Mdm april may 2018 by MWK Design

April May 2018 Issue

Atlas Copco to acquire South African exploration manufacturing business Atlas Copco, a leading provider of sustainable productivity solutions, has agreed to acquire the assets of Renegade Drilling Supplies Proprietary Ltd., a South African manufacturer and distributor of drilling consumables for mining exploration.

The business will become part of Epiroc South Africa (Pty) Ltd.'s Rock Drilling Tools division. Epiroc, a whollyowned subsidiary of the Atlas Copco Group, was created when Atlas Copco split into two separate international groups of companies in 2017. This development saw Atlas Copco's Mining & Rock Excavation Technique Business Area together with its Construction Tools division form part of Epiroc with a mining and civil engineering sector focus. Epiroc AB is planned to be listed on the stock exchange in 2018. The industrial businesses remain with Atlas Copco.

Renegade Drilling is based in Johannesburg, South Africa, and sells its products throughout the Southern African region. The company manufactures and distributes mining exploration drilling consumables, such as drill rods, in-the-hole tools and diamond drill bits. It has 22 employees. “We are happy to bring the strong team at Renegade Drilling into our Group,” said Helena Hedblom, President of Atlas Copco's Mining and Rock Excavation Technique business area. “This acquisition will expand our product portfolio and establish a regional footprint for manufacturing of mining exploration consumables.” The acquisition is expected to be completed shortly. The purchase price is not materially signiﬁcant to Atlas Copco's market capitalisation and is not disclosed.

Core barrels used in the drilling process 2

Regulatory Release Lonmin update on covenant waiver, non-cash impairment of assets and expected date for publication of full year accounts

until the earlier of the Offer closing, lapsing or being withdrawn and the current transaction long-stop date of 28 February 2019.

Following the announcement of the recommended allshare offer pursuant to which Sibanye Gold Limited (“Sibanye-Stillwater”) and/or a wholly owned subsidiary of Sibanye-Stillwater, will acquire the entire issued and to be issued ordinary share capital of Lonmin Plc, (“Lonmin” or “the Company” or “the Group”) the (“Offer”), the Company announces that it has obtained in-principle agreement from its lenders, subject to credit approval and execution of the necessary legal agreements, for a further waiver of compliance with its consolidated tangible net worth debt covenants

As part of the Company's ﬁnalisation of its full year accounts, the determination of the non-cash impairment to the carrying value of the Group's assets for the year ended 30 September 2017 is substantially complete, the effect of which is anticipated to reduce the Group's consolidated tangible net worth signiﬁcantly below the $1,100 million minimum required under the debt covenants. The abovementioned waiver will ensure that this shortfall is not regarded as an event of default during the waiver period.

The announcement and publication of the Company's financial results for the year ended 30 September 2017 is now scheduled to take place on 22 January 2018. The Quarter 1 Production Report for the 2018 financial year will be published on the same day.

PUBLISHER E.S.C Magazine T/A Mining Developments Magazine SOUTH AFRICA OFFICE Tel: +27 11 027 9009 Fax: +27 86 601 9195 62, 2nd Avenue, Houghton.P.O. Box 92744, Norwood, 2117 South Africa UGANDA OFFICE Plot no.768, Entebbe road, Kawuku, Kampala Tel : +256 75 510 1313, Uganda. Email: info@miningdevelopmentsmagazine.com Website: www.miningdevelopmentsmagazine.com Contributions The editors welcome news items, press releases, articles and photographs relating to the Mining Industry. These will be considered and, if accepted, published. No responsibility will be accepted should contributions be lost, damaged or incorrectly printed. © All rights reserved

WESCOAL ON TRACK AND STEAMING AHEAD 24th January 2018, Johannesburg -- Wescoal, Holdings Limited, the junior coal miner, trader and supplier today issued a voluntary strategic update on the integration of Keaton Energy assets,

operational and ﬁnancial matters pertaining to the enlarged organisation and key changes to the management and Board. Keaton Acquisition and Integration Update Wescoal acquired certain Keaton assets mid-way through 2017 to further diversify the Group's asset base, realise economies of scale and synergies, expand optionality in contracts and off-take negotiations, as well as strengthen the balance sheet and free cash generation.

The enlarged business now has coal resources well in excess of 300 million tonnes, four operating mines, three processing plants and signiﬁcant interests in coal supply chain infrastructure. This translates into additional revenue certainty and diversiﬁcation through production of a range of coal qualities, mining and washing/processing options, customer and sales strategies across domestic and export markets, as well as optionality in contracts and CEO Waheed Sulaiman off-take negotiations. 4

The integration programme is at an advanced stage and progressing according to plan. Identified personnel redeployments and overhead reductions are complete. Immediate operational cost-savings and efficiencies identified during the acquisition due diligence have been implemented with the combined effect of savings in excess of R40m per annum. Additionally, mining operations at Vanggatfontein, formerly Keaton's flagship mine, are progressing well and integration into Wescoal is at an advanced stage and key mining and technical skills have been successfully retained. Waheed Sulaiman, Wescoal's Chief Executive said: “We are pleased with the progress of the integration programme. After several improvement and efficiency projects were identified early on, these have been implemented in a measured fashion. For example, systems integration with the aim of common reporting and resource management across the Wescoal Group is well underway. These projects represent low risk

value enhancement opportunities which support the Group's philosophy around standardisation and scalability.” Management The transition of Thivha Tshithavhane into head of the Mining Division, as of 1 April 2017, is complete and is a resounding success. His predecessor, Dutch Botes, formally left the Company's employ at the end of December 2017. Dutch was instrumental in growing the Wescoal business to where it is today and continues to assist in a consultant capacity on new projects.

