DELIVERING ON OUR BUSINESS PLAN 16 MAY 2016 - INTERIM RESULTS PRESENTATION
DELIVERING ON OUR BUSINESS PLAN
16 MAY 2016 - INTERIM RESULTS PRESENTATION
2
Agenda
Key Highlights1
Operational Performance2
Financial Performance3
Macro Environment4
Conclusion5
KEY HIGHLIGHTSBEN MAGARA CHIEF EXECUTIVE OFFICER
Key Highlights: Successful Progress on the Delivery of the Business Plan
Controlling the controllables
i.LTIFR has been on an improving trend since FY15. Regrettably three of our colleagues have been fatally injured, one in the half year and two post period end. Focus on safety improvements remains a priority
Safety improvements
5, 433 reductions comprising 3,070 employees and 2, 363 contractors, a further 1428 successfully redeployed and reskilled
iii.Reorganisation
successfully completed
PGM unit costs were R10,668 in H1 2016 and contained to R10,390 in Q2. Full year guidance of R10,400 maintained
iv.Continuing and sustained unit
cost improvementQ1'16 Q2'16
10,949 10,390
Generation 2 shafts broadly flat on H1 2015, Generation 1 shafts managed down in line with our plans to close high cost areas
Platinum sales up 36.1% on H1 2015
ii.Production
1,739 1,189
3,913 3,884
H1'15 H1'16
G1
G2
H1'15 H1'16
266 362
Tonnes mined, kt
Platinum sales, koz
Unit cost/PGM ounce
4
Key Highlights: Successful Progress on the Delivery of the Business Plan (cont’d)
5Enhanced liquidity
Continuing to strengthen the relationships with key stakeholders in a challenging operating environment
viii.Protecting social
investment
Dec'15 Mar'16
$474m
Operating profit up to $36 million from $(6)million in 2015 due to the beneficial impact of our cost reductions. The impact of the lower Dollar PGM prices was offset by the weaker Rand
vii.Improving
profitabilityH1'15 H1'16
$(6)m
$36m
v.
Cost savings ahead of schedule with R469 million savings achieved in H1 2016 (in FY15 money terms) - 67% of annual target of R700 million. Gross costs at R6,828 million in H1 2016, down R427 million on H1 2015 largely due to the reorganisation
Cost savings ahead of schedule
vi.Net cash at $114 million 31 March 2016
Liquidity of $474 million at 31 March 2016
Strengthened balance sheet
Sept'15 Mar'16
320474
Liquidity ($m)
EBITDA ($m)
OPERATIONAL PERFORMANCEBEN MOOLMANCHIEF OPERATING OFFICER
6
0.0
2.0
4.0
6.0
8.0
10.0
Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
Lonmin Peer 1 Peer 2 Peer 3 Pt Industry
7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2011 2012 2013 2014 2015 H1 FY16
Comparison of platinum peers – fatality rate
Lost time injury frequency rate
Safety
Ongoing commitment to achieve Zero Harm
Improvement
(12 Month Rolling)
LTIFR improved by 5.7% to 5.10 at 31 March 2016 from
5.41 at 30 September 2015
To date, three employees fatally injured. We extend our
deepest condolences to their families and friends
Improvement in safety resulted in significant reduction in
s54s safety stoppages in Q2 2016 vs. Q1 2016
Du Pont safety intervention programme
Safety improvements remain a priority and focus areas in
H1 includes:
Improvements to strata controls to prevent falls of
ground
Specific focus on interventions preventing finger
injuries - a major contributor to LTIs
No. of fatal incidents
Peer average
Operating Results
8
A total of 5.1 million tonnes were mined in H1 2016
77% of tonnes mined from the core Generation 2 shafts, where production of 3.9 million tonnes was broadly flat on H1 2015
Production from Generation 1 shafts down 27.7% to 1.2 million tonnes in line with our plan to close high cost areas in an oversupplied market
Mining
Productivity at Generation 2 shafts - improved on H1 2015 by 3.9% to 5.9 square metres per person
Productivity
Operation flexibility preserved – immediate available ore reserves of 22 months average production
Ore reserves
