well repositioned...refined production of 741,890 platinum ounces achieved production 3,497 2,244...
TRANSCRIPT
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
MUCH ACHIEVED WELL REPOSITIONED ….
14 NOVEMBER 2016 - FINAL RESULTS PRESENTATION
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
2
Agenda
Key Highlights 1
Financial Performance 2
Operational Performance 3
Macro Environment 4
Conclusion and Guidance 5
KEY HIGHLIGHTS BEN MAGARA CHIEF EXECUTIVE OFFICER
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Key Highlights: Much Achieved. Well Repositioned
4
Sales of 735,747 Platinum ounces, exceeded the sales guidance of 700,000 ounces
The innovative smelter clean-up project released 73,186 ounces of Platinum during the year, to make up for the shortfall in mined ounces
The Other Precious Metals (OPM) plant commissioned during the year, using improved latest technology, contributed to additional release of Rhodium and Iridium
Exceeded sales guidance
Net cash of $173 million at 30 September 2016 from $69 million after the first quarter
Liquidity of $537 million at 30 September 2016 (gross cash plus undrawn facilities)
Improved net cash position
Dec'15 Sept'16
422 537
Liquidity ($m)
Cost reductions ahead of schedule with R1.3 billion achieved – 86% ahead of promised annual target of R700 million
Underlying costs decreased by 3.2% to R14.1 billion
Cost reduction ahead of schedule
A successful reorganisation, with 19% reduction in headcount
Reskilling and redeployment into more productive roles Reorganisation
completed
Completed Rights Issue, strengthened our balance sheet and renewed bank facilities Balance sheet strengthened
Operating profit of $7 million versus 2015 operating loss of $134 million Enhanced
profitability
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Delivering on Our Business Plan: Repositioned the Business to Generate Cash
LTIFR improved by 8.1% to 4.97. Regrettably four of our colleagues were fatally injured. Focus on safety improvements remains a priority
Experiencing a reduction in the duration and frequency of Section 54 stoppages and more localised application of the stoppages, based on better collaboration between shaft management, the DMR and the unions
Safety improvements
Generation 2 shafts production 4.0% up on prior year
Decline in high cost Generation 1 shafts production as planned
Refined production of 741,890 Platinum ounces achieved
Production 3,497 2,244
7,752 8,061
FY'15 FY'16
G1
G2
Tonnes mined, kt
5
Completed peaceful and realistic multi-year wage agreement on 31 October 2016, reflecting the maturing of relationships and reducing risk
Construction of employee housing in progress
Reviewing our employee housing strategy
Delivered R1.6 billion procurement deals for the Bapo Ba Mogale community
Employees, other stakeholders and social licence to
operate
Post year end, Lonmin acquired AAP’s 42.5% stake in the Pandora JV. An attractive option for development. Consolidation of shallow and high-grade mineral resource, which is contiguous with our operations. Relies on our mining and processing infrastructure. Pandora JV made an operating loss of R109 million in financial year 2016, and Lonmin 50% share is reflected in our 2016 accounts. Lonmin received a contribution of R117 million from ore purchase agreement, which offsets JV loss
Acquisition of Pandora joint
venture
FINANCIAL PERFORMANCE BARRIE VAN DER MERWE CHIEF FINANCIAL OFFICER
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Cash Generation
7
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Balance Sheet Strength and Liquidity
8
Net cash position at 30 September 2016 of $173 million with liquidity of $537 million
Rights Issue in November 2015 raised net proceeds of $373 million
Bank debt facilities mature in May
2020 (assuming Lonmin exercises its option to extend by one year)
• Revolving Credit Facility totalling $71 million and a $150 million term loan
• Revolving Credit Facility totalling R1,980 million ($135 million)
320 219
322
203 215 320
422 537
Sep'15 Dec'15 Sep'16
Gross Cash Undrawn facilities
Liquidity ($m)
(185)
69 173
Sep'15 Dec'15 Sep'16
Net (debt) / cash ($m)
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Cost Performance
9
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Unit Cost Performance 8
,51
5kt
7,6
42
kt
53
4o
z
48
6o
z
53
7ko
z
52
2ko
z
54
4ko
z
52
5ko
z
R10
,1m
R9.6
m
R1,0
