Lonmin Plc
4 Grosvenor Place
London SW1X 7YL
United Kingdom

T: +44 (0)20 7201 6000
F: +44 (0)20 7201 6100

www.lonmin.com

REGULATORY RELEASE

26 November 2014

Lonmin completes its remaining 8% BEE credits

Lonmin is pleased to announce the completion of three transactions which combined make up the remaining 8% of its Black Economic Empowerment (BEE) as follows:

a)    Completion of the royalty-for-equity swap transaction with the Bapo Ba Mogale Traditional Community ("the Bapo") already approved by shareholders in general meeting. The transactionincludes a swap of the Bapo's interest in Pandora for Plc shares and the establishment of a Bapo Community Trust holding a 0.9% equity stake in Lonplats. This results in Lonmin achieving 3.3% HDSA equity empowerment.

b)    The establishment of the Lonplats Employees Share Ownership Trust (EST) which will acquire 3.8% of the ordinary share capital in Lonplats. Lonplats will implement a profit share scheme for the benefit of employees through this Trust.

c)    The establishment of the Lonplats Marikana Community Development Trust (CDT) which will acquire 0.9% of the ordinary shares in Lonplats for the benefit of specific communities residing in the western portion of Lonmin's Marikana operations. 

Details of the Bapo transaction were announced on 30 July 2014 and subsequently in the general meeting circular dated 14 August 2014. Application will be made shortly to the UK Listing Authority and The London Stock Exchange for 13,125,436 ordinary shares of $1 each in Lonmin, to be admitted to trade on The London Stock Exchange and to be admitted to The Official List. Application will also shortly be made to the JSE Limited, for approval for the shares to be admitted to listing and trading on the Main Board of the JSE.  The new shares will be issued to the Bapo on Wednesday 3 December 2014 and it is expected that admission of the new shares will take place on Thursday 4 December 2014. The new shares shall rank equally with the existing issued shares of the Company.

Lonmin's Chief Executive Ben Magara said: "I am pleased that we have reached this important milestone. Our employees and host communities now have equity shareholding and a shared vested interest to see Lonmin succeed for their own benefit and that of our shareholders. "

Technical and legal details of the employee and community trust transactions can be found in Appendix A ( "Further details ") of this regulatory statement.

-ENDS-

ENQUIRIES

Investors / Analysts:

Lonmin

Media:

Financial adviser to Lonmin :

The Standard Bank of South Africa Limited

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 producing assets 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

APPENDIX A

The Employee and Community Trust Transactions - Further details.

The trusts

To meet the Mining Charter ownership obligations, LSA (UK) Limited (" LSA "), a subsidiary of Lonmin, will sell WPL and EPL ordinary shares (the "WPL Sale Shares " and "EPL Sale Shares ") (together the "Lonplats Sale Shares "), in aggregate comprising 4.7% of Lonplat ' s issued share capital to two separate trusts, which will hold the interests of the participants as follows:

a.   The Lonplats Employees Share Ownership Trust (the "EST ")will acquire 3.8% of the ordinary share capital in Lonplats. Lonplats will implement a profit share scheme for the benefits of employees via the EST, that will see employees being entitled to share in 3.8% of the profits of Lonplats; and

b.  The Lonplats Marikana Community Development Trust (the "CDT ") will acquire 0.9% of the ordinary shares in Lonplats for the benefit of specific communities residing in the western portion of Lonmin's Marikana operations. 

Transaction rationale

Lonmin' s compliance with the South African Government ' s Codes of Good Practice on Broad-Based Black Economic Empowerment and more specifically the empowerment requirements of the South African Mineral and Petroleum Resources Development Act 2002 ( "MPRDA ") and the Mining Charter will be materially enhanced through the Transaction. Lonmin supports the South African government ' s B-BBEE initiatives and recognises the importance of these in achieving a sustainable economic and political environment in South Africa. Lonmin believes that broad based BEE is a key requirement for the promotion of sustainable economic growth and social development in South Africa.

In line with Lonmin ' s  equity empowerment objectives, the Transactions are therefore designed to increase black economic and shareholder participation in Lonmin by providing long-term economic benefits to a broad range of black South Africans, comprising employees and the communities where Lonmin currently operates, which have played an integral role in the success of its Lonplats business.

Lonmin believes the inclusion of these participant groups as shareholders will facilitate the closer alignment of Lonmin ' s interests with its many stakeholders and compliance with legislation.  

The EST

Beneficiaries

The beneficiaries of the EST ( "Eligible Employees ") are:

a.   All Lonmin employees currently not eligible to participate in existing share incentive or retention schemes; and

b.  All employees at or between Paterson Grades A to C on the Paterson Grading System.

The Group currently has around 27,500 Eligible Employees, comprising of all employees who are members of the majority union and all other minority unions as well as non unionised employees who meet the requirements to participate in the EST (the "Beneficiaries ").