The other precious metals plant was successfully commissioned resulting in a cash flow benefit of around R116 million as a result of permanently reducing our metals in process stock
Other precious metals plant
Refined Platinum production at 348,885 ounces in H1 2016 was up 33% in comparison to the prior year period, when processing throughput was impacted by smelter stoppages
Refined production
Excellent concentrator recovery rates maintained at 86.8% in H1 2016Concentrated
recoveries
Delivering on Our Business Plan
Target Achieved to date Status
9
• Reduce high cost production ounces to improve the Group's profitability and cash flows
• Shut down complete: 1B shaft, Opencast• Pipeline closure: W1 + E1 (to be reassessed
September 16), Newman (end FY16), Hossy (end FY17)
1. Removing high cost production
i. Reorganisation: reduce headcount by 6,000 by the end of September 2016
ii. Costs: c.R0.7 billion savings target (in FY15 money terms) in FY16
iii. Productivity: focus on stoping crew efficiencies and half level optimisation resulting in sustained improvement of production rates
i. Reorganisation: s189 restructuring programme complete, including management restructure
ii. Costs: Total savings in H1 FY16 of R469 million, 67% of FY16 target
iii. Productivity: Productivity at Generation 2 shafts at 5.9 square metres per mining employee, 3.9% improvement on H1 FY15
2. Removing costs
• Limiting capital expenditure to that necessary for a safe, efficient and sustainable operation, c.$132 million guidance for FY2016
• Capital expenditure in H1 2016 was limited to $27 million. Revised FY2016 guidance $105 million
3. Reducing capital expenditure
• Maintain healthy level of immediately available ore reserves to enable operational flexibility
• Immediately available ore reserve position at 31 March 2016 of 22 months average production
4. Maintaining operational
flexibility
Delivering on Our Business Plan: Removing High Cost Production
10
Shafts Focus/status
Ge
ne
rati
on
2G
en
3G
en
era
tio
n 1
Shaf
ts o
f th
e f
utu
re
69%
H1 2016 H1 2015
77%
K4 N/A • Long term option remaining on care and maintenance - 23
K3 • Continued operational performance 1,318 1,336
Rowland • Continued operational performance 807 926
Saffy • Continued operational performance 990 830
4B /1B• 4B: Continued operational performance• 1B: Closed Oct 2015 – on care and maintenance
769 821
Total Gen 2 3,884 3,913
Hossy • Orderly closure and placed on care and maintenance by end of FY17 334 533
Newman • Orderly closure to care and maintenance as planned by end of FY16 245 399
E1,W1 • Closure deferred - re evaluation at the end of FY16 158 164
E2, E3(incl. JV 100%)
• Delivering operational performance as planned 442 535
Open cast • Closed – will be rehabilitated 10 108
Total Gen 1 1,189 1,739
Decision
Tonnes mined (kt)
Generation 2 contribution to total tonnes mined
Cutting high cost production in an oversupplied market
/
28,276 28,462 26,968 25,543
10,016 9,398 8,701 7,088
38, 292 37, 860 35, 669 32, 631
Sep-14 Mar-15 Sep-15 Mar-16
Delivering on Our Business Plan: s189 Restructuring Process Completed
Headcount reductions achieved
11
5,433 people had left the Group by 31 March 2016
No. of employees
4,500
3,070
1,500
2,363
6,0001,428
6, 861
Target by Sep-16 At Mar-16
No. of employees who have left the Group or have been redeployed since June 2015
Includes 2,491 voluntary separation
Employees Contractors Reskilled + Redeployed
Reskilling and redeployment of staff
Plans for the future
Headcount reduced 5, 433 at end March
1,428 employees reskilled and redeployed into vacant,
more productive roles
Once off redundancy costs paid in H1 2016 of $13 million
but $22 million lower than originally anticipated
Mining operations at E1 and W1 shafts to continue at least
until the end of the financial year; 1,100 employees
including c.1,000 contractors