The internal appointment of Izak van der Walt into the Group Chief Financial Officer role, during August 2017, is a further reflection of the quality of personnel embedded in the Group.

Staff acquired through the Keaton acquisition coupled with a forward-looking people resourcing model ensures that Wescoal continues to have the internal expertise and experience required for a proﬁtable, sustainable business. Board and governance During November 2017, Wescoal announced the appointment of Cecil Maswanganyi and Eric Mzimela to the Wescoal Board. It is the intention of the Wescoal Board to further augment the Board skill set and independence in the coming months. 5

ROM production from Vanggatfontein totalled 1.5 million tonnes during the second and third quarters of the financial year. This is equivalent to 3 million tonnes per annum ROM on an annualised basis. Recently secured surface rights will enable the multiple mini-pits at Vanggatfontein to be developed in an optimal, cost efficient manner.

continues to be well positioned to take advantage of value enhancing opportunities in a sustainable manner. Wescoal continues to adopt best-practice governance principles at all levels of the organisation.

The enhanced ﬂexibility of the enlarged resource base and associated mine infrastructure has facilitated increased ROM production and product variations to service the market as and when required.

Wescoal leadership's top strategic priorities remain to grow the business, to strive for safe production and solid and predictable operational and ﬁnancial performances. Planning and executing projects in a conservative, risk-based manner is how Wescoal will continue to manage and realise value from its sustainable growth plans.

Total run of mine (“ROM”) production attributable to Wescoal has doubled to 4.8 million tonnes up until end December 2017. This is double the amount achieved during the prior comparable period. The Group is well on its way to achieve its announced 8 million tonnes ROM production target.

Production and performance update from the combined operations

Production at Elandspruit was ramped up to take advantage of spot sale opportunities and the mine

is on track to comfortably exceed its annual target of 2.5 million tonnes. During October 2017, a new mining contractor was introduced at Elandspruit. The transition was carefully planned and well executed – it was concluded safely and without impacting negatively on production rates. Sulaiman added; “The combined Group is now better positioned to meet increased demand, both from Eskom as well as other domestic and export customers, which have grown noticeably as a contributor segment. This also reduces our concentration and dependency risk to a greater extent.”

Growth options The Moabsvelden resource, which is adjacent to Vanggatfontein, represents a significant organic growth option for the Group. Study work on the Moabsvelden project remains on track to be completed in the coming weeks. Preliminary results confirm that Moabsvelden represents a significant value enhancing opportunity.

Combined output from Intibane and Wescoal's share of the Khanyisa complex is approximately 1.5 million tonnes on an annualised basis.

“We expect to produce between 1.5 million and 2 million tonnes per annum of additional ROM from the Moabsvelden project. This will result in us comfortably exceeding our 8 million tonnes per annum overall production objective,” concluded Sulaiman.

OIL ANALYSIS

involving the use of a spectrometer within which a sample of oil is run and analyzed for possible additives and metals that may be existing. This is paramount as it gives one a proper result of whatever degree that an engine is or could be wearing Oil analysis is generally a out. Secondly, insoluble test process that is quick and by nature non-destructive, which is done to see the abrasive solids existing in the oil, focuses on examining which arise from oxidation of whatever is in the oil hence the oil as well as by the act of ensuring standard condition of an operational engine. The blowing past the rings. Insoluble test is important overall process is composed mainly because it indicates of a number of tests. the level that the oil has oxidized and also estimates To begin with, there is the the performance of the oil spectral examination ďŹ lter. Thirdly, oil analysis encompasses the viscosity test, which quantiďŹ es the grade or viscosity of the oil. Oil may be required in different viscosities and hence with this test, one can be in a position to tell whether the oil is actually within the expected range. With this test, facts discovered are those that explain why the oil viscosity may not be within the range. They are namely, overheating or contamination of the oil by moisture, fuel or coolant. 8

Flashpoint test is the final test that determines the temperature within which oil vapor ignites. Normally, each grade of oil has a point of temperature at which its vapor ignites. It is said that if it ignites at that exact point or above the point, then the oil is not contaminated, but, if it flashes far below the flash point, then the oil is said to be contaminated. The major contaminant of oil is usually fuel.

Signiﬁcantly, a regular and detailed oil analysis becomes a maintenance strategy. It provides a normal wear of engines by providing room for quick detection of abnormal wear as well as oil contamination. Thus, possible damage is repaired in advance preventing potential enormous damage. Finally, oil analysis can be conducted to any kind of oil such as transmission oil, engine oil, lube oil, oil-based additive oil, hydraulic oil, bio diesel or even power steering ﬂuid.

DRA expands its footprint in Asia-Pacific via acquisition of Minnovo Engineering, project delivery and contract operations specialist, DRA, has achieved another major milestone in its international growth strategy with the execution of an agreement to acquire Minnovo, a Perth based engineering company. Minnovo will expand DRA's growing Australian footprint and add further depth to DRA's metallurgical, engineering, procurement, project management, construction and commissioning capabilities in Australia, as well as enhancing on-theground resources to clients in the APAC region. Wray Carvelas, Chief Executive Ofﬁcer of DRA said, “The acquisition of Minnovo will add key resources and experience to DRA's Australian capabilities and will

enhance the Group's overall strength in the design and construction of processing facilities across a wide range of minerals including ferrous metals, precious metals, base metals and industrial minerals, along with the associated infrastructure requirements.”

