JOHANNESBURG (miningweekly.com) – During the three months ended December 31, Lonmin’s total attributable mining production amounted to 2.6-million tonnes, a 10% year-on-year decline, as the operational momentum built up during 2013 was significantly disrupted by a fatality and safety stoppages.

In addition, production from the company’s opencast operations was also scaled down owing to the subdued price environment.

Lonmin added that low productivity levels, which were directly linked to the tensions around the ongoing wage negotiations, further negatively impacted output.

The company’s Marikana underground mining operations, which included the Karee, Middelkraal, Easterns and Westerns operations, produced 2.5-million tonnes during the first quarter, a decrease of 7% year-on-year.

Production at the Karee operation declined by 13% year-on-year to 1.05-million tonnes, driven by an increase in safety stoppages and industrial relations issues, while production at Westerns was broadly flat on the prior year period.

Further, production at Easterns reflected a 5% year-on-year decrease to 476 000 t, driven by the planned depletion of the East 1 shaft as it approached its end of life.

Meanwhile, production from the company’s Merensky opencast operations, also located at Marikana, declined by 50% to 78 000 t.

The mining company stated that a total of 271 000 t of underground production was lost during the quarter, of which 175 000 t related to Section 54 safety stoppages, 19 000 t to management-induced safety stoppages and 77 000 t as a result of labour disruptions.

However, Lonmin’s refined production increased by 45% year-on-year to 196 249 oz of saleable platinum, with sales increasing by 24% year-on-year to 134 804 oz.

“These results benefitted from a healthy closing pipeline position at the end of September 2013 and continued improvement in recovery rates,” the company said.

Meanwhile, total milled output for the period under review was 2.9-million tonnes, which was in line with the prior corresponding period, as the healthy ore stockpiles ahead of the concentrators reduced the impact of the lower tonnes mined to produce metal in concentrate of 179 691 oz of platinum.

Lonmin also said it would revise its full-year sales guidance of 750 000 oz, as a result of the ongoing strike by the Association of Mineworkers and Construction Union (AMCU) that was costing the miner about 3 100 oz/d in production.

The company also indicated that it would revise its unit cost of production and capital expenditure (capex) estimate of $210-million.

“All of our mining operations are at Marikana, in the North West, and, therefore, all are impacted by the strike,” Lonmin said in its first quarter 2014 production report.

Liberum Capital stated that it retained its ‘sell’ recommendation for the company, given the downside to its estimates for the 2014 financial year.

The firm estimated Lonmin’s 2014 production to be around 765 000 oz, with capex of $180-million and unit cash costs of 11 800/oz.

“Given our already optimistic numbers, we expect our cash flow estimates to be hit by higher unit costs and capex and lower production,” Liberum said.