LEI No: 213800FGJZ2WAC6Y2L94

 

 

REGULATORY RELEASE

 

15 May 2017

2017 Interim Results

 

Lonmin Plc ("Lonmin" or "the Company") today publishes its Interim Results for the period ended 31 March 2017. Lonmin has published today its Q2 Production Report in a separate announcement. Lonmin also announces today conditional acquisition of the remaining 7.5% of the Pandora JV to take its equity to 100%.

 

KEY FEATURES

 

?     Total tonnes mined in the half year down 7.6% (387,000 tonnes) on comparative period due to the planned removal of high cost Generation 1 production (down 258,000 tonnes) and the poor mining production from K3, our biggest shaft, in the first four months (down 145,000 tonnes).

?     Decisive action taken to deliver mining improvement including senior management changes has resulted in the best March production for four years. A flatter management structure with the General Managers now reporting directly to the Chief Executive Officer; and by leveraging our relationship with the union to address the management/union impasse at K3 has resulted in a step change in production at all shafts. Whilst we are pleased with the improved overall mining performance, there is still much to do.

?     Improving production underpins maintenance of full year sales guidance of 650,000 to 680,000 Platinum ounces.

?     Unit costs in March were R9,695 per PGM ounce, on the back of improved mining production. Unit costs guidance for the full year is being revised to between R11,300 and R11,800 per PGM ounce from the original guidance of between R10,800 and R11,300, due the weak mining performance to 31 January 2017.

?     Net cash at 31 March improved to $75 million (from $49 million at 31 December 2016), typical of the seasonality of the business, and compared to $114 million at 31 March 2016. Total liquidity was $447 million.

?     Revenue of $486 million, down 6% compared to prior year revenue of $515 million as a result of lower production offset by an 8% increase in revenue per ounce.

?     Operating loss of $181 million and $35 million excluding the impairment charge compared to $15 million operating loss. The comparative period did not have an impairment charge.

?     The impairment of $146 million has reduced headroom on the Tangible Net Worth lending covenant to $334 million. Any future adverse movements in key assumptions could result in further impairment that could impact this covenant.

 

Commenting on the results Lonmin CEO Ben Magara said: "The whole Lonmin team working in partnership reversed the weak mining performance seen in the first four months of our financial year. That improvement continues to be essential for the sustainability of the business in the prevailing low pricing environment. We are pleased to maintain our full year sales guidance at between 650,000 and 680,000 Platinum ounces. Although unit cost guidance has increased we remain determined to be at least cash neutral in the current environment. While the improvement in mining performance since March is pleasing, I am not yet satisfied that we have delivered all that I know we can, and all of us at Lonmin recognise that this improvement needs to be sustained. We are operating in a volatile and challenging environment, but we have the right team in place to manage these challenges. Further, to enable maximum focus on production, and in line with our hands-on approach, we are moving Lonmin's South African headquarters from Johannesburg to our operations in Marikana." 

 

Operational Results

?     LTIFR improved by 1.8% to 4.88 at 31 March 2017 from 4.97 at 30 September 2016 on a 12 month rolling basis. Regrettably however, three of our colleagues were fatally injured: Mr Giji Mxesibe; Mr Joao Fernando Macamo; and Mr Letlhohonolo Rakotsoane. We extend our deepest condolences to their families and friends.

?     In H1 2017 Generation 2 shafts produced 3.7 million tonnes (down 4% from 3.9 million in H1 2016), principally attributable to the poor mining performance in the first four months of the period at K3.  Production at Rowland and Saffy increased year on year and decreased at 4B due to worse than planned geological conditions. Saffy shaft produced 213,000 tonnes in March 2017, an all-time record for the life of the shaft. K3 produced 276,000 tonnes in March 2017, the highest monthly mining production for the last 29 months, on the back of addressing the management/union impasse and change in management, compared to 126,000 tonnes in January 2016. Management changes and turnaround plans introduced at E3 shaft are showing progress as there was a quarter on quarter improvement of 25%.

?     Overall H1 unit costs of R12,059 per PGM ounce were higher, driven by the weak mining performance at K3 for the first four months, which now has been addressed. Lonmin delivered 978,000 tonnes in March, the highest March production since 2012 and the highest monthly mining production for the last 18 months. The unit cost for March at R9,695 per PGM ounce, highlight the importance and impact of good production.

?     Tonnes lost due to Section 54 safety stoppages were 194,000 tonnes, an improvement of 17% against the comparative period and tonnes lost due to management induced safety stoppages increased to 130,000 tonnes, resulting in total tonnes lost due to safety stoppages increasing to 324,000 tonnes, from 241,000 tonnes in the comparative period, reflecting our non-negotiable approach to safety.

?     Immediately Available Ore Reserves are 20.6 months average production, continuing to provide operational flexibility. Critical development areas were not compromised during the period, and development crews deployed to stoping areas earlier in the year have begun reverting to their own work areas and will be fully returned by the end of the financial year.

?     Refined Platinum production of 301,261 ounces benefited from 10,295 ounces from the ongoing smelter clean-up contribution, but was overall down 13.7% on the comparative prior year period, reflecting the weak mining performance to 31 January 2017.

?     Platinum sales of 306,996 ounces were down 15.2% on the prior year period, reflecting the lower production. Processing facilities have operated reliably and efficiently.

 

Financial Results

?     $98 million of cash consumed for the half-year compared to $74 million during the comparative period, in line with the normal business cycle

?     Quarter 2 cash positive by $26 million with $75 million of net cash and total liquidity of $447 million at 31 March 2017 (Q2 2016 cash positive by $46 million with $114 million of net cash and total liquidity of $474 million at 31 March 2016).

?     Revenue of $486 million, down 6% compared to prior year revenue of $515 million as a result of lower production offset by an 8% increase in revenue per ounce.

?     Operating loss of $181 million and $35 million excluding the impairment charge compared to $15 million operating loss. The comparative period did not have an impairment charge.

?     Spend remained well controlled with cost reductions of R1.7 billion over the last 18 months compared to a two year target of R1.8 billion, however, unit cost under pressure and guided upwards

?     Capital expenditure discipline continues and full-year guidance revised downward by R300 million - R400 million as guided below, as well as progressing Pandora acquisition to realise longer-term reductions as described later in this report.

?     Further impairment of $146 million resulting in the headroom against the tangible net worth covenant in lending agreements reducing to $334 million..

?     Adverse changes in assumptions could impact on compliance with lending covenants and our disclosure in the accounts draws attention to this.

 

Outlook and Guidance:

?     Sales guidance of 650,000 to 680,000 Platinum ounces for the full financial year maintained on the back of improved mining production and smelter clean-up project.

?     We are revising our unit costs guidance for the year from between R10,800 and R11,300 to between R11,300 to R11,800 per PGM ounce to reflect the weak production in the first four months of the year.

