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Lonmin to consolidate in 2008 Posted: Wed, 14 Nov 2007 [miningmx.com] -- LONMIN CEO Brad Mills blamed staff turnover, long-term transformation, and cost inflation for the group’s “difficult year” in which it reported a 6.6% decline in share earnings. Production also fell. Total platinum group metal (PGM) sales totalled 1.49 million ounces compared to 1.8 million oz in the previous financial year. Platinum metal sales fell to 793,584 oz from 947,498 oz, a 16% year-on-year decline. There would be a 15% increase in costs at the Marikana and Limpopo mines before base metal by-products, Mills said. Mills promised the 2008 financial year, which began in October, would be one of consolidation with renewed production growth. Production for 2008 was estimated to be 900,000 oz. However, this is far short of the 1.1 million oz/year of platinum production in earlier estimates. Commenting on the year under review, Mills said it was marred by the challenges of tackling transformation in the group, such as meeting the South African government’s mining charter, and growing future production. "These changes are not overnight. We need to step back before going forward," said Mills. There was “a disconnect between long-term and short-term planning on the mines which was owing to turnover,” said Mills. Lonmin has suffered an unusually high turnover of staff but had recently attracted three executives to its team including former BHP Billiton manager, Mohamed Seedat who was now president of Lonmin SA; chief financial officer Alan Ferguson formerly with BOC; and Chris Sheppard formerly of Anglo Platinum. Share earnings came in at 205.1 US cents but the dividend was increased 15% to 115c/share, a decision representing the board’s confidence in the fundamentals of the business, Mills said. Investors, however, appeared to use the financial results as a buying opportunity with the share up 4.6% by midday in Johannesburg after falling 10% between November 8 and November 13. Mishaps The company suffered a number of mishaps in the 2007 financial year to end-September with the burnout of the No 1 furnace in December creating a backlog that had to be toll-treated (smelted) by a third party company. There was also a wildcat strike at its Marikana mine which Mills said resulted in the loss of 10 working days. A volatile labour relations environment remained a feature of mining in South Africa, he said. Lonmin’s Limpopo operations, bought from SouthernEra Platinum in 2004, continued to show signs of troubled geology and a lack of mining flexibility. Efforts to further mechanise Marikana were continuing. Click Here to subscribe to our daily newsletter
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