Trustees

The role of the Trustees will be to administer the EST in accordance with the objectives of the EST Trust Deed. The Trustees for the time being of the EST shall facilitate the appointment of future Trustees as soon as reasonably possible after the conclusion of consultations with AMCU (see later). Future Trustees will be appointed as follows:

a.  There shall be at least four trustees on the board of trustees and 50% of the trustees shall be appointed by Lonplats.

b. For so long as a trade union is recognised by Lonplats and officially represents:

i.    more than 10% of the Beneficiaries it shall be entitled to appoint one eligible Lonplats employee as a trustee, provided that if at any time there are more than 3 trade unions which individually represent more than 10% percent of the Beneficiaries, only the 3 trade unions which represent the highest number of Beneficiaries shall be entitled to appoint 1 person to act as trustee; or

ii.   more than 50% of the Beneficiaries it shall be entitled to appoint two eligible Lonplats employees as trustees; or

iii. more than 90% of the Beneficiaries it shall be entitled to appoint three eligible Lonplats employees as trustees.

Profit share

The EST will be entitled to a share of the net profit after tax of Lonplats for the financial year starting 1 October 2014 and future financial years based on the percentage of shares held by the Employee Benefit Trust in Lonplats ( "Profit Share "). The annual distribution from Lonplats to the EST will therefore be the higher of:

a.   Dividends declared on the shares held by the EST; and

b.  The Profit Share.

To the extent that the amount of the dividends declared on the shares held by the EST in Lonplats is less than the amount of the Profit Share, Lonplats will make a top up payment to the EST ( "EST Top up Payment ").

Profit share allocation

The Profit Share will be shared equally between the beneficiaries of the EST. In this regard, each Beneficiary will be allocated one unit in the EST that entitles the beneficiary to share in the annual distributions made by the EST in proportion to the total number of units issued to all Beneficiaries ("Profit Share Unit "). Eligible Employees will be allocated a Profit Share Unit as follows:

a.   For initial allocations, all Eligible Employees in the employ of Lonmin on 1 October 2014 will receive an allocation;

b.  Future allocations will have eligibility criteria attached whereby Eligible Employees will need to have been in the employ of Lonmin for a full financial year (1 October to 30 September the following year) in order to receive an allocation in the profit share scheme;

c.   Should an employee, in possession of a Profit Share Unit, leave the employ of Lonmin for any reason they will immediately forfeit their Profit Share Unit.

Each Profit Share Unit will pay out to the holder as follows:

a.   The profit share scheme will operate in respect of the 2015 financial year and future financial years;

b.  Profit share payments will be made within 5 months of the end of each respective financial year (i.e. before the end of February the following year);

c.   The first profit share payment will accordingly be made before end of February 2016.

Acquisition of the Lonplats Sale Shares and related notional funding

The purchase consideration to be paid by the EST in respect of the EPL Sale Shares and the WPL Sale Shares is R10.47.

The purchase consideration is to be allocated as follows:

a.   In respect of the EPL Sale Shares, R0.21 in aggregate, being R0.00001 per EPL Sale Share; and

b.  In respect of the WPL Sale Shares, R10.26 in aggregate, being R0.00001 per WPL Sale Share.

A notional loan equal to the difference in the market value of the Lonplats Sale Shares and the purchase consideration, on the date that the EST Sale of Shares Agreement is concluded, will be raised and interest on the notional loan will be calculated and capitalised at a rate of 85% of the South African prime rate. Any EST Top up Payments made will be added to the notional loan. In order to settle the notional loan, LSA has the right to repurchase, at R0.00001 per share such number of Lonplats Sale Shares from the EST as may have a market value equivalent to the then outstanding notional loan.

Duration

The EST and profit share scheme is envisaged to endure in perpetuity however the notional loan may be settled, at LSA's option, at any time after 7 years. The profit share arrangement will come to an end should the EST no longer hold shares in Lonplats .

Consultations with AMCU

Lonmin acknowledges its agreed intention to consult with AMCU in respect of certain elements of the EST in accordance with the agreement in respect of the Review of Wages, Salaries and Other Terms and Conditions of Employment concluded between AMCU and Lonplats on 24 June 2014.

As at the date of this announcement Lonmin is in the final stages of the  consultation process with AMCU with regards to the mode of operation of the EST, and to the extent that the consultations result in changes to the mode of operation of the EST, then amendments will subsequently be made to the EST Trust Deed. 

The CDT

Beneficiaries

Specific communities on the western portion of Lonmin ' s Marikana operations will benefit from the CDT.

Trustees

The role of the Trustees will be to administer the Trust in accordance with the objectives of the CDT Trust Deed. The Trustees will be appointed as follows:

a.   The Trustees shall at all times be no fewer than four and not more than eight Trustees;

b.  Lonplats will appoint four Trustees for which the following applies

i.    Two of the Trustees must be independent Trustees;

ii.  Two of the Trustees must be a Historically Disadvantaged South African (HDSA) people; and

iii. One Trustee must be an HDSA woman

c.   At least 50% of all Trustees must be independent Trustees; at least 50% must be HDSA people and at least 25% must be HDSA women;

d.  Local Ward Councillors must elect two Trustees from among themselves;

e.  Local Ward Councillor Trustees must also elect two additional independent Trustees.