?     We continue to aim to fund sustaining capital expenditure from operating activities and third party funding. Consequently we are reducing our full year guidance from R1.8 billion to a range of R1.4 billion to R1.5 billion, which includes around R400 million for the third party funded Bulk Tailings Treatment project, whilst minimising near term impact to production.

 

FINANCIAL HIGHLIGHTS

 

	6 months to 31 March 2017		6 months to 31 March 2016
Revenue	$486m		$515m
EBITDA i	$nil		$36m
Operating loss ii	$(181)m		$(15)m
Operating loss Ii excluding impairment	$(35)m		$(15)m
Loss before taxation	$(199)m		$(21)m
Loss per share vi	(64.4)c		(1.8)c
Trading cash inflow/(outflow) per share iii, vi	(16.9)c		(24.9)c
Unit cost of production per PGM ounce	R12,059/oz		R10,668/oz
Capital expenditure	$45m		$27m
Free cash outflow per share iv, vi	(32.9)c		(37.3)c
Net cash/(debt) as defined by the Group v	$75m		$114m
Liquidity as defined by the Group vii	$447m		$474m

 

Footnotes:

The Group measures performance using a number of non-GAAP measures which better allow for understanding of the financial performance and position of the Group.

 

i       EBITDA / (LBITDA) is operating profit / (loss) before depreciation, amortization and impairment of goodwill, intangibles and property, plant and equipment.

ii     Operating profit / loss is defined as revenue less operating expenses, profit on disposal of joint venture, finance income and expenses and before share of (loss) / profit of equity accounted investment.

iii    Trading cash flow is defined as cash flow from operating activities.

iv     Free cash flow is defined as trading cash flow less capital expenditure on property, plant and equipment and intangibles, proceeds from disposal of assets held for sale and dividends paid to non-controlling interests.

v      Net cash/(debt) as defined by the Group comprises cash and cash equivalents, bank overdrafts repayable on demand and interest bearing loans and borrowings less unamortised bank fees, unless the unamortised bank fees relate to undrawn facilities in which case they are treated as other receivables.

vi     The number of shares held prior to 12 December 2015 has been adjusted by a factor of 0..08 to reflect the bonus element of the Rights Issue.

vii   Liquidity as defined by the Group comprises gross cash and cash equivalents and undrawn debt facilities.

 

ENQUIRIES

 

Investors / Analysts:

Lonmin

Tanya Chikanza (Head of Investor Relations)	+44 203 908 1073/+27 11 218 8358
Andrew Mari (Investor Relations Manager)	+27 11 218 8420

 

Media:

Wendy Tlou (Head of Communications)

+27 83 358 0049

 

Anthony Cardew/ Emma Crawshaw	+44 207 930 0777

 

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 Igneous Complex in South Africa, where nearly 80% of known global PGM resources are located.

 

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 Operations 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

 

 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

1.   Introduction

 

After a challenging first four months of the financial year to 31 January 2017, I am pleased to report an improvement in mining performance since February. As a result the business was able to return to our goal of being cash neutral after capital expenditure in the second quarter of the year, in line with our strategic objective to be able to deal successfully with the continued low pricing PGM environment.

 

The duration and spread of Section 54 safety stoppages continued to decrease during the period, however, the weak mining performance seen in the first quarter and through January 2017 adversely affected unit costs for the first half, which was at a non cash-generative level of R12,059 per PGM ounce, 13% higher than the prior year period.. They also impacted the Processing Division's performance, with refined Platinum production down 13.7% on the prior year period. Platinum sales were down 15.2% on the first half of 2016 to 306,996 ounces. This reduction in output is partly due to planned reduction of high cost production from Generation 1 shafts.

 

The improving trend in our mining performance in the latter half of the second quarter is encouraging, with the month of March delivering 978,000 tonnes, the highest monthly mining production for the last 18 months and the highest March production since 2012. This performance was achieved despite the continuing planned closure of our high cost Generation 1 shafts. Importantly, this strong performance had a positive effect on unit costs for the month of March, which were down at R9,695 per PGM ounce, demonstrating the importance and impact good mining performance has on unit costs. While I am pleased with the strong mining performance as sustained through April notwithstanding Easter break, I am not yet satisfied that we have delivered what I know we can and all of us at Lonmin recognise that the performance since March needs to be sustained to ensure our future. The recent unrest in our local communities illustrates the complex and challenging environment in which we operate as it has impacted the employees who work in our Eastern Limb shafts.

 

2.    Safety

 

Regrettably three of our colleagues were fatally injured during the period: Mr Giji Mxesibe, a Rock Drill Operator at K3 shaft on 17 February; Mr Joao Fernando Macamo, a Production Team Leader from E1 shaft on 10 November 2016; and Mr Letlhohonolo Rakotsoane, a supervisor working at Newman Shaft on 15 March 2017. I also regret to report that since the period end, on Thursday 11 May 2017 Mr Simon Sibitane, a locomotive operator, was fatally injured at our 4B shaft. We extend our deepest condolences to all their families and friends.

 

LTIFR improved by 1.8% to 4.88 at 31 March 2017 from 4.97 at 30 September 2016 on a 12 month rolling basis. Year on year, we are equally pleased that the LTIFR has improved by 4%. Our Total Injury Frequency Rate improved 14% to 11.92, from 13.88 at 31 March 2016. The Total Injury Frequency Rate is a lead indicator of our safety improvement initiatives, which has resulted in a reduction in of Section 54 safety stoppages.

 

There was an increase in the number of management induced safety stoppages over the period, which illustrates our non-negotiable stance on safety. Safety is essential for good performance and remains our priority. We remain determined to better our overall safety performance and we continue to enhance our safety improvements.

 

In that regard, we are pleased that the downward trend in the duration of Section 54 safety stoppages seen in the fourth quarter of 2016 has continued into the first six months of 2017, notwithstanding the increase in the second quarter from the fatalities at K3 and Newman. We believe this is a reflection of our improving safety performance and our work to better engage with the Department of Mineral Resources (DMR), developing an improved understanding and working relationship with the inspectorate and with The Association of Mineworkers and Construction Union (AMCU). This has also resulted in more localised application of the stoppages, as evidenced, at our K3 shaft in February.

 

We remain committed to achieving zero harm.

 

3.    Production Performance

 

Mining Operations

 

Total tonnes mined of 4.7 million during the period, represents a 7.6% or 387,000 tonne decrease on H1 2016. This decline is the result of the removal of high cost Generation 1 production (258,000 tonnes), in line with our Business Plan strategy to remove high cost ounces, and due to the weak mining performance experienced at K3 (145,000 tonnes). K3 production suffered from a breakdown in the relationship between management and the employees at K3, in the first fourth months to 31 January 2017.

