During the 2011 financial year, the Mining Division demonstrated continued growth despite the impact of the illegal industrial action encountered at the Karee operations during May as well as the safety stoppages. Total tonnes mined during the 2011 financial year were 11.7 million, a 0.4 million tonne increase from 2010.
This is largely attributable to improvements at K3 shaft and the ramp up in production from our Merensky opencast operations. Momentum has been re-established following the strike in May.
Marikana Ore Reserves:
|Easterns (including JV)||576||483||93||19%|
Overview of Marikana Mines
It is pleasing to note that the ore reserve position has increased by 9% from the level reported in 2010. The ore reserve increase for Karee of 25%, Middelkraal of 9% and Easterns of 19% support Lonmin’s growth build up towards the 950,000 Platinum ounces. The Westerns operations decreased as planned.
Mining grades reduced in comparison to 2010 due to:
- an overall reduction in the in situ grade;
- increased development to support the ramp up in production, poor ground conditions at K3;
- increased dilution necessitated for safety reasons while mining through geologically disturbed ground conditions; and
- an increase in the proportion of underground Merensky and of lower grade opencast Merensky ore.
Grades, however, remain within the acceptable range.
Progress has been made on a number of initiatives launched over the past years to ensure improved delivery and increased productivity in the Mining Division. These include:
- finalisation of incentive programmes for our productive employees including supervision to increase the element of variable pay;
- improved long and short term planning systems are entrenched and have been enhanced to enable the evaluation of different production scenarios at short notice;
- design of fit for purpose cost and management systems have been completed and are scheduled to be rolled out to all operations during the course of 2012;
- the “Line of Sight” management system to track production on a daily basis has been embedded in all the operations and is starting to bear fruit in allowing early identification of technical bottlenecks, lost blast analysis and improved productivity; and
- relationships with the unions and DMR improved and continue to be enhanced as a result of various management actions, such as the safety initiatives, that were driven through the year.
The inflationary cost pressures being experienced by the industry are of great concern to management and various productivity improvement programmes such as team effectiveness development, technical up skilling of employees, face advance and blast frequency improvement projects, have been identified and are scheduled for implementation in 2012 to mitigate these pressures.
In 2011 the Karee operations, K3,1B, 4B and K4, mined 4.4 million tonnes which represents an increase of 0.3 million tonnes from 2010. This is a result of the flexibility created by an improvement in ore reserves at K3 resulting in a better than anticipated ramp up following the industrial action during May of this year. Going forward management is confident that the improved momentum will continue and result in the planned increase from the Karee operations. The mining grade has decreased as a result of increased dilution associated with split reef and increased stoping widths for safety reasons. Unit cost per tonne increased by 6.8% to R573 and was negatively impacted by the high fixed cost base during the strike.
Production from our Westerns operations, Rowland and Newman, at 3.4 million tonnes declined by 0.3 million tonnes on 2010 as expected with the depletion of Newman shaft. Additional dilution from the roof bolting in the stoping horizon, necessitated by safety concerns, together with a drop in the in situ grade had a negative impact on the head grade. The reduced production resulted in the unit cost per tonne increasing by 14.3% to R542 per tonne.
The production from our mechanised and hybrid shafts at Middelkraal, Saffy and Hossy, was largely flat at 1.9 million tonnes per year. Grade was negatively impacted by the higher ratio of development ore versus stoping production. Unit cost per tonne increased to R739 per tonne or 17.5% whilst the operations struggled to meet increased production targets.
Saffy’s production was significantly impacted during 2011 by adverse ground conditions. The production delays experienced during the year have largely been addressed by means of changes in layout designs as well as a revision to the support strategy. The increase in face length availability resulting from the change in layout and the build up of stoping crews have resulted in this shaft having the necessary flexibility to achieve planned production increases in 2012.
Good progress was made at Hossy during the year. However, the biggest challenges that continue to be faced by the mechanised mining team centre around machine reliability, the availability of replacement parts and the supply of trained artisans. Whilst we have ongoing programmes to address these issues a decision has been taken to introduce hybrid mining in some upper quadrants, to reduce the risk to production.
Although this is a small section of our business our Easterns operations, E1, E2, and E3, performed exceptionally well with production increasing by 8.4% in comparison to 2010 supported by the healthy position of the ore reserve. The mining grade from stoping operations improved, however, this was offset by increased ore from development evident from the improved ore reserve position. Cost per tonne was contained to increase by only 6.1% to R577 per tonne.
The Merensky opencast operation at Marikana included a full year of production in 2011 compared to around six months of production in 2010. Although the grade was below expectations during most of the year the change in the mining method and sequencing introduced in the last quarter have resulted in improved grades being achieved.
Future growth from our underground operations will be generated from our Karee and Middelkraal mines as the K4 shaft continues to ramp up over the next few years.
Pandora Joint Venture
|Attributable production (’000 tonnes)||168||166||1.2%|
|Saleable metals in concentrate (’000 oz PGMs)||48,199||49,345||(2.3)%|
|Profit after tax||$8m||$5m||60%|
The extension of the current Pandora underground operation which will give access to two additional levels, extending the life of E3 shaft to 2029 is in execution phase. The capital project is currently ahead of schedule and has performed well.
The feasibility study on the 180,000 tonnes per month project has undergone review of the different components of the study and is ongoing.Back to top
The Mining division demonstrated continued growth despite the impact of the illegal industrial action at Karee and the safety stoppages.
Output from K3 increased by 10% from 2010 and the shaft’s safety performance improved. We invested further capital in the development of ore reserves and we expect K3 to contribute around 20 to 30% of our underground production in 2012.
Our K3, K4, Saffy and Hossy shafts drive our growth ambitions.
We are introducing an element of hybrid mining to some of the mine areas to mitigate the risk to production.