Newman shaft closure by end of FY16 will impact c.1,100
employees including c.200 contractors
Hossy shaft closure by the end of FY17 will impact c.1,500
employees including c.200 contractors
Delivering on Our Business Plan: Productivity Improvements
Overall improvement in productivity of
Generation 2 shafts
Saffy productivity increased significantly
compared to H1 2015 – fully ramped up
during H1 2016
4B/1B shaft displayed the highest
productivity – closure of 1B has further
improved efficiencies
Productivity at K3 and Rowland impacted by
slight under complement of production
employees and the timing of s189 process
Concentrator recoveries remains strong
5.96.8
5.7
4.4
5.75.7
7.5
5.4 5.45.9
K3 4B/1B Rowland Saffy Generation 2shafts
H1 2015 H1 2016
Square metres per person – Generation 2 shafts
Concentrator recoveries maintained %
85.3 86.1 87.0 86.9 86.7 86.8
2011 2012 2013 2014 2015 H1 2016
12
Delivering on Our Business Plan: Minimising Near Term Capex and Maintaining Operational Flexibility
13
Diligent management of capital spend for cash
flow purposes
Capital expenditure in H1 2016 $27 million
Capital expenditure guidance for FY16 reduced
from $132 million to $105 million, as a result of:
Rand being weaker than anticipated
Concentrator operations: BTT third party
funding delayed
Operational flexibility preserved –
immediately available ore reserves at the
Generation 2 shaft not compromised by the
cost cutting initiatives
14.715.2
17.217.7
18.919.4
2011 2012 2013 2014 2015 H1 2016
months
Immediately Available Ore Reserves – Generation 2 Shafts
35 37
25 18
65
40
7
10
132
105
Original 2016 Revised 2016
Generation 2 Other mining Processing Others
$ million
Revised Capital Expenditure Outlook
Delivering on Our Business Plan: Maintaining Flexibility –Saffy Case Study
Growth in ore reserve is a critical enabler of the production ramp up
An ore reserve of around 20 months is adequate to sustain steady state
production level
We have successfully executed our plan to ramp up Saffy to full production
during a most challenging year
141. FY12 and FY14 have been normalised
878
886
847
2013
2015
H12016
Cost per tonne hoisted
(R/t) shaft head costs
20.8 20.0
22.724.6 25.3
23.256
74
8492
96 96
2013 2014 2015 Mar 2016 2016 Est 2017 Est
Ore Reserve (months) Crews
Immediately available Ore Reserves (Months) and Crews
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015 H1 FY16
Shaft capacity
Average tonnes hoisted/month (kt)1
FINANCIAL PERFORMANCESIMON SCOTTCHIEF FINANCIAL OFFICER
Summary of Financial Results
16
6 months to 31 March Variance
2016 2015 Abs %
Platinum Sales koz 362 266 96 36.1%
Platinum Price $/oz 905 1,187 (282) (23.8)%
Basket Price $/oz 736 988 (252) (25.5)%
Revenue $m 515 508 7 1.3%
Underlying EBITDA $m 29 8 21 > 100%
Underlying LBIT $m (22) (70) 48 68.8%
Special Costs $m 7 (14) 21 > 100%
EBITDA/(LBITDA) $m 36 (6) 42 > 100%
LBIT $m (15) (84) 69 82.2%
Underlying LPS cents (3.2) (127.1)1 123.9 97.5%
Basic LPS cents (1.8) (164.6)1 162.7 98.9%
1. The number of shares held prior to 20 November 2015 has been adjusted by a factor of 0.08 to reflect the bonus element of the Rights Issue
Costs and Cost per PGM ounce - PGM Operations
17
1. Excludes inventory movement, group charges and FX2. Average FX for the period3. Cost of production of PGM operations per PGM ounce excluding ore concentrate and other purchases, Limpopo mining, special
costs, share based payments, inventory movement, FX and group charges
6 months to 31 MarchUnits 2016 2015 % Change
Gross underlying costs - PGM Operations1 Rm 6,828 7,255 5.9 %
Exchange rate on gross underlying costs2 R/$ 14.82 11.44 29.6 %
Gross underlying costs - PGM Operations1 $m 461 634 27.4 %
SA exchange translation impact $m (136) - n/a
Cost of production (PGM operations)3 R/oz 10,668 10,516 (1.4)%