 

As a result of the poor Q1 2017 performance, which continued into January 2017, a number of turnaround initiatives were implemented to address mining production and the relationship with employees at K3. Significant progress was made in this area, which consequently resulted in production increasing to 794,000 tonnes in February 2017, up from the 584,000 tonnes in January. March production was 978,000 tonnes, the highest monthly mining production for the last 18 months and the highest March production since 2012. This was achieved despite the planned reduction in high cost Generation 1 production and the reduced workforce, following the rationalisation programme in 2015/6. The main initiatives driving the improved mining performance have been:

?     Step change in approach and management routines at all shafts and a flatter structure, with the General Managers at the Generation 2 shafts now reporting directly to the Chief Executive Officer, which has provided the General Managers at the shafts with more clearly defined responsibilities and accountability.  

?     Leveraging our union relationship to resolve management/union impasse at K3, and the  management change  which included:

o  Meetings with unions, including the mass meeting on 6 February 2017;

o  Reinforced communication of the need to increase throughput, cut costs and acceptance of this at all levels; and

o  Underground visits to all the shafts by Coalition of Management, AMCU leadership and inspectors from the DMR North West office.

 

Generation 2 shafts

Tonnes mined from our Generation 2 shafts were 3.7 million tonnes, a decrease of 4.0% on the comparative period as a result of the weak mining performance at our main operation, K3 shaft, for the first four months to 31 January 2017.

 

?     K3, our biggest shaft, produced 1,173,000 tonnes in H1 2017, a decrease of 11.0% or 145,000 tonnes on the comparative prior year period. The strained relationship between operational management, employees and union which we highlighted in our Quarter 1 Production Report resulted in an impasse between operational management and the union and as a result impacted production at this shaft for four months to 31 January 2017. The impasse has since been addressed as explained above and the shaft produced 276,000 tonnes in March 2017, the highest monthly mining production for the last 29 months, compared to 126,000 tonnes in January 2017.

?     Saffy shaft produced 991,000 tonnes in H1 2017, broadly in line with the comparative prior year period, demonstrating that the shaft is maintaining its steady state performance. This shaft has performed well and is now operating at full production and achieved an all-time record of 213,000 tonnes in March.

?     Rowland shaft produced 876,000 tonnes in H1 2017, an increase of 8.5% or 69,000 on the prior year, as this shaft is yielding the production benefits from improved safety performance and steadfast management.

?     4B produced 682,000 tonnes in H1 2017, a decrease of 10..7% or 82,000 as a result of worse than anticipated geological conditions]

 

Generation 1 shafts

We remain on track with the closure of our high cost Generation 1 shafts, as seen from lower platinum prices. As such, tonnes mined from our Generation 1 shafts (Hossy, Newman, W1, E1, E2, E3 and Pandora (100%)) for the half year were 900,000 tonnes, down 21.8% on H1 2016. Most of these shafts are staffed by contractors, which provides better flexibility to retain or close them.

 

Newman shaft

A thorough technical assessment was conducted at the Newman shaft following the recent fatality. As a result, the shaft, is currently on under review whilst on care and maintenance.

 

Hossy shaft

Production at Hossy shaft was flat at 330,000 tonnes. Hossy shaft remains on track for placement on care and maintenance for the end of the year.

 

Pandora JV/E3 shaft

Management changes and recovery plans introduced at E3 shaft are showing progress with a quarter on quarter production improvement of 25% having been achieved during the period.

 

Ore Reserve Development

We closely monitor our Immediately Available Ore Reserve position, in order to protect our operational flexibility. As at 31 March 2017, the ore reserve position of the Marikana mining operations was 3.5 million square meters (September 2016: 3.8 million square meters), which represents an average of 20.6 months production (September 2016: 22.4 months), well above the industry benchmark of around 15 months.

 

As part of our drive to increase mining production, following the Q1 2017 Production Report, some non-critical development crews were moved to provide additional stoping and vamping crews in our core Generation 2 shafts. However, following the stoppage of Newman, contractor crews from this shaft are also being moved to stoping and vamping in the Generation 2 shafts, which is allowing some of the developments crews to move back to development. The development crews are expected to be back to development by the end of the year.

 

Summary of Immediately Available Ore Reserves (square meters millions)

	31 Mar 2017	30 Sep 2016
	m2 million	m2 million
Generation 2	2.6	2.9
Generation 1	0.7	0.7
Generation 3 (K4 shaft on care and maintenance)	0.2	0.2
Total	3.5	3.8

 

Production Losses

We have been encouraged that tonnes lost due to Section 54 safety stoppages at 194,000 tonnes for the first half of the year were lower than the prior year period of 234,000 tonnes, an improvement of 17%. While the duration of Section 54 safety stoppages continued to decrease, as experienced during the first quarter of FY2017, and the fourth quarter of 2016, the K3 and Newman fatalities resulted in an increase in tonnes lost to Section 54 safety stoppages in the second quarter.  

 

There was an increase in Management Induced Safety Stoppages (MISS). Production lost due to MISS for the half year increased to 130,000 tonnes from 7,000 tonnes in the prior year period, reflecting our non-negotiable stance on safety. Safety is essential for good performance and remains our priority. We remain determined to better our overall safety performance and we continue to enhance our safety initiatives.

 

Most of these stoppages were at our K3 shaft where 133,000 tonnes were lost to Section 54 safety stoppages and 96,000 tonnes were lost to MISS.

 

	H1 2017	H1 2016
	Tonnes	Tonnes
Section 54 Safety Stoppages	194,000	234,000
Management Induced Safety Stoppages	130,000	7,000
Total tonnes lost	324,000	241,000

 

Process Operations

 

Total tonnes milled in the period under review was 4.6 million tonnes, down 9% or 0.5 million tonnes, on H1 2016.

 

Underground milled head grade was 4.56 grammes per tonne, broadly in line with H1 2016. Concentrator recoveries for the half year remained excellent at 86.6%. Total Platinum-in-concentrate was 290,966 saleable ounces, 9.5% lower than H1 2016, reflecting the weak mining performance in the first four months of the year and closure of high cost production.

 

Total refined Platinum production for H1 2017 at 301,261 ounces was 13.7% or 47,624 ounces lower than H1 2016 for the same reasons. Refined Platinum production benefited from the smelter clean-up project, which released a further 10,295 Platinum ounces during the second quarter. Platinum and PGM sales for the six months period were 306,996 ounces, 15% lower than prior year period. PGM sales of 609,858 ounces were achieved, with a disproportionately higher proportion of Ruthenium in the mix of metal which arose as a result of stock releases during Quarter 1 and Quarter 2  following the stock build from the prior year which arose as a result of changes to the OPM  refining process.   

 

Our processing facilities operated reliably during the period. Number Two furnace will however be on a planned shut down for a Tap-hole Mickey Block overhaul in May. Overall output is not expected to be affected owing to capacity at other furnaces.

 

We continue with various initiatives to fill the pipeline and utilise the excess capacity within our processing facilities. Our toll treatment contract with Jubilee Platinum Plc commenced in March 2017 and is expected to deliver approximately 1,000 Platinum ounces per month once in full production.

