Lonmin production down

The strike by Association of Mineworkers and Construction Union (Amcu) members led to a loss of 3.1 million tonnes of ore containing about 192,700 saleable platinum ounces.

 

Around 82 percent of the company's mining employees are members of Amcu.

 

As a result, production was limited mainly to contractor-operated shafts and opencast operations.

 

Amcu members at Lonmin, Anglo American Platinum, and Impala Platinum downed tools on January 23, demanding a basic monthly salary of R12,500.

 

The companies signed a three-year wage agreement with Amcu on June 24, ending the strike. In terms of the agreement, the salary of the lowest-paid worker would increase by R1000 in the first two years and R950 in the third year.

 

According to Lonmin's production report, its unaudited net cash was nil as at June 30 this year.

 

"Our unaudited net cash as at 30 June 2014 was nil, being comprised of gross debt of US586 million drawn under the ZAR and USD facilities and surplus cash of US586m," according to the report.

 

The company's cash had stood at US71m at the end of March this year.

 

Lonmin said it would require working capital during its ramping up process.

 

"The company has significant headroom available in its banking facilities to fund the debt levels which will rise as we fund the production ramp up, and re-build the stock pipeline over the coming months."

 

The company's initial focus following the end of the strike had been to carry out medical examinations and safety inductions on its employees.

 

While most passed their medical tests, a higher than normal failure rate of around eight percent was noted, mainly as a result of untreated chronic illnesses and workers not getting enough food during the strike.

 

Lonmin said most of these employees had since regained fitness as a result of re-starting treatment and because of company food parcels and nutritional supplements.

 

According to the report, the ramp-up would "take some time". The company was achieving around 30 percent of its normal monthly production.

 

All 11 shafts were now back to production. Production levels were expected to normalise during the first financial quarter of 2015.

 

The company was expecting 2014 financial year production to be around 340,000 saleable platinum metal in concentrate ounces, compared to 751,000 ounces in the previous financial year.

 

"I am pleased with the enthusiasm in our management and all employees to the re-building of our relationships and operational credibility," Lonmin chief executive Ben Magara said.

 

He said they were assessing their medium to long-term options to improve productivity and profitability.

 

(File photo: Gallo images)