Cost savings of R469 million achieved in H1 2016 (in FY2015 money terms)
67% of the annual target of R0.7 billion
• Labour cost savings of R416 million (in FY15 money terms) driven by reorganisation
• Total cost of ownership savings of R53 million (in FY15 money terms)
Unit costs were only 1.4% higher than H1 2015, despite the 8.2% year-on-year increase in labour cost
Delivering on Our Business Plan:Unit Costs on Track to Reach R10,400 per PGM ounce
18
10,380 10,668
10,949
10,390
Column2 Column3
R/o
z
R/oz
Impacted by safety stoppages
7,000
9,000
11,000
13,000
15,000
17,000
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2016
2015
Q1 15 Q1 16 Q2 15 Q2 16
FY16/17/18 guidance:c. R10,400/oz
H1 2015: 10,516H1 2016: 10,668
H1 unit costs typically higher than H2 due to
seasonality – December and Easter holidays
December 2015 and January 2016
impacted by capacity throughput
constraints
H2 2016 anticipated to benefit from full
impact of reorganisation
Annual wage increases in Q4 built into
our plans
H2 2015: 10,314
10,516 10,668
10,314 10,400 10,339
Column2 Column3
R/o
z
H1 15 H2 15 FY15 H1 16 FY16 target
19
Underlying EBITDA Variance Analysis
Proactive cost control has delivered results
8 (174) 180 14
181 (205)
43 (4) 29
(200)
(150)
(100)
(50)
-
50
100
150
200
250
H1 2015 EBITDA PGM Price FX effects Like-for -likeEBITDA
Sales Volumes& Mix
Stockmovement like-
for-like
CostSavings/Volume
Reduction
Other impacts H1 2016 EBITDA
$m
$6m
- $124m stock build-up in H1 2015
- ($81m) stock release in H1 2016
Excludes FX impact
External factors Factors under our control
1
1. Excludes impact of FX and PGM price movements
8 (174) 180 14
181 (205)
43 (4) 29
(200)
(150)
(100)
(50)
-
50
100
150
200
250
H1 2015underlying
EBITDA
PGM Price FX effects Like-for -likeEBITDA¹
Sales Volumes& Mix
Stockmovement like-
for-like
CostSavings/Volume
Reduction
Other impacts H1 2016underlying
EBITDA
$m
$6m
External factors Factors under our control
Cash Flow Statement Analysis
20Strengthened Balance Sheet
(185)
373
36 (11)(65)
38 (27)
(21)
(13)(11) 9 (9)
114
(200)
(150)
(100)
(50)
0
50
100
150
200
250
OpeningNet Debt
1 Oct2015
Netproceeds
fromissue ofshares
EBITDA Debtors Creditors Stock Capex Non cashitems
One offVSP
Payments
Netfinancing
cost
FX onloans &
bankbalances
DeferredRevenue
ClosingNet Cash
Seasonal Working Capital Requirement ($38m)
Balance Sheet Strengthened
21
Net cash position at 31 March 2016 of $114
million with liquidity of $474 million
Rights Issue in November2015 raised net
proceeds of $373 million
Bank debt facilities mature in May 2020
(assuming Lonmin exercises its option to extend
by one year)
RCF totalling $75 million and a $150 million
term loan
RCF totalling R1,980 million ($135 million)
320 219 264
203 210 320
422 474
Sep'15 Dec'15 Mar'16
Gross Cash Undrawn facilities
Liquidity ($m)
Liquidity of $474 million at 31 March 2016
(185)
69 114
Sep'15 Dec'15 Mar'16
Net (debt) / cash ($m)
MACRO ENVIRONMENTBEN MAGARA CHIEF EXECUTIVE OFFICER
Strong Underlying Performance in a Challenging Global Economy and PGM Market
23
0
400
800
1,200
1,600
2,000
0
3,000
6,000
9,000
12,000
15,000
18,000
May
-13
Au
g-1
3
No
v-1
3
Feb
-14
May
-14
Au
g-1
4
No
v-1
4
Feb
-15
May
-15
Au
g-1
5
No
v-1
5
Feb
-16
May
-16
R/oz
Source: Bloomberg
Macro specifics
Full Rand basket price
Working hard to deliver on the Business Plan
amid tough market conditions
Prices have trended upwards since the lows of
November 2015
• 34% uplift (in Rand terms) from the low in Nov ’15
• 15% uplift (in Rand terms) on a YTD basis
The weak PGM prices were offset by Rand
weakness
ZAR basket price of R10,962 was down for H1
2016 by 2.7% on the prior period vs. 25.4%
decrease in Dollar PGM prices
Current spot price is above unit cost guidance
9,0009,500
10,00010,50011,00011,50012,00012,50013,000
Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
R/oz