50
m
R6
42
m
$7
7m
$9
1m
10,339
607 100 14 11,060 (156)
907 (1,063)
10,748
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
FY15 CPI @ 6.5% Labour aboveCPIIncl
Contractors
Power / waterabove CPI
Sub-Total Grade andRecovery
Volume Cost FY16
R/o
z
-7.0% 2.8%
-4.0%
10
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
To update
11
Underlying Operating Profit
1
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
To update
12
Capital Expenditure
1
132 -14
118 2 -26
-3 -2
89
50
70
90
110
130
150
Guidance FX RestatedGuidance
Mining Concentrating Smelting &Refining
Other Actual
USD
m
As a direct result in the delay of the Bulk Tailings
treatment project ($19m)
and the Rowland Pump station ($8m)
Weaker rand than orginally anticipated
R14.31 versus budget
of R12.82
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Summary of Financial Results
13
Units 2016 2015
Platinum sales koz 736 752
Rand Basket Price R/oz 11,030 10,207
Revenue $m 1,118 1,293
Underlying EBITDA $m 109 21
Underlying Operating Profit/(Loss) $m 7 (134)
Special costs $m (329) (1,884)
Operating Loss $m (322) (2,018)
Underlying LPS cents (35.6) (194.5)
Basic LPS cents (137.0) (3,437.6)
12 months to 30 September
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
In Conclusion
Cash of $104 million generated from Quarter 2 through to Quarter 4 Cash generated
14
Cost reductions ahead of plan, but becoming increasingly challenging Cost reductions
Capital structure stabilised and liquidity levels adequate Capital structure
stabilised
OPERATIONAL PERFORMANCE BEN MOOLMAN CHIEF OPERATING OFFICER
15
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
16
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2011 2012 2013 2014 2015 2016
Lost time injury frequency rate
Safety
Safety remains work in progress until we achieve Zero Harm
Improvement
No. of fatal incidents
(12 Month Rolling)
Comparison of platinum peers – LTIFR
We remain determined to regain our leading position in industry safety by improving our overall safety performance, which is currently not acceptable
Four employees fatally injured. We extend our deepest condolences to their families and friends
LTIFR improved by 8.1% to 4.97 at 30 September 2016 from 5.41 at 30 September 2015
Generation 2 shafts performed well, except for Rowland with two of the fatalities
• 4B/1B shaft achieved 10 million fatality free shifts and won the JT Ryan Safety Award
• K3 shaft achieved 6 million fatality free shifts
• Saffy shaft achieved 3 million fatality free shifts
Section 54 stoppages – more localised and reduced in duration and frequency in the last quarter
0.0
2.0
4.0
6.0
8.0
Jan-13 Dec-13 Nov-14 Oct-15 Sep-16
Lonmin Peer 1 Peer 2 Peer averagePt industry
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Delivering on Our Business Plan: Reducing High-Cost Production on Track
17
Shafts Status
Ge
ne
rati
on
2
Ge
n 3
G
en
era
tio
n 1
Shaf
ts o
f th
e f
utu
re
69%
FY 2016 FY 2015
78%
K4 N/A • Long term option – remaining on care and maintenance - 49
K3 • Continued operational performance 2,687 2,713
Rowland • Continued operational performance 1,731 1,872
Saffy • Continued operational performance 2,055 1,758
4B • Continued operational performance 1,588 1,409
Total Gen 2 8,061 7,752
E2, E3 (incl. JV 100%)
• Delivering operational performance 827 1,002
E1,W1 • Under contract mining – annual re-evaluation 304 328
Hossy • Orderly closure to care and maintenance planned by end of FY17 712 953
Newman • Lonmin own production stopped Oct 2016. Under contract mining 346 765
1B • 1B – Closed Oct 2015. On care and maintenance 6 220
Open cast • Merensky pit closed. UG2 low cost ounces opened – to close in 2017 49 230
Total Gen 1/OC 2,244 3,497
Focus
Tonnes mined (kt)
Generation 2 contribution to total tonnes mined
Restructuring programme on track - focusing on core Generation 2 shafts in an oversupplied market
4%
36%
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Mining Performance Being Addressed
0
2
4
6
8
10
12
14
Generation 2 Generation 1 & OpenCast
Total
'00
0 t
on
nes
FY 2015 Act FY 2016 Act 2016 BP 2017 BP
Tonnes mined
Immediately Available Ore Reserves (months)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
K3 Rowland Saffy 4B/1B
2015 2016
Generation 2 production
• 4% higher than prior year
• 11.6% (1.1 million tonnes) lower than CPR (Competent Persons Report) Business Plan (BP) 2016
