Download Lonmin is a primary producer of Platinum Group Metals (PGMs

Lonmin is a primary producer of Platinum Group Metals
(PGMs). These metals are essential for many industrial
applications, especially catalytic converters for internal
combustion engine emissions, as well as their widespread
use in jewellery. Saleable by-products produced from our
PGM mining include gold, copper, nickel, chrome and cobalt.
Our core operations, consisting of eleven shafts and inclines, are situated in
the Bushveld Igneous Complex in South Africa, a country which hosts nearly
80% of global PGM resources. We have been granted a New Order Mining
Licence by the South African government for our core operations, which
runs to 2037 and is renewable to 2067. We have resources of 183 million
troy ounces (3PGE + Au) and 36 million ounces (3PGE + Au) of reserves.
Contents
02 Key Features
01 /
Strategic Report
A summary of the changing landscape we operate in,
and how that has shaped our strategy and financial
position. Plus a review of performance against our goals
and our approach to running a sustainable business.
04
06
08
10
22
26
34
36
Chairman’s Letter
Chief Executive Officer’s Letter
Our Business Model
Our Strategy
Market Review
Principal Risks and Viability
Key Performance Indicators
Performance
36 Safety
38 Financial Review
44 Operations
44 Mining
48 Processing
49 Capital Expenditure
50 Social and Labour Plans
51 Farlam Commission of Inquiry Report
51 People
54 Living Conditions
55 Transformation through Enterprise Development
and Procurement
56 Community Relations and Our
Corporate Citizenship Agenda
57 Our Environment
02 /
Governance
We explain how we are organised, what the Board has
focused on and how it has performed, our diversity
practices, how we communicate with our shareholders
and how our Directors are rewarded.
60
62
64
76
85
87
89
91
96
Board of Directors
Executive Committee
Corporate Governance Report
Audit & Risk Committee Report
Nomination Committee Report
Safety, Health & Environment (SHE) Committee Report
Social, Ethics & Transformation (SET) Committee Report
Directors’ Report
Directors’ Remuneration Report
Lonmin Plc
Annual Report and Accounts 2015
/ 01
Contents
01 /
How we are
Accelerating
Our Strategy
Strategic Report
Financial Statements
The statutory financial statements of
both the Group and the Company and
associated audit reports.
04 /
A Deeper Look
05 /
Shareholder Information
Additional information for shareholders
including our forthcoming reporting calendar
186 Consolidated Group Five Year Financial Record
187 Operating Statistics – Five Year Review
193 Mineral Resources and Mineral Reserves
196
198
198
199
200
ibc
03 /
Key financial and operational statistics over the
past five years and a summary of our mineral
resource and mineral reserve information
Governance
03 /
02 /
Throughout this Annual Report we tell you how we are delivering
on our strategic vision.
Details of the
Group’s debt
facilities can
be found in the
Financial Review
on page
>
38
Underlying cost
of sales analysis
in both Dollar and
Rand can be
found on page
>
173
A breakdown
of the cost of
production per
PGM ounce
(unit costs) can
be found on page
>
www.lonmin.com
192
Shareholder Information
>
191
05 /
Details of the
impairment of
non-financial
assets can be
found in Note 31
on page
187
A Deeper Look
>
04 /
Tonnes mined on
a shaft-by-shaft
basis can be
found on page
Shareholder Information
Corporate Information
Reporting Calendar
Acronyms and Abbreviations
The Sixteen-Eight Memorial Trust
Lonmin Charter
Financial Statements
126 Independent Auditor’s Report to the
Members of Lonmin Plc only
130 Responsibility Statement of the Directors in
Respect of the Annual Report and Accounts
131 Consolidated Income Statement
131 Consolidated Statement of
Comprehensive Income
132 Consolidated Statement of Financial Position
133 Consolidated Statement of Changes in Equity
134 Consolidated Statement of Cash Flows
135 Notes to the Accounts
178 Lonmin Plc Company Balance Sheet
179 Notes to the Company Accounts
/ 02
Lonmin Plc
Annual Report and Accounts 2015
Performance Highlights
Key Features
• Safety
–
–
Regrettably three fatalities in the second half of the year after 18 months fatality-free
Lost Time Injury Frequency Rate (LTIFR) increase to 5.41 from 3.34
• Operational achievements
–
–
–
–
–
–
Saffy shaft ramped up to steady state full production as planned
Platinum sales of 751,560 ounces – the highest since 2007 and above market guidance of 730,000 ounces
Platinum metal-in-concentrate for the year was 740,315 saleable ounces
Mined production of 704,776 Platinum ounces – impacted by a loss of 48,000 ounces due to Section 54
safety stoppages
Operational flexibility maintained with available ore reserves at an average of 22 months production
Outstanding instantaneous recovery rates improved to 87.2%
• Business Plan
–
–
Business Plan developed to address low PGM pricing and retain flexibility
Right sizing now 50% complete within six months with 3,136 workers exited (2,120 employees and
1,016 contractors)
• Financial Results – Decisive action taken on operational and cost savings
–
–
–
–
–
–
Cost of production per PGM ounce reduced to R10,339 per PGM ounce – lower than guidance of R10,800
Tightly controlled capital expenditure of $136 million – lower than original guidance of $250 million
Net debt of $185 million with available committed facilities of $543 million (net debt of $29 million in 2014)
Net assets attributable to equity shareholders valued at $1.6 billion after impairment charge of $1.8 billion
Underlying loss before tax $143 million ($46 million profit in 2014)
Underlying loss per share of 16.2 cents versus earnings 5.4 cents in prior year
• Guidance for 2016 to 2018
–
–
–
–
Platinum sales of c.700,000 ounces for 2016, and c.650,000 for each of 2017 and 2018
Reduction in the size of the Group’s workforce and overheads planned to deliver 2016 cost reduction of
c.R0.7 billion and c.R1.6 billion for 2017 (in real terms)
Unit costs to be broadly flat on 2015 in nominal terms at c.R10,400 for three more years to 2018
Capital expenditure limited to c.$132 million for 2016, $110 million for 2017 and $188 million for 2018,
of which $43 million third party funding to be used for the Bulk Tailings Treatment plant
• Strengthening of Balance Sheet
–
–
The Rights Issue is expected to raise approximately $407 million (in gross proceeds)
Conditional amended banking facilities with all existing lenders for $370 million