 

Bulk Tailings Treatment Plant Update

On 18 August 2016, we announced that we had secured $50million in external funding for the low-cost Bulk Tailings Treatment ("BTT") project.  The project is progressing within cost, scope and time and is expected to ramp up and reach full production during 2018. Once at steady-state, the project is expected to deliver the lowest cost ounces in the Lonmin portfolio, producing about 29,000 ounces of Platinum per year or some 55,000 ounces of PGM. The project is expected to be mined by a contractor over a seven-year period.

 

Cost of Production per PGM Ounce

Unit costs for the six months under review were R12,059 per PGM ounce, a 13% increase on H1 2016. The holidays in December typically result in unit costs peaking in the first half of the financial year, however during the period under review unit costs were also adversely impacted by the weak mining performance seen in the first four months of the period. Mining is where the majority of our costs are incurred and as such, the importance and impact of good mining production on unit costs is significant. This was illustrated by the unit cost of R9,695 per PGM ounce for the month of March 2017, on the back of strong mining production..

 

While we do not anticipate significant unit cost increases over the remainder of the year, all else being equal, due to the impact from the weak mining performance of the first four months of the year, we are revising our guidance for unit costs for the full year to between R11,300 and R11,800 per PGM ounce from the original guidance of between R10,800 and R11,300.

 

Shaft Head Cost Per Tonne and Per PGM Ounce

?     At K3, the shaft head cost per tonne and per PGM ounce was R1,032 and R9,057 respectively, an increase on H1 2016 of 18.9% and 24.6%, due to the poor mining performance at this shaft, for the first four months to 31 January 2017 [unit costs have stabilized at normal levels again during March and April].

?     At Rowland, the shaft head cost per tonne and PGM ounce at R938 and R7,466 respectively represented cost reduction on H1 2016 of 1..7% and 1.4%, reflecting the improved mining performance.

?     Saffy has become and remains one of our lowest cost Generation 2 shafts at R887 per tonne and R6,863 per PGM ounce. There was an increase on H1 2016 of 4.7% and 1.6% respectively, well within South Africa's inflation of 5..4%.

?     4B, also a lower cost Generation 2 shaft at R834 per tonne and R7,878 per PGM ounce, increased cost per tonne on H1 2016 by 15.2% and 12.1% respectively, due to lower production as a result of the worse than planned geological conditions.

 

The cost per PGM ounce at the Generation 1 shafts at R7,599 was 3.1% lower than the Generation 2 shafts at R7,838 due to limited development costs as they do not require ore reserve development at these shafts.

 

4.   Wage Settlement

 

On 31 October 2016, we announced our agreement with Association of Mineworkers and Construction Union on wages and conditions of service. The agreement, effective from 1 July 2016 to 30 June 2019, acknowledges the tough PGM market conditions while providing employees with a realistic and competitive outcome and was negotiated without any business interruptions, demonstrating advances made in this area. The impact of this agreement is an average annual increase of 7.6%.

 

5.   Pandora Acquisition Update

 

On 11 November 2016, we announced that we had reached agreement to acquire Anglo American Platinum's (AAP) 42.5% interest in the Pandora Joint Venture.  We have received AAP and Northam Limited's (Northam) respective consents for the transaction and have submitted the Merger Notification to the Competition Authorities and requisite application for Section 11 consent to the DMR.  The transaction is subject to consent from our lending banks. We expect the transaction to complete by the end of the year. 

 

We have also reached agreement with Northam to acquire their 7.5% interest in the Pandora Joint Venture for R45.6million ($3.5million) in cash. 

 

On completion of these transactions, Lonmin will own 100% of Pandora. Full ownership of Pandora allows us to extend the mining at Saffy shaft further on strike east and west of the shaft and to also access the same Saffy ounces through Pandora, which will enable the deferment of the deepening of the shaft. The acquisition allows us to defer over R1.6 billion of allocated capital expenditure required for the further deepening of Saffy shaft over the next four years. and defer another R1 billion thereafter.

 

6.   Balance Sheet Management

 

Liquidity at 31 March 2017 was $447 million comprising gross cash of $229 million and undrawn bank facilities of $218 million. After deducting the term loan of $154 million, (including interest) from the gross cash balance, net cash at 31 March 2017 was $75 million, up from $49 million as at 31 December 2016 and compared with net cash of $173 million $114 million at 30 September 2016 and 31 March 2016 respectively.

 

We remain attentive to the challenging operating environment. Our objective remains to be at least cash break-even after capital expenditure. As ever, we continue to have proactive engagement with our lending banks.

 

Our change in outlook on unit costs combined with the strengthening of the Rand against the Dollar on the balance sheet date has resulted in an impairment charge of $146 million. This reduced the headroom against the Tangible Net Worth covenant in banking facilities to $334 million. Adverse movements in key assumptions could result in an additional impairment which could impact the Company's compliance with the lending covenants.  More detail is also available in the Financial Review section and note 1 to the accounts.

 

Capital Expenditure

Our strategy is to minimise capital expenditure whilst ensuring compliance with regulatory and safety standards and ensuring that the Immediately Available Ore Reserve position is maintained at the level necessary to support planned production at the Generation 2 shafts. Capital expenditure in H1 was limited to R612 million (around $45 million compared with R403 million (around $27 million) in the prior year period. Capital invested in the period included R111 million for the Rowland MK2 project.

 

As a result of the deferrals, we have reviewed and revised our capital expenditure guidance for the current year to between R1.4 billion and R1.5 billion from our original guidance of R1.8 billion, whilst minimising the near term impact on production. As in previous years, capital expenditure will be H2 weighted.

 

Summary of Capital Expenditure:

 

	6 months to 31 Mar 2016	6 months to 31 Mar 2017		12 months to 30 Sep 2017
				Revised Guidance
	Rm	Rm		Rm
K3	106	103		172
Rowland	21	14		42
Rowland MK2	91	111		159
Saffy	-	2		7
Generation 2 shafts	219	230		379
K4	7	5		12
Hossy	6	-		-
Generation 1 & 3 shafts	13	5		13
Central and other mining	27	49		143
Total Mining	259	284		535
Concentrators - Excl BTT BTT	25 20	67 146		185 408
Smelting & Refining	64	45		110
Total Process	109	258		703
Hostel / Infill Apartments	32	43		156
Other	3	27		37
Total	403	612		1430

 

7.    PGM Market Overview

 

The global economy's recovery may be a good indicator of when platinum prices will recover driven by fundamental demand. Price is ultimately the real indicator of the perceptions of supply, demand and stock levels, fuelled by lack of supplier discipline and investor sentiment. Lonmin is certainly doing its part in managing supply and we can but hope others will follow suit. 

 

As a Company, we are driving market development as follows:

Jewellery: We continue to support the Platinum Guild International (PGI) focusing on specific initiatives to assist in making a difference in the near to mid-term in key markets. We have increased our support of The Platinum Incubator in South Africa and will focus on assisting the incubator to increase support to SMME's. 

