Lonmin PLC Final Results (9746E)

TIDMLMI

RNS Number : 9746E

Lonmin PLC

09 November 2015

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THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL CONSTITUTE AN OFFERING OF ANY SECURITIES. ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY OF THE COMPANY'S SECURITIES MUST BE MADE ONLY ON THE BASIS OF INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY THE COMPANY IN DUE COURSE.

9 November 2015

2015 Final Results Announcement

Lonmin Plc, ("Lonmin" or "the Group"), one of the world's largest primary Platinum producers, today publishes its Final Results for the year ended 30 September 2015.

   --     Safety 

o Regrettably three fatalities in the second half of the year after 18 months fatality-free

o Lost Time Injury Frequency Rate (LTIFR) increase to 5.41 from 3.34

   --     Operational achievements 

o Saffy shaft ramped up to steady state full production as planned

o Platinum sales of 751,560 ounces - the highest since 2007 and above market guidance of 730,000 ounces

o Platinum metal-in-concentrate for the year was 740,315 saleable ounces

o Mined production of 704,776 Platinum ounces - impacted by a loss of 48,000 ounces due to Section 54 safety stoppages

o Operational flexibility maintained with available ore reserves at an average of 22 months production

o Outstanding instantaneous recovery rates improved to 87.2%

   --     Business Plan 

o Business Plan developed to address low PGM pricing and retain flexibility

o Right sizing now 50% complete within six months with 3,136 workers exited (2,120 employees and 1,016 contractors)

   --     Financial Results - Decisive action taken on operational and cost savings 

o Cost of production per PGM ounce reduced to R10,339 per PGM ounce - lower than guidance of R10,800

o Tightly controlled capital expenditure of $136 million - lower than original guidance of $250 million

o Net debt of $185 million with available committed facilities of $543 million (net debt of $29 million in 2014)

o Net assets attributable to equity shareholders valued at $1.6 billion after impairment charge of $1.8 billion

o Underlying loss before tax $143 million ($46 million profit in 2014)

o Underlying loss per share of 16.2 cents versus earnings 5.4 cents in prior year

   --     Guidance for 2016 to 2018 

o Platinum sales of c.700,000 ounces for 2016, and c.650,000 for each of 2017 and 2018

o Reduction in the size of the Group's workforce and overheads planned to deliver 2016 cost reduction of c.R0.7 billion and c.R1.6 billion for 2017 (in real terms)

o Unit costs to be broadly flat on 2015 in nominal terms at c.R10,400 for three more years to 2018

o Capital expenditure limited to c.$132 million for 2016, $110 million for 2017 and $188 million for 2018, of which $43 million third party funding to be used of the Bulk Tailings Treatment plant

   --     Strengthening of Balance Sheet 

o The Rights Issue is expected to raise approximately $407 million (in gross proceeds)

o Conditional amended banking facilities agreed with all existing lenders for $370 million

Lonmin Chief Executive Officer Ben Magara said:

"2015 has been a tough year for Lonmin given the adverse pricing environment and the imminent maturity of our debt facilities in mid 2016. However, we have worked hard with all stakeholders and have reduced costs and started to restructure the Group to focus our efforts on the four Generation 2 shafts, which is expected to account for 90% of our production. Our priority is to run the business with a focus on cash generation and profitable ounces. We are repositioning Lonmin and aiming for the business to generate positive free cash flow after capital expenditure in this current low environment. In addition, we remain confident of the long-term market fundamentals for Platinum and its associated group of metals even though our Business Plan is designed to ensure Lonmin is resilient in this low price environment. I am pleased that we have secured $370 million of bank facilities from all ten of our existing lending banks which is conditional on the $407 million Rights Issue. It is encouraging that our Rights Issue has been fully underwritten and we hope shareholders vote positively on 19 November 2015. We firmly believe that the Rights Issue is in the best interest of our shareholders."

FINANCIAL HIGHLIGHTS

 
                                     30 September   30 September 
                                             2015           2014 
----------------------------------  -------------  ------------- 
 
 Revenue                                  $1,293m          $965m 
 Underlying (i) operating (loss) 
  / profit                                ($134)m           $52m 
 Operating loss (ii)                    $(2,018)m        $(255)m 
 Underlying (i) (loss) / profit 
  before taxation                         ($143)m           $46m 
 Loss before taxation                   $(2,262)m        $(326)m 
 Underlying (i) (loss) / earnings 
  per share                               (16.2)c           5.4c 
 Loss per share                          (285.5)c        (33.0)c 
 
 
 Trading cash outflow per share 
  (iii)                                    (2.1)c        (20.4)c 
 Free cash outflow per share 
  (iv)                                    (28.7)c        (43.2)c 
 
 
 Net debt as defined by the 
  Group (v)                               $(185)m         $(29)m 
 
 
 Interest cover (times) (vi)                 7.9x           4.0x 
 Gearing (vii)                               9.9%           0.6% 
 
 

Footnotes:

 
 i     Underlying results are based on reported results 
        excluding the effect of special items as disclosed 
        in note 3 to the financial statements. 
 ii    Operating (loss) / profit is defined as revenue 
        less operating expenses before impairment of 
        available for sale financial assets, finance 
        income and expenses and before share of (loss) 
        / profit of equity accounted investments. 
 iii   Trading cash flow is defined as cash flow from 
        operating activities. 
 iv    Free cash flow is defined as trading cash flow 
        less capital expenditure on property, plant 
        and equipment and intangibles, proceeds from 
        disposal of assets held for sale and dividends 
        paid to non-controlling interests. 
 v     Net (debt) as defined by the Group comprises 
        cash and cash equivalents, bank overdrafts 
        repayable on demand and interest bearing loans 
        and borrowings less unamortised bank fees, 
        unless the unamortised bank fees relate to 
        undrawn facilities in which case they are treated 
        as other receivables. 
 vi    Interest cover is calculated on the underlying 
        operating (loss) / profit divided by the underlying 
        net bank interest payable excluding exchange 
        differences. 
 vii   Gearing is calculated as the net debt attributable 
        to the Group divided by the total of the net 
        debt attributable to the Group and equity shareholders' 
        funds. 
 

ENQUIRIES

Investors / Analysts:

Lonmin

 
 Tanya Chikanza (Head of    [phone] / +44 
  Investor Relations)        20 7201 6007 
 

Media:

Cardew Group

 
 Anthony Cardew / James    [phone] 
  Clark                     0777 
                           +27 72 644 
 Sue Vey                    9777 
 

Notes to editors

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

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.

For further information please visit our website: http://www.lonmin.com

IMPORTANT NOTICES

This announcement, and the information referred to in it, is an advertisement and not a prospectus and any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities in Lonmin plc (the "Company") ("Securities") should only be made on the basis of information contained in or incorporated by reference into a prospectus. This announcement cannot be relied upon for any investment contract or decision.

This announcement is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Securities in any jurisdiction.

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November 09, 2015 02:59 ET (07:59 GMT)

The information contained in this announcement is not for release, publication or distribution to persons in the United States of America, Australia, Canada or Japan or any other jurisdiction where to do so would be unlawful (an "Excluded Territory") and should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute a violation of the securities laws or regulations of such jurisdiction. There will be no public offer of Securities in the United States of America or any Excluded Territory. The distribution of this announcement and/or the Prospectus and/or the Securities into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement and/or the information contained herein and/or the Prospectus and/or a Provisional Allotment Letter and/or a Form of Instruction comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction.

The Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Securities have not been approved or disapproved by the United States Securities Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the proposed rights issue or the accuracy or adequacy of the Prospectus. Any representation to the contrary is a criminal offence in the United States.

Accordingly, subject to certain exceptions, the proposed rights issue is not being made in the United States of America and neither this announcement, the prospectus to be published in due course, the Letters of Allocation nor the Provisional Allotment Letters constitute or will constitute an offer, or an invitation to apply for, or an offer or an invitation to subscribe for or acquire any Securities in the United States. Subject to certain limited exceptions, Provisional Allotment Letters will not be sent to, and Nil Paid Rights will not be credited to the CREST account of, any qualifying shareholder with a registered address in or that is located in the United States of America.

This communication is for distribution only to, and directed only at, persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (as amended by Directive 2010/73/EU) ("Qualified Investors"). For the purposes of this provision, the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each member state of the European Economic Area which has implemented the Prospectus Directive. In addition, in the United Kingdom, this communication is for distribution only to, and is directed only at, Qualified Investors who (i) have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) are persons falling within Article 49(2)(a) to (d) of the Order, or (iii) are persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). Any investment or investment activity to which this communication relates is available only to and will only be engaged in with such persons. This communication must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area (including the United Kingdom), by persons who are not Qualified Investors.

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change. Nothing in this announcement should be interpreted as a term or condition of the Company's proposed rights issue.

