Lonmin’s Q2 platinum sales up 30%, sticks to 700 000oz target for 2009
miningweekly.com
By: Esmarie Swanepoel
23rd April 2009
JOHANNESBURG (miningweekly.com) – Platinum producer Lonmin maintained its sales guidance of 700 000 oz for its 2009 financial year, reporting on Thursday that sales in the first half were around 45% of the full-year target and ahead of its initial expectations for the period.
The company also announced that it had completed a $575-million debt-refinancing package, comprising $250-million in a revolving credit facility and a $150-million amortising term loan, both maturing in November 2012 in the UK, and a $175-million credit facility in South Africa, maturing in November 2010.
The company said in a statement that the refinancing significantly lengthened the tenure of the company’s banking facilities.
Share prices jumped to 17 100c a share on the release, up from the 15 999 c a share recorded earlier in the day.
Final metal sales for the first half of the 2009 financial year were 311 853 oz of platinum and 583 873 oz of total platinum group metals (PGMs), up 8% and 5% respectively on the same period in 2008.
Metal sales for the second quarter of the 2009 were 185 651 oz of platinum and 355 069 oz of PGMs, and increase of 30% and 26% respectively over the prior year period.
The group’s total refined production for the first half of the 2009 financial year was 318 219 oz of platinum and 606 145 oz of total PGMs, both up 13% from the same period in 2008, partly reflecting the improvement from Lonmin’s core Marikana underground operations during the first half of 2009.
Refined production for the second quarter, meanwhile, was 185 284 oz of platinum and 362 326 oz of total PGMs, an increase of 45% and 41% respectively over the second quarter of 2008.
“The key driver of this was the performance of the process division, where metal in process inventory was drawn down faster than had been expected following the No 1 furnace rebuild during the first quarter of the 2009 financial year,” the company said in a statement.
The division’s performance during the second quarter was ahead of expectations, with the majority of the inventory built up during the planned rebuild of the No 1 furnace having been processed.
Refined production and sales in the prior year period were significantly impacted on by a planned inspection and repair of the No 1 furnace, following the Eskom power outage, which caused a build-up of metal in process at that time.
The sales figures for the first half were achieved despite a 3% decline in the total tons mined during the first half of the 2009 financial year, owing to a planned cessation of production at the Marikana opencast operations, at the end of the first quarter of 2009. Production at the company’s Baobab shaft, in Limpopo, was also impacted by the winding down of the operation towards care-and-maintenance.
Further, production was affected by a 21-day wage-related strike at Limpopo during the first quarter of the financial year.
In the first six months of the 2009 financial year, Lonmin mined a total of 5,3-million tons of ore from its core underground Marikana operations, an increase of 7% on the same period last year, the company said in a statement.
This was owing to an improved performance from its conventional sections, with production rising in both the first and second quarters of the 2009 financial year from the same periods in 2008. Production from the Saffy and Hossy shafts also increased during the first half of 2009.
Lonmin stated that the concentrators produced a total of 338 142 oz of platinum-in-concentrate in the first half of 2009, a 3% year-on-year decline, mainly as a result of the planned operational changes at the Marikana opencast and Limpopo operations.
Overall concentrator recoveries improved during the first half of the year to 80%, up from 78,8% in the first half of 2008, partly owing to reduced levels of low-grade opencast stock piles being processed during the first half of the 2009 financial year.
However, during the first half of 2009, underground recoveries fell to 80,8%, from 81,5% in 2008, partly as a result of the extensive maintenance undertaken on some of the Marikana concentrators in the first quarter of the 2009 financial year.
“Overall, milled head grade improved by 2% year-on-year to 4,58 g/t five platinum-group elements and gold (5PGE+Au), mainly owing to higher levels of low grade opencast stock piles processed during the first half of the 2008 financial year, which had an adverse impact on grade at that time,” the company stated.
The underground milled head grade was 3% lower year-on-year at 4,57 g/t 5PGE+Au as a result of an increased percentage of development ore coming from the Hossy and Saffy shafts, and unplanned dilution on the upper ground two (UG2) reef horizon, as well as a lack of flexibility in face availability on the Merensky reef horizon where some localised lower grade areas were encountered, particularly during the first quarter.
The total tons mined for the second quarter of the 2009 financial year were 2,7-million an 8% decline on the tons of ore milled for the second quarter of 2009.
This was owing to the planned closure of the Marikana opencast operations, as well as the Baobab shaft in Limpopo.
“Our underground Marikana mining operations produced 2,6-million tons during the second quarter of the 2009 financial year, a 7% increase from the same period last year, when production was impacted on by the Eskom power outage in January 2008,” the company said in the statement.
The increase in production from the prior-year period was supported by an improved performance from the company’s conventional operations, which was achieved, despite the disruption caused by the significant restructuring programme being carried out during the period.
Production at the Saffy and Hossy shafts continued to ramp up, while underground ore reserve development at Marikana continued to improve.
The total tons milled in the quarter increased 2% year-on-year to 2,8-million tons, reflecting increased production from Marikana and the Pandora underground mining operations, and exceeded total tons mined, owing to the milling of some opencast stockpiles in the period.
The remainder of these opencast stockpiles and the further opencast tons from Pandora will be processed during the second half of the 2009 financial year.
The concentrators produced 164,909 saleable ounces of platinum in concentrate for the quarter, a 5% increase from the second quarter in the 2008 financial year, reflecting increased production from underground Marikana operations and Pandora.
Lonmin stated that underground and overall concentrator recoveries improved to 81,4% and 80,6% respectively from the first quarter of 2009, when underground and overall recoveries were 80,2% and 79,4% respectively.
The overall milled head grade was up 2% year-on-year to 4,68 g/t 5PGEs+Au, while underground milled head grade increased marginally to 4,69 g/t 5PGEs+Au.
“Encouragingly, underground head grade improved 5% from the first quarter of the 2009 financial year, reflecting in part the impact of management actions taken to tackle the unplanned dilution identified in the first quarter of 2009,” the company stated.
It added that it had essentially completed a major restructuring exercise at its Marikana and Limpopo operations, but that the focus for the second half would be on minimising the possible disruption resulting from the programme.
“In addition, the continuing ramp-up of Saffy shaft is a key area of focus.
“It is anticipated that any impact of these factors on production and sales will be compensated for by the normalising of metal-in-process inventory from the process division,” the company concluded. |