 

Industrial: We are pleased to be working with Thakadu Battery Materials (Pty) Ltd (Thakadu) on the flagship Black Industrialist Nickel Purification Project. Thakadu has made good progress and successfully completed the Definitive Feasibility Study (DFS). Their project next step is the completion of a detailed engineering design. Thakadu has independently secured equity funding and are progressing debt finance discussions with the Industrial Development Corporation (IDC). Execution of the project plan with the plant commissioning is expected at the end of 2018. Other projects include 3D Printing, Purified Nickel Sulphate and the production of PGM powders. 

 

Jewellery Investment: We continue to support the World Platinum Investment Counsel initiatives for new investment Platinum products; most recent products conceived and supported include the Platinum Investment product by the Bullion Vault and the series of platinum coin and bars by the Royal Mint.

 

8.    Management and Board Update

 

As announced on 6 March 2017, Ben Moolman resigned as Chief Operating Officer and as a Director for personal reasons.   We thank Ben for his contribution to Lonmin and wish him well in his future career.

 

Upon his resignation, I took charge of Ben's responsibilities and the General Managers at the Generation 2 shafts are now reporting directly to me. Mike da Costa, Executive Vice President: Business Support Office has taken responsibility for the management of all, and closure of some, of the Generation 1 shafts in addition to his Business Support Office responsibilities.

 

The relatively flat structure, changes in management routines and migration to operations that we have adopted are enabling us to focus on the delivery of our operational plan as outlined in our three year business plan, and is allowing us to maintain both operational and strategic focus.

 

9.    Outlook

 

Months of hard work in partnership with the whole Lonmin team have succeeded in reversing the weak mining performance seen in the first four months of our financial year. Maintaining and improving production is essential for the sustainability of our business, especially in light of the low pricing environment. The recovery in mining performance since March has continued and we plan to build on that production platform. We will harness the improved relationships we have built with our workforce and the DMR and will continue to prioritise safety. Lonmin is now in a stronger position to deliver value to all stakeholders. We remain focused on managing the operational delivery.

 

10.  Strategic Options

 

The operating environment remains tough and our operational strategy to be at least cash neutral by removing high cost ounces, improve production, reduce capital expenditure to the minimum required for the safe and efficient running of operations and maintaining operational and strategic flexibility remains appropriate.

 

We continue to review our portfolio of assets to ensure the focus remains on our core assets.  As a result, we are carrying out a study on K4 to better understand our optionality with this shaft, and exploring the best way of optimising value from Limpopo, which has been on care and maintenance since 2009] and curtailing our exploration activities in Northern Ireland from FY2018.

 

We are relocating our South African operational headquarters from Johannesburg to Marikana in 2018, to enhance executive management support to operations. This is expected to have the consequential impact of generating further savings.

 

11.  Guidance

 

The improvement in mining performance from February, through March and April, notwithstanding the recent unrest in our local communities that has impacted our Eastern Limb shafts, still supports maintaining our sales guidance at between 650,000 and 680,000 Platinum ounces for the full year on the back of improved mining production and smelter clean-up project.

 

Unit costs guidance for the full year is being revised to between R11,300 and R11,800 per PGM ounce from the original guidance of between R10,800 and R11,300, accounting for the weak mining performance to 31 January 2017.

 

Capital expenditure guidance is also being revised to between R1.4 billion and R1.5 billion from our original guidance of R1.8 billion.

 

12.  Other

 

In acknowledgement of our shareholder register which reflects a significant South African holding (40/60 split between our South African and international shareholders), from next year, the Interim Results will be announced in Johannesburg. We will offer all our usual webcast facilities for London based analysts and investors wishing to join the presentation. We will continue to hold our Final Results presentation in London.

 

13.  Conclusion

 

While I am pleased with the recovery in our performance since March, I am not yet satisfied that we have delivered what I know we can, and all of us at Lonmin recognize that the performance since March needs to continue to be. Our performance from March onwards demonstrates that, with relentless determination and energy, we can overcome the operational challenges. We are operating in a volatile and challenging environment but the Board, our employees, the management team and I will continue to focus on working to deliver the best result possible for all our stakeholders.

 

Ben Magara

Chief Executive Officer

14 May 2017

 

FINANCIAL REVIEW

 

Overview

 

Dollar PGM prices in H1 2017 were on average 8% higher than H1 2016 with the platinum price less volatile and ranging from $905 to $1,032 per ounce in the period in comparison to ranging from $816 to $1,020 per ounce in H1 2016. Palladium and Rhodium prices showed upwards trends through the period in comparison to downward trends in H1 2016.

 

PGM volumes sold were 13% lower than the prior year period. This was partly as planned due to the reduction of high cost production, however, production was also impacted by safety stoppages following fatalities and disappointing production in the first four months of the year.

 

Costs were well contained in Rand terms with the cost escalations offset by cost reductions. The cost reductions we achieved in H1 2017 amounted to R377 million (in FY15 money terms) which is pleasing when compared to the targeted reduction of R500 million for the year (in FY15 money terms) This brings the total cost reductions in 2016 and H1 2017 to R1.7 billion against the guidance of R1.8 billion in 2016 and 2017 (all in FY15 money terms).

 

However the Rand was on average 10% stronger against the Dollar when comparing period on period which resulted in an increase in costs in Dollar terms.

 

The cost of production per PGM ounce at R12,059 was 13% higher than H1 2016 driven by cost escalations and lower production despite the successful cost savings. Further details on unit costs can be found in the Operating Statistics section of the Report.

 

The operating loss for the period was $181 million including an impairment of $146 million (H1 2016 - a loss of $15 million). Excluding the impact of the impairment in H1 2017 the adjusted operating loss realised in the period was $35 million (H1 2016 - operating loss of $15 million). The depreciation charge was $16 million lower period on period due to the impact of the impairment in 2016 and the lower production levels. EBITDA for H1 2017 was $nil, a decrease of $36 million on H1 2016 as the increase in metal prices was more than offset by the stronger Rand and lower than planned productivity. 

 

We typically see a net cash outflow in the first half of the year due to the impacts of public holidays, stock takes and maintenance work which is timed around these downtimes resulting in lower production. Net cash at 31 March 2017 at $75 million was $98 million lower than 30 September 2016. In the first quarter of the year the net cash outflow was $124 million due to seasonal working capital movements and low production. This partly reversed in the second quarter of the year with a net cash inflow of $26 million. The trading cash outflow for the half year period was $48 million, an improvement of $6 million on H1 2016 as a result of $24 million deferred revenue received in the period. After capital expenditure of $45 million in H1 2017 of which $11 million was for the Bulk Tailing Treatment project which was funded through a metal streaming transaction the free cash outflow for H1 2017 was $93 million of which $63 million related to working capital movements. We are continuing to take the steps required to work towards achieving our objective to fund the reduced capital expenditure from free cash flow.