Global engineering, project delivery and asset management group, DRA, has completed an Australian acquisition to advance its growth objectives in the Asia-Pacific region.

Greg McRostie, Managing Director of Minnovo added that “We are excited about combining the Minnovo and DRA capabilities in APAC and we are delighted to be joining the DRA team of 3,300 dedicated people across the globe.” The acquisition is expected to be concluded in the ﬁrst quarter of 2018.

Dickinson China Provides Hot Kiln Alignment services to Chinese Cement Industry emerging and lucrative global markets including Asia, South East Asia and the Middle East. The Group's growth and expansion strategy is underpinned by the organization's vision, vast experience, technological expertise and extensive geographic presence throughout sub-Saharan Africa, Middle East and Asia. The company has been trading successfully for more than 100 years, with business operations and representative ofďŹ ces in South Africa, Mozambique, Zambia, With most businesses Kenya, Zimbabwe, Ethiopia, currently enduring a dry Democratic Republic of spell, some cutting down on new expansion projects Congo, Indonesia, Philippines, UAE, investments and others facing total closure of ďŹ rms Mauritius, Egypt and People's Republic of China. due to the lasting impacts of the harsh economic climate and increased Provision of global competition. All is Comprehensive Hot Kiln not doom and gloom, as Alignment in China Established in 2015, Dickinson Group of Dickinson China has grown Companies is sailing in leaps and bounds, against the economic tide providing specialized by establishing new Furnace and Industrial business and expanding Services to the Chinese operations into the 12

Market including Silo Cleaning, Hot Kiln Alignment and Tyre Grinding services. At the pinnacle of Dickinson China's service portfolio is Hot Kiln Alignment, a wellknown specialized preventive maintenance tool for corrective misalignment on rotary units. The company has been providing world class and state of the art Hot Kiln Alignment Services to the Chinese Cement Industry for the last 3 years and has continued on rapid growth trajectory with the establishment of mutual beneďŹ cial partnerships, alliances with global players in the industry and successful completion of numerous Hot Kiln Alignment projects in China Global Alliances Dickinson Group of 14

Companies represents global leading specialist Geoservex from Poland in providing measurements and analyses of rotary machine deformations and measurements. Dickinson Group of Companies in conjunction with this strategic partner offer world class and state of the art Hot Kiln Alignment Services to select cement market including Africa, Asia and South East Asia. To date the companies have completed several major Hot Kiln Alignment projects for cement plants across the People's Republic of China. Geoservex, since its inception in 1983, is the world's ďŹ rst developed and implemented technology of kiln alignment in dynamic conditions (during normal operation), termed "Hot Kiln Alignment" specialises in developing, implementing and realizing unusual and highly precise geodetic measurements. The method was patented and used in 42 countries around the world Hot Kiln Alignment Kiln alignment is a very critical aspect of the kiln maintenance, yet most cement plant managers and engineers will agree that it is the importance thereof is often

neglected. While most engineers understand its importance, some others are still not familiar with its importance and correct procedure. Our maintenance inspection programs has been designed to help clients adopt a proactive approach to rotary kiln maintenance. Direct beneﬁts of our maintenance and inspection programs include:

Ÿ Compilation of a

Ÿ Ÿ

comprehensive history of wear rates for mechanical components Reduced unplanned stoppage Achievement of maximum plant availability thereby increasing production and reducing operating cost Reduced wear rates achieved due to rotary kilns being correctly aligned on a regular basis Installation & Repair Efﬁcient planning for programmed shutdowns and spare-parts Conﬁdent budget planning for replacement of high cost items such as girth gears, pinions, tyres and trunnion rollers Short payback time due to fewer unforeseen stoppages Knowledge sharing with maintenance staff during alignment

DRA secures Exxaro's Belfast Implementation Project in Mpumalanga The project will commence in January 2018 and is expected to be completed in October 2019.

Global engineering ﬁrm, DRA, has secured a contract with Exxaro Coal Mpumalanga (Pty) Ltd a subsidiary of JSE listed Exxaro Resources Ltd, to construct a 500tph coal handling and preparation plant in Belfast, Mpumalanga. The coal handling and preparation plant consists of primary and secondary sizing stations, overland conveyor, two 7500t silos, low gravity and high gravity Dense Medium Separation (DMS) modules, thickener circuit, ﬁlter plant, stacker conveyor. The plant will produce both a domestic and an export product. “We are excited to partner once again with such a prestigious organisation. The quality of our engineering designs in the earlier project phases as well as our

competitive pricing and well-established reputation in coal projects ultimately secured us the work when Exxaro embarked on a campaign to develop one of their key coal assets in the Belfast area,” explains Alistair Hodgkinson, Senior Vice President at DRA. “This latest partnership allows DRA the opportunity to showcase our vast experience in successfully implementing largescale coal projects and the added value we can offer our clients on any project,” says Hodgkinson. “We look forward to the successful completion of this project and accompanying Exxaro on their development campaign in the area,” concludes Hodgkinson.

