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Lonmin mining performance improves in third quarter

Jul 17 2017 10:03
  • Cape Town - In its unaudited production results for the quarter to end-June 2017, platinum producer Lonmin [JSE:LON] announced on Monday that it sustained its mining performance improvement since March 2017 into the third quarter of 2017.
  • Total tonnes mined rose by 3.8% to 2.7 million tonnes compared with the third quarter of 2016, up 13.2% on the second quarter of 2017.
  • Tonnes mined from its Generation 2 shafts, which generate 84% of production, increased by 9.0% to 2.2 million tonnes compared with the prior year period and increased by 18.6% against the second quarter of 2017.
  • Concentrator recoveries continue to be excellent at 86.8%, according to Lonmin.
  • Gross cash improved to $236m at June 30 2017 from $225m as at the end of the second quarter. Net cash improved to $86m (gross cash of $236m less the drawn term loan of $150m) at June 30, up from $75m (gross cash of $225m less the drawn term loan of $150m) at the end of the second quarter.

    Sales of 180 348 platinum ounces increased by 10.8% on the prior year period. The company said it is maintaining its full-year sales guidance of 650 000 ounces to 680 000 oz.

    The average rand full basket price was down 3.0% on the prior year period, at R11 506 per platinum group metal (PGM) ounce.

    As a result of the much improved mining performance, unit costs reduced by 4.7% quarter-on-quarter to R11 278 per PGM ounce (6E basis), and increased 6.4% year-on-year, slightly above inflation.

    Lonmin said it was at the lower end of the revised unit cost guidance of between R11 300 and R11 800 per PGM ounce.

    The miner "with great regret" reported two fatalities during the period, although it pointed out that the safety lost time injury frequency rate had shown improvement.

    Lonmin CEO Ben Magara said the company aims to be at least cash neutral, even at current low PGM prices and a strong rand. He said he was pleased that mining turnaround has been sustained.

    "We continue to find levers to pull, in this 'lower prices for longer' environment and to make the improvement of our performance a priority. I am particularly pleased that our net cash has improved," said Magara.

    Lonmin's share price was up 6.3% at R11.90 on the JSE at around 09:30.

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    lonmin  |  earnings reports  |  platinum

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