Lonmin Plc. Standard Chartered Earth Conference, Hong Kong. Albert Jamieson Chief Commercial Officer June 2012

Transcription

1 Lonmin Plc Standard Chartered Earth Conference, Hong Kong Albert Jamieson Chief Commercial Officer June 2012

2 Contents Introduction PGM Markets Operational Performance Operating Environment Lonmin s Outlook 2

3 Introduction Third largest primary producer of Platinum in the world Significant low cost reserves and resources in the world s primary PGM area Listed on the London Stock Exchange FTSE 250 and JSE Securities Exchange Only major integrated PGM participant on the London Stock Exchange Operating assets and operational headquarters in South Africa Marikana is the main asset, with concentrating, smelting and refining capability Significant potential with our other assets - Pandora, Limpopo and Akanani Shanduka is our Black Economic Empowerment partner through Incwala structure 3

4 Platinum Price Sensitivity to Euro Crisis Probability of a country leaving EU increased from 22% to 45% in May according to polls Euro weakened 8% against US dollar since February this year EURO STOXX equity index down 19% since February European auto sales down 10.1% y-o-y in first four months of 2012 Platinum price dropped 10% in May Platinum price dropped 18% since February Platinum price dropped 18% since February Platinum price down 11% y-o-y in first four months Short term price volatility driven by EU macro events 4

5 Moz (decade/period) Global Autocatalyst Recycling - Platinum Collection inefficient, less than 30% historical recovery Even at 100% autocat recycle recovery, new demand is not serviced Autocat Demand Theoretical 100% Recycling of 10-year old cars Actual Recycling Autocat recycling unlikely to meet autocat demand in foreseeable future Source: Johnson Matthey, SFA Future closed-loop autocat recycling unlikely 5

6 Future Demand Autocatalysis Demand Automotive Pt demand, '000 oz 5000 Stationary Fuel Cell ,220 3,900 4, ,630 2,500 2,940 3,350 3, Off-road HCV LCV Passenger Cars Source: SFA-Oxford Upside scenario Central case Downside scenario Source: SFA-Oxford Growth in non-road, heavy duty diesel and fuel-cell demand 6

7 Supply Forecasts a Regressing Target Source: SFA SA producers have started 2012 cut backs 7

8 PGM Market Outlook Euro concerns - seeing softer near term demand Lonmin View Current industrial stocks make short term outlook opaque View changed from deficit to small surplus in 2012 Global growth recovery would lead to deficits on the back of inflexibility in supply response Long term fundamentals for PGMs remain attractive 8

9 Operational Highlights Safety performance record low LTIFR at 4.69 Solid half year operational performance Platinum sales of 318,402 ounces flat Section 54 tonnes lost 347,000 up 398% Tonnes produced at 5.8 million, down 1.7% Saleable metal in concentrate up 3.8% to 368,175 Platinum ounces Ore reserves at 3.1 million centares, up 10.7% Underground concentrators maintained recoveries at 85.5% Maintaining guidance 9

10 Financial Highlights A challenging metals price environment Underlying EBIT US$14 million, down 90% on H Rand unit cost 10.9% up on H however full year guidance maintained Underlying EPS (6.9) cents, down 115% Net debt at US$356 million vs. US$234 million at September 2011 Gearing 11% EBIT impacted by weak pricing environment 10

11 South Africa Operational challenges Safety Managing an evolving trade union landscape Community unrest Political landscape Social pressures Resource nationalism debate ANC policy and leadership conferences Keysha Confident of legal position and taking necessary measures to protect our rights Challenging operating environment 11

12 Reef Production % of Capacity Overview of Marikana Mines Shaft lifecycle Hossy E3 Newman Saffy E1 W1 FS Access development Ramp-up Steady State up to 30+ years End of life High Cost and Capital Requirement Low Unit Cost Increased Unit Cost Karee Westerns Easterns Middelkraal Pandora Multiple shafts moving towards steady state production provides a strong platform for unit cost reduction 12

13 Lonmin Shaft Operating Costs Capex costs Opex costs Lonmin Opex costs Source: SFA, Lonmin Moving down the cost curve as production increases 13

14 Review process Navigating Softer Near Term Demand Markets Outlook Capex Review Opaque near term outlook - PGM prices tapered by sensitivity to Euro crisis and industrial stocks Internal review to update view of near and medium term market dynamics - and impact thereof on long term planning scenarios Immediate containment and ensuring optimal levels and composition of capital for to match updated market outlook maintaining flexibility to accelerate investment on recovery of markets Balance Sheet Capacity US$945 million of long-term facilities Moderating net debt to support growth Balancing capital spend retaining flexibility 14

15 Levers We Have Available to Pull If low price environment persists Range of capex options going into 2013 Option to scale back on opencast mining Thrifting of areas of high cost ounces and overheads across the business Range of options available 15

16 Conclusion Solid operational performance, assets technically healthy and management team on top of operations and challenges PGM medium and long term fundamentals remain sound, but near term outlook likely to remain unpredictable as market looks for inflection point Balancing capital spend vs prudent balance sheet will be key Review process underway to factor in near term market conditions Investing for future growth whilst delivering profitable ounces Growing down the cost curve over time Maintaining guidance for 2012 Building for the future 16

17 Lonmin Plc Questions

18 Lonmin Plc Appendices

19 Overview of Marikana Mines ROWLAND SD: 1032 SC: MO: est MK3 SHAFT K5 SHAFT K4 SD: 1331 SC: SS: est 2017 MO: est K3 SD: 809 SC: MO: est # HOSSY SD: 489 SC: SS: est MO: est WESTERNS KAREE MINE SAFFY SD: 804 SC: SS: est MO: est PANDORA DEEPS MK2 SHAFT PANDORA HW SI K4 SHAFT HW V SAFFY SHAFT ROWLAND SHAFT K3 SHAFT HOSSY SHAFT E1 INC SHAFT E3 INC SHAFT E2 INC SHAFT EASTERNS NEWMAN INC SHAFT 4B INC SHAFT E1 BELT SD: 394 SC: MO: est KEY Shallow inclines 2nd generation verticals 4B INCLINE SD: 445 SC: MO: est SHAFT SD: 322 SC: MO: est NEWMAN SD: 396 SC: MO: est E2 BELT SD: 345 SC: MO: est Mining Legend f Marikana Shaft Overview Dec 2011 # Includes Middelkraal Mineral Reserves Excludes Newman Merensky Mineral Reserves 0 Km 1 Km E3 BELT (INCLUDING PANDORA JV) SD: 349 SC: MO: est rd generation verticals * PANDORA SHALLOWS MIDDELKRAAL 1 SHAFT 1st generation verticals PANDORA SHALLOWS SD: (Feasibility study) SC: SS: est MO: est Km 10 Km SD Shaft Depth below Collar SC SS MO Shaft Capacity (Reef Tonnes) Steady State Production Expected to be Mined Out by UG2 GEOLOGICAL DOMAINS Strategic Domains Development Stoped out face Normal Reef Facies Geological Structures Split reef facies Outcrop High Risk Domain Major Faults Dykes Surface Aeromagnetic anomaly SCALE LEGEND Slump 2012 REF CASE (LTP) FY12 Mine Extrac_Shaft Overview : 10FEB

20 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. 20