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Year end presentation 30 September 2002
Year end presentation 30 September 2002
Today’s presentation
• Operations report and update
• Organic growth/expansion update
• Market report and analysis
• Financial report
• Strategic developments including BEE
Operational highlights
• Total tonnes ore milled +7%
• Refined production of PGM’s +8%
• Smelter successfully commissioned
• Expansion plan remains on time and on budget
Financial highlights
• Operating profit $331million
• Earnings per share 121.5c
• Total net debt at 30 September
2002 $155million
• Final dividend of 42c per share making
the total dividend for the year 72c
Strategic highlights
• $75 million invested in Ashanti
• Indepgold in Zimbabwe sold for $15.5 million
• Use of assets within the secondary markets
• Strategic developments
Balance sheet management
• Balance sheet restructuring early
in the year highly successful
• Year end gearing level 23%
• Continued commitment to tight
balance sheet management
610
1163
New production records setPGM oz’000 refined
Refined production of Platinum
Refined production of PGM’s
1999 2000 2001 2002
660
1236
717
1358
757
1468
Unit costs
2001 2002 2001 2002
SAR cash cost per PGM oz(excludes royalties)
US$ cash cost per PGM oz(excludes royalties)
SAR US$
1594
1780 197
168
0.48
0.65
0.44
0.62
0.52
0.32
0.45
SafetyFatality rate: surface and underground
7Fatalities per FY:
Rat
e per
1000 e
mplo
yees
per
annum
10 7 10 9 6 11
Industry
1996 1997 1998 1999 2000 2001 2002
0
0.2
0.4
0.6
0.8
Successfully commissioned during 2002 at a final cost of $51million
Growth milestoneNew smelter
Both the Eastern Platinum C Stream Concentrator (pictured) and the K4South Concentrator were successfully commissioned in October 2002
Growth milestoneNew concentrators at Karee and Eastern
Hossy shaft. One of the four new shafts currently being sunk by Lonplats
Growth milestoneShaft projects
Construction of shafts and infrastructure to commence in 2003
Growth milestonePandora
600
700
800
900
1000
2000 2001 2002 2003 2004 2005 2006 2007 20080
20
40
60
80
100
120
140
Future growth profileProduction and Capex profile 2000-2008
Capex Actualproductionprofile
FY 2002productionprofile
FY 2003productionprofile
Financial year
Pt ozsThousands US$ million
Note: Above figures reflect major replacement and expansion Capex.
The platinum market
• Strong price recovery• Platinum fundamentals
remain sound• Autocatalyst demand
buoyant• Record offtake by
Chinese jewellerymarket
US$ per Platinum oz
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2001 2002
300
400
500
600
The palladium market
• Russian spotsupplies controlled
• Palladium fundamentalscharacterised byweak demand andinventory overhang
• Automakers drawdown stocks
US$ per Palladium oz
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2001 2002
300
400
500
600
The rhodium market
600
700
800
900
1000
1100
1200
• Rhodium fundamentalswholly dependent onautocatalysis
• Affected by automakersinventory management
• Thin markets capped byproducer selling
• New lower trading range
US$ per Rhodium oz
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2001 2002
Market summaryJohnson Matthey reported
Platinum
• Record demand
• Widening deficit
• Strong Chinese and Autocatalyst off-take
Palladium
• Demand down 28% to eight year low
• Inventory draw down by US auto companies
• Russian spot supply withheld
• Signs of stability in dental / electronic demand
Financial results
Highlights
Turnover
EBITDA
Operating profit
Profit before tax
Earnings per share
Dividends per share
Gearing at year end - on equity
- on total
2002$ million
2001$ million
697
372
331
332
121.5c
72.0c
23%
18%
866
541
490
523
153.7c
64.0c
nil
nil
Summary of results
EBITDA
Depreciation – standard
Depreciation - Zimbabwe impairment
Associate's operating loss
Operating profit
Net interest and similar items
Profit before tax
EBITDA margin
2002$ million
2001$ million
372
(39)
-
(2)
331
1
332
53%
541
(39)
(12)
-
490
33
523
62%
Operating profit variance analysis
Operating profit at 31st September 2001
Lonplats - prices
- volumes
- costs
Zimbabwe
Head Office - exploration
- other
Operating profit - 30th September 2002
$ million
490
(225)
51
6
15
(10)
4
331
Summary of results
Profit before tax
Tax
Minority interest
Profit for the year
2002$ million
2001$ million
332
(75)
(72)
185
523
(150)
(99)
274
121.5
153.7
20012002
EPScents
Tax
Current tax - excl exch
- on local exch
Deferred tax
STC
Exchange - current tax
- deferred tax
Tax charge
