Lonmin Plc

Q1 2010 Production Report 

& Interim Management Statement

Lonmin Plc ("Lonmin" or the "Company") today announces its production report and Interim Management Statement for the quarter to 31 December 2009 (unaudited).

Overview

Our performance in the first quarter of 2010 exemplified management's focus on operational stability and delivering on its commitments,
with metals in concentrate production from our underground operations at Marikana being equivalent to the prior year period. Tonnes mined from Marikana underground operations fell slightly, partly as a result of the planned closure of uneconomic production units in 2009.  However, this volume reduction was compensated for by improvements in grade and concentrator recoveries during the period and was achieved with a significantly reduced workforce. Following its successful re-build during October, the Number One furnace performed well.  

Mining

Our underground mining operations at Marikana produced 2.6 million tonnes during the first quarter of 2010, a like for like decline of 3.9%, equivalent to around 100,000 mined tonnes, from the same period in 2009. 

There were two reasons for this shortfall. Firstly, as expected, production was impacted by the previously announced closure of an
uneconomic decline shaft and a number of half levels at Marikana during the third quarter of 2009. These unprofitable operations contributed around 35,000 mined tonnes during the first quarter of 2009. 

Secondly, whilst the frequency of Section 54 safety stoppages at Marikana during the first quarter of 2010 declined from the prior year period, the volume impact was worse with tonnes lost during the quarter being around 60,000 tonnes higher than the prior year period. This was predominantly due to production at our largest shaft, K3, being impacted by a 7 day Section 54 safety shutdown following a fatal incident at the shaft on 10 December 2009. 

Production at Saffy and Hossy shafts continued to perform well, delivering a combined tonnage increase of 46% from the prior year period. 

Pandora underground production increased slightly during the first quarter of 2010 from the prior year period. 

Total tonnes mined declined by 15.3% from the same period in 2009 to 2.6 million, following the planned closure of non-value adding production at our Limpopo operations and the opencast operations at Marikana and the Pandora joint venture during the 2009 financial year.  

Concentrators

As a result of the above factors, total tonnes milled for the quarter declined by 15.6% from the first quarter of 2009 to 2.6 million tonnes. However, total metals in concentrate production declined by just 6.6% to 161,845 saleable ounces of Platinum, with metals in concentrate production from our Marikana operations remaining flat at 156,025 saleable ounces of Platinum. This was due to improvements in grade and concentrator recoveries during the first quarter of 2010. Underground milled head grade during the period increased by 6.3% to 4.74 grammes per tonnes, as a result of a number of factors including cleaner mining across the property, a better ratio of stoping ore to development ore at Hossy and Saffy as well as an improved ore mix. This also helped underground concentrator recoveries, which improved significantly during the quarter to 84.5%, from 80.2% during the prior year period. The improvement in concentrator recoveries was also the result of continued benefits from our concentrator optimisation programme, excellent plant availability and a rigorous focus on batch milling the right ore through the right concentrators. It should also be noted that the performance in quarter one last year was impacted by an intensive maintenance programme which reduced recoveries. 

These improvements in grade and recoveries are pleasing. However, we need to see these sustained before being confident that we have made a step change in our performance.  

Smelter and Refineries

The planned 30 day re-build of the Number One furnace was completed successfully and the furnace has been operating consistently since matte was tapped on 9 November 2009.  A furnace re-build was also conducted during the prior year period and total refined PGM production was flat at 243,114 ounces. However, refined Platinum production for the first quarter of 2010 declined 16.7% 110,786
ounces mainly as a result of metal-in-process inventory timing differences. 

Sales & Pricing

Consequently, Platinum sales for the first quarter of 2010 declined 13.6% from the prior year period to 109,044 ounces, whilst sales of total PGM's increased 4.8% to 239,685 ounces.     

The US dollar PGM pricing environment improved considerably during the first quarter of the 2010 financial year from the prior year period, with the basket price improving 35%, but our South African Rand PGM basket price was flat due to a much stronger South African Rand against the US dollar during the quarter.

Incwala Resources

Discussions regarding the future of Incwala Resources (Pty) Ltd, our Black Economic Empowerment partner, are ongoing. We will update the market on these discussions, once they have been concluded. 

As anticipated, on 18 December 2009, R147 million ($20 million) was paid to Impala Platinum Holdings Limited (Impala), as part of the vendor financing indemnity given by Lonmin to Impala at the time of the creation of Incwala.. Following an earlier payment in October 2009, a total of R441 million ($59 million) has been paid to Impala in relation to this vendor financing indemnity. Further details of these and other indemnity agreements can be found in Note 25 on page 121 of the 2009 Annual Report. 

Wage Settlements 

As announced on 4 December 2009, we completed a two year wage agreement with the National Union of Mine Workers in respect of our Marikana operations. Employees will receive a 10% wage increase during the first year of the agreement, which has been backdated to 1 October 2009. In the second year of the wage agreement, employees will be eligible to receive a CPI (Consumer Price Index) plus 2% wage increase. In addition, certain minimum rates of pay will be increased over the life of the wage agreement. In November 2009, we also concluded a one year wage agreement with Solidarity, under the terms of which employees will receive a 9.5% wage increase for the 2010 financial year.

Outlook 

Our production performance during the first quarter of 2010 represents a solid start to the year and supports our 2010 sales guidance of 700,000 ounces of Platinum, as published on 16 November 2009. Our cost guidance for the increase in South African Rand gross operating costs to be below local inflation, still stands despite the above inflation wage increases agreed. We therefore reiterate our sales and cost guidance for the year. 

ENQUIRIES: 

Investors / Analysts: 

Rob Gurner                                                                                                                  +44 (0) 207 201 6050

Head of Investor Relations

Media:

Cardew Group                                                                                                              +44 (0) 207 930 0777

Anthony Cardew / Rupert Pittman    

Financial Dynamics                                                                                                       +27 (0) 21 487 9000    

Dani Cohen / Ravin Maharaj

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