Production for 2016 is in line with BP for 2017
Reorganisation, redeploying and reskilling
Section 54 stoppages in the first nine months
Higher absenteeism also reduced planned blasts
Additional stoping crews to take advantage of Immediately Available Ore Reserves (IAOR)
18
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Productivity Improvements
Generation 2 shafts
• Productivity improved by 5% to 5.9 from 5.6 square meters per mining employee
• Stoping crew productivity (square meters per crew) improved by 7%
• Successful rationalisation of the workforce by 19%
2017 will be the first full settled year after the reorganisation
Additional stoping crews can now be deployed at
Generation 2 shafts to meet BP 2017
Various initiatives being implemented in the Business Support Office to improve productivity and mining performance
2.0
3.0
4.0
5.0
6.0
7.0
FY12 FY13 FY14 FY15 FY16
Squ
are
met
res
per
man
•Generation 2 Productivity
28,000
32,000
36,000
40,000
FY12 FY13 FY14 FY15 FY16
Nu
mb
er
•Total Labour Reduction
19
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Initiatives to Address Mining Performance
• To improve the output of poor performing half levels
• Fully implementing the Theory of Constraints (TOC) management model on the half levels
• Establishing a labour skills buffer on selected production half levels
• Implementing systems, processes and behaviours that impact on people not being available at the working faces
• Ensure that the right people are present on a daily basis in order that daily production targets can be achieved
• Lost blasts due to absenteeism will be reduced and production for the half level targeted to increase by at least 15%
• To empower the front line supervisors so that they can provide their team members with the means and ability to perform their work, and also be able to hold them accountable for what they need to deliver
• Improved accountability at the mining faces is expected to translate into improved safety performance as well as improved production output
Empowerment of Front Line Supervisors
Reducing Absenteeism
Theory of Constraints
Framework – Labour Buffer
20
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Operational Excellence in Processing
21
OPM Plant
PGM and underground concentrator recovery rates
82.4%
85.0%
86.2%
87.2%
89.6%
86.1%
87.0% 87.0% 86.8% 86.7%
2012 2013 2014 2015 2016
Instantaneous PGM Recoveries Underground Concentrator Recovery
Excellent processing performance, realising benefits of innovation and ongoing optimisation and improvement projects
Concentrators achieving consistent levels of PGM recoveries. Industry leading recovery at 87.0%
Smelter clean-up (of past incidences) released 73,186 Platinum ounces, boosting the instantaneous recovery rate to 89.6%
The OPM plant commissioned. Release of 25,280 ounces of Rhodium and 13,068 ounces of Iridium
Overall permanent pipeline reduction
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Operational Excellence in Processing (continued)
22
Smelter Furnaces
(One & Two)
Base Metal Refinery
Precious Metal
Refinery
Ounces (000)
Ounces (000)
Ounces (000)
Capacity per annum 1,135 1,242 1,500
Platinum produced in 2016
742 742 742
Capacity utilisation in 2016
65% 60% 49%
Processing capacity Our processing facilities have stabilised and are operating efficiently
• Concentrators are more efficient
• Furnaces at steady state – Pyromet back-up
• Improvements at Precious Metal Refinery
We continue with various initiatives to fill the pipeline and use the excess capacity
As part of these efforts, and in line with our focus on low cost ounces and near term cash, projects include
• The Bulk Tailings Treatment (BTT) project 29,000 Platinum ounces per year over a seven-year period, with commissioning and ramp up to full production planned for FY 2018
• Toll treating contract with Jubilee Platinum Plc. Commencing in FY 2017, expected to deliver 17,000 Platinum ounces per year
Actively pursuing opportunities to do more
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Right-Sizing Capex to Maintain Production Profile
23
540 562
198 213
326 432
103
414
101
159
2016 2017
R million
Others BTT
Concentrating & Processing (Excl BTT) Other mining
Generation 2
1,268
1,780
Capex spend Capex optimised to focus on our key Generation 2 shafts to maintain production profile, and on processing
Generation 2 shafts: Development of the MK2 resource.