Tax rate excl exch
2002$ million
2001$ million
71
5
36
16
(29)
(24)
75
37%
132
6
20
38
(19)
(27)
150
36%
EPS analysis
EPS as reported
EPS pre buybacks/capital return
EPS enhancement
121.5c
107.9c
12.6%
2002
Trading cash flow
Net cash inflow from operating activities
Net interest
Tax paid
Trading cash flow
Trading cash flow per share
359
3
(181)
181
118.9c
525
17
(109)
433
242.9c
2002$ million
2001$ million
Free cash flow
Trading cash flow
Capital expenditure
Minority dividends paid
Free cash flow
Free cash flow per share
181
(152)
(36)
(7)
(4.6)c
433
(115)
(88)
230
129.0c
2002$ million
2001$ million
Net cash flow
Free cash flow
Acquisitions and financial investment
Shares issued
Shares bought back
Capital return
Equity dividends paid
Net cash (outflow)/inflow
2002$ million
2001$ million
(7)
(78)
3
(128)
(360)
(109)
(679)
230
(17)
4
(19)
-
(110)
88
Balance sheet highlights
Equity interests
Net (borrowings)/cash
Gearing - on equity
- on total
Return on equity
Return on capital employed
Return on operating assets
2002$ million
2001$ million
675
(155)
23%
18%
21%
38%
52%
1077
523
Nil
Nil
27%
71%
99%
Enterprise value
Market cap
Less:
(Borrowings)/net cash
Enterprise value
Total cash paid to shareholders during 2002 - $597m
2002$ million
2001$ million
1881
(155)
2036
2180
523
1657
growth
23%
Financial summary
• Capital distribution of around $0.5bn
• Return on operating assets of 52%
• Dividend increase of 13% to 72c per share
• Enterprise value enhanced by 23%
• Gearing of 23% at year end
Strategic developments
Strategic developments
North America
Lonmin’s venturewith Wallbridge
explores for PGM’sin Sudbury Canada
United Kingdom
Lonmin’s head office is basedin London. It is the onlyfocused PGM producer withit’s primary listing on the LSE
Australia
Lonmin has investmentsin two PGM explorationcompanies
Tanzania
Lonmin has entered into ajoint venture to explore forPGMs in Tanzania
South Africa
Lonmin Platinum which is owned 73% butoperated 100% by Lonmin is the third largest ofthe South African PGM producers, and is locatedin the North West province. The Group maintainsa regional office in Johannesburg and Lonmin islisted on the JSE
Australian investmentHelix and Platinum Australia
Munni MunniPGM project
Panton PGM project Helix• Lonmin has taken an 11.8%
equity interest and has spentA$8.7m on exploration drilling onthe Munni Munni project
• No further spend is anticipatedpending final evaluation of data
Platinum Australia• Lonmin holds 39% of PLA and
has underwritten a rights issuefor A$3.1m
• Resource - Top Reef 10.6mt @5.6g/t (Pt+Pd+Au)
• Economics depend on thedevelopment of a commerciallyviable metallurgical process. Testwork continues as part of theFeasibility Study
Canadian investments
Wallbridge
• US $4.5m committed toexploration for PGM's in Sudbury
• Attractive targets identified
Tanzanian investments
Mibango
• agreement signed:August 2003
• US$1.0m committed toexploration
Secondary processing
• Ample smelting and refining capacity available
• Opportunities exist - optimise mass pulls
- support junior miners
- recycle material
• Recycle material build up to an estimated rate
of some 100,000 ounces of annualised PGM’s
over 2003
• Flexibility to be maintained
Gold investments
• Independence gold in Zimbabwe sold in October
2002 for $15.5m
• $75m invested in Ashanti M.E.N.'s
• Equity conversion via rights issue within a year
• Ashanti balance sheet strengthened
• Equity dilution maintained at 28%. Dilution to
below 20% avoided
• Ashanti investment value protected and Lonmin
well positioned for exit
BEE approach
• Lonmin supports the Government objectives
• Consultations with Impala have commenced
• Lonmin are targeting a timely solution
• South African capital market participants must
recognise the need for liberation of HDP savings
for broad based BEE use
HDSA EquityShareholding
HDSA ProcurementPolicies
Employment Equityand Skills Development
Corporate SocialInvestments
HDSA EquityShareholding
Employment Equityand Skills Development
HDSA ProcurementPolicies
Corporate SocialInvestments
Lonmin’s current positionvs. anticipated BEE scorecard
Lonmin Empowerment
Vision
Summary
Lonplats
Gold
Financial
Corporate
• Growth on track• Recycle opportunity• BEE
• Zimbabwe sold• Ashanti strengthened
• Tight balance sheet• High yield
• Impala• Other opportunities
• Continue to manage diligently• Gradual build up• Timely solution targeted
• Rights issue and seek exit
• Maintain• Maintain
• Continue to seek solution• Remain open minded and
opportunistic
Status Quo Strategy