 

Net cash at 31 March 2017 was $75 million being gross cash of $229 million offset by the drawn term loan of $154 million (including interest). Undrawn available debt facilities amounted to $218 million giving total liquidity of $447 million. The debt facilities expire in May 2020, assuming Lonmin exercises its option to extend by one year. As at 31 March 2017 the Company had adequate facilities in place.

 

Productivity assumptions planned at time of the 2015 Rights Issue are proving to be challenging which has placed upward pressure on our unit costs. We have therefore revised our cost guidance for the current year and have adjusted the productivity assumption in our value-in-use calculation used for impairment testing. At the same time we have made a downward revision to our platinum price outlook which was more than offset by an upward revision of prices for the other PGMs and base metals, especially palladium. The net impact of the change in these assumptions combined with the strengthening of the Rand against the US Dollar resulted in the value-in-use of our assets declining below the carrying value and resulted in an impairment charge of $146 million which is reflected in the financial statements.

 

The debt facilities available to the Group are subject to financial covenants, which include that the consolidated tangible net worth (TNW) of the Group will not be at any time less than $1,100 million. At 31 March 2017 the TNW of the Group was $1,434 million and the headroom in the TNW covenant was $334 million. As disclosed in note 1 to the financial statements adverse movements in key assumptions in the value-in-use modelling could result in an additional impairment. Should a further impairment in the future result in the TNW falling below $1,100 million this debt covenant would be breached which could reduce the liquidity of the Group. The external auditors in their review report draw attention to this material uncertainty. This risk has been flagged to the Group's lenders and is being managed proactively through regular engagements with them. The other debt covenants are well within thresholds and are not considered to be at risk.

 

The impairment testing uses the Rand:Dollar exchange rate on the balance sheet date in accordance with IAS 36. Given the volatility of the Rand against the Dollar there exists inherent uncertainty around what this assumption will be on the date of the next impairment review. Whilst there exists an inherent uncertainty in this regard the Directors consider that it remains appropriate to prepare the accounts on a going concern basis. All options available to the Group to improve viability and value creation are continuously reviewed.

 

Income Statement

 

The $36 million decrease between the EBITDA of $nil for the six months ended 31 March 2017 and EBITDA of $36 million for the six months ended 31 March 2016 is analysed below:

 

	$m
H1 2016 EBITDA	36
PGM price PGM volume PGM mix Base metals	47 (62) (18) 4
Revenue changes	(29)
South African operating cost reductions (FY15 money terms and exchange rate)	26
South African one-off items in H1 2016 previously disclosed as special	(16)
Escalation on South African underlying costs at CPI of 6.1% for FY17 and 6.5% for FY16	(26)
South African cost changes	-
Non-South African one-off items in H1 2016 - Debt refinancing costs	10
Foreign exchange impact on cost, metal stock and working capital	(48)
Metal stock movement	47
H1 2017 EBITDA	-

 

Revenue

 

Total revenue for the six months ended 31 March 2017 of $486 million reflects a decrease of $29 million compared to the prior year period.

 

The US Dollar PGM basket price (including by-products) increased by 8% compared to the H1 2016 average price, resulting in an increase in revenue of $47 million. It should be noted that whilst the US Dollar basket price increased compared to H1 2016, in Rand terms the basket price (including by-products) decreased by 1% driven by the stronger Rand. The average prices achieved on the key metals sold are shown below:

 

		6 months to 31 March 2017	6 months to 31 March 2016
Platinum	$/oz	960	905
Palladium	$/oz	727	551
Rhodium	$/oz	800	689
PGM basket (including by-product revenue)	$/oz	797	736
Average FX rate	ZAR/USD	13.56	15.02
Rand PGM basket (including by-product revenue)	R/oz	R10,852	R10,962

 

The PGM sales volume for the six months to 31 March 2017 was 13% lower compared to H1 2016, which had a negative impact on revenue of $62 million.

 

The mix of metals sold decreased revenue by $18 million mainly due to the higher proportion of Ruthenium sold in H1 2017 as a result of a one-off stock release following a change in the refining process. Base metal revenue increased by $4 million as a result of an increase in prices compared to H1 2016.

 

Costs

 

In Rand terms South African operating costs for H1 2017 at R6.8 billion were flat on H1 2016, excluding the benefit of one-off items in H1 2016, despite CPI at 6.1% and cost escalations above CPI for labour and utilities. The impact of the stronger Rand against the Dollar meant that in Dollar terms costs increased by $44 million to $504 million.

 

We guided to total cost reductions of R1.8 billion for the two financial years 2016 and 2017 in FY15 money terms. We reported cost savings of R1.3 billion in 2016 and for H1 2017, excluding two years of CPI to get back to FY15 money terms and one-off items in H1 2016 previously reported as special, we have achieved cost savings of R377 million as analysed below.

	$m	Rm
H1 2016 - South African operating costs	(443)	(6,573)
One-off items in H1 2016	(16)	(239)
H1 2016 - South African operating costs - adjusted	(459)	(6,812)
Cost reductions in 2015 money terms and exchange rate (Rand/USD 14.85):
Underground mining	13	192
Opencast mining	(1)	(15)
Concentrating	-	(3)
Smelting and refining	1	16
Overhead, centralised services and other	8	115
Ore and concentrate purchases	5	72
	26	377
Escalation, assuming South African CPI of 6.1% in 2016 and 6.5% in 2017	(26)	(383)
Translation losses on underlying costs due to movement in exchange rate	(44)
H1 2017 - South African operating costs	(504)	(6,818)

 

In FY15 money terms before CPI escalation, underground mining costs decreased by R192 million or 5% during the period driven by an 8% reduction in volumes mined combined with strict cost control which more than offset the above CPI labour cost increase of 7.6%. Opencast mining costs increased by R15 million as we extracted final ore from the opencast UG2 pit having previously stopped mining from the opencast Merensky pit. Concentrating costs were broadly flat (up R3 million) with volumes down 9%. Smelting and refining cost reductions were R16 million or 3% lower in FY15 money terms with PGM production down 15% period on period. Overheads reduced by R115 million or 17% largely due to a reduction in share-based incentive programmes for management. Ore and concentrate purchases decreased by R72 million period on period driven by lower volumes purchased.

 

One-off items in H1 2016 included the reversal of overprovision for restructuring and reorganisation costs of R313 million offset by a share-based payment charge of R74 million as employee share option schemes were adjusted to reflect the Rights Issue and share consolidation. These items were reported as special in 2016 and have been converted to FY15 money terms in this analysis.

 

Exchange rate impacts

 

The Rand strengthened by 10% against the US Dollar during the period averaging R13.56/$ in H1 2017 compared to an average of R15.02/$ in H1 2016 resulting in a $48 million negative impact on the underlying operating cost of sales.