A copy of the prospectus containing details of the proposed rights issue when published will be available from the registered office of the Company and on the Company's website at www.lonmin.com provided that the prospectus will not, subject to certain exceptions, be available (whether through the website or otherwise) to shareholders in the United States or any Excluded Territories.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

This announcement does not constitute a recommendation concerning any investor's options with respect to the proposed rights issue. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, any of the Banks or any other person. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company's group since the date of this announcement or that the information in it is correct as at any subsequent date.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

This announcement, and the information referred to in it, includes forward-looking statements. All statements other than statements of historical fact included in this announcement and the information referred to in it, including without limitation those regarding Lonmin's plans, objectives and expected performance, are forward-looking statements. Lonmin has based these forward-looking statements on its current expectations and projections about future events, including numerous assumptions regarding its present and future business strategies, operations, and the environment in which it will operate in the future. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "could", "would", "expect", "intend", "estimate", "anticipate", "believe", "plan", "aim" or "continue", or, in each case, their negative, or other variations or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors related to Lonmin, including, among other factors: (1) material adverse changes in economic conditions generally or in relevant markets or industries in particular; (2) fluctuations in demand and pricing in the mineral resource industry and fluctuations in exchange rates; (3) future regulatory and legislative actions and conditions affecting Lonmin's operating areas; (4) obtaining and retaining skilled workers and key executives; and (5) acts of war and terrorism. By their nature, forward-looking statements involve risks, uncertainties and assumptions and many relate to factors which are beyond Lonmin's control, such as future market conditions and the behaviour of other market participants. Actual results may differ materially from those expressed in forward-looking statements. Given these risks, uncertainties, and assumptions, you are cautioned not to put undue reliance on any forward-looking statements. In addition, the inclusion of such forward-looking statements should under no circumstances be regarded as a representation by Lonmin that Lonmin will achieve any results set out in such statements or that the underlying assumptions used will in fact be the case. Other than as required by applicable law or the applicable rules of any exchange on which Lonmin's securities may be listed, Lonmin has no intention or obligation to update or revise any forward-looking statements included in this announcement after the publication of this announcement.

CONTENTS

This document contains the following sections:

-- Chief Executive Officer's Review;

-- Operational Review;

-- Market Review;

-- Mineral Resources & Mineral Reserves

-- Financial Review;

-- Responsibility Statement of the Directors;

-- Operating Statistics - 5 Year Review; and

-- Financial Statements

CHIEF EXECUTIVE OFFICER'S REVIEW

Overview

A year ago we outlined our strategy, based on operational excellence, robust cost control, solidifying relationships with stakeholders and mining for value. We have seen solid delivery in these areas, but the macroeconomics have seen the benefits of that work eroded and our share price placed under immense pressure.

Operational

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Operationally, we have delivered on our promises and I am pleased with that progress. We took decisive action to mitigate the effects of the low pricing environment and costs of production per PGM ounce for 2015 were R10,339, well within our guidance of R10,800. Capital expenditure was tightly controlled and minimised to $136 million, compared to our original guidance of $250 million. Our strategy, and hard work across the business, combined are aimed to deliver well.

Saffy shaft reached steady state as promised and we exceeded our sales guidance to the market achieving sales of 751,560 Platinum ounces. Our mined production of 704,776 Platinum ounces was impacted by an increase in frequency and duration of Section 54 safety stoppages, resulting in lost Platinum metal production amounting to 48,000 ounces. Our immediately available ore reserves continue to offer operational and strategic flexibility. Despite an outage at our smelters in December, we delivered strong processing recoveries. We are working hard with government and our unions to reduce the level of Section 54 safety stoppages we saw in the year. We believe that transparency and dialogue are key and we are encouraged by the collaboration and progress that we have made in this area.

We achieved R526 million of net benefits during 2015 as we realised significant cost reductions from the review of the operating model and the total cost of ownership programmes. This was partially offset by the limited progress on productivity and efficiency enhancement which have been hampered by the high level of Section 54 safety stoppages that we, and the whole industry, experienced during the year. Productivity, though, is an industry-wide issue which has its roots in wider social issues and will require a holistic approach from everyone involved.

I said a year ago that my aim was to build a Lonmin that is flexible and sustainable through the cycle. There is no doubt that this year has been one of the toughest and, whilst we expect things to remain challenging in the medium term, we believe the long-term PGM fundamentals are sound.

Strategic Decisions

Your Board and management team resolved to build resilience into the business, taking firm action to reduce Lonmin's cost base and conserve cash so that the Company remains sustainable and viable. Our intent was to reposition your Company so that it weathers the low pricing environment we face; to safeguard the long-term interests of our shareholders, employees and all key stakeholders; and to be well positioned to exploit improvements in the market when they come. We have also implemented plans to strengthen our balance sheet, with the support of you, our shareholders and lenders, to allow us to navigate our way to better times ahead, today we expect to publish our Prospectus for a $407 million Rights Issue and entering into conditional Amended Facilities Agreements with our existing lenders.

The reduction in profitability due to low PGM prices and the maturing of our debt facilities in 2016 led us to accelerate the execution of our published strategy. It was necessary for us to take some tough decisions as we sought to respond to the conditions we faced by continuing to manage the elements within our control. We concluded that we needed to remove high cost ounces, reduce production and overhead costs as well as minimising capital expenditure. The decision to right size our business was not taken lightly as it will impact 6,000 employees and contractors, but the reality is that it is essential to protect the business, and the jobs of many thousands more who work for your Company.

Our conclusion, that it was necessary to reduce high cost production in an oversupplied market, resulted in the orderly closure of Hossy and Newman shafts. This will be achieved by stopping development and capital work. Instead, only the immediately available ore reserves will be utilised, reducing the overall costs of production and enhancing cash generation and profitability as the shafts are closed. In addition, 1B shaft of the 1B/4B shaft complex was closed and put on care and maintenance in October 2015.

We have re-examined the Generation 1 shafts, some of which are currently managed by contractors, namely W1 and E1. We are renegotiating the ore purchase agreements to include more favourable terms, which if concluded and subject to a favourable outcome of the S189 consultation process, will allow mining to continue at these shafts for the 2016 financial year. Going forward we will focus on our Generation 2 large, long-life shafts, K3, Rowland, Saffy and 4B which combined will represent 90% of production.

I remain confident that our initiatives around employee wellness, financial literacy and counselling as well as the technical solutions around de-bottlenecking logistics will continue to bear fruit. Like most things, it is a journey, and one we cannot give up if we are to succeed for you, our shareholders and indeed all our stakeholders.

It's important to remember that when market conditions improve, your Company has strong assets and projects: our large, long-life and low-cost K4 project, the Rowland MK2 resource, opening up further levels at Saffy shaft, Pandora E3 deepening project and E4 Pandora Deep which is perhaps the shallowest remaining PGM deposit anywhere in the Western Limb Bushveld Igneous Complex.

People

We have overseen robust action in cutting costs, reducing numbers, streamlining, and taking sensible decisions on pay freezes and waiving bonuses. The right sizing of the business is now 50% complete. As at 6 November, 3,136 colleagues of the 6,000 affected positions have left the Company; 2,120 employees through a voluntary process and 1,016 contractors, all within six months. In addition we started a Section 189 consultation process to engage on the implementation of the agreed avoidance measures which include redeployment and re-skilling and further voluntary separations. Our relationship charter established between the Group and AMCU allowed us to have a robust process around that. Unions work to look after their members, as they should, but the progressive way this process has unfolded would have been unthinkable two years ago. We hope that this will continue in to the next round of wage negotiations.

Safety

As a miner myself, safety is my number one priority and Lonmin's performance in this area has been the achievement in which I take the greatest pride. After 18-months without a fatality though, this year has seen us lose three colleagues; Bonisile Mapango, Mark Potgieter and Silva Cossa. Their loss, for which I offer my deepest condolences on behalf of the Company, has led us to re-examine all areas of safety. We never rest in this, and I believe we will achieve Zero Harm. Under my stewardship that remains an absolute and realistic ambition.

Strategic Priorities

In 2013 we began a fundamental review of our business. Throughout and after the subsequent five month strike in 2014 we took the opportunity to refine our plans. This has developed into the strategy we have today.

The sustained low PGM pricing environment we experienced in 2015 and which we anticipate to prevail in the short to medium term was a major challenge to the sector, and to Lonmin in particular given the Group's maturing debt facilities in 2016. We took the opportunity to re-examine our strategy set against these new pressures.

In essence we found that our wider strategic approach remained correct, but we needed to take robust and decisive action to further protect the business in the short and medium term and embed sustainability.

Fundamentally this resulted in us developing a comprehensive response which has seen us accelerate the move to reshape and re-size the business for the low-price environment, reducing fixed cost expenses, removing high cost ounces, reducing headcount and capital expenditure to the minimum required for the safe and efficient running of the Group's operations, while preserving the ability of the Group to increase its production when PGM prices improve. We are able to do this because our operations and capital expenditure is scalable. Our existing strategy was built to ensure flexibility in these areas and that has proved vital in recent months. We say more about this below.