"Another solid operational performance quarter" Lonmin, which is listed on both the London Stock Exchange and the Johannesburg Stock Exchange, is one of the world's largest primary producers of PGMs. These metals are essential for many industrial applications, especially catalytic converters for internal combustion engine emissions, as well as their widespread use in jewellery.

Lonmin Plc ("Lonmin" or "the Company"), one of the world's largest primary platinum producers, today announces its unaudited Quarter 1 2018 production results for the three months to 31 December 2017 and provides an operational update.

Lonmin also publishes Ÿ today, in a separate announcement, its results for the financial year ended 30 September 2017. Ÿ Overview Ÿ Fatality free first quarter with the twelve-month rolling LTIFR to 31 December 2017 improving by 5.3% to 4.28 per million man hours. Ÿ Mining performance improvement has been sustained from March 2017. Tonnes mined by our Generation 2 shafts Ÿ increased by 11.4% to 1.8 million tonnes compared with the first quarter of 2017. Total tonnes mined increased by 2.4% to 2.4 million tonnes compared with the first quarter of 2017. Ÿ E3/Pandora classified as Generation 2 whilst 4B

has been reclassified as Generation 1. Refined production of 161,363 Platinum ounces increased by 17.7% against the first quarter of 2017. Sales of 147,216 Platinum ounces increased by 9.1% compared with the first quarter of 2017. Average Rand full basket price for the first quarter of R13,153 increased 26.8% on the first quarter of 2017. Our unit costs for the first quarter were R12,703 per PGM ounce (6E basis), an increase of 3.3% on the first quarter of 2017, but below the consumer price inflation (CPI) of around 5%. We are maintaining our unit cost guidance of between R12,000 and R12,500 per PGM ounce. Net Cash at 31 December 2017 of $63 million, reflecting reduction in the historical first quarter cash burn rate, as a result of improved production, prices and working capital management.

Lonmin's operations are situated in the Bushveld Igneous Complex in South Africa, where more than 70% of known global PGM resources are found.

Ben Magara, Chief Executive Ofﬁcer, said: "Another fatality free allround operational performance, from mining, to processing through to sales, demonstrating the strength of our mine-tomarket business. I am pleased that we have maintained the mining performance improvement since March 2017. The higher sales volume from good production, focus on working capital management, combined with better Palladium and Rhodium prices which boosted Dollar basket revenues, resulted in a historically reduced quarter one cash burn and a positive net cash position, however we still have much work to reduce costs." Safety Our safety strategy is centred on the belief that Zero Harm is achievable and important contributions are required from all stakeholders to achieve it. Lonmin remains fatality free since July to December 2017.

in December 2017. Ÿ EPL Concentrator achieved 1 year LTI free in October 2017. Ÿ Marikana Mining Operations achieved 5 Million Fall of Ground Fatality Free Shifts in November 2017 and were on 3 Million Fatality Free Shifts at the end of Q1. Ÿ The twelve month rolling

LTIFR to 31 December 2017 was 4.28 per million man hours, an improvement of 5.3% on September 2017 at 4.52. Mining Operations It is pleasing to note that our focused effort in our core shafts is bearing fruit. The Marikana mining operations, including Pandora produced 2.4 million tonnes during the quarter, up 2.4% on the comparative period, driven by an 11.4% increase in production from our Generation 2 shafts.

Generation 2 Tonnes mined from our Generation 2 shafts were 1.8 million tonnes, an increase of 11.4%, or 0.2 Ÿ We achieved signiﬁcant million tonnes against the milestones in the comparative period. journey towards Zero Ÿ K3, our biggest shaft, Harm at the following produced 695,000 operations: tonnes, an increase of 17.9% on the prior Ÿ Precious Metal Reﬁnery period, demonstrating achieved 2 years LTI free 22

The Company creates value for shareholders through mining, refining and marketing PGMs and has a vertically integrated operational structure - from mine to market. Underpinning the operations is the Shared Services function which provides high quality levels of support and infrastructure across the operations.

the shaft's recovery in performance from the challenges it faced in the prior year period. Ÿ Rowland shaft produced 448,000 tonnes, an increase of 5.7% on the prior year period. Ÿ Saffy shaft produced 521,000 tonnes, an increase of 5.6% on the prior year period. Ÿ On completion of the Pandora acquisition, combined with the progress made pursuant to our recovery plans, the E3 shaft and Pandora production has been combined and reclassiﬁed as a Generation 2 shaft, with comparatives adjusted accordingly. The combined area produced 147,000 tonnes, an increase of 23.8% on the prior year period. Ÿ Immediately available ore reserves for the Generation 2 shafts has been maintained at around 20 months. Generation 1 The performance of the Generation 1 shafts is in line with our plan and we continue to reduce high cost production in a low price environment. Tonnes mined from our Generation 1 shafts (4B, Hossy, W1, E1 and E2) were 0.6 million tonnes, a decrease of 14.0%, or 0.1 million tonnes

on the prior year period, reflecting the planned decline in production. The decrease is also due to both Newman and E2, which produced in Q1 2017, now being on care and maintenance. We continually review each shaft on its merits and as reported, in light of 4B shaft's lacklustre performance, its short life of mine relative to the other Generation 2 shafts, and our capital constrains, 4B has been reclassified as a Generation 1 shaft and comparatives adjusted accordingly. 4B produced 306,000 tonnes, a decrease of 9.0% on the prior year period, as the bad geological conditions persist. W1, E1 and E2 are shafts at the end of their resource lives. E2 shaft was put on care and maintenance in November 2017. Contractors have continued to run W1 and E1, and are responsible for all the costs associated with such shafts, and we thus retain the flexibility to cease production if required. Hossy shaft was scheduled to be put on care and maintenance, but it continues to contribute to the business. Based on its relative contribution and