Processing: BTT project which is third party funded
Planned capital expenditure limited to
• Required to satisfy regulatory and safety standards
• Essential sustaining capital expenditure and
• A limited number of development projects
Optimising the operational flexibility from the preserved IAOR at the Generation 2 shafts of 22.1 months
Social Labour Plan commitment of R500 million over 5 years
MACRO ENVIRONMENT BEN MAGARA CHIEF EXECUTIVE OFFICER
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Regulatory Environment, Relationships and Corporate Citizenship
25
1608 Education Trust has first university graduate – Mandla Yawa
Bapo Ba Mogale community – R1.6 billion of procurement contracts
Maintaining our social licence to operate through securing the trust and acceptance of communities and stakeholders is material as they host our operations
Complex and dynamic socio-political and regulatory environment, and we have confidence in the institutions that safeguard our constitutional rights and we have solid relationships to navigate the environment
Our people and corporate
citizenship agenda
Completed conversion of legacy hostels
Construction of new apartments underway
Reviewing future employee housing strategy
Employee housing
Shared value creates shared vision
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Platinum Demand Analysis
• In the near term the negative sentiments towards diesel, while unhelpful, do not seem to impact demand. In India the new government position on diesel did impact diesel vehicle demand
• Long –term tighter emissions legislation will see demand for platinum continue to grow
Automotive
Other Industrial
26
• Despite the lower prices, which normally induces Chinese jewellery buying, demand is expected to contract as the consumers are now opting to spend on travel rather than luxury goods. The decrease in China was partially offset by healthy growth in India 23% and US of around 5%
• Targeted marketing programmes executed by the PGI could go a long way to mitigate the decline in jewellery demand
Jewellery
• Investors rekindle interest in platinum with aggressive ETF buying leading up to the end of September
• Growth in disposable income and healthier than expected economic conditions are driving demand from the investment sector
• Lower prices incentivised active bar and coin buying by the Japanese investors during 2016
• We continue to support the WPIC initiatives that stimulate existing and new investment products
Investment
• Demand for platinum in the chemical industry has grown more than a third in the past five years
• Petrochemical and glass demand remains cyclical and may remain flat after significant growth in 2015
• Growth in population and urbanisation continues to support the growth trend expected over the next decade
• Opportunities offered within the additive manufacturing space may see increased demand in the long-term
Subdued global market sentiment is driving the low price environment
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Platinum Supply Analysis
• Primary suppliers have mostly released above normal stocks on hand during 2016
• The perception of liquidity remains which dampens price rallies Inventories
27
• Supply from South Africa contracted in 2016 but it was offset by growth in Zimbabwe and North America
• Prior decade investment secured resources and reserves but a continued low price environment disincentivises the reactivation of mothballed shafts and projects. In the long run this may lead to severe fall in primary supply
Primary Production
• Lower prices in scrap steel dampened recycling
• Growth in platinum recycling was further muted due to consumers holding on to older vehicles for longer
Secondary Production
As labour conflict and social political risk reduce, continued low prices threaten supply
CONCLUSION BEN MAGARA CHIEF EXECUTIVE OFFICER
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Conclusion
29 29 Much achieved. Well repositioned
Improved profitability, cash and liquidity
• Reorganisation has delivered R1.3 billion cost reduction
• Benefiting from maturing union relationships
• Peaceful restructuring and wage negotiations
Housing strategy being implemented
Lonmin now an efficient, lean organisation
• Solid base to drive essential mining production improvement initiatives
• IAOR of 22.1 months for generation 2 provides flexibility and headroom to increase production
• Will only spend on capex using cash generated from operations and third party funding
While market conditions remain tough, we have repositioned the business
• Not only to withstand the current low PGM price environment
• But also to seize opportunities to maximise value for shareholders and stakeholders
Successfully dealt with a series of challenges
Dec'15 Sept'16
422 537
Liquidity ($m)
Sept'15 Sept'16
(134)
7
Underlying Operating (loss)/profit ($m)
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
FY 2017 Guidance
30
Platinum sales between 650,000 and 680,000 ounces
Unit costs to remain under pressure until evidence of sustained improvement in mining tonnes comes through – expected to be in the range of R10,800 to R11,300 per PGM ounce
Capital expenditure of R1.8 billion, including R400 million third party funding
• Management is very disciplined and rigorous and will not spend on capex except from cash generated or third party funding. We have the flexibility, using our capital portfolio optimisation model, to delay capex whilst ensuring our production is maintained
30 Our Mantra: Cash positive after capex in a low price environment
Guidance
Thank You
QUESTIONS?
