced at 5.7 million, down 1.8%
  • Ore reserve position at 3.4 million centares, up 9.3%
  • Saleable metal in concentrate, flat on prior year period
  • Underground head grade increased to 4.63g/t from 4.48g/t
  • Overall concentrator recoveries improved from 85.5% in prior year to 86.8%
  • Incident at Number Two furnace mitigated through reduced scope of Number One furnace rebuild

Market outlook:

  • Rising costs force South African producer cuts
  • Deficits in 2013 as South African supply shrinks
  • Continuing deficits in 2014 to 2018
  • Prices expected to rise on falling inventories

Guidance:

  • Increasing guidance for Platinum metals in concentrate production from 680,000 ounces to in excess of 700,000 ounces
  • Maintaining our sales guidance of 660,000 saleable Platinum ounces – near term smelter capacity constraints
  • Unit cost per PGM ounce reduced from previous guidance of a 10% increase to below 8%
  • Capex guidance of US$175 million maintained

“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,” said Simon Scott, Lonmin Acting Chief Executive Officer.

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