Our overarching strategy comprises the following four pillars:

-- Operational Excellence

-- Enhancing Balance Sheet Strength

-- Our People and Relationships

-- Our Corporate Citizenship Agenda

1. Operational Excellence

   1.1          Safety 

Safety comes first in everything we do.

After an industry record of 18 months fatality free, Lonmin sadly lost three employees to fatal accidents during the second half of 2015 financial year.

We strive to be the industry leader in safety and we believe that "Zero Harm" is both achievable and realistic. This starts with the safety, health and wellbeing of our employees and extends to everything we do including minimising the environmental impact of our operations. We believe that integrating our operational and sustainability strategies will enable us to deliver on our goal of Zero Harm.

   1.2          Priorities 

Our highest short-term priority is the performance of our excellent Marikana operations which we believe are some of the best in the industry, in terms of quality, safety and efficiency. We believe we are an industry leader in UG2 mining and processing technology, an increasingly important factor of the ore mix mined in the industry.

Within our mining operations, our shafts are split into three categories, namely Generation 1, Generation 2 and Generation 3 shafts. The Generation 1 shafts - Newman, E1, E2, E3 and W1 are smaller, older shafts in the latter stages of their operational life. The Generation 2 shafts, K3, Rowland, 4B/1B, Saffy and Hossy are the larger, newer, shafts. Saffy was the last to ramp up and did so successfully, reaching steady state in 2015 ahead of schedule.

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Our Generation 3 vertical shaft, K4, had reached the early stages of ramp up prior to being placed on care and maintenance in September 2012. We believe that K4 is one of the Group's best projects in South Africa as it continues to offer the best brownfield replacement and growth optionality for the Group. We plan to reopen the shaft when market conditions improve.

Profitability and returns are crucial. The Group is highly geared to the PGM pricing environment and the Rand/US exchange rate. We mine for value, not for volume. Where volume might help deliver value in the future, we aim to have the flexibility to increase production with minimal expenditure, but given the present PGM market, we believe that the priority in the short-term is prioritising efficiency and cash.

Within the constraints of market conditions, we strive to ensure that our newer assets reach the most efficient and profitable points they can in terms of safety, costs, production and productivity as the older shafts reach the end of their lives.

   1.3          Actions 
   1.3.1      Marikana Asset Flexibility and our New Business Plan 

The Board and executive management, are attendant to the low pricing environment and carried out a comprehensive review of the Group's business and capital structure.

The resultant plan ensures sustainability through the difficult headwinds we face, reshaping and resizing the business both to give the flexibility to respond to more attractive market conditions in the future, and in recognition of the fact that we believe the PGM industry will look significantly different in the medium and long-term.

The result is a Business Plan which accelerates the implementation of the Group's published strategy of ultimately operating only our large, long-life and low-cost shafts, and is focused on factors that are within the Group's control, whilst seeking to preserve the integrity of the Group's operations. Overall, the Business Plan focuses on:

-- removing high-cost PGM production ounces and, importantly, eliminating associated fixed and variable costs;

-- reducing fixed cost expenses by right sizing the Group's workforce and reducing overhead costs and support service structures;

-- reducing capital expenditure to the minimum required to sustain the efficient running of the Group's operations while satisfying regulatory and safety standards and limiting the number of development projects for the continuing shafts;

-- maintaining operational and strategic flexibility through sufficient immediately available ore reserves;

-- creating, preserving and enhancing long-term equity value by retaining long-term expansion opportunities;

-- continuing to improve relationships with key stakeholders. Lonmin's sustainability depends on creating shared value for all so that each stakeholder sees Lonmin as a net positive contributor to their wellbeing and development; and

-- each stakeholder taking some short-term pain for long-term value protection and employment.

The Group's Business Plan aims to continue to preserve cash with the objective of achieving a cash flow positive position after capital expenditure despite the current low PGM pricing environment.

As described below, the Business Plan aims to keep unit costs per PGM ounce in nominal terms broadly flat in line with the year ended 30 September 2015 at around R10,400 per PGM ounce, for three further years ending 30 September 2016, 2017 and 2018.

The key elements of the Business Plan are:

   a)    Removing high cost production 

Following a shaft-by-shaft analysis, Lonmin has decided to reduce high cost production ounces to improve the Group's profitability and cash flows. Specifically, the following actions are being taken.

Generation 2 shafts

-- Planned orderly closure and placement on care and maintenance of the Hossy shaft: There has been significant improvement over the last twelve months at the Hossy shaft in productivity and in the relationship between management and employees. However, the Hossy shaft remains the Group's highest cost Generation 2 shaft and Lonmin has concluded that in the prevailing low PGM pricing environment the shaft has no prospect of self-funding its direct mining and processing costs and direct capital expenditure. The Directors plan to implement the closure and placement on care and maintenance of the Hossy shaft in an orderly manner over the next two financial years, allowing the Group to continue to extract the immediately available ore reserves that have been built up at the shaft during its turnaround.

-- Closure and placement on care and maintenance of the 1B shaft: All ore reserve development capital has been stopped. Overall, the 4B/1B combined shaft complex has remained profitable despite the weak PGM pricing environment. However, the 1B part of the complex has produced high cost ounces and Lonmin expects that its closure and placement on care and maintenance will result in improved performance metrics as direct and associated costs are removed. The shaft was placed on care and maintenance in October 2015.

Generation 1 shafts

-- Planned orderly closure and placement on care and maintenance of the Newman shaft: Whilst the Newman shaft has remained profitable despite the low PGM pricing environment, the shaft is nearing the end of its life and the capital expenditure required to extend its life ranks below other projects in the Group's capital allocation programme. Lonmin plans to implement the closure and placement on care and maintenance of the Newman shaft in an orderly manner over the next financial year, allowing the Group to continue to use immediately available ore reserves at the shaft, whilst limiting capital expenditure to essential levels.

-- Ongoing assessment of certain Generation 1 shafts: As part of the response to prolonged weakness in PGM prices, the Group previously announced plans to put on care and maintenance two of its Generation 1 shafts, namely, the E1 and W1 shafts, which are managed by contractors. These shafts were operating only at break-even levels and not generating significant cash. Subsequently, the Group engaged with the contractor managing these shafts and the contractor developed a plan that Lonmin believes will allow the shafts to be cash generative. In light of this development, the Group plans to renegotiate the ore purchase agreement with the contractor to include more favourable terms which, subject to a favourable outcome of the section 189 consultation process, Lonmin believes will allow mining at these shafts to continue for the year ending 30 September 2016. Lonmin will reassess the viability of continuing to mine these shafts at the end of the year ending 30 September 2016.

Lonmin expects the implementation of the Business Plan to result in a reduction of approximately 100,000 Platinum ounces in the Group's normalised annual production over the next two financial years as high-cost production at certain shafts is wound down, with a concomitant reduction in staffing and overhead levels. Lonmin expects that the sales profile for the Group will be approximately 700,000 Platinum ounces for the year ending 30 September 2016 and approximately 650,000 Platinum ounces for each of the years ending 30 September 2017 and 2018.

   b)    Removing fixed costs 

(i) Reducing the size of the Group's workforce to protect the business in the low PGM price environment: The Group announced a retrenchment programme and has embarked on a Section 189 consultation process with relevant stakeholders. By 6 November 2015, approximately 3,136 people had left the Group; 2,120 employees through the voluntary separation programme that was launched in May 2015, and 1,016 contractors. In total, approximately 6,000 employees, including contractors, are affected and the process is expected to be completed by 30 September 2016, and the Directors expect additional employees and contractors to leave the Group by 30 September 2017 in connection with the planned closure and placement on care and maintenance of shafts. Combined this should result in a large reduction in overheads.

The Group continues to work closely with key stakeholders, particularly its unions and the South African government, in connection with the workforce reductions. The relationship charter established between the Group and AMCU during 2014 has been a useful reference point in the Section 189 consultation process. In the interests of ensuring timely consultations, the Group has undertaken two Section 189 consultation processes in parallel -one with AMCU, the Group's majority union, and another with the other unions and non-unionised employees. Both processes are being facilitated by the South African Commission for Conciliation, Mediation and Arbitration. The consultation period was extended by mutual agreement of all relevant stakeholders to enable full exploration of all alternatives to forced retrenchments. The formal consultation process with the Unions ended on 22 October 2015, and the Group is now in the process of finalising the voluntary separations and redeployment. In the event that there is an insufficient number of voluntary separations and redeployment, forced retrenchment may occur, and any forced retrenchment is expected to be phased over a period of time.