Community projects

Members of the local community, the Trustees, and Lonplats are entitled to propose community development projects which may be suitable for the CDT to undertake establish or support.

A shortlist of feasible community development projects shall be prepared and submitted to the Trustees and the Trustees will then select projects from this shortlist.

The following categories of community projects will be considered for selection by Trustees:

a.   Welfare and Humanitarian;

b.  Healthcare;

c.   Education;

d.  Cultural;

e.  Conservation and animal welfare; and

f.   Sport.

Economic participation

The CDT is entitled to an annual distribution from Lonplats which will be the higher of:

a.   Dividends paid on the Lonplats shares held by the Trusts; and

b.  A top up payment ("CDT Top up Payment "),

such that the minimum guaranteed benefit payable to the CDT will total an amount of at least R5 million each year (increasing with inflation annually) ( "Minimum Guaranteed Benefit "). The Minimum Guaranteed Benefit in respect of the CDT will cease when the CDT no longer hold shares in Lonplats or if Lonplats ceases to be part of the Lonmin Group.

Any distributions received by the CDT must be used for the community development projects set out above. 

Acquisition of the Lonplats Sale Shares and related notional funding

The purchase consideration to be paid by the CDT in respect of the EPL Sale Shares and the WPL Sale Shares is R2.48.

The purchase consideration is to be allocated as follows:

a.   in respect of the EPL Sale Shares, R0.05 in aggregate, being R0.00001 per EPL Sale Share; and

b.  in respect of the WPL Sale Shares, R2.43 in aggregate, being R0.00001 per WPL Sale Share.

A notional loan equal to the difference in the market value of the Lonplats Sale Shares and the purchase consideration, on the date that the CDT Sale of Shares Agreement is concluded, will be raised and interest on the notional loan will be calculated and capitalised at a rate of 85% of the South African prime rate.  Any CDT Top up Payments will be added to the notional loan. In order to settle the notional loan, LSA has the right to repurchase, at R0.00001 per share such number of Lonplats Sale Shares from the CDT as may have a market value equal to the outstanding notional loan.

Duration

The CDT is envisaged to endure in perpetuity however the notional loan may be settled, at LSA's option, at any time after seven years.

Repurchase provisions in the event of a breach or insolvency

The EST and CDT are envisaged to hold the Lonplats shares indefinitely. The Sale of Shares Agreements for each of the trusts above includes a deemed offer provision in favour of Lonmin, LSA, EPL or WPL (together "the Lonmin Parties ") as well as a call option provision in favour of LSA in the event that the CDT or EST breaches the related agreements which may put Lonplat ' s BEE ownership at risk. If the deemed offer is triggered by a breach of terms then the offending trust will be deemed to offer the shares it holds in LSA back to the Lonmin Parties at 60% of the market value at the time of the deemed offer. The 40% discount is considered reasonable in recognition of the substantial costs, effort and time to procure a substitute BEE party as well as the fact that one of the primary objectives of the Transaction is to procure Lonplats ' compliance with the ownership element of the Mining Charter.  In the event of insolvency the deemed offer will be at full market value.

Conditions precedent

All conditions precedent to the Transactions have now been fulfilled and the Transactions are now unconditional. The transfer of the Lonplats Sale Shares to the various trusts and the issue of the Lonmin plc shares will occur in 7 business days, upon which the Transactions will become effective. A further announcement will be made to shareholders in this regard at that time.

APPENDIX B

BROAD-BASED BLACK ECONOMIC EMPOWERMENT ("B-BBEE", OR "BEE")

MINING CHARTER

The South African government has developed The Mining Charter to accelerate the pace of the transformation within the mining sector. Holders of mining, prospecting and other rights must comply with the provisions of the Mining Charter and its associated Scorecard in order to continue participating in the country ' s mineral and mining sector.

The Charter's stated objectives are to:

a.   Promote equitable access to South Africa's mineral resources for all the people of South Africa;

b.   Expand opportunities for HDSAs to enter the mining and minerals industry and to benefit from South Africa's mineral resources;

c.   Expand the skills base for the empowerment of HDSAs in order to serve the community;

d.   Promote employment and advance the social and economic welfare of mining communities and areas supplying mining labour;

e.   Promote beneficiation of South Africa's mineral commodities beyond mining and processing, including the production of consumer products; and

f.    Promote sustainable development and growth of the mining industry.

The Mining Charter requires, among other things, that:

a.  At least 26% of the equity of mining companies (or equivalent units of production) be owned by HDSAs by 31 December 2014;

- ENDS -