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
APPENDICES
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Changes to the Management Team
33
Ben Magara (49) Chief Executive Officer BSc Eng (Hons), ADP (LBS) Ben joined the Company and Board as Chief Executive on 1 July 2013
Thandeka Ncube (48) Executive Sustainability and Transformation, Phembani Group B.Soc.Sc, MBA (Henley Business School) Thandeka works with Phembani’s investee companies advising on transformation and broad based empowerment
Mike da Costa (52) EVP Business Support Office BSc Engineering, MBA Mike joined Lonmin in September 2008 and has held a number of different roles in the company. He was appointed to his current role in July 2015
Barrie van der Merwe (40) Chief Financial Officer CA (SA) Barrie joined Lonmin and the Board as Chief Financial Officer on 17 May 2016
Ben Moolman (55) Chief Operating Officer BSc Engineering (Mining) Ben joined us in August 2014 to head up our newly established Business Support Office, was promoted to Chief Operating Officer in February 2015 and was subsequently appointed to the Board in June 2015
Abey Kgotle (45) EVP Human Resources B.Soc.Sc, M.Dip HRM Abey joined Lonmin in April 2008 and was appointed Executive Vice President Human Resources in September 2013
Muzi Kuzwayo (48) Acting EVP Communications and Public Affairs B.Sc. (Rhodes), MBA (UCT) Muzi joined Lonmin in October 2016
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Exploration
Mining Processing
Marketing
We are Lonmin – The Investment Case
Lonmin is one of only three
integrated “mine-to-market”
primary platinum producers
globally and the only LSE/JSE
listed Platinum producer
Source: SFA (Oxford)
Sou
th A
fric
an S
haf
t d
epth
s -
mb
s
Shallow Depth Shafts Enhancing Ease of Access and Lower Costs
Top 3 Platinum Producer Globally with High Quality, Long-life PGM Resources
Our aim is to create long term value for our shareholders as we move through the economic cycle
34
-2,500
-2,000
-1,500
-1,000
-500
0South African shaft depths, mbs
Lonmin Generation 1 Shafts
Lonmin Generation 2 Shafts
Lonmin Marikana
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
-50 0 50 100 150 200 250 300 350
In-s
itu
gra
de (
4E g
/t)
Resource size, contained 4E PGMs (moz)
Resources (inclusive of reserves) versus production Bubble size = 4E production, CY2015
Fully integrated
value chain
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Summary of Production Statistics
35
Generation 2 shafts
FY 2016 FY 2015
Tonnes mined K3 shaft kt 2,687 2,713
Rowland shaft kt 1,731 1,872
Saffy shaft kt 2,055 1,758
4B/1B shaft kt 1,588 1,408
Total Generation 2 kt 8,061 7,752
1B Shaft kt 6 219
Hossy Shaft kt 712 953
Newman shaft kt 346 765
W1 shaft kt 162 180
East 1 shaft kt 141 148
East 2 shaft kt 293 390
East 3 shaft kt 63 68
Pandora (100%) kt 471 544
Total Generation 1 kt 2,196 3,267
K4 shaft kt 0 49
Opencast kt 49 230
Total Underground & Opencast kt 10,305 11,297
Tonnes milled Total kt 10,375 11,810
Milled head grade Total g/t 4.59 4.47
Concentrator recovery rate Total % 86.6 86.7
Shaft head per tonne – underground operations excluding K4
K3 shaft R/t 890 840
4B/1B shaft R/t 714 760
Rowland shaft R/t 936 825
Saffy shaft R/t 858 886
Generation 2 R/t 857 830
Hossy shaft R/t 915 927
Newman shaft R/t 1,008 738
East 1 shaft R/t 1,041 1,025
East 2 shaft R/t 1,033 824
East 3 shaft & ore purchases R/t 927 872
W1 shaft R/t 920 902
Generation 1 R/t 957 858
Total Underground R/t 878 838
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Marikana Mines Overview
36
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Shaft Lifecycle of Marikana Mines R