The Group employed approximately 35,669 people, including contractors, as at 30 September 2015 and through the South African Chamber of Mines is a signatory to the Mining Leadership Declaration Agreement. In this agreement, the tripartite committed to limit job losses and also to minimise production disruptions. It is Lonmin's objective to protect the majority of those jobs over the long-term by ensuring that the Group can deal effectively with the ongoing sustained low pricing PGM environment.

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(ii) Reducing overhead and support service structures: New measures identified as part of the Business Plan for overhead and support services will remove associated overhead costs, at least in line with the reduction in the size of the Group's operations. The closure and placement on care and maintenance of the shafts outlined below will result in the removal of associated overhead costs, including the decommissioning of a concentrator and the revision of all incentive schemes to encourage production efficiencies and to ensure that bonus and incentives schemes are self-funding. Annual bonuses to management level employees for the year ended 30 September 2015 have been waived. In addition, no salary increases have been granted to management for the year ending 30 September 2016. Marketing and promotional expenses, as well as discretionary spending on training, are being reduced with discussions taking place with Platinum Guild International and World Platinum Investment Council to reduce financial commitments by at least 20%.

   c)    Reducing capital expenditure 

A comprehensive assessment of capital projects has been undertaken resulting in the planned capital expenditure for the next two financial years being limited to:

-- capital expenditure sufficient to keep the Group's existing assets in operation and to comply with legislative, Safety, Health and Environment and social responsibility requirements;

-- ore reserve development capital expenditure sufficient to ensure that immediately available ore reserves continue to be available to support planned production; especially in Generation 2 shafts, and

-- expansion capital expenditure for a limited number of development projects.

Capital portfolio optimisation tools have been used with the aim of ensuring that capital expenditure is invested only in the early cash generative and most valuable ore reserve development and expansion projects. Although certain ore reserve development and expansion projects have been deferred, thereby reducing the discounted value of certain of the Group's shafts and their associated projected revenue streams, Lonmin believes that this is a necessary measure in order to improve the Group's cash flows and liquidity in the short-term.

The Group expects to limit its total capital expenditure to approximately $132 million and $110 million for the years ending 30 September 2016 and 2017, respectively. Based on current information, the Group anticipates that its capital expenditure for the year ending 30 September 2018 will increase to approximately $188 million, as the Group's investments in stay-in-business and ore reserve development capital expenditure are expected to increase.

A large portion of the planned ore reserve development capital expenditure is for the further deepening of the existing, profitable K3 shaft as well as the development of the Middelkraal MK2 resource that the Group plans to extract via its existing, profitable Rowland shaft to partly offset the expected reduction in Rowland shaft's production profile in 2019. Lonmin believes that a continued investment in these projects will enable the hoisting capacity of these shafts to be fully used for an extended period and to maintain their low unit costs.

We aim continue to maintain the resilience of our processing plants and concentrators to achieve the high levels of PGM recoveries we achieve. Our smelter complex, which is comprised of the two large furnaces and the three pyromet furnaces provides us with the flexibility required in this industry and offers opportunistic third party concentrate purchases or toll treatments.

The Group's planned capital expenditure also includes expansion capital expenditure for the bulk tailings treatment (BTT) project which was deferred earlier in the year. The BTT project entails the re-mining of a tailings dam to extract chrome and contained PGMs. The BTT project is expected to be mined by a contractor over a seven-year period with the first tonnes expected in the latter half of the year ending 30 September 2017. The chrome is expected to be recovered in a new chrome spiral plant and the contained PGMs are expected to be recovered in the Group's Number One furnace. The Group is in the process of securing third party funding for the conversion of the concentrator and the establishment of the slurry pipeline that will be required. Approximately $29 million and $14 million are included for the BTT project in the total planned capital expenditure for the years ending 30 September 2016 and 2017, respectively.

The Business Plan accelerates our core strategy of focusing on the larger Generation 2 shafts which is working well in terms of saving costs and improving efficiencies and operational performance. Ongoing elements of that strategy remain in place.

Core shafts on target

We are accelerating improvement initiatives through theory of constraints at our big, long-life and low cost shafts of the future to increase and sustain shaft hoisting performance and improve capital efficiency. K3, 4B and Rowland shafts are benefitting from this as highlighted above.

Saffy shaft's ramp up profile was delivered in line with promises despite the strike. We have driven the strong ramp up of the shaft while maintaining 18 months of available ore reserve to support the required extraction rate, putting stoping crews in place ahead of schedule and improving crew efficiencies. We changed the top operational management team and also deployed a highly skilled business improvement team to identify and eliminate bottlenecks and improved infrastructure to support planned production levels and, crucially, we are taking the lessons we have learnt from these successes and applying them at other shafts we think can benefit.

Maintaining flexibility

We intend to maintain a clear strategic focus, on the Group's mineral resources and mining and processing infrastructure at Marikana, which has seen considerable investment in recent years, with approximately $388 million of capital expenditure incurred in the last three years. The expenditure of recent years has resulted in an improvement in the rate of ore reserve development and, as at 30 September 2015, the Group had immediately available ore reserves equating to approximately 22 months of mining under normal operating and market conditions, which provides the Group with operational and strategic flexibility with particular focus on the Generation 2 shafts.

Preserving longer term optionality

In the longer term, the Directors believe that the Group has a number of attractive brownfield expansion opportunities that can be developed when the PGM pricing environment improves, including the K4 project and the Pandora E3 and E4 deepening projects. As at 30 September 2015, these projects had in aggregate 30.5 million ounces of mineral resources of platinum, palladium, rhodium and gold, including 18.7 million ounces of platinum resources.

   1.3.2      Value Benefits 

Over the past 18 months, we have looked hard at our Marikana operations, reviewing assets, practices, systems and operating models.

We launched a comprehensive review of our assets to address asset utilisation, reduce the total cost of ownership, improve capital efficiency and productivity and therefore profitability and cash flow with the aim that Lonmin improves the quality and consistency of its earnings and reduces cost per ounce in the medium term, whilst prudently managing risk through all cycles and improve its relative cost position on the industry cost curve.

In 2014 we announced that we aimed to achieve greater than R2 billion of value benefits over three years to 2017 through a review of our operating model, improving productivity and efficiencies and further optimization of our process operations. We've achieved significant success, achieving net benefits of R526 million in 2015. Cost savings from the total cost of ownership programme, headcount reduction combined with stringent cost control measures totalled R800 million. Furthermore R102 million of value was generated from the permanent release of pipeline stock. These benefits were partly offset by lower productivity which is estimated to have cost R376 million partly a consequence of an increased level of Section 54 safety stoppages. This demonstrates the focused cost management actions the Group has been undertaking. We continue to look for ways of enhancing productivity and efficiencies by innovatively changing our work practices and enhancing the way we work. This is a journey and an industry-wide issue. Lonmin remains focused on doing more and we have seen how striving to make these savings has been an excellent way for our employees, management and unions to collaborate.

 
                               2015 
                                 Rm 
 Review of operating model      600 
 Total cost of ownership        200 
 Permanent pipeline stock 
  release                       102 
 Productivity                 (376) 
 Net value benefit              526 
                             ------ 
 

The Group has already started to benefit from the implementation of the Business Plan initiatives. We believe that the implementation of the Business Plan, including the reduction in the size of the Group's workforce and in overhead costs and support service structures detailed above, will result in a cost reduction of approximately R0.7 billion in real terms in the year ending 30 September 2016 (against the annual cost base for the year ended 30 September 2015) and a further cost reduction of approximately R1.6 billion in real terms in the year ending 30 September 2017 (against the forecast annual cost base for the year ending 30 September 2016), thereby potentially improving the Group's relative cost per PGM ounce produced in comparison with some competitors. The Group's unit cost per PGM ounce produced was R10,339 per PGM ounce for the year ended 30 September 2015 and the Group aims to keep its unit costs in nominal terms broadly flat for the years ending 30 September 2016, 2017 and 2018. An independent report currently forecasts

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that for 2015 the Group's position on the South Africa PGM industry cost curve (net total cash costs per 3PGE + Au ounce) should improve to the second quartile. Such an improvement in the effectiveness of the Group's operations will help improve the Group's ability to operate in a low PGM pricing environment and will position the Group to benefit from any recovery in PGM prices in the medium to long term.

2. Enhance Balance Sheet Strength

Our philosophy of preserving a conservative balance sheet with access to sufficient funds to finance both ongoing operations and prudent and efficient capital expenditure was severely tested by the sustained deterioration of PGM prices, and the strike of 2014, coupled with our need to renegotiate bank debt facilities against this acutely difficult backdrop.

We examined multiple options around refinancing as our success in delivering solid and steady operational results in all quarters was undermined by PGM prices. We concluded that amending our debt facilities and launching a $407 million Rights Issue in November 2015 was in the best interest of Lonmin's shareholders.

We are grateful for the continued support of our shareholders and banks through what has been an exceptionally challenging period for the Group.