Platinum price performance
Pt price $/oz
$/oz
L3Y % change
Pt price ($) (29%)
Pt price (R) 16%
R11,263/oz R10,919/oz R10,962/oz
H1’15 H2’15 H1’16
Pt price R/oz
Unit cost target: 10,400
Spot
PGM Market Outlook
Continued growth in core demand segments will see PGM’s shift towards deepening deficits in the long term 24
Platinum Market Balance
0
2
4
6
8
10
12
14
16
18
20
2015 2016 2020 2025
Recycling
Other
USA
Canada
Russia
Zimbabwe
South Africa(adjusted)
Refined production
PGM (3E) Supply
Refined production peaks in 2019 where further investment would be required to ensure growth in primary production
moz
PGM (3E) Demand
0
2
4
6
8
10
12
14
16
18
20
22
2015 2016 2020 2025
Other
Medical,Dental &BiomedicalGlass
Electrical
Chemical
Petroleum
Gross jewellerydemandNon-road demand
Gross autocatalystdemandmoz
Automotive demand is forecast to grow at around
2%. Other industrial demand will grow at 4.5%. Jewellery
demand is forecast to be flat but as growth is a factor of
marketing this segment offer upside opportunity.
0
500
1000
1500
2000
(2.0)
(1.5)
(1.0)
(0.5)
0.0
0.5
1.0
1.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
RHS: Pt price, $
Source: SFA (Oxford)
LHS: Pt balance excl. investment, moz
Lonmin’s Stakeholders, Relationships and Commitment to the Mining Charter
25
Collaboration between government and business to limit credit downgrades The Reviewed Mining Charter – South African Chamber of Mines is responding to the Department
of Mineral Resources on behalf of all potentially affected companies to be resolved in a consultation process
Local government elections to be scheduled for 3 August 2016
Our South African Environment
Farlam – 143 dependent children are being educated through the trust Bapo ba Mogale Community – objective of awarding contracts worth over R200 million achieved
Our people and corporate citizenship
agenda
The merger between Shanduka, our former BEE partner and Pembani completed in Dec 2015 with Pembani assuming all the rights and obligations previously held by Shanduka
Lonmin retains its BEE equity ownership status Pembani has indicated its commitment to the Platinum sector and we anticipate developing a
long-standing mutually beneficial relationship The deadline for Pembani to exercise its option over Limpopo has been extended until 30 April
2017
Pembani and Limpopo
Continue to focus on strengthening relationships with union and ongoing communication about the state of the business
Lonmin will continue to work closely with the unions and engage constructively ahead of the wage negotiations
Relationships with unions and
negotiations
CONCLUSION BEN MAGARA CHIEF EXECUTIVE OFFICER
Changes to the Management Team
27
Ben Moolman (54)Chief Operating OfficerBSc 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
Ben Magara (48)Chief Executive OfficerBSc Eng (Hons), ADP (LBS)Ben joined the Company and Board as Chief Executive on 1 July 2013
Abey Kgotle (45)EVP Human ResourcesB.Soc.Sc, M.Dip HRMAbey joined Lonmin in April 2008 and was appointed Executive Vice President Human Resources in September 2013
Lerato Molebatsi (46)EVP Communications and Public AffairsBA Phil, SMDP (Stellenbosch)Lerato joined Lonmin in September 2013 from the Department of Labour, where she was the Deputy Director General; Corporate Services
Thandeka Ncube (46)Executive Sustainability and Transformation, Pembani GroupB.Soc.Sc, MBA (Henley Business School)Thandeka works with Pembani’s investee companies advising on transformation and broad based empowerment
Mike da Costa (51)EVP Business Support OfficeBSc Engineering, MBAMike 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
Simon Scott (57)Chief Financial OfficerCA (SA)Simon joined Lonmin and the Board in September 2010, became CFO in November 2010 and was Acting CEO during the period 24 August 2012 to 30 June 2013.