Balance Sheet and Liquidity Net cash at 31 December 2017 was $63 million, after working capital and capital expenditure investment during the quarter. The higher production and metal prices in the quarter and management of working capital initiatives resulted in the historical quarter 1 cash burn of around $120 million being contained to only $40 million.

the available IAOR, which stood at 11 months at FY 2017, we will continue to operate Hossy for the duration of FY 2018. Production Losses Overall total tonnes lost in the quarter reduced to 57,000 tonnes, compared to 147,000 tonnes lost in the ﬁrst quarter of 2017. We have been encouraged that the number and duration of Section 54 stoppages has continued to improve, as experienced during the Fy2017.

(Metals-in-Concentrate) was 164,488 ounces, which was 7.6% higher than the prior year period and total PGMs production (Metalsin-Concentrate) was 315,316 ounces, which was 7.7% higher than the prior year period.

Refined Platinum production of 161,363 ounces in the first quarter, was 17.7% higher than the prior year period, with the smelter clean-up project not contributing any Platinum ounces as expected, (no contribution in Q1 2017). We expect Processing Operations minimal ounces from the Underground milling production in the quarter of smelter clean-up project in 2.5 million tonnes was 3.0% the 2018 financial year as the ounces are depleting. higher than in the prior Total PGMs produced were year period. 308,774 ounces, an increase of 17.3% on the Underground milled head grade at 4.63 grammes per prior year period. tonne (5PGE+Au) increased by 1.5% when compared to Number One furnace had a run out on 2 December the 4.56 grammes per tonne achieved in the prior 2017, necessitating it's year period and the overall planned shutdown milled head grade was also scheduled for the end of 2018 to be brought forward. 4.63 grammes per tonne, We expect some lock up of up 1.5% on the prior year ounces in the second period, due to improved quarter, which will unwind quality of mining. within the financial year. As Concentrator recoveries in such overall output is not expected to be affected the quarter remained excellent at 88.0%, up 1.2% owing to capacity at other furnaces, as we will be from 87.0% in the prior running the number two year period. furnace and the three pyromets. Platinum production

Outlook and Guidance Sales guidance for the full year is maintained at between 650,000 and 680,000 Platinum ounces. We are maintaining unit cost guidance of between R12,000 and R12,500 per PGM ounce produced. Our capital expenditure guidance for the year of between R1.4 billion and R1.5 billion is maintained.

Sales and Pricing Platinum sales for the quarter were 147,216 ounces, 9.1% higher than the prior year period sales of 134,954 ounces. PGM sales were 292,335 ounces, marginally higher (0.8%) on the prior year period sales of 289,962 ounces; Ruthenium sales decreased by 33.7%, as the Ruthenium to other metal sales ratio was brought in line with the normal production ratio in this quarter, converse to Q1 2017 when there was a release of built up stocks of Ruthenium, which reduced the impact of the increase of the other PGM metals sales. The US Dollar basket price (including base metal revenue) at $968 per ounce during the quarter was up 30.9% on Q1 2017, while the corresponding Rand basket price of R13,153 per ounce was 26.8% higher than the Q1 2017, with the stronger Rand diluting the increase. The average Rand to US Dollar exchange rate was 2.1% stronger at 13.61 compared to 13.90 in Q1 2017. Business and Operating Environment Update The operating environment has remained challenging as the Company strives to balance the economic,

social and environmental imperatives. Management continues to participate in strategic multi-stakeholder engagements to address these challenges. As part of our Operational Review, we identiďŹ ed cost reduction initiatives, to reduce annual overhead costs by a minimum of ZAR500 million by the end of 30 September 2018. These initiatives are ongoing. We expect the substantial majority of overhead reductions to come from non-production central functions and high cost production areas as their production comes to an end. As highlighted in the 2017 Financial Results announcement released separately today, a section 189 process commenced in October 2017 and is ongoing, with over 600 employees already having left the business. Unit Costs Unit costs of R12,703 per PGM ounce were 3.3% higher on the prior year period. Whilst this increase is below the CPI of around 5%, the increase highlights the need for us to remain vigilant in working to reduce our operating costs and we maintain our unit cost guidance in the range of R12,000 to R12,500 per PGM ounce for the full 2018 ďŹ nancial year.

REVIEW OF OPERATIONS We are experiencing a reduction in the duration and frequency of section 54 stoppages and more localised application of these stoppages. We continue to engage proactively with the DMR to build sound relationships, based on delivering on our joint aspiration of achieving "Zero harm"

Safety Despite most safety indicators showing improvement, regrettably ﬁve of our colleagues were fatally injured during the period. Messrs Joao Fernando Macamo, Giji Mxesibe, Letlhohonolo Rakotsoane, Simon Sibitane and Mangi Bunga succumbed to injuries suffered in separate incidents at E1 (9 November 2016), K3 (17 February 2017), Newman (15 March 2017) and 4B (11 May, 29 June 2017).

