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We have produced a very encouraging set of results whilst continuing to improve on our safety record. These results mark the end of the two year period we set ourselves in 2008 to restore the operational health of our business and demonstrate the significant progress we have made in that time. We achieved Platinum sales of 706,000 ounces from our Marikana operations, ahead of sales guidance of 700,000 ounces. The problems we encountered with the Number One furnace again this year were disappointing and meant that we had to toll refine and sell some part processed material. This was the best commercial option for the business.
Encouragingly metal in concentrate was 694,000 Platinum ounces, well ahead of 663,000 Platinum
ounces delivered last year, whilst the mines hoisted some 700,000 Platinum ounces as ore stocks were built up. This improvement came about through an increase in underground tonnes hoisted, better grades and significantly improved recoveries, all of which more than offset the impact of closing Limpopo and our UG2 opencast pits in 2009.
At the same time, we continued to make significant progress with our development of ore reserves, a crucial indicator of the health of our mining operations.
Although we operated in an environment with inflationary pressures on key inputs such as wages
and electricity, our Rand unit costs per PGM ounce produced only increased by 2%, much lower than South African PPI reflecting productivity improvements.
Of course we will still have issues as this is, and will always be, a very challenging business. These results however, could not have been delivered without a management team, and an emerging culture, in which matters are identified and dealt with in a timely, constructive and professional manner and where Key Performance Indicators are tracked and monitored on a regular basis.
We have reiterated our production target of 850,000 Platinum ounces by 2013 from our Marikana
operations including our share of Pandora joint venture, with replacement and growth ounces being generated from Hossy, Saffy and K4.
Safety is fundamental in everything we do and it will always be at the forefront of our minds. We have worked hard at addressing the behavioural and cultural issues which are fundamental to a good safety performance. This includes focusing on upgrading our safe production training programmes and increasing safe behaviour observations. We have also improved our procedures for compiling safety data.
Our Lost Time Injury Frequency Rate (LTIFR) improved marginally, from the end of the 2009
financial year to 5.87 per million man hours worked, but sadly we suffered three fatalities, two as a result of fall-of-ground incidents and one from a tramming incident.
We lost fewer tonnes this year from Section 54 stoppages as the frequency and length of the stoppages decreased and the manner in which they are applied became more pragmatic. This reflects the collaborative relationship we have developed with our employees and the Department of Mineral Resources (DMR) on safety matters, and the emphasis we have been placing on consistent application of high safety standards in all our operations.
Hossy's production profile and grade has improved during the year and we have decided to continue with the fully mechanised proof of concept project. The average monthly production has ramped up to 67,000 tonnes per month in 2010, a significant increase from 2009 when it averaged 56,000, whilst the grade has improved from 4.38 to 4.60 grammes per tonne. Two new mining half levels, defined as quadrants in a mechanised shaft, came on stream in the first half of this year bringing the total number of quadrants being mined to six.
The key drivers to Hossy's improvements have been enhancements to the mining layout and infrastructure and equipment upgrades. We have also kept up our development and training initiatives in core areas. This is important as there is a general shortage of people with mechanised experience in the industry and this will remain a key area of focus.
We retain our target of achieving productivity of 2,200 square metres per month per suite of equipment by the end of 2011 financial year in fully developed quadrants.
We have continued to make good progress with the capital development at Hossy, Saffy, K4, and
the declines at K3 and Rowland shafts, all of which are essential to our medium term production.
While the key focus for the team is delivery on time and budget, the Capital team, under the leadership of Frank Russo-Bello, are examining ways of reducing capital costs and improving project productivity. Frank is also leading a team that is looking at further opportunities to optimise our life of mine extraction strategy.
Motivating and developing our people is a key contributor to achieving consistent production. We continued to introduce a number of employee relations initiatives designed to promote a safe performance driven culture.
These are supported by regular and improved communication between management and employees. We have also rolled out a programme to standardise and align the production reward system across all our operations.
We are delighted to have played our part in helping secure the future of Incwala, our BEE partner. It is important that we have a strong BEE partner, and we welcome Shanduka as Incwala's majority shareholder. The terms of the funding provided to Shanduka, to help facilitate this transaction, provide for Lonmin to receive a fair commercial return. In addition, in the event that there is significant future value created for Shanduka through its Incwala shareholding, the terms of the funding provide that a proportion of such incremental value uplift will be shared with Lonmin. This was not available to Lonmin under the original Incwala transaction in 2004. Shanduka has representation on our Executive Committee which meets every month to consider operational and strategic issues, and Cyril Ramaphosa has joined the Lonmin Board. This partnership will enable us to work closely together as we explore new initiatives and execute our transformational objectives.
We raised £160 million of fresh capital to part fund the loan to Shanduka.
Our communities and our employees are very important stakeholders. This year we have spent R35 million on community projects and R15 million on converting five hostel blocks into married and single room accommodation for our employees. There is still much more work to be done in both these areas and we have budgeted to invest some R42 million in 2011 on community projects and R100 million per annum for the next three years on our hostel conversion programme.
The education and training of our employees is another key area and we continue to have employees enrolling in the Adult Based Education Training (ABET) adult learning scheme. Our total training budget for 2011 amounts to some R208 million, which includes the provision of bursaries to some 43 full time university students of which 37 are Historically Disadvantaged South Africans (HDSAs) and 21 are female. Our management payroll now includes 43% HDSAs and these are all merit based appointments.
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