 

	6 months to 31 March 2017	6 months to 31 March 2016
	R/$	R/$
Average exchange rate	13.56	15.02
Closing exchange rate	13.42	14.71

 

The stronger Rand resulted in underlying operating costs for H1 2017 being $44 million higher than H1 2016 and the movement in metals stock due to the weaker Rand was $18 million favourable to the prior year period. The exchange loss on working capital was $3 million in H1 2017 compared with $19 million in H1 2016 resulting in an adverse movement period on period of $22 million.

	$m
Period on period Dollar cost increase due to impact of weaker Rand	(44)
Reduction in metal stock movement due to impact of weaker Rand	18
Period on period reduction in exchange gains on working capital	(22)
Net impact of exchange rate movements on operating profit	(48)

 

Metal stock movement

 

Excluding the impact of exchange rate movements the increase in metal stock of $47 million comprised an increase in metal stock of $10 million in H1 2017 and a decrease in metal stock of $37 million in H1 2016. The increase in H1 2017 was largely due to an increase in unit costs and a decrease of $5 million in the adjustment to bring the carrying value of metal stock down to net realisable value due to an increase in metal prices.

 

Depreciation and amortisation

 

Depreciation and amortisation decreased by $16 million period on period mainly due to the impairment of assets in September 2016. The reduced production also had an impact on the depreciation charge as depreciation is calculated on a units-of-production basis, spreading costs in relation to proven and probable reserves.

 

Impairment

 

At 31 March 2017 the value-in-use of the business units declined driven by a change in our outlook on unit costs and the stronger Rand against the Dollar on the balance sheet date. As a result an impairment charge of $146 million is reflected in the interim financial statements (H1 2016 - $nil). See note 11 to the financial statements for details.

 

The sensitivity of reasonably possible changes in assumptions may lead to a reduction or increase in the impairment charge as follows:

 

Assumption	Movement in assumption	Reversal of impairment / (Further impairment)
Metal prices	+/?5%	$407m / $(418)m
ZAR:USD exchange rate	?/+5%	$318m / $(361)m
Discount rate	?/+100 basis points	$173m / $(147)m
Production	+/?5%	$352m / $(341)m

 

Net finance costs

 

	6 months to 31 March 2017 $m		6 months to 31 March 2016 $m
Net bank interest and fees	(6)		(9)
Unwinding of discounting on environmental provisions	(5)		(4)
Foreign exchange gains on net cash/(debt)	4		9
Other	-		2
Net finance costs	(7)		(2)
HDSA receivable - accrued interest	12		14
HDSA receivable - exchange losses	(12)		(21)
HDSA receivable - impairment	(8)		-
Foreign exchange gains on the Rights Issue proceeds	-		5
Net finance costs	(15)		(4)

Net finance costs increased by $3 million to $7 million for the six months ended 31 March 2017.

 

Net bank interest and fees incurred in the year at $6 million were $3 million lower than H1 2016 due to the impact of the strengthened balance sheet following the Rights Issue in December 2015 and accordingly the reduction in drawn debt facilities. Exchange gains on net cash in H1 2017 amounted to $4 million (H1 2016 - $9 million).

 

The Historically Disadvantaged South Africans (HDSA) receivable is the Sterling loan to Phembani Group (Proprietary) Limited (Phembani). In 2010, Shanduka Resources Group (Proprietary) Limited, our former BEE partner, acquired 50.03% of the shares in Incwala Resources Proprietary Limited (Incwala) which was part funded by a loan provided by Lonmin and which was subsequently restructured into a preference share structure comprising A and B class preference shares with the key terms of the preference shares including repayment provisions, mirroring the loan. The receivable is disclosed as a current asset as the preference shares are redeemable at any time on or after 8 July 2015 at Lonmin's request. It is not our current intention to request redemption as Phembani could forfeit the loan and the 50.03% that Phembani hold in Incwala would revert to Lonmin. Equity attributable to non-controlling interests amounted to a negative $199 million at 31 March 2017 and relates to Incwala's shareholding in Western Platinum Limited (WPL), Eastern Platinum Limited (EPL) and Akanani. In December 2015 Shanduka completed its merger with Phembani and the merged entity operates as Phembani Group (Proprietary) Limited.

 

The gross loan, excluding prior years impairments of $376 million, drew an exchange loss for the period of $12 million (H1 2016 - $21 million) due to the weakening of Sterling against the US Dollar. Prior years impairments are based in US Dollar, being the Group's functional currency, resulting in no exchange gains on the impairment. Accrued interest in the period amounted to $12 million (H1 2016 - $14 million). The loan was impaired by $8 million in the period due to the decline in the valuation of the Marikana cash generating unit (CGU). The receivable is secured on the HSDA's shareholding in Incwala, whose only asset of value is its underlying investment in WPL, EPL and Akanani. The value of the security is driven by the value of WPL, EPL and Akanani. The balance of the receivable at 31 March 2017 was $61 million (31 March 2016 - $95 million).

 

In the prior year period the $5 million foreign exchange gains on the Rights Issue comprise the gains on translation of advanced cash proceeds received prior to the effective date of the Rights Issue as well as hedging gains on forward exchange contracts entered into to minimise the risk of the exposure to currency fluctuations on the Rand and Pound Sterling proceeds.

 

Taxation

 

The tax charge for the six months ended 31 March 2017 was $15 million (H1 2016 - tax credit of $15 million) and comprised current tax of $4 million (H1 2016 - $4 million) and a deferred charge tax of $11 million (H1 2016 - deferred tax credit of $19 million). The deferred tax charge for H1 2017 included the derecognition of $28 million deferred tax assets for unredeemed capital expenditure in our subsidiary EPL as it does not seem likely that these will be utilised in the near term.

 

Cash Generation and Net Cash

 

The following table summarises the main components of the cash flow during the period:

 

			6 months to 31 March
			2017		2016
			$m		$m
Operating loss			(181)		(15)
Depreciation and amortisation			35		51
Impairment			146		-
Changes in working capital and provisions			(61)		(94)
Deferred revenue received			24		-
Other non-cash movements			(1)		15
Cash flow generated from operations			(38)		(43)
Interest and finance costs			(6)		(11)
Tax paid			(4)		-
Trading cash inflow/(outflow)			(48)		(54)
Capital expenditure			(45)		(27)
Free cash outflow			(93)		(81)
Contributions to joint venture			(1)		(2)
Transfer to restricted funds for rehabilitation obligation			(8)		-
Net proceeds from equity issuance			-		368
Cash inflow/(outflow)			(102)		285
Opening net debt			173		(185)
Foreign exchange			4		14
Closing net cash/(debt)			75		114
Trading cash inflow/(outflow) (cents per share)			(16.9)c		(24.9)c
Free cash outflow (cents per share)			(32.9)c		(37.3)c

 

Cash flow utilised in operations in the six months ended 31 March 2017 at $38 million improved by $5 million compared to $43 million utilised in H1 2016. The decrease in profitability in the current period was offset by $24 million of third party funding received for the bulk tailings project and working capital movements which at $(61) million were $33 million favourable to the prior year period.