Ÿ K3 mine manager UG2

Ÿ Ÿ

Ÿ Ÿ Ÿ Ÿ

section - 7 million fatality free shifts Saffy shaft- 5 million fatality free shifts Lonmin Mining - 4 million fall of ground fatality free shifts Rowland Shaft - 2 million fatality free shifts East 2 - 1.5 million fatality free shifts K4 Concentrator - two years PMR - one year LTI free

The Lost Time Injury Frequency Rate (LTIFR) has improved year-on-year by 9.1% to 4.52 from 4.97 as at We extend our deepest condolences to the families 30 September 2016 and the Total Injury Frequency Rate and friends of our has improved by 17% yearcolleagues and deeply on-year to 10.70 from 12.95 regret their loss. We as at 30 September 2016. remain determined to The Total Injury Frequency better our overall safety Rate is a lead indicator of performance and we our safety improvement continue to enhance our initiatives, and the safety initiatives. Each improvement has incident was thoroughly contributed to the investigated in collaboration with the DMR reduction in of Section 54 safety stoppages.. and organised labour. Lessons learned from each incident were implemented There was a year-on-year increase in the number of into action plans and management-induced shared across operations. safety stoppages over the Lonmin achieved a number period, which illustrates our non-negotiable stance of noteworthy safety on safety. Safety is awards and milestones during the year, including: essential for good performance and remains

These shafts are managed as a coherent unit and some of them are run by contractors, providing better flexibility to retain or stop them, depending on their profit contribution to the Company.

our priority. We remain determined to continue to improve our overall safety performance and we continue to enhance our safety improvements. We remain committed to achieving zero harm.

our production performance since February 2017 enabled the mining operations to produce total tonnes for the year of 10.1 million tonnes, broadly ﬂat on the 10.3 million tonnes from the prior year. Our three core Generation 2 shafts (excluding 4B) increased year-on-year production by 7.1% (increase of 0.4 million tonnes from 6.5 million tonnes to 6.9 million tonnes) and, in line with our strategy to reduce high cost production in a low price environment, our Generation 1 shafts reduced production by 15.6% (decrease of 0.3 million tonnes from 2.2 million tonnes to 1.9 million tonnes).

Operations Ÿ Produced 10.1 million tonnes from mining, broadly flat on the 10.3 million tonnes from the prior year. Production of 6.9 million tonnes from our three core Generation 2 shafts increased by 7.1% on the prior year Ÿ Mined production of 651,307 Platinum ounces Ÿ Refined production of 687,529 Platinum ounces Ÿ Concentrators continue to deliver excellent recoveries of 87% Ÿ Total tonnes mined for Ÿ Sales of 706,030 the last nine months to Platinum ounces, September 2017 of 7.8 exceeded the sales million tonnes was in guidance of 650,000 to line with the prior year 680,000 Platinum ounces period, but our three Ÿ Unit costs increased by core Generation 2 shafts 8.9% to R11,701, partly increased production by impacted by the 8% 10.6% on prior year for increase in labour costs the same period, despite Ÿ Average Rand full basket the poor start to the price (including base financial year, when total metals) down 3.4% on tonnes mined for the prior year, at R11,236 first quarter decreased per PGM ounce by 7.8% from the prior year on prior year for the Mining same period. This result Ÿ After a poor first four illustrates the extent of months of the financial the momentum the year, the improvement in

*We continually review each shaft on its merits and in light of 4B shaft's lacklustre performance and its short life of mine relative to the other Generation 2 shafts, the capital required to improve 4B ranks behind other projects in capital allocation. As such, while we remain in a capital constrained environment, we are reclassifying 4B as a Generation 1 shaft for 2018.

mining team has established in the last nine months, following the weak ﬁrst quarter. Ÿ The turnaround was

achieved as a result of the decisive action taken, including senior management changes, a ﬂatter management structure with the General Managers now reporting directly to the Chief Executive Ofﬁcer and by leveraging our relationship with the union to address the management/union impasse, resulting in a step change in production at all shafts.

Ÿ There was an increase in

Management Induced Safety Stoppages (MISS). Production lost due to MISS for the year increased to 176,000 tonnes from 33,000 tonnes in the prior year period, reﬂecting our non-negotiable stance on safety.

Generation 2 Shafts Our three core Generation 2 shafts, which represent around 68% of total tonnage production, produced 6,9 million tonnes for the year, a 7.1% increase on prior year comparable production, driven by a strong turnaround at K3 which was up 5.4% year on year Ÿ A total of some 276,000 tonnes of production was (28% of total production) after a slow start, and a lost in the year due to 11.2% year on year Section 54 safety stoppages, equivalent to increase from Rowland 17,000 Platinum ounces (19% of total production). Saffy (21% of total lost, compared to production) continues to 559,000 tonnes lost in the prior year. This was a perform well and was up 5.8% year on year. reduction of 51% in production tonnes lost. Production at 4B (13% of total production) was down Ÿ We continued to experience a reduction in 16.9% due to worse than anticipated geological the duration and conditions and was also frequency of Section 54 stoppages as a result of impacted by safety stoppages and the our continued interaction with the DMR disruption associated with two fatalities. and the unions and a Productivity measured as decrease in serious square meters per mining injuries. employee at our Generation

2 shafts is slightly down at 5.8 compared to 5.9 from the prior year. Generation 1 shafts Our Generation 1 shafts have shorter life of mine relative to Generation 2 shafts with limited economies of scale and, as expected, production has declined. Hossy shaft Hossy shaft produced 0.7 million tonnes, broadly flat on prior year. Hossy shaft was scheduled to be put on care and maintenance by the end of the current financial year, but it continues to contribute to the business. Based on the available IAOR, which stand at 10.5 months and its relative contribution, we will continue to operate Hossy for the duration of FY 2018. Pandora E3 Joint Venture The combined E3 Pandora production of 574,000 tonnes is up 7.5% on the prior year, on the back of progress made pursuant to our recovery plans. In light of this improved performance and on completion of the Pandora acquisition, E3 is under consideration to be classified as a Generation 2 shaft.

