Lonmin Expects to Boost its Platinum Sales by 13%
By Charlotte Mathews
15 Nov 2007 at 11:10 AM GMT-05:00
resourceinvestor.com
JOHANNESBURG (Business Day) -- Platinum miner Lonmin [LSE:LMI] expects to sell about 900,000 ounces of platinum in its current financial year, a 13% increase on the past year when it was hit by processing and labour problems.
It will spend $400-$450 million on capital projects this year, up from $276 million in the year to September, to complete shafts at Marikana, continue extending its Limpopo mine to the east and planning a mine at Akanani.
By 2012. Lonmin expects to be able to produce about 1.2 million ounces of platinum from its new mechanised shafts at Marikana and expansion at Limpopo. It has completed a study on expanding Limpopo, but is now undertaking further work on the possibility of building an even larger mine, including upgrading the concentrator and building another on the eastern side.
By end-December a study on the joint Pandora venture, a conventional, standalone mine, should be completed. This could see Lonmin, focusing on mechanised mining, exit the project.
Lonmin revenue rose to $1.9 billion, or 4.6% more than in the previous year, driven mainly by higher prices. It realised a 23% higher price for its basket of platinum group metals at $1,196/oz.
Pre-tax profits improved 11.4% to $705 million, helped by a 53% decline in net financing costs, on revenues up 5.
Production was below forecast because of a longer Christmas break, industrial action at Marikana and a leak at its number one furnace, which took months to rebuild. The Merensky furnace was recommissioned to reduce reliance on the number one furnace, and the process division got new management.
CEO Brad Mills said it was impossible to identify either technical issues or human error as a single reason for the accident, but the structure was weakened by previous incidents.
Soaring costs also outweighed a 23% increase in the average price the company was paid for its platinum group metals, leading to a 7% decline in earnings per share to 205 cents.
Lonmin warned that costs could increase by another 15% next year as the mining and construction boom in South Africa sent costs of both labour and materials higher, and utility bills continued to climb. |
