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Drilling Reports

Lonmin reports poor mining production

15 May 2017 07:36

Lonmin said total tonnes mined in the half year was down 7.6% (387,000 tonnes) on comparative period due to planned removal of high cost Generation 1 production (down 258,000 tonnes).

It also blamed poor mining production from K3, its biggest shaft, in the first four months (down 145,000 tonnes).

London announced the conditional acquisition of the remaining 7.5% of the Pandora JV to take its equity to 100%.

Decisive action was taken to deliver mining improvement including senior management changes resulted in the best March production for four years.

A flatter management structure with the general managers reporting directly to the chief executive officer and leveraging its relationship with the union to address the management/union impasse at K3 resulted in a step change in production at all shafts.

Improved production underpinned 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 was revised to between R11,300 and R11,800 per PGM ounce from the original guidance of between R10,800 and R11,300, due to weak mining performance to 31 January 2017.

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

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

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

The impairment of $146m reduced headroom on the tangible net worth lending covenant to $334m. Any future adverse movements in key assumptions could result in further impairment that could impact this covenant.

Story provided by StockMarketWire.com

Related Company: LMI

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