JOHANNESBURG (miningweekly.com) – The world’s third-largest platinum miner Lonmin said on Thursday that it expected to meet its revised 720 000 oz sales target for 2011, but raised its outlook for production costs after an illegal strike at its Karee mine in May.

Lonmin lowered its full-year sales target in June from 750 000 oz, following production safety stoppages and the strike of some 9 000 workers. At the time, the company warned that unit costs would be negatively impacted owing to the lower production.

“We are now able to clarify the impact of the resultant reduced production on our unit costs and are consequently increasing our guidance from an annual increase of around 8% to around and 11% increase in unit costs for the full year,” the platinum producer stated on Thursday.

Lonmin said that it had made good progress in restoring production since the Karee strike and that it expected to be back at normal operating levels by August.

Platinum sales fell by 36% to 160 499 oz in the three months ended June, when compared with the second quarter, while refined production slumped 25% quarter-on-quarter to 166 832 oz.

Production and sales increased by 81% and 74% respectively, when compared with the prior year when output was hit by down time of the Number One furnace.

Underground operations at Marikana produced 2.4-million tons during the third-quarter, which was a decrease of 8.1% from the same period last year. At Karee, output fell by 7.2% from the same period last year, because of the industrial action, which resulted in a loss of 258 000 t of production.

Lonmin’s Middelkraal and Easterns operations’ combined production decreased by 8.5% against the prior year as challenging ground conditions and mechanical breakdowns at Saffy and Hossy persisted and the planned decline at Newman continued.

The impact of Section 54 shut downs was 132 000 t in lost production during the quarter, mainly at the K3 and E1 shafts, where the fatalities had occurred in April. This compares to a loss in production during the same period last year of around 109 000 t. Management induced safety stoppages, particularly following the fatalities in April, resulting in 44 000 t of lost production.

The Merensky opencast operations’ production increased by 53.1% from 2010, as opencast production was ramping up at that time.

In the quarter, 2.5-million tons were mined, which is a 6.2%, or 168 000 t, reduction from the same period last year.

Further, tons milled in the quarter were flat year-on-year at 2.8-million with the contribution from opencast contributing an additional 50 000 t offsetting the slightly reduced underground tons milled.

“Underground and overall concentrator recoveries were broadly flat when compared with the prior year period reflecting a high performing and stable operating environment at our concentrators. The opencast concentrator recoveries improved by 2.0 percentage points,” the company said.

Platinum in concentrate from the Marikana operations and overall total platinum in concentrate were 158 490 oz and 64 212 oz, respectively, a 3.0% and 3.2 % decrease over the prior year quarter.

Lonmin is investing over $2-billion to grow its production over the next five years, which will include an expansion at its Marikana operations to 950 000 oz/y by 2015.

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