iafrica.com

Justin Brown
Wed, 16 Nov 2005

World number three platinum miner Lonmin on Wednesday announced that it had generated earnings per share of 115 US cents for the year to September 2005, up 32 percent from 87 US cents in the previous comparative period.

Underlying earnings per share increased by 20 percent to 116.4 US cents compared with 96.9 US cents previously.

Lonmin's full year dividend remained unchanged at 72 US cents.

The group's total platinum production was 916 420 troy ounces, practically unchanged from the previous year's 916 757 oz.

Total platinum group metal output rose 1.7 percent to 1.704 million oz from 1.677 million oz in the previous year.

Turnover

Turnover rose to $1.128-billion from $1.030-billion previously. Profit before tax was $353-million, up from $303-million before.

"This year has seen us recover fully from last November's smelter accident and our furnace is now performing at record levels of throughput. With the acquisition of Southern Platinum, we now have the resource base to deliver around one million ounces of platinum production in our 2006 financial year," Lonmin's Chief Executive Brad Mills said in a statement.

By 2010, Lonmin is aiming to increase its annual platinum production to 1.3 million oz.

"We are creating a Lonmin culture that is committed to safety and operational excellence which fully reflects the demographics of South Africa.

"Our Six Sigma programme has had a very successful year delivering net benefits well ahead of our target. We will continue to focus on cost containment in 2006 with the expansion of our Six Sigma programme, the introduction of Shared Business Services, our New Era Labour Agreement and the continued de- bottlenecking of our operations.

"We expect to make considerable progress with the mechanisation of our operations in 2006 with around eight percent of our ore delivery coming from fully mechanized stopping panels by year end," Mills added.

Lonmin's Six Sigma programme delivered net benefits of R206-million in the 2005 year, R70-million ahead of the group's target.

Safety record

During the year, there were six fatalities at Lonmin and two children drowned in a mine water reclaim pond prior to it being fenced.

"Historically, the Limpopo operations had a very poor safety record due both to poor operating discipline and the mining method being used. Since taking control of the mine, we have made great progress in reforming the operating practices which has materially reduced the number of long time injuries and the severity of the incidents," Lonmin said.

Lonmin took control of its Limpopo operations on June 15.

Platinum market

The global market for platinum has continued to be robust with strong demand for auto catalysts and from other industrial uses, Lonmin said.

Earlier on Wednesday, platinum moved to a fresh 25-year high of $988/oz.

Supply has remained constrained due to the strength of the rand, which has limited the development of new sources of platinum production in South Africa, the group said.

"We expect these dynamics to continue to drive the market in 2006 and we continue to be very positive about the outlook for platinum and rhodium. We expect both these metals to experience continued strong growth in demand over the next few years," Lonmin added.

Turning to the outlook, Lonmin said that the group expected its cost of metal produced net of base metal by product credits in 2006 at its Marikana operations to be between R2300 and R2400 per PGM ounce.

At Lonmin's Limpopo mine for 2006, the company is forecasting an average cost of R2900 per saleable PGM ounce in concentrate.

I-Net Bridge