 

The cash outflow on interest and finance costs decreased by $5 million as the proceeds from the Rights Issue in the prior year period were used to pay down the Rand debt facilities. Tax paid in the period was $4 million compared to nil in the prior year period due to the timing of provisional payments for the year.

 

Trading cash outflow for the period amounted to $48 million. The trading cash outflow per share was 16.9 cents for the six months ended 31 March 2017 (H1 2016 - 24.9 cents).

 

Capital expenditure at $45 million was $18 million higher than the prior year period largely due to $11 million spent on the construction of the Bulk Tailings Treatment plant for which we received $26 million third party funding in the period.

 

Barrie van der Merwe

Chief Financial Officer

 

Operating Statistics

			Units	6 months to 31 March 2017	6 months to 31 March 2016
Tonnes mined 1	Generation 2	K3 shaft	kt	1,173	1,318
		Rowland shaft	kt	876	807
		Saffy shaft	kt	991	990
		4B shaft	kt	682	763
		Generation 2	kt	3,721	3,878
	Generation 1	1B shaft	kt	0	6
		Hossy shaft	kt	330	334
		Newman shaft	kt	50	245
		W1 shaft	kt	72	88
		East 1 shaft	kt	75	70
		East 2 shaft	kt	132	154
		East 3 shaft	kt	39	23
		Pandora (100%)2	kt	229	265
		Generation 1	kt	927	1,185
		Total underground	kt	4,649	5,063
		Opencast	kt	38	10
	Lonmin (100%)	Total tonnes mined (100%)	kt	4,686	5,073
		% tonnes mined from UG2 reef (100%)	%	74,2%	76.2%
	Lonmin (attributable)	Tonnes mined	kt	4,572	4,940
Ounces mined 3	Lonmin excluding Pandora	Pt ounces	oz	280,745	303,367
	Pandora (100%)	Pt ounces	oz	15,693	18,060
	Lonmin	Pt ounces	oz	296,438	321,427
	Lonmin excluding Pandora	PGM ounces	oz	538,136	582,085
	Pandora (100%)	PGM ounces	oz	31,047	35,425
	Lonmin	PGM ounces	oz	569,183	617,510
Tonnes milled 4	Marikana	Underground	kt	4,310	4,725
		Opencast	kt	49	50
		Total	kt	4,359	4,775
	Pandora 5	Underground	kt	229	265
	Lonmin Platinum	Underground	kt	4,539	4,989
		Opencast	kt	49	50
		Total	kt	4,588	5,040
Milled head grade 6	Lonmin Platinum	Underground	g/t	4.56	4.57
		Opencast	g/t	4.42	2.77
		Total	g/t	4.56	4.55
Concentrator	Lonmin Platinum	Underground	%	86.8	86.8
recovery rate 7		Opencast	%	68.3	83.9
		Total	%	86.6	86.8

 

 

			Units	6 months to 31 March 2017	6 months to 31 March 2016
Metals-in-	Marikana	Platinum	oz	274,671	301,119
concentrate 8		Palladium	oz	126,868	140,126
		Gold	oz	6,915	7,223
		Rhodium	oz	38,933	43,649
		Ruthenium	oz	65,353	70,991
		Iridium	oz	13,535	13,984
		Total PGMs	oz	526,275	577,092
	Pandora	Platinum	oz	15,693	18,060
		Palladium	oz	7,395	8,421
		Gold	oz	112	53
		Rhodium	oz	2,632	2,990
		Ruthenium	oz	4,319	4,920
		Iridium	oz	896	981
		Total PGMs	oz	31,047	35,425
	Lonmin Platinum before	Platinum	oz	290,364	319,179
	concentrate purchases	Palladium	oz	134,263	148,547
		Gold	oz	7,026	7,275
		Rhodium	oz	41,565	46,640
		Ruthenium	oz	69,673	75,912
		Iridium	oz	14,431	14,965
		Total PGMs	oz	557,322	612,517
	Concentrate purchases	Platinum	oz	603	2,265
		Palladium	oz	164	811
		Gold	oz	2	9
		Rhodium	oz	58	301
		Ruthenium	oz	99	473
		Iridium	oz	24	121
		Total PGMs	oz	950	3,980
	Lonmin Platinum	Platinum	oz	290,966	321,444
		Palladium	oz	134,427	149,358
		Gold	oz	7,028	7,284
		Rhodium	oz	41,624	46,941
		Ruthenium	oz	69,771	76,385
		Iridium	oz	14,456	15,086
		Total PGMs	oz	558,272	616,497
		Nickel 9	MT	1,437	1,564
		Copper 9	MT	893	945

 

 

			Units	6 months to 31 March 2017	6 months to 31 March 2016
Refined	Lonmin refined metal	Platinum	oz	300,238	346,763
production	production	Palladium	oz	133,131	155,097
		Gold	oz	7,678	9,528
		Rhodium	oz	42,593	53,770
		Ruthenium	oz	68,726	78,423
		Iridium	oz	14,683	20,441
		Total PGMs	oz	567,048	664,022
	Toll refined metal	Platinum	oz	1,023	2,121
	production	Palladium	oz	195	499
		Gold	oz	8	20
		Rhodium	oz	77	135
		Ruthenium	oz	236	565
		Iridium	oz	27	36
		Total PGMs	oz	1,566	3,376
	Total refined PGMs	Platinum	oz	301,261	348,885
		Palladium	oz	133,326	155,597
		Gold	oz	7,685	9,547
		Rhodium	oz	42,670	53,906
		Ruthenium	oz	68,962	78,988
		Iridium	oz	14,710	20,476
		Total PGMs	oz	568,614	667,399
	Base metals	Nickel 10	MT	1,477	1,743
		Copper 10	MT	846	1,012
Sales	Lonmin Platinum	Platinum	oz	306,996	361,882
		Palladium	oz	132,516	162,744
		Gold	oz	7,345	10,645
		Rhodium	oz	50,997	61,161
		Ruthenium	oz	97,676	82,094
		Iridium	oz	14,329	20,742
		Total PGMs	oz	609,858	699,269
		Nickel 10	MT	1,728	1,781
		Copper 10	MT	215	1,078
		Chrome 10	MT	651,655	752,979
Average prices		Platinum	$/oz	960	905
		Palladium	$/oz	727	551
		Gold	$/oz	1,207	1,363
		Rhodium	$/oz	800	689
		Basket price of PGMs 11	$/oz	745	697
		Basket price of PGMs 12	$/oz	797	736
		Basket price of PGMs 11	R/oz	10,129	10,394
		Basket price of PGMs 12	R/oz	10,852	10,962
		Nickel 10	$/MT	8,643	6,946
		Copper 10	$/MT	5,465	4,464
Capital			Rm	612	403
expenditure 13			$m	45	27
Employees and	as at 31 March	Employees	#	24,922	25,543
contractors	as at 31 March	Contractors	#	7,658	7,088