London, England —31 October 2012 – Major platinum producer Lonmin has reined in its capital expenditure for the next two years by another 23% as the company seeks to map its way forward following the strikes and violence at its Marikana mine in South Africa during August.
Miningmx reports that, making this announcement, the group said its priority would be to maintain ore reserve flexibility without pursuing significant production growth.
The company has now truly abandoned its previously stated objective of achieving output of 950,000 ounces of PGMs by 2016, saying its new target for that year would be 800,000 oz. The guidance came with the disclaimer that it was “contingent upon performance in the earlier years (2013/14) and sufficient market demand and sufficiently attractive pricing for PGMs to warrant increased investment”.
Lonmin’s previously envisaged target of 950,000 oz by 2016, from 750,000 oz in 2012, would have been achieved by consistently spending US$450 million in capex each year until that time. But the company has been pushed to reduce its capex forecast for 2013 and 2014 by 40% – to US$250 million per year, largely motivated by the ongoing weak market prospects for PGMs.
The company’s revised strategy now forecasts investment of around US$175 million in 2013 and US$210 million in 2014, targeting sales of 680,000oz in 2013 and 750,000oz during the two years after that.
For 2013 and the following year, most of Lonmin’s capex would be directed at maintaining the group’s ore reserve flexibility, which equated to 18 months of mining on 30 September. “The company’s planned capital expenditure over the next two financial years is expected at least to maintain this level of reserve availability,” Lonmin said.
In the 2015 and 2016 financial years, the directors expect capital expenditure to rise to around US$400 million per year to fund the further development of the Hossy, Saffy and K4 shafts.
The K4 shaft, which was put on care and maintenance in September, would remain the thrust of Lonmin’s future output growth and is expected to come back into production towards the second half of 2014.
“The current arrangements are appropriate for the time being and are working well to stabilise the company and bring production back to normal,” the group said.
Source: Miningmx. For more information, click here.