3. Our People and Relationships

Building on our relationships with our employees and unions

The unprecedented five month long strike in 2014 refocused our energy on rebuilding relations with employees and their representative trade unions.

We believe the priority we put on this made us industry leaders, and the outstanding ramp up we saw in the wake of the strike was the first solid evidence of this.

In the months since we made a priority of further solidifying and growing those relationships - particularly with our unions. Given the significant changes to employee numbers which became necessary in 2015, the fact we have been able to manage that process without disruption and with tough but mutually-respectful and productive negotiations with unions, has shown the hard work of the last two years in this area is reaping dividends.

We are continuing with our efforts to communicate directly with employees and to reclaim our role as the primary source of communication. We believe that this direct engagement with employees through the existing line management structures and the periodic communication forums forms part of the way we work and the basis of creating empowered, high performance teams. Through the leadership development and team effectiveness training programmes, we continue to develop our managers' capacity to manage this new form of direct engagement. Following the BEE transaction we completed in December 2014, the Group's employees hold a 3.8% equity interest in the principal operating companies in South Africa, through an employee profit share scheme. We believe this aligns more closely the interests of employees and shareholders.

Management and unions also engage at regular meetings of the Future Forum that was established in December 2014 as required by the MPRDA, which aims to establish a joint working relationship between the mine, workforce representatives, government and community representatives. We have been encouraged by the robust but constructive engagements with unions. We believe that if we continue to deepen our relationships with our employees and their union representatives that the wage negotiations in 2016 will take place on a much stronger platform of respect and trust than in the past.

In addition we initiated a relationship building programme. This programme has culminated in the Relationship Charter, which outlines our aspirations of the nature of relationship that will be built with the unions and measures that are being implemented to give effect to the Charter. The Charter presents a real opportunity to strengthen relations with trade unions inter alia through constructive and regular engagements (using our union engagement structures such as the Future Forum).

We believe we have a lean, focused management team

We have implemented the changes of personnel and structures in our top team which we talked about last year and seen immediate positive impact. Our management structure is now flatter, and our operational structure reconfigured to increase cohesion, execution and accountability. The operating philosophy promotes operational excellence, knowledge sharing, collaboration and consistency. We believe that the Group has experienced major benefits of this, which are seen both in the effective, holistic oversight management has of the business, and in the empowering of key operational staff to bring their experience and skills to bear quickly.

The new structure enables us to utilise the skilled resources we have across the mining and processing operations and develop a common culture. This provides for our employees' growth and development with great benefits to Lonmin. Our new approach is also improving our ability to attract, develop and retain the best talent and, crucially, the entire new structure is forensically focused on delivery.

Management has begun to drive through the strategic actions and we are seeing encouraging results.

4. Our Corporate Citizenship Agenda

   4.1          Stakeholder Engagement 

The importance of genuine and robust stakeholder engagement and relationship building has become increasingly apparent over the past decade, given the need to understand stakeholder expectations and communicate on key issues transparently, consistently and in a timely manner. We have identified and prioritised our stakeholder groups and individuals and allocated relationship "owners" to each grouping. Our aim is to develop and protect Lonmin's relationships with all stakeholders who have a significant ability to impact Lonmin's operations and investment case. The renewed focus and energy on stakeholder engagement acknowledges the role of partnerships in confronting the challenges plaguing the industry. Functional partnerships between Government, organised labour and community leaders are essential if we are to create the necessary environment for a sustainable future and realise the true meaning of "shared value for all".

   4.2          Social Licence to Operate 

Maintaining our social licence to operate through securing the trust and acceptance of communities and stakeholders is material as they host our operations. This is achieved through:

-- Stakeholder engagement to ensure social expectations are understood and managed;

-- Community investment initiatives to address social issues;

-- Transformation initiatives to meet the government's social and economic development goals;

-- Ethical business practices that include a commitment to upholding human rights; and

-- Corporate and community partnerships.

This is very much work in process and is based on an acknowledgement that trust must be restored and communities healed.

   4.3          Greater Lonmin Community and Government 

Alongside the Group's legal and regulatory obligations, Lonmin believes that it is necessary to earn its social licence to operate from the people and communities which host its operations. The Group refers to the people who live in the areas immediately adjacent to its operations and refers to them collectively as the GLC. The Group has therefore, over the years, engaged with and invested in its local communities. Lonmin considers spend in social initiatives as an investment and a business imperative for sustainability.

The Group's New Order Mining Rights include detailed obligations set out in social and labour plans agreed with the South African Department of Mineral Resources. The Group is also required to achieve a compliance level of at least 26 per cent. of ownership by HDSAs under the Mining Charter and to comply with certain obligatory targets under the Mining Charter.

For over 20 years, the Group paid royalties into a trust fund for the benefit of the Bapo Community. The royalty stream was subsequently converted into equity ownership as part of the three BEE transactions which were completed in December 2014. In connection with the Bapo Community BEE transactions, the Bapo Community was also granted the opportunity to participate in the Group's procurement and business value-chain activities. The Bapo Community therefore forms an integral part of the Group's HDSA ownership profile which is an important aspect of maintaining the Group's mining licences and building sustainable relationships with the communities that host its operations.

Lonmin believes in developing leadership in the communities in which it operates. For example, the Group has invested in local schools, in the belief that education has the power to transform lives and also the money earned by those who attend the schools will ultimately flow through to the benefit of other community members. The Group also has an active bursary programme supporting students at university and is proud that approximately 50% of the students it supports and sponsors have been drawn from the GLC.

Our community investment focus also ties into the impact we have on our labour-sending areas as well as the local communities who host our operations. The long-term feasibility of mining operations relies upon the wellbeing of all these communities. Conversely, our business has a finite life span and we are responsible for the continued sustainability of these communities. Through education, health and infrastructure programmes we aim to address the challenges faced in the GLC, which were partially created from the legacy of migrant labour to the mines and the historical inequalities of economic opportunity. Our programmes provide us with a pipeline of skilled local employees and increased procurement from the local community.

The Group also donated 50 hectares of its property to the South African Government for the building of accommodation for local community members and employees and has made significant progress including the building of infill apartments.

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Lonmin is supportive of and commits to participate in the South African government's National Development Plan (NDP). The NDP's priorities include raising employment through faster economic growth and improving the quality of education, skills development and innovation. The global economy is in a down cycle and to ensure sustainability of its business, Lonmin has had to take rough action and sadly 6,000 jobs are affected in the short-term. The long-term fundamentals of PGM's remain attractive and Lonmin's sustainability is important in order to create more jobs when the global economy recovers.

   4.4          Farlam Commission 

The publication of Judge Farlam's report has reminded us of the vital importance of shared value, not that a reminder was needed. The Judge highlighted that Lonmin could have done more but he did not conclude that Lonmin broke any laws.

We have given the Farlam Report our detailed considered review and have begun implementing its recommendations. Details of these will be included in our Sustainable Development Report which will be available on Lonmin's website: www.lonmin.com

   4.6          BEE Equity Ownership 

In November 2014, Lonmin successfully completed three BEE transactions which cumulatively give the Group an additional 8% equity empowerment. Lonmin accordingly achieved the target of 26% BEE ownership by 31 December 2014 as required by the Mining Charter. These transactions support the improvement and development of local communities and align the interests of communities, employees and shareholders.

   4.7          Living Conditions 

This year we have seen infill hostel construction move ahead on plan, delivered 50 hectares of land for a joint partnership project with government to provide new homes and signed a historic transaction with the Bapo Community near our mines which sees them benefit further from our future profitability and gives them a stake in our future success.

Acknowledgements

During the course of the year the Board welcomed Varda Shine, who joined as an Independent Non-Executive Director. Gary Nagle and Paul Smith were Glencore's representatives on the Board and consequently resigned when their company ceased to be a shareholder. Meanwhile Karen de Segundo, a Non-Executive Director, retired as she had planned to do. Ben Moolman was appointed Chief Operating Officer in March, following the departure of Johan Viljoen, and appointed to the Board as an Executive Director in June. Ron Series also joined us in August as Chief Restructuring Advisor to drive long-term capital requirements.

We thank Gary, Paul, Karen and Johan for their contribution to the Company over their many years with us and wish them all the very best in their future endeavours.

Conclusion

In conclusion, this year has been tough but our strategy is delivering results operationally and we have taken robust measures to ensure our sustainability through these challenging times. We have taken to refinancing the business and address balance sheet concerns which were thrown into sharp focus by the combination of maturing debt facilities and low prices. This will stand us in good stead in the years ahead as the long-term PGM market remains attractive due to more stringent emissions legislation, growing jewellery demand and the adoption of fuel cells as a real source of power.

