Lonmin sees 43% production decrease due to strikes - CNBC Africa

Lonmin sees 43% production decrease due to strikes

Earnings

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Labour unrest in S.Africa's platinum industry. PHOTO: Jay Caboz/Forbes Africa

“Our production performance in the first half of the 2014 financial year declined significantly as a result of the industrial action led by Amcu. This unprecedented strike action has rendered the latter part of the half year unproductive, with limited mining activity from contract mining,” [DATA LON:Lonmin plc] said. 

“Total tonnes mined during the half year showed a decrease of 43 per cent when compared to the prior year period production of 5.7 million tonnes. In total, 2,806,000 tonnes of underground production were lost during the half year, of which 2,592,000 tonnes were lost due to industrial action.”

The platinum mining company did however indicate that its ore reserve position remained healthy, with immediately available ore reserves at Marikana, at the end of the period, sitting at 3.7 million centares.

(READ MORE: Lonmin posts solid FY results despite Marikana massacre)

“This level of ore reserve represents an average of 18 months based on production levels before the start of the strike and will support our ramp up programme when operations re-start, as we will have the necessary flexibility to deploy our production stoping crews,” it said.

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Lonmin saw revenue decrease from 735 million dollars for the six months to 31 March 2013 to 578 million dollars for the same period in 2014.    

It also reported an operating loss of 131 million dollars for the 2014 period from a profit of 90 million dollars in 2013 a loss before taxation of 278 million dollars from a profit of 54 million dollars.

The company, which is listed on the London Stock Exchange as well as the Johannesburg Stock Exchange, reported a loss per share of 35.5 cents in 2014 from earnings of 13.3 cents in 2013.

(READ MORE: Two workers killed at Lonmin mine in S.Africa: union)

“The protracted wage strike, which has been the main feature of the first half of the year, has significantly impacted the company’s profitability. Our ability to achieve a sustained steady state production is predicated on when operations resume,” Lonmin said.  

“We expect unit costs to exceed wage inflation and capital spend to be less than the previously guided 210 million dollars. We will update the market on the production, associated unit costs and capital spend outlook once the strike has ended.”

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