eef
Pro
du
ctio
n %
of
Cap
acit
y
Build-up
High Cost & Capital Requirement Low Unit Costs Increased Unit Costs
Generation 3 Generation 2 Generation 1
Rowland MK2
K3 UG2 Sub-Incline Hossy (Stoping Only)
E2
Newman UG2
E1
W1
Steady-state Wind down
37
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Shaft Head Cost per Tonne (excl. Central Mining Services)
38
0
200
400
600
800
1,000
1,200
K3 4B/1B Rowland Saffy Gen 2 Hossy Newman E1 E2 E3 & ore W1 shaft Gen 1 Gen 1 &Gen 2
2015 2016
2016 890 714 936 858 857 915 1,008 1,041 1,033 927 920 957 878
2015 840 760 825 886 830 927 738 1,025 824 872 902 858 838
(R/t)
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Costs
2016 2015
Revenue (reported) $m 1,118 1,293
Metal stock movement (like-for-like) $m (121) (85)
Costs - PGM Operations Rm (14,083) (14,550)
Like-for-like FX R/$ 11.95 11.95
Costs (like-for-like SA) $m (1,178) (1,218)
Costs (like-for-like RoW) $m (15) (19)
Costs (like-for-like) $m (1,193) (1,237)
Exchange (total) $m 305 50
Cost of sales (reported) $m (1,009) (1,272)
EBITDA (underlying) $m 109 21
Depreciation (reported) $m (102) (155)
EBIT/(LBIT) (underlying) $m 7 (134)
Cost of production (PGM operations) R/oz 10,748 10,339
12 months to September
39
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Special Items
2016 2015
$m $m
BEE transaction
- BEE charge - (13)
- Consulting fees - (1)
Restructuring and reorganisation costs
- FY15 - (20)
- FY16 21 (39)
Debt refinancing costs (10)
Share-based payments (5)
Impairment of non-financial assets (335) (1,811)
- Impairment of goodwill - (40)
- Impairment of intangibles (19) (358)
- Impairment of property, plant and equipment (316) (1,413)
(329) (1,884)
40
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Consolidated Income Statement for the year ended 30 September
2016 Special 2016 2015 Special 2015
Underlying items Total Underlying items Total
$m $m $m $m $m $m
Revenue 1,118 - 1,118 1,293 - 1,293
EBITDA / (LBITDA) 109 6 115 21 (73) (52)
Depreciation, amortisation and impairment (102) (335) (437) (155) (1,811) (1,966)
Operating loss 7 (329) (322) (134) (1,884) (2,018)
Profit on disposal of joint venture - 5 5 - - -
Finance income 23 32 55 16 20 36
Finance expenses (28) (60) (88) (20) (255) (275)
Share of loss of equity accounted investments (5) - (5) (5) - (5)
Loss before taxation (3) (352) (355) (143) (2,119) (2,262)
Income tax (expense) /credit (109) 64 (45) 35 328 363
Loss for the year (112) (288) (400) (108) (1,791) (1,899)
Attributable to:
- Equity shareholders of Lonmin Plc (89) (253) (342) (94) (1,567) (1,661)
- Non-controlling interests (23) (35) (58) (14) (224) (238)
Loss per share (137.0)c (3,437.6)c
Diluted loss per share (137.0)c (3,437.6)c
41
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours Consolidated Statement of Financial Position at 30 September
42
2016 $m
2015 $m
Non-current assets Intangible assets 74 94 Property, plant and equipment 1,158 1,477 Equity accounted investment 24 26 Royalty prepayment 37 38 Other financial assets 21 19
1,314 1,654
Current assets Inventories 245 281 Trade and other receivables 67 71 Tax recoverable - 1 Other financial assets 69 102 Cash and cash equivalents 323 320
704 775
Current liabilities Trade and other payables (193) (208) Provisions - (39) Interest bearing loans and borrowings - (505) Deferred revenue - (23)
(193) (775)
Net current assets 511 -
Non-current liabilities
Interest bearing loans and borrowings (150) - Deferred tax liabilities (34) (9) Deferred royalty payment (3) (3) Deferred revenue (9) - Provisions (127) (122)
(323) (134)
Net assets 1,502 1,520
Capital and reserves