Guidance

Going forward the remaining shafts will allow for a more sustainable and agile business. We expect that the sales profile will be approximately 700,000 Platinum ounces in 2016, stabilising to approximately 650,000 for 2017 and 2018 and capital expenditure is anticipated to be limited to approximately $132 million and $110 million for 2016 and 2017 respectively. We anticipate that capital expenditure for 2018 will increase to approximately $188 million as the Group's investment in stay-in-business and replacement ore reserve development capital expenditure is expected to increase.

In addition, our actions are anticipated to reduce the cost base of financial year 2016 by R0.7 billion in FY15 real terms when compared to the current year and a further R1.6 billion in 2017 when compared against 2016, in FY15 real terms. We aim to keep unit costs per PGM ounce in nominal terms broadly flat in line with the year ended 30 September 2015 at around R10,400 per PMG ounce, for three further years ending 30 September 2016, 2017 and 2018.

Thank You

Finally, to my fellow colleagues, this has been another tough year for all of us, but I know each and every one of you has continued to make a significant contribution. I thank you for your hard work and dedication. Also, our banking syndicate, our core advisors and customers, I thank you for your continued support. Brian and the Board, your resilience and resolve have been invaluable and I thank you too.

As shareholders, I know you have felt first-hand the challenges of the business over the last few years and I thank you for your loyalty and support as we work through these.

Yours faithfully

Ben Magara

Chief Executive Officer

9 November 2015

OPERATIONAL REVIEW

Safety

Our safety strategy is centred on the belief that zero harm is achievable in mining. We record our safety performance according to injury rates and fatality rates and how they impact on human life and production, as these are the ultimate indicators of the success or failure of our strategies, practices and systems.

It is particularly disappointing, therefore, that our safety record deteriorated in 2015, with the LTIFR increasing to 5.41 per million man hours worked from 3.34 in 2014.

In addition, it is with deep regret that after 18 months fatality free Lonmin lost three employees to fatal accidents during the second half of the year, despite our continued efforts to promote a safe working environment. There were two fatalities in separate incidences at Hossy shaft resulting in the deaths of Mr Silva Cossa, a mine overseer assistant on 19 May and Mr Mark Potgieter, a Sandvik Mining contractor on 22 July. Mr Bonisile Mapango, a winch driver at E3 shaft passed away on 31 July. Subsequent to the year end, Zilindile Ndumela, a locomotive driver at Rowland shaft was fatally injured on 26 October. We extend our heartfelt condolences to the families, friends and colleagues of all the deceased.

All incidents, but especially the deaths of Mr Cossa, Mr Potgieter, Mr Mapango and Mr Ndumela, remind us of the inherent risks associated with mining and that we must never become complacent in our approach to safety. The deterioration in our performance, which has been evident since the five month strike in 2014, indicates the real impact that breaks in operational continuity have on employee focus. It is imperative that we redouble our efforts if we are to achieve zero harm, which we believe is attainable, and prevent similar incidents from occurring again in the future.

We know from experience that improving safety gets incrementally harder as you move from changing systems and equipment to changing behaviours, however the safety of our employees is paramount and our approach has to be robust if we are to ensure that people remain safe above and below ground, at home and at work. We continue our pro-active safety management procedures, nurturing a culture focused on safety and, importantly, in order to enhance safety and production performance, a programme is being developed to empower front line supervisors. This is planned for implementation in 2016.

Mining Division

With the five month stoppage dominating the 2014 financial year, year on year comparisons are inappropriate. As such, the commentary below also includes comparisons to the financial year 2013.

Overview

Tonnes mined at 11.3 million were 77.9% higher than the strike impacted prior year but 6.3% lower than 2013. This was due to the planned decline of the Generation 1 shafts in end of lifecycle management and the depleting opencast operations.

Production from our Generation 2 shafts was flat on 2013 as the ramp-up at Saffy shaft (up 52.9%) and improvements at Rowland (up 5.1%) following the successful implementation of the Theory of constraints in 2014, were offset by the significantly increased Section 54 safety shut downs at K3 and Hossy shafts.

2015 was impacted by an increase in the frequency and duration of Section 54 safety stoppages but we are encouraged by interaction at industry level to tackle these issues and our internal focus on the Group's safety performance. Tonnes lost, mainly due to increased Section 54 safety stoppages and management induced safety stoppages, at 0.9 million tonnes were lower than the strike impacted prior year but were 0.3 million tonnes higher than 2013. In total, 899,000 tonnes were lost during the year, of which 770,000 tonnes related to Section 54 safety stoppages, 102,000 tonnes to management induced safety stoppages (MISS) and 27,000 due to labour issues. This compares to a total of 6,747,000 tonnes lost in the prior year of which 6,382,000 were lost due to industrial action, 282,000 tonnes were due to Section 54 safety stoppages and 83,000 tonnes were due to MISS.

Marikana Ore Reserves

The ore reserve position of the Marikana mining operations at 4.1 million square metres represented an average of 22 months production.

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At the Generation 2 shafts the increase in the ore reserve position at K3 shaft was driven by development on the UG2 reef. Rowland shaft increased the ore reserve position on the UG2 reef as a result of excellent development achievements and the Merensky reef where capital was invested to develop an additional half level. Saffy shaft further increased the ore reserve position during 2015 due to the completion of the capital development on levels 19 and 20. The ore reserve position at Saffy shaft is now sufficient to sustain steady state and production, and the rate of development is planned to reduce to a level where the ore reserve position is maintained into the future. The ore reserve at the 4B/1B shaft was maintained at a healthy level and at Hossy shaft the increase was a result of capital invested to extend the on reef access development deeper to 14 and 15 levels before the decision was taken to orderly shut this shaft down.

The increase in ore reserve position at the Generation 1 shafts can be attributed to an increase in ore reserve at E2 shaft, where on reef development below level 10 has resulted in additional ore reserve becoming available.

Productivity

Productivity measured as square meters per mining employee at our Generation 2 shafts was significantly higher than the strike impacted prior year and slightly down on 2013.

Significant improvements in productivity were made at Saffy shaft, which has been ramping up to full production, and at Rowland where the implementation of the Theory of Constraints management philosophy was first trialled. These improvements are the result of the integration of this management philosophy into the shafts culture more widely, together with the implementation of other improvement initiatives supported by the Business Support Office.

These improvements have offset declines in productivity at K3, 4B/1B and Hossy. Production performance at K3 was negatively impacted by the high frequency and lengthy duration of DMR safety stoppages during the second and third quarter of the year. This was further exacerbated by poor employee work attendance. Hossy shaft experienced two fatal accidents within a two month period during the third quarter and this resulted in lengthy DMR safety stoppages, which severely impacted production.

Business Improvement Initiatives

A number of business improvement initiatives, supported by the Business Support Office and aimed at increasing productivity and improving performance, are currently being implemented.

After the successful pilot programme conducted at Rowland shaft, the Theory of Constraints management philosophy is being rolled out to other operations under the guidance of knowledgeable personnel within the Business Support Office. Good progress has been made at Saffy shaft during the year and programmes have recently been initiated at 4B shaft and K3 shaft. The roll out at these shafts will continue into 2016.

Improved stope crew output was targeted as an objective during the 2015 financial year and the main initiative that was implemented to drive this was to improve the performance of the population of stoping crews that made up the bottom 20% at each of the Generation 2 shafts. This initiative was implemented with the assistance of experienced on the job training personnel within the Business Support Office. Good progress has been made during the year, with the average performance of the worst performing 20% population being improved from 150 square meters per crew per month at the beginning of the financial year, to just over 200 square meters at the end of the financial year. This programme will continue during 2016 with the objective of improving the performance of this bottom 20% of crews to an average of 220 square meters per crew per month by the end of the financial year.

An improved stoping crew bonus system has been designed and is planned for implementation early in the 2016 financial year. The rate earned per production unit has been increased in the improved bonus system and the rate improvement has been geared to favour higher performers. It is anticipated that this will incentivise crews and lead to a much improved performance once it is implemented.

One of the major causes of lost production during 2015 was employee absenteeism. A programme is being developed to better understand the drivers of this behaviour and then to develop and implement a plan to address the underlying causes in order to improve attendance and thereby production performance.

In order to enhance safety and production performance, a programme is being developed to empower front line supervisors. This is planned for implementation in 2016.

Overview of Marikana Mines

Generation 2 shafts

Our Generation 2 shafts represent around c.80% of total production.

K3 shaft

K3, our largest shaft produced 2.7 million tonnes. This was 0.4 million tonnes lower than 2013 of which 0.2 million tonnes was due to an increase in tonnes lost due to Section 54 safety stoppages. Poor employee attendance was also a major contributor to production losses.

Rowland shaft

Rowland increased production on 2013 by 5.1% reflecting the positive impact of management actions and the Theory of Constraints projects successfully completed at this shaft which were aimed at de-bottlenecking operations.

