This is after the platinum group metals (PGM) producer safely stopped the furnace when a leak of molten furnace matte was detected.
“An assessment of the furnace has shown that mechanical structure and refractories below the tap hole as well as the copper tap block need to be replaced,” [DATA LON:Lonmin] said.
“During the five months strike it was impossible to operate the smelter on a consistent basis. In order to mitigate operational risk as we carry out these repairs we have decided to bring forward the planned hearth rebuild of the furnace.”
The company added that it expects the repairs to take around three months and that it does not expect its refined production for the 2015 financial year to be affected.
(READ MORE: Lonmin begins its post-strike rebuilding process)
“Our back-up facilities for such events have been put into operation. The Number Two furnace will continue to operate and we have restarted the three smaller Pyromet furnaces,” Lonmin added.
In terms of the financial impact, Lonmin stated that this has the potential to back-end load sales into the second half of the 2015 financial year and that there will be a build-up of concentrate stocks, which is expected to unwind by year end.
“We are looking at commercial ways to mitigate this. We are maintaining our overall sales and unit cost guidance for 2015 financial year,” it said.
(READ MORE: Operational excellence a priority – Lonmin chief)
“Although we expect our net borrowings to increase at the end of March 2015 as a direct result of the lower sales volume in H1, they are expected to remain well within our borrowing facilities.”
The JSE-listed company further stated that the capital spend for the repairs will be absorbed into the guided capital spend for the year and that it will continue to focus on its cash conservation measures.