Barrie van der Merwe (40)Chief Financial Officer DesignateCA (SA)Barrie joins Lonmin and the Board as Chief Financial Officer on 17 May 2016
Conclusion
28
Sales guidance for FY 2016 maintained at around 700,000 Platinum ounces
Unit cost guidance maintained at approximately R10,400 per PGM ounce produced
Capital expenditure guidance reduced from $132 million to $105 million (including $7 million for BTT plant to be third party funded)
28Prudent, proactive, disciplined Business Plan focused on cash maximisation and value creation
in this low price environment
Delivering against the Business Plan
Keeping promise to reduce high cost production
Reorganisation and s189 process complete
Cost savings ahead of schedule
Unit costs kept to R10,390 in Q2
Balance sheet strengthened: net cash of $114 million at 31 March 2016, liquidity of $474 million
Continuing to aim to be cash flow positive after capex
Market conditions remain tough
Guidance
Conclusion
QUESTIONS?
APPENDICES
Exploration
MiningProcessing
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 31
-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 productionBubble size = 4E production, CY2015
Fully integrated
value chain
Delivering on Our Business Plan: Achieving Cost Savings
Cost savings of R469 million achieved in H1 2016
(in FY15 money terms)
67% of the annual target of R0.7 billion
• Labour cost savings of R416 million (in FY15
money terms) driven by reorganisation
• Total cost of ownership savings of R53 million
(in FY15 money terms)
A further benefit of R116 million has been
realised as a result of permanently reducing our
metal in process stock following upgrade to the
other precious metals plant at the precious
metals refinery
FY17 cost savings target of R1.6 billion (FY15
money terms)
• Full year impact of FY16 reorganisation
• Newman, E1 and W1 closures
• Hossy scaling down
• Total cost of ownership savings
416
53
469
700
H1 2016 FY16 target
R m
illio
n
Labour cost savings Total cost of ownership savings
67% of full year target achieved in H1
32
Summary of Production Statistics
33
6 months to 31 March 2015
6 months to 31 March 2016
SRK report
FY 2015 FY 2016 FY 2017 FY 2018
Total tonnes mined kt 5,675 5,073 11,298 11,757 10,078 9,695
K3 kt 1,336 1,318 2,713 3,062 3,042 3,209
Rowland kt 926 807 1,872 1,981 1,845 1,853
Saffy kt 830 990 1,758 2,204 2,199 2,316
1B,4B kt 821 769 1,628 1,874 1,502 1,329
Total Generation 2 kt 3,913 3,884 7,971 9,121 8,588 8,707
K4 kt 23 - 49 - - -
Hossy kt 533 334 953 770 401 -
Newman kt 399 245 765 464 0 -
E1,W1 kt 164 158 328 156 0 -
E2, E3 (incl. JV 100%) kt 535 442 1,002 1,246 1,089 988
Open cast kt 108 10 230 - - -
Total Generation 1 kt 1,739 1,189 3,278 2,636 1,490 988
Total tonnes milled kt 6,020 5,040 11,810 12,052 12,539 13,615
Milled head grade g/t 4.52 4.55 4.47 4.53 4.05 3.82
Concentrator recovery rate % 87.0 86.8 86.7 86.78 84.03 82.61
Operating cost ZAR/t
K3 ZAR/t 838 868 840 756 766 732
Rowland ZAR/t 809 954 825 780 779 756
Saffy ZAR/t 898 847 886 761 759 724
1B,4B ZAR/t 745 724 760 696 697 767
Total Generation 2 ZAR/t 824 852 830 750 755 741
Hossy ZAR/t 849 965 927 808 1,135 n.a
Newman ZAR/t 746 852 738 930 n.a. n.a.
E1,W1 ZAR/t 944 957 957 978 n.a. n.a.
