JOHANNESBURG (miningweekly.com) – Platinum-miner Lonmin reported on Thursday that its first-quarter platinum sales were 39,1% lower than during the comparable quarter of the previous year, falling to 66 426 oz, while production declined 26% to 81 982 oz, owing to the rebuild of its No 1  furnace.

Sales were also disrupted by inclement weather, which affected deliveries to northern hemisphere customers in December.

Nevertheless, the company, which is also the world’s third-largest producer of the precious metal, said that the first-quarter represented a “solid start” for the 2011 financial year and was supportive of its full-year sales guidance of 750 000 oz of platinum.

The LSE- and JSE-listed company reported that the work on the No 1 furnace had resulted in an increase in platinum and platinum-group metals (PGMs) concentrate stocks and the rebuild had been successfully completed and the furnace recommissioned in the middle of December.

Total PGMs sales decreased by 23,1% to 184 317 oz, while its total production was at 240 366 oz, down 1,1% compared with the previous year.

The decreased production was partially offset by 9 700 oz being returned from toll refining, such that total refined production was 91 682 oz, 17,2% less than the prior year period.

The US dollar basket price improved considerably during the first quarter of the 2011 financial year at $1 175/oz, 15,6% higher than the prior year period. The increase in the South African rand PGMs basket price was more moderate, at 6,5%, owing to a much stronger rand against the dollar.

The company reported that its operational performance in the first quarter of 2011 demonstrated continued progress in mining as both tons mined and milled increased over the prior year period, together with further progress in the production of metals in concentrate, resulting from improvements in the recovery rate.

Total tons mined at all operations was 15% up at three-million tons against the prior year period.

Total tons mined in the first quarter of the 2011 financial year from the Marikana underground operations was 2,8-million tons, up 200 000 and representing a 7,8% increase from the previous corresponding period. This increase was attributed to the production increase at the Karee, Middelkraal and Easterns mining units from the prior year period.

Karee`s operations increased production by 196 000, with a significant contribution from K3. Middelkraal`s production also increased by 59 000 t as production at Saffy continued to ramp up, while Easterns increased production by 57 000 t, with a notable contribution from the E2 shaft.

These increases were offset by a 113 000-t fall in production at Westerns during the quarter, owing to the planned decline at Newman. The decrease in Section 54 safety shutdowns also contributed to the higher production in the quarter, compared with last year.

Newman was the only shaft to have a Section 54 shutdown and lost 21 000 t of production during the quarter, compared with last year’s losses of 84 000 t by all operations.

Production at Lonmin’s opencast operations continued to ramp up in the quarter to 193 000 t, while the production at Pandora increased marginally to 39 000 t.

Total tons milled in the quarter increased by 17,4%, or 452 000 t to three-million tons over the prior year period, with underground tons milled increasing by 11% to 2,8-million tons from last year. There was also an increase of 172 000 t milled from opencast, compared with 61 000 t in the prior period.

Underground milled head grade was 4,55 g/t platinum for the quarter, down 0,19 g/t platinum from 4,74 g last year and down 0,08 g/t platinum from 4,63 g in quarter four of the prior financial year. This was a result of poor ground conditions at K3. The opencast milled head grade was at 2,24 g/t platinum, 14,3% higher than the prior year period, as the opencast milled in the prior year period was from lower grade stockpile material.

The company reported that underground concentrator recoveries continued the positive trend and increased from 84,5% to 85,1%, while the opencast recovery rate increased from 42,3% to 80,7%, mainly as a result of the improved grade of the opencast material milled in the current period.

Platinum in concentrate from the Marikana operations was 175 769 saleable ounces, a 12,7% increase over the prior year period. In total, the concentrators produced 180 433 saleable ounces of platinum in the quarter, a 11,5% increase.

Lonmin previously reported that it had reached an agreement with the National Union of Mineworkers (NUM) in terms of an 8% wage increase backdated to October 1, as well as a one-off payment of R850. All wage negotiations had been concluded.

The company maintained its capital expenditure guidance of around $380-million and expected rand unit costs to increase by less than the 8% wage settlement agreed with the NUM.
 

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