W1, East 1 and East 2 shafts W1, East 1 and East 2 are shafts at the end of their lives and together produced 0,6 million tonnes, broadly ﬂat on the prior year. East 2 shaft was put on care and maintenance, post year end in November 2017. Contractors have continued to run W1, East 1 and East 2 (we run the engineering for East 2), and are responsible for all the costs associated with such shafts, and we thus retain the ﬂexibility to cease production if required.

In line with the Group's rationalisation of high cost areas, production from our Generation 1 shafts (Hossy, Newman, W1, E1, E2, E3 and Pandora (100%)) at 1.9 million tonnes was 15.6% lower than the prior year period.

Newman shaft A thorough technical assessment was conducted at the Newman shaft following the fatality in March 2017. A decision was taken to stop mining the limited remaining reserves due to safety concerns and, as a result, the shaft is on care and maintenance. OUR PEOPLE The Company recognises the labour intensive nature of our operations, and the important role that each of our employees play in ensuring the achievement of our goals. To mitigate the impact of the challenging environment in which we operate, and its 35

Lonmin views safety as a proxy for good performance and our commitment to Zero Harm aims to ensure that the necessary controls and procedures are in place to support the safety and health of our workforce and the environment.

likely impact on employee motivation and engagement, the Company has continued to invest on initiatives to improve the effectiveness of its leader's abilities to work effectively and motivate their employees.

principles in the organisation and increasing visibility on safety matters.

Our safety strategy takes a proactive approach to safety management with a focus on injury prevention and aims to entrench an operational culture that positively inﬂuences safety Focus has also continued on initiatives to improve the behaviour. This is entrenched via three general wellbeing of our objectives: employees including Ÿ Fatality prevention housing and living Ÿ Injury prevention conditions, ﬁnancial and Ÿ A safe high-performance employee wellness and operational culture employee's assistance programs. Employee development has been Health The services provided by refocused on developing core skills and compliance Lonmin's Health Department under related requirements in Lonmin's safety, health and line with revised budget environmental strategy and retention initiatives implemented for key skills provide comprehensive healthcare services and a and talent during this period. This will continue to continuum of care to improve the health status receive attention in the and quality of life of our future. employees and their Safety. families. Health services Our safety strategy is built are available to employees, their dependants and around the belief that we community members can operate without accidents and maintaining through three clinics and a high safety standards is an hospital at our Marikana operations, and a clinic integral part of demonstrating operational each at the PMR and Limpopo operations. excellence. Our goal is for every person in the business to have a personal Community members are treated on a fee-for-service understanding of, and respect for, the importance basis. Community members are assisted in of safety in the workplace through entrenching safety emergency situations

through our emergency care programme. Community health issues are managed through the community development department.

Black Economic Empowerment (BEE) Our BEE equity ownership is at least 26% in line with the requirements of the Mining Charter.

Union relations Lonmin respects and supports our employees' rights to freedom of association and representation, as well as the right of every employee to be heard. Lonmin interacts with unions at different levels within the Company on an ongoing basis.

Once-Empowered-AlwaysEmpowered principle The Chamber of Mines and the DMR are currently scheduled to argue the applicability of the OnceEmpowered-AlwaysEmpowered principle by way of a declaratory order application in 2018. There is a possibility that this application may be incorporated into a wider Charter Review application set down for March 2018.

Engagement takes place through the various union structures and management interactions with union representatives and critically directly with employees. Monthly and quarterly meetings are held to share information on Lonmin's performance and evolving situation. The Company also provides training to shop stewards on legislative matters, business skills and the requirements of their roles, responsibilities and obligations. The Association of Mineworkers and Construction Union (AMCU) is the majority union, representing 81.8% of full-time employees as at 30 September 2017.

Our business begins and ends with relationships and the quality of those relationships are central to our success and that of our stakeholders.

The New Mining Charter The 2010 Mining Charter contained targets until 2014. An attempt by the DMR to implement the provisions of a new Mining Charter gazetted in 2017 was interdicted on an urgent basis by the Chamber of Mines. This led to an unsuccessful attempt by the DMR to impose a moratorium on new mineral right applications and ultimately to the DMR agreeing not to impose the provisions of the Reviewed Mining Charter pending the outcome of the Mining Charter review. In the interim, the targets contained in the 2010 Mining Charter continue to apply. 37

Lonmin embraces transformation as a business imperative and continue to make progress in this regard. We are committed to playing our part in addressing historic inequalities and creating conditions in which current and future generations can succeed in creating a shared purpose. The Mining Charter requires a focus on increasing the number of Historically Disadvantaged South Africans (HDSAs) in management and the number of women in mining.