Share capital 586 586 Share premium 1,816 1,448 Other reserves 88 88 Accumulated loss (821) (493)
Attributable to equity shareholders of Lonmin Plc 1,669 1,629 Attributable to non-controlling interests (167) (109)
Total equity 1,502 1,520
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Consolidated Statement of Cash Flow
43
2016 2015 $m $m Operating loss (322) (2,018) Depreciation, amortisation and impairment 437 1,966 Changes in working capital (25) 63 Other non-cash movements (8) 4
Cash flow generated from operations 82 15 Interest and finance costs (14) (24) Tax paid (10) (3)
Trading cash inflow/(outflow) 58 (12) Capital expenditure (89) (136) Dividends paid to minority shareholders - (19)
Free cash outflow (31) (167) Contributions to joint venture (3) (7) Proceeds from sale of joint venture 5 - Net proceeds from equity issuance 368 3
Cash inflow/(outflow) 339 (171) Opening net debt (185) (29) Foreign exchange 20 17 Unamortised fees (1) (2)
Closing net cash/(debt) 173 (185)
Trading cash inflow/(outflow) (cents per share) 23.2c (24.8)c
Free cash outflow (cents per share) (12.4)c (345.6)c
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Western European Diesel Market
48%
49%
50%
51%
52%
53%
54%
55%
56%
Jan FebMarAprMayJun Jul AugSep OctNovDec
Diesel car sales in W.Europe, %
2014 2015 2016
4.3M
4.5M
4.7M
300
400
500
600
700
800
900
Jan FebMarAprMayJun Jul Aug Sep Oct NovDec
Diesel car sales in W.Europe, '000 units
2014 2015 2016
2015 YTD:
2014 YTD:
2016 YTD:
Source: SFA (Oxford), LMC Automotive
44
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Alternative Powertrains
Diesel21%
Gasoline76%
FHEV, 67%
MHEV, 5%BEV, 13%
EREV, 1%
PHEV, 9%
FCEV, 0.04%
Other, 5%
Other, 3%
Light vehicle production in 2015, %
Diesel Gasoline FHEV
MHEV BEV EREV
PHEV Fuel cell Other
Diesel19%
Gasoline74%
FHEV, 40%
MHEV, 9%
BEV, 21%
EREV, 1%
PHEV, 26%
FCEV, 0.3%
Other, 3%
Other, 7%
Light vehicle production in 2023, %
Diesel Gasoline FHEV
MHEV BEV EREV
PHEV Fuel cell Other
Combustion engines projected to dominate powertrains for years
Source: SFA (Oxford), LMC Automotive
45
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Investors Rekindle Interest in Platinum
46
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Market Development Focus
47
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
PGM Market Outlook
PGM demand remains solid 48
-0.39 -0.19 -0.26 -0.75
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
2015 2016(f) 2017(f) 2025(f)
Platinum outlook Palladium outlook Rhodium outlook
2016 • Platinum market remains in deficit
• Primary and secondary supply flat
• Jewellery decline offset by growth in
automotive and industrial sectors
2017 • Supply remains unchanged
• Jewellery could recover but at risk
• If investment continues, the deficit
will remain
• Recycling could narrow deficit
Long
term • Supply will reduce
• Demand will recover in all segments
• Thrifting will result in limited
secondary supply growth
Source: SFA(Oxford), Lonmin
South Africa
Other Mines
Secondary Supply
Automotive
Jewellery
Other Industrial
Investment
-0.34 -1.40 -1.05 -0.49
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
2015 2016(f) 2017(f) 2025(f)
South Africa
Other Mines
Secondary Supply
Automotive
Other Industrial
2016 • Palladium market remains in
significant deficit
• Investment may be a supplier
• Auto catalyst demand remains strong
2017 • Automotive demand remains strong
• Investment considered neutral
• Recycling supply recovers
• The deficit marginally narrows
Long
term • Primary Supply remains unchanged
• Secondary supply increases
dramatically
• Demand remains strong
2016 • Rhodium remains in surplus
• Modest increase in demand offset by