E2, E3 (incl. JV 100%) ZAR/t 870 923 947 734 756 767
Total Generation 1 ZAR/t 840 925 853 805 858 798
Generation 2 shafts
Successful downsizing and reduction of production volumes to focus on profitable ounces H2 2016 to be the first “clean” semester not impacted by the restructuring effort Seasonality with H2 2016 production higher than H1 2016 (holidays)
Marikana Mines Overview
34
Shaft Lifecycle of Marikana Mines
Ree
f P
rod
uct
ion
% o
f C
apac
ity
Build-up
High Cost & Capital Requirement Low Unit Costs Increased Unit Costs
Generation 3Generation 2Generation 1
Rowland MK2
K3 UG2 Sub-Incline Hossy (Stoping Only)
E2
Newman UG2
E1
W1
Steady-state Wind down
35
Shaft Head Cost per Ton (excl. Central Mining Services)
Costs well contained notwithstanding 8.2% increase in labour costs 36
Costs
2016 2015
Revenue (reported) $m 515 508
Metal stock movement (like-for-like) $m (81) 124
Cost SA (reported) Rm (6,828) (7,255)
Like-for-like FX R/$ 11.44 11.44
Costs (like-for-like SA) $m (597) (634)
Costs (like-for-like RoW) $m (8) (10)
Costs (like-for-like) $m (605) (644)
Exchange (total) $m 200 20
Cost of sales (reported) $m (486) (500)
EBITDA (underlying) $m 29 8
Depreciation (reported) $m (51) (78)
EBIT (underlying) $m (22) (70)
Cost of production (PGM operations) R/oz 10,668 10,516
6 months to 31 March
Gross underlying costs of $461 million plus exchange of $136 million 37
Consolidated Income Statement for the period ended 31 March 2016
38
6 months to
31 March
2016 Special items
6 months to
31 March
2016
6 months to
31 March
2015 Special items
6 months to
31 March
2015
Underlying Total Underlying Total
$m $m $m $m $m $m
Revenue 515 - 515 508 - 508
EBITDA / (LBITDA) 29 7 36 8 (14) (6)
Depreciation, amortisation and impairment (51) - (51) (78) - (78)
Operating loss (22) 7 (15) (70) (14) (84)
Finance income 14 19 33 7 9 16
Finance expenses (16) (21) (37) (12) (36) (48)
Share of loss of equity accounted investments (2) - (2) (2) - (2)
Loss before taxation (26) 5 (21) (77) (41) (118)
Income tax credit 15 - 15 9 24 33
Loss for the period (11) 5 (6) (68) (17) (85)
Attributable to:
- Equity shareholders of Lonmin Plc (7) 3 (4) (61) (18) (79)
- Non-controlling interests (4) 2 (2) (7) 1 (6)
Loss per share (1.8)c (164.6)c
Diluted loss per share (1.8)c (164.6)c
Consolidated Statement of Financial Position as at 31 March 2016
39
As at As at
31 March 31 March
2016 2015
$m $m
Non-current assets
Goodwill - 40
Intangible assets 94 455
Property, plant and equipment 1,455 2,874
Equity accounted investments 25 28
Royalty prepayment 38 39
Other financial assets 18 25
Deferred tax assets 8 -
1,638 3,461
Current assets
Inventories 243 496
Trade and other receivables 85 75
Tax recoverable - 2
Other financial assets 95 310
Cash and cash equivalents 264 60
687 943
Current liabilities
Trade and other payables (143) (215)
Provisions - -
Interest bearing loans and borrowings - (80)
Deferred revenue (14) (26)
Tax payable (1) -
(158) (321)
Net current assets 529 622
Non-current liabilities
Interest bearing loans and borrowings (150) (262)
Deferred tax liabilities - (342)
Deferred royalty payment (3) (4)
Deferred revenue - (14)
Provisions (119) (131)
(272) (753)
Net assets 1,895 3,330
Capital and reserves
Share capital 586 583
Share premium 1,816 1,448
Other reserves 88 88
(Accumulated loss) / retained earnings (484) 1,087
Attributable to equity shareholders of Lonmin Plc 2,006 3,206
Attributable to non-controlling interests (111) 124
Total equity 1,895 3,330
Consolidated Statement of Cash Flow
40
6 months to 6 months to
31 March 31 March
2016 2015
$m $m
Loss for the period (6) (85)
Taxation (15) (33)
Share of loss of equity accounted investments 2 2
Finance income (33) (16)
Finance expenses 37 48
Non-cash movement on deferred revenue (9) (10)
Depreciation, amortisation and impairment 51 78
Change in inventories 38 (124)
Change in trade and other receivables (11) 1
Change in trade and other payables (65) (31)
Change in provisions (47) (15)
Share-based payments 15 7
Loss on disposal of property, plant and equipment - 3
BEE charge - 13
Cash (outflow) / inflow from operations (43) (162)
Interest received 5 3
Interest and bank fees paid (16) (11)
Tax paid - -
Cash outflow from operating activities (54) (170)
Cash flow from investing activities
Contribution to joint venture (2) (2)
