Lonmin plc
Department
of Mineral Resources orders Lonmin to suspend sale of
associated minerals
Late
on 4 August 2010, Lonmin plc ("Lonmin" or "the Company") received a letter
from the Department of Mineral Resources of the Government of South Africa
("DMR") which contained an order to refrain from selling Nickel,
Copper, Chrome and any other minerals ("associated minerals") other
than Platinum Group Metals ("PGMs") with
immediate effect, notwithstanding the natural occurrence of these minerals in
the PGM reefs and seams. Lonmin will contest this
matter vigorously and will be seeking an urgent court ruling to overturn this
order.
Lonmin has mined PGMs and
associated minerals at Western Platinum Limited and Eastern Platinum Limited
for in excess of 30 years. Associated minerals are inextricably linked to
PGMs in the ore body and it is not feasible nor economically viable to mine them alone. These minerals
contributed US$80 million to Lonmin's turnover in the
2009 financial year. The previous legal framework gave miners the right to
dispose of associated minerals for their own benefit, while the 2002 Mineral
and Petroleum Resources Development Act ("MPRDA"), under which Lonmin converted its mining rights in October 2006, is
silent on this matter.
Whilst
Lonmin believes it is entitled to mine and dispose of
associated minerals, in order to protect its position, it filed MPRDA Section
102 applications which would explicitly give Lonmin
these rights. This was done in late 2009.
The
above mentioned applications did not cover 100% of Lonmin's
associated minerals as a prospecting right had already been applied for
over the associated minerals on a small portion of Lonmin's
property, where we are mining the UG2 reef. This right was applied for in
March 2009 and issued on 12 May 2010 to a Holgoun
Group company. Lonmin understands that Holgoun's shares are held by interests associated with Sivi Gounden, who resigned from
the Lonmin Board on 16 October 2009..
Lonmin appealed against both the original application
in March 2009 and against the award of this right on 11 June 2010 and has not
yet been notified of the outcome of the appeals made.
Lonmin has taken comprehensive legal advice on this
matter and believes that the action taken by the DMR is wrong and the Company
will defend its interests robustly.
Lonmin is deeply disappointed that this situation has
arisen. Lonmin extracts the associated minerals as an
integral part of mining PGMs from these two reefs, Merensky and UG2. The sale of these associated
minerals has produced a revenue stream which has augmented taxable income and
royalty payments, and has been reported monthly to the DMR.
Lonmin has made, and continues to make, every
reasonable effort to support the transformation process espoused by the South
African Government. At the same time the Company has a duty to preserve,
and indeed enhance the integrity and value of its operations in South Africa,
which derive ultimately from its mineral rights and its licence to operate
under the New Order Mining Licence.
Lonmin will spare no effort in resolving this
situation. Meanwhile, our mining and processing operations will continue as
normal.
ENQUIRIES:
Investors:
Alan
Ferguson, Finance Director
+44 (0) 20 701 6034
Media:
Cardew Group
+44 (0) 20 7930 0777
Rupert
Pittman/Jamie Milton
Financial
Dynamics
+27 (0) 21 487 9000
Dani Cohen / Ravin Maharaj