recycling
2017 • Surplus prevails
• Automotive demand will grow
modestly
• Recycling will increase
Long
term • As emissions legislation tightens and
mine supply contracts, rhodium will
shift back into deficit
0.00 0.04 0.10 -0.03
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2015 2016(f) 2017(f) 2025(f)
South Africa
Other Mines Secondary Supply
Automotive
Other Industrial
Lhs: moz, Rhs:koz Lhs: moz, Rhs:koz Lhs: moz, Rhs:koz
016
033
141
008
083
166
000
173
226
072
072
072
118
118
118
161
192
218
235
235
235
146
205
220
194
214
155
204
153
255
231
233
241
204
209
225
Table alternative highlight-light
Table alternative highlight-dark
Line chart colour 171
228
245
204
255
204
255
255
000
250
191
143
178
161
199
224
226
241
More colours Main colours
Disclaimer
This presentation, which is personal to the recipient, has been issued by Lonmin. This presentation includes forward-looking statements. All statements other than statements of historical fact included in this announcement, including without limitation those regarding Lonmin's plans, objectives and expected performance, are forward-looking statements. Lonmin has based these forward-looking statements on its current expectations and projections about future events, including numerous assumptions regarding its present and future business strategies, operations, and the environment in which it will operate in the future. Forward-looking statements generally can be identified by the use of forward-looking terminology such as 'ambition', 'may', 'will', 'could', 'would', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek' or 'continue', or negative forms or variations of similar terminology. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors related to Lonmin, including, among other factors: (1) material adverse changes in economic conditions generally or in relevant markets or industries in particular; (2) fluctuations in demand and pricing in the mineral resource industry and fluctuations in exchange rates; (3) future regulatory and legislative actions and conditions affecting Lonmin's operating areas; (4) obtaining and retaining skilled workers and key executives; and (5) acts of war and terrorism. By their nature, forward-looking statements involve risks, uncertainties and assumptions and many relate to factors which are beyond Lonmin‘ control, such as future market conditions and the behaviour of other market participants. Actual results may differ materially from those expressed in forward-looking statements. Given these risks, uncertainties, and assumptions, you are cautioned not to put undue reliance on any forward-looking statements. In addition, the inclusion of such forward-looking statements should under no circumstances be regarded as a representation by Lonmin that Lonmin will achieve any results set out in such statements or that the underlying assumptions used will in fact be the case. Other than as required by applicable law or the applicable rules of any exchange on which Lonmin's securities may be listed, Lonmin has no intention or obligation to update or revise any forward-looking statements included in this presentation after the publication of this presentation. This presentation is for information only and does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any shares in Lonmin or any other securities, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied upon in connection with, any contract or investment decision related thereto. Information supplied by host presenters may not be used, referenced or published without the prior written consent of the author of the presentations.
49