Purchase of property, plant and equipment (27) (64)
Purchase of intangible assets - (1)
Cash used in investing activities (29) (67)
Cash flow from financing activities
Dividends paid to non-controlling interests - (19)
Proceeds from current borrowings - -
Repayment of current borrowings (505) -
Proceeds from non-current borrowings 150 180
Proceeds from equity issuance 395 -
Costs of issuing shares (27) -
Gain on retranslation and forward exchange contracts on equity issuance 5 -
Issue of other ordinary share capital - -
Cash inflow from financing activities 18 161
(Decrease) / increase in cash and cash equivalents (65) (76)
Opening cash and cash equivalents 320 143
Effect of exchange rate changes 9 (7)
Closing cash and cash equivalents 264 60
(2.00)
(1.80)
(1.60)
(1.40)
(1.20)
(1.00)
(0.80)
(0.60)
(0.40)
(0.20)
0.00
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
Pt supply-demand balance, moz
(1,400)
(1,200)
(1,000)
(800)
(600)
(400)
(200)
0
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
Pd supply-demand balance, moz
(60)
(40)
(20)
0
20
40
60
80
100
120
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
Rh supply-demand balance, koz
Platinum - Reductions to supply have outweighed downward revisions to autocatalyst demand and have shifted the platinum market balance into modest deficits out to 2020 from the small surpluses that were anticipated in the last review. In the long term the significantly deepening deficits remain unchanged
Palladium - In the long term, industrial palladium demand is set to be progressively weakened by thrifting and substitution in key electrical markets and the dental industry, which are likely to contribute to a reduction in palladium consumption
Rhodium - Primary rhodium supply peaks at 755 koz in 2019 (730 koz including disruption factor), and reduces at 2.8% p.a. between 2020 and 2025 (vs. -2.6% p.a. for platinum and -1.9% p.a. for palladium). Probable and possible projects comprise mainly palladium-rich, rhodium-poor orebodies (over 80% of potential new capacity). The addition of these projects would see global rhodium supply maintained at 740-760 koz/y until around 2028 before depletion reduces supply to below 700 koz
Source: SFA (Oxford)
41
Long Term Market Outlook
Disclaimer
This presentation, which is personal to the recipient, has been issued by Lonmin. This presentation includes forward-lookingstatements. All statements other than statements of historical fact included in this announcement, including without limitationthose regarding Lonmin's plans, objectives and expected performance, are forward-looking statements. Lonmin has based theseforward-looking statements on its current expectations and projections about future events, including numerous assumptionsregarding 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 ofsimilar terminology. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and otherfactors related to Lonmin, including, among other factors: (1) material adverse changes in economic conditions generally or inrelevant markets or industries in particular; (2) fluctuations in demand and pricing in the mineral resource industry andfluctuations 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-lookingstatements involve risks, uncertainties and assumptions and many relate to factors which are beyond Lonmin‘ control, such asfuture market conditions and the behaviour of other market participants. Actual results may differ materially from thoseexpressed in forward-looking statements. Given these risks, uncertainties, and assumptions, you are cautioned not to put unduereliance on any forward-looking statements. In addition, the inclusion of such forward-looking statements should under nocircumstances be regarded as a representation by Lonmin that Lonmin will achieve any results set out in such statements or thatthe underlying assumptions used will in fact be the case. Other than as required by applicable law or the applicable rules of anyexchange 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 informationonly and does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any sharesin 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 inconnection 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.
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