Transformation Transformation is monitored and overseen at Board level by the Social, Ethics and Transformation Committee. Transformation considerations are incorporated into recruitment, succession, skills development and talent management functions to develop an internal pipeline of HDSAs, including women. Lonmin's bursary and graduate development programmes prioritise HDSAs in order to build the future supply of appropriate candidates. Targets relating to transformation are included in the Corporate Balanced Scorecard that is used to measure performance for the incentive scheme.

employee base, and ultimately is a direct investment in the sustainability of our operations themselves. Stakeholder engagement We have made signiﬁcant progress in this area having consolidated departmental structures under a Stakeholder Engagement and Regulatory Affairs Executive Vice President; segmentalised and prioritised stakeholder groups and individuals; and formalised engagement policies and procedures for each group allowing for consistent and constructive engagement to be monitored and tracked.

The objective of having a rigorous stakeholder engagement strategy and Social Labour Plans (SLPs) process is to: Ÿ Ensure that there is Our commitment to sufﬁcient buy-in for corporate citizenship community projects deﬁnes our duty to contribute to the wellbeing Ÿ Build a partnership model for community and development of the projects that ensures communities that host, and sustainability, ownership are affected by, our and exit strategies operations. This duty is Ÿ Align with government formalised in the SLP development goals obligations under the terms of our mining rights. Ÿ Create jobs and support local business Investing in the long-term development to align and social, economic and manage expectations infrastructural Ÿ Create shared value and development of our host purpose communities translates into an investment in our current and future

Sustainability Acknowledging all the social and labour challenges of the past, Lonmin strives to conduct its business in a sustainable, socially and environmentally responsible manner, openly and transparently going beyond compliance, to address the spirit of the Mining Charter. Market Outlook 2018 Cuts to production by South African producers initiated in 2017 are expected to result in reduced platinum output next year, while demand is forecast to recover to 2016 levels leaving the market in a fundamental deﬁcit. Automotive demand is expected to be marginally lower as diesel's share continues to decline in a modestly growing light vehicle market. Most automakers continue to develop new light duty diesel powertrains, recognising their role in meeting tough ﬂeet greenhouse gas targets. Sales Prices Over FY2017 rhodium staged a strong recovery and was the best performing PGM rising 72% from $685/oz to $1,175/oz. Palladium also performed well gaining

30% to $935/oz which resulted in palladium trading at a small premium to platinum, which lost 11% to $920/oz, for the first time since 2001. The Rand averaged 13.37 against the US dollar during FY2017. The Rand ended the financial year as it started at 13.55 to the US dollar. After some weakness at the end of 2016 when the Rand traded down to 14.4, it spent most of 2017 trading closer to 13.0 until September when it weakened to 13.6. Automotive electrification Automotive electrification is driven by the need to decarbonize transport to protect the environment; primarily to reduce global greenhouse gas (CO2) emissions, but also to improve local air quality. Paris has announced plans to ban combustion engines by 2030, the culmination of short term responses to air pollution.

Global demand for jewellery is anticipated to improve as jewellery demand in China is expected to stabilise and growth continues in most other regions, especially India, given marketing development efforts. Industrial demand is set to grow again in 2018, as glass and petroleum demand cyclically rebounds, as well as demand from chemical catalysis in the production of silicones.

Diesel has long been seen as a signiﬁcant step on the path to reduce CO2 emissions, but concerns over urban air quality, particularly NOx levels, have prompted a move away from combustion engines. Diesel has still made a substantial 39

The average platinum content of diesel after treatment systems increased under Euro 6b legislation as lean NOx traps (LNT) were added to comply with tighter NOx emissions standards. But as Euro 6d, with Real Driving Emissions (RDE), takes effect from September 2017, the platinum content is expected to reduce somewhat as automakers move away from LNT to non-PGM selective catalytic reduction (SCR) for better NOx control, increasingly combined with the particulate filter on a single PGM-free brick. Some limited NOx trap functionality may return to light duty diesels for Euro 6d final, with some limited platinum loadings upside.

contribution to European fleet average CO2 reductions, so many automakers may struggle to meet the 2021 target of 95 g/km CO2 emissions. Much higher levels of electrification than current, will be needed to meet these global CO2 targets. Electrification covers a spectrum of architectures, from mild hybrids, through full hybrids and plug-in hybrids, to battery electric vehicles (BEVs). All the hybrids retain an internal combustion engine (mainly gasoline, though some diesel) and so will continue to need a PGM-based autocatalyst.

them to meet emissions targets in a commercially viable way over the medium term. Many automakers are cutting costs and warning that profits may reduce as they find ways to fund the development of BEVs and their infrastructure. The intermittent combustion when operating under hybrid conditions and combustion modified to lower emissions can both lead to lower exhaust temperatures, which severely test the catalytic after treatment system.

Minimising cold-start emissions has always been one of the challenges in three way catalyst (TWC) design for gasoline The rate at which vehicles; increasing the automotive electrification palladium and rhodium proceeds depends on loadings would have little battery technology, on fuelling infrastructure and effect at low temperatures, so it is likely that the PGM on electricity generation. content of hybrids will be While the technological, legislative and commercial similar to comparable conventional gasoline aspects are often vehicles. There is scope prominent, the consumer further to lower emissions aspects of cost and from gasoline and convenience cannot be gasoline-hybrid vehicles by overlooked either; people will only buy a car at a price optimising the location of the PGMs and improving they can afford, that they several aspects of the can drive long distances, and can refuel quickly and catalyst substrate, including moving from easily. For most conventional TWC automakers, combining architectures to electrification with catalytically-coated increasingly fuel efficient gasoline particulate filter combustion engines in hybrid vehicles will enable architectures.