Saffy shaft

Saffy shaft recorded an increase of 52.9% on 2013 demonstrating the continued good progress that we have made with our promised ramp up. Saffy is reaching steady state production and mined a record 187,621 tonnes in July. The ore reserve position was improved further during the year and the full complement of stoping crews has been deployed at the operation. The focus has now shifted to improving the performance of the stoping crews and the introduction of the Theory of Constraints management philosophy to de-bottleneck targeted areas and sustain output at more than 90% of shaft capacity.

4B/1B shaft

4B/1B produced 1.6 million tonnes which was 0.2 million tonnes lower than 2013 of which 0.1 million tonnes was due to an increase in tonnes lost due to safety stoppages. In addition, the aging mechanized equipment at 1B shaft has become less reliable and availabilities have dropped off significantly, adversely impacting stoping output at the shaft. The sharp drop off in metal prices during the year coupled with underperformance triggered a review of the future viability of 1B shaft. The review concluded that the shaft was not financially viable at current prices and performance levels and a decision was taken to place the 1B portion of the mine on care and maintenance as of the end of the 2015 financial year.

Hossy shaft

Hossy saw a decrease in production of 0.1 million tonnes driven by safety shut downs following the fatalities in May and July. A review of the performance of Hossy shaft was conducted in July and it was concluded that the high shaft costs, driven by poor mechanised equipment efficiencies, could not be sustained in the current low metal price environment. As a result, a decision was taken to place the shaft on orderly closure. All development was therefore stopped at the end of the 2015 financial year and the ore reserve that remains will be stoped out over the next 18 months where after the shaft will be placed on care and maintenance.

Generation 1 shafts

Our Generation 1 shafts are reaching their end of lives and, as expected, productivity has declined.

Newman shaft

Newman shaft produced 0.8 million tonnes which was a decrease of 19.2% on 2013 as this shaft is nearing the end of its life. Newman has been in planned decline for a while and it is envisaged that the shaft will be mined out by the end of the 2016 financial year at which time it will be placed on care and maintenance.

Pandora Joint Venture

Pandora production (100%) at 0.5 million tonnes was 4.8% lower than 2013 due mainly to 0.1 million tonnes lost due to Section 54 stoppages.

Western 1, East 1 and East 2 shafts

W1, East 1, East 2 are also shafts at the end of their lives and together produced 0.7 million tonnes compared with 1.0 million tonnes in 2013. These shafts will continue to be managed by contractors and run for cash. W1 and E1 have been included in the Business Plan for the 2016 financial year only and their viability will be re-assessed at the end of the financial year. E2 is planned to complete mining at the end of the 2017 financial year.

K4 shaft

Activity at K4 shaft was limited during the year with production of 48,571 tonnes. Given the current economic climate and our rationed capital expenditure plans, we have re-considered our strategy of conducting early mining in preparation of a full ramp up at K4 and the shaft has been placed on care and maintenance once more.

Opencast

Production from our depleting Merensky opencast operations of 229,930 tonnes was 103,000 tonnes, or 31.0%, lower than 2014 as the operations reach the end of their life. Opencast operations operated throughout the strike in the prior year period, albeit at a reduced level of output. Mining ceased at the end of the 2015 financial year and all that remains to be done is the filling of the final void and final rehabilitation of the area that is planned for completion at the end of the second quarter of the 2016 financial year.

Process Operations

Concentrating

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Total tonnes milled in the year at 11.8 million tonnes were 0.5 million tonnes higher than tonnes mined due to the healthy stock piles ahead of the concentrators which were drawn down due to the impact of section 54 safety stoppages on the mining production. Tonnes milled in 2015 were 5.7 million tonnes higher than the strike impacted prior year, as the concentrating operations were also impacted by the strike action and shut down. Compared to 2013 tonnes milled were flat despite only utilising six out of our seven Marikina concentrators as part of our measures to reduce costs, demonstrating our ability to scale our operations as required. The impact of electricity constraints during the year was 0.1 million tonnes as the Group's strategy is to manage electricity constraints via the concentrators, minimising the impact on the mining operations and smelters.

Underground milled head grade was 4.51 grammes per tonne, an increase of 0.7% compared to 2014 due to stockpile movements at a higher grade. Overall the milled head grade was 4.47 grammes per tonne, up 1.8% on 2014 due to the increase in underground grade and a decrease in lower grade opencast ore in the mix.

Underground and overall concentrator recoveries for the year at 86.8% and 86.7% respectively continue to be strong.

Together, this resulted in Platinum-in-concentrate for the year of 740,315 saleable ounces, which was 94.6% higher than the strike impacted prior year and 1.4% lower than 2013.

Smelting

As reported earlier in the year, the Number One furnace was safely stopped in early December 2014 following the detection of a leak. The repairs to the furnace crucible and the additional maintenance work that was brought forward was completed within the scheduled three months and first matte was successfully tapped on 9 March 2015. The Number Two furnace was also safely stopped at the end of December 2014 following condition monitoring and the detection of electrode breaks. The repairs to this furnace were made successfully and the first matte tap was in January 2015. The three smaller Pyromet furnaces were restarted in early December 2014 to increase smelting capacity during this time. These furnaces will continue to provide smelting capacity throughout the year as the Number Two furnace was taken down on 26 September 2015, as planned, for the scheduled rebuild and to implement design upgrades on the roof and off-gas system. The build-up of concentrate was processed during the second half of the year demonstrating the benefit of the additional smelting capacity available due to the commissioning of the Number Two furnace in 2012.

Base Metals and Precious Metal Refineries

Both the Base Metal Refinery (BMR) and the Precious Metal Refinery (PMR) delivered an outstanding performance. Platinum ounces produced of 759,695 were the highest since 2007 and were up 74.2% on the strike impacted prior year and 7.1% on 2013. PGMs produced of 1,447,364 ounces were the highest since 2011 and were up 64.1% on the strike impacted prior year and 8.3% higher than 2013.

The instantaneous recovery rate achieved in 2015 of 87.2% was outstanding and represents a 1.0 percentage point increase on 2014 and a 2.2 percentage point increase on 2013. The continuous year on year improvement is a result of extensive optimisation and improvement plans across our processing operations that continue to yield positive results.

Other Assets

Limpopo

The deadline for Shanduka to exercise its option over Limpopo is 30 April 2016. However, the pending finalisation of the Pembani and Shanduka merger will most likely result in a re-assessment of the project and a potential re-negotiation around the current transaction completion date.

Akanani

Akanani offers the prospect of a large, long-life, low cost and highly mechanised mine which gives us optionality in the long-term.

Exploration International

North America

Lonmin is exploring for PGM deposits around the Sudbury Basin in Ontario, Canada in joint ventures with Vale S.A. and Wallbridge Mining Company Limited. Resource drilling is continuing on the Vale JV Denison property targeting shallow PGM-bearing deposits. Lonmin has recently secured the rights to explore the Parkin properties as part of the North Range Joint Venture with Wallbridge and exploration will continue on these and several other properties around the Sudbury Basin in 2016.

Europe

Lonmin signed a joint venture with Koza UK Ltd on two of our Northern Ireland licences for gold, silver and base metals. Geochemical and geophysical surveys with preliminary drilling were carried out on targets. PGM targets were assessed with preliminary drilling on two licence areas not covered by the joint venture and analysis is ongoing.

Exploration - South Africa

Our Vlakfontein prospecting right was not renewed and accordingly all exploration activities on the property have now ceased. Lonmin has a joint venture with Boynton in the eastern Bushveld but is involved in arbitration proceedings against Boynton on the basis that they failed to comply with a warranty to deliver an unencumbered asset to the joint venture. Boynton has appealed the initial Judgement given in Lonmin's favour. The appeal will be heard in November 2015.

Capital Expenditure

Capital expenditure for 2015 was tightly controlled and scaled back from our original guidance of $250 million to $136 million in light of the persisting low PGM prices. Capital spend was minimised whilst ensuring compliance to regulatory and safety standards to ensure safe and efficient operations. Essential sustaining capital was spent at the continuing shafts to maximise shaft capacity and reduce unit costs. At the concentrators the majority of the Bulk Tailings Treatment plant was deferred and all other non-critical expenditure was cut back or deferred. The weaker ZAR/US$ exchange rate also assisted the reduction by around $30 million.

 
                                2014 - Act    2015 - Act    2016 - Est   2017 - Est   2018 - Est 
                              -------------  ------------  -----------  -----------  ----------- 
                                         $m            $m           $m           $m           $m 
----------------------------  -------------  ------------  -----------  -----------  ----------- 
 K3                                      19            19           16            6            3 
 Saffy                                   10             8            1            2           24 
 Rowland                                  9            18            3            5           11 
 Rowland MK2                              -             -           15           27           29 
 K4                                       8            19            -            -            - 
 Hossy                                    7             7            -            -            - 
 Other mining                            10            12           25           25           40 
                              -------------  ------------  -----------  -----------  ----------- 
 Total Mining operations                 64            84           60           64          107 
 Concentrators                           12            17           44           18           15 
 Smelting & Refining                      9            27           21           19           52 
                              -------------  ------------  -----------  -----------  ----------- 
 Total process operations                21            43           64           37           67 
 Hostel / Infill Apartments               5             7            5            6            5 
 Other                                    2             2            3            2            9 
 Total                                   93           136          132          110          188 
----------------------------  -------------  ------------  -----------  -----------  ----------- 
 

Comprehensive assessment of capital projects has been undertaken with the aim of limiting capital expenditure to levels required to satisfy regulatory and safety standards and essential sustaining capital expenditure in the continuing shafts and for a limited number of development projects. Capital portfolio optimisation tools have been utilised with the aim of ensuring that capital expenditure is invested only in the most cash generative development projects available to the Group. The Group expects to limit its capital expenditure in 2016 - 2018.

Future K3 project capital is planned to be spent on ore reserve development to access an additional two levels (25 and 26) and at Saffy capital is anticipated to be spent to access additional levels (21-28) via a sub-decline. Extraction of the Rowland MK2 UG2 resource via the existing Rowland shaft infrastructure is anticipated to result in production from this area from 2018 onwards. Concentrator capital includes the Bulk Tailings Treatment project which allows for the re-mining of the Eastern Tailings Dam 1. This was partially deferred from 2015 and going forward is anticipated to be financed by third party funding. Sustaining capital across the operations is anticipated to revert to normal levels in 2018.

Capital available for employee accommodation is lower than the Group's Social and Labour Plan commitment to spend R500 million between 2015 and 2019.

People

Employee Relations

The employee relations environment at Lonmin has stabilised over the last 12 months, evidenced by the successful completion of the voluntary separation programme (VSP) and the Section 189 consultations in October 2015. While the environment has remained stable, more work is required and is being done to strengthen relations with our employees and the unions to mitigate any possible risk of operational disruptions. Our view and commitment remains to be a multi union environment where all employees have a voice through their union of choice.

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The limited organisational rights agreements we have with our minority unions, UASA and Solidarity, are based, on the same agreement that was concluded with AMCU while it was a minority union and amongst other things entitle the minority unions to stop order deduction facilities, access to the workplace and two full-time union representatives.

Our focus in the first half of 2015 was on a rigorous process of rebuilding relations with AMCU after last year's five-month long strike. This included the creation of a Relationship Charter that maps out the legal aspects of the Company's relationship with the majority union as well as aspirations, expectations, accountabilities and commitments from both parties to enable the relationship. A series of workshops were conducted across all leadership, union and management levels to deepen understanding and strengthen relationships. Union engagement structures have been institutionalised and regular meetings are held with management to update unions on the status of the business. Training is provided to shop stewards on legislative matters, business skills and the requirements of their roles and responsibilities.

Joint task teams between management and the union was set up to ensure progress is made on the non-financial needs that were raised during negotiations in 2014, but that were not finalised at the time of the wage agreements. These include broader stakeholder engagement in line with the generic processes of consultation and social dialogue, and will cover among other things, productivity improvements, housing and living conditions, employee indebtedness, skills development, and shareholding and profit sharing. Management and unions (excluding the majority union) also engage at regular meetings of the Future Forum that was established in December 2014 as required by the MPRDA, which aims to establish a joint working relationship between the mine, workforce representatives, government and community representatives. We have been encouraged by the robust but constructive engagements with unions. We believe that if we continue to deepen our relationships with our employees and their union representatives that the wage negotiations in 2016 will take place on a much stronger platform of respect and trust than in the past.

Workforce Profile

As at the end September, our total workforce was 35,669, compared to 38,292 in September 2014, of which 26,968 were permanent employees and 8,701 were contractors. 84% of the overall workforce is South African, with 16% still being migrant. 8.8% of our permanent employees are women. Our management headcount as at 30 September 2015 was 475 compared to 516 at 30 September 2014.

Employment Equity

Lonmin embraces transformation as a business imperative. We are committed to playing our part in addressing historic inequalities and creating the 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.

Community Relations and Our Corporate Citizenship Agenda

Community Value Proposition (CVP)

The CVP project, now in its second year, has enabled the Company to deliver focused social investment that is impactful and sustainable. Our investment includes community education and skills development, community healthcare, infrastructure development and enterprise development.

Our Corporate Citizenship Agenda

We engage in a range of activities aimed at uplifting our communities. These include education, health and social infrastructure projects.

Social and Labour Plan (SLP)

Our commitment to corporate citizenship defines our duty to contribute to the wellbeing and development of the communities that host, and are affected by, our operations. This duty is formalised in the Social and Labour Plans obligations under the terms of our mining rights, and such plans are submitted for approval on a five year basis. Despite numerous challenges confronted during 2015, we remain committed to delivering on the commitments of our Social Labour Plans, which are focused on accelerating transformation and implementing measures to significantly improve the living conditions of our employees, host communities and major labour sending communities.

However, given the current economic climate, subdued market conditions and consequential downscaling of the organisation, Lonmin has commenced with the review of the current SLPs. Of particular focus is the remaining three year period: 2016 - 2018. The intended outcome of the review is to align the SLPs to the Company's new reality by way of revising our commitments via a Section 102 application to the regulator (DMR) as per the Mineral and Petroleum Resources Development Act.

BEE Equity Ownership

The Company's HDSA ownership in its prospecting and mining ventures is now 26% as required under the Mining Charter. The three BEE transactions involved to increase this ownership from the previous 18% were designed to support the improvement and development of local communities and align the interests of communities, employees and shareholders:

Bapo transaction

The Bapo Ba-Mogale Traditional Community is a key shareholder in Lonmin. The intention of the BEE deal with the community is to share the value created by the Company and to assist in building our host community. The value that accrues to the Bapo community should make a real difference to their lives and help to improve living conditions and provide Lonmin with a stable and peaceful operating environment, which is important to successfully operating the business.

The Bapo Transaction involved a royalty for equity swap and the sale of the Bapo 7.5% stake in the Pandora Joint Venture to a Lonmin subsidiary. This transaction provided the Bapo Community with equity participation of circa 2.25% at Plc level and a deferred royalty payment of R20 million per annum payable by Lonplats (Eastern and Western Platinum combined) in each of the ve years following completion of the transaction. The BEE accreditation arising from this royalty for equity swap transaction amounted to 2.4%.

The transaction includes a commitment from Lonmin to provide procurement opportunities to members of the Bapo community of at least R200 million over an initial 18-month period. The first such contract was finalised in March 2015 involving the supply of equipment to move ore between shafts. Some 200 Bapo community members received training to fulfil this contract. A further stock pile management and movement contract was finalised in September 2015. These contracts will bring additional benefits to the community through job creation and other multiplier effects. Other long-term opportunities are currently being identified that will not only achieve the committed amount during the stipulated period but also bring additional benefits to the community through job creation and other multiplier effects.

Employee Profit Share Scheme (EPSS)

The EPSS was implemented in 2014 and aims to provide our employees with economic partnership and ownership whilst simultaneously sharing the responsibilities and involvement that this ownership brings. The implementation of this EPSS enabled Lonmin to receive an HDSA equity accreditation of 3.8%.

Community trusts

2014 saw the establishment of two separate community trusts. Each trust holds 0.9% of the ordinary shares in Lonplats, and is entitled to dividend payments which have been mandated for upliftment projects in the respective communities. To the extent that no dividend is payable in a particular year, each community trust will be entitled to a minimum annual payment of R5 million escalating in line with CPI each year. While these transactions have been successfully concluded, there has been a challenge to the transaction by a faction within the Bapo community. Lonmin continues to engage with all stakeholders to resolve the issues of concern.

Farlam Commission of Inquiry Report

The release of the Marikana Commission of Inquiry: Report on matters of public, national and international concern arising out of the tragic incidents in Marikana in the North West Province (the Farlam Report) to the broader public in June 2015 was a vital step towards achieving healing. The Farlam Report is of huge significance for all South Africans and Lonmin is grateful for the enormous effort by so many people which made the report possible.

We can never forget that 44 people, mostly Lonmin colleagues, died in August 2012, in the period leading up to, during and after the week that changed our lives. This report is about them, their families and the people of Lonmin whose lives were touched by those events.

Lonmin gave its full support to the Commission which we believe was essential if South Africa is to build sustainable peace. This was not an easy process, requiring intensive introspection. Immediately after the report was released we undertook as a Company to consider its findings in detail and Lonmin has taken these lessons on board and the implementation of which is underway.

MARKET REVIEW

Overview

During the year under review, the platinum price has fallen unsustainably and the metal is now oversold. The deficit market of 2014 is now shifting back towards balance as the recovery of supply closes the gap to demand.

Autocatalyst demand is growing, particularly in Western Europe with the introduction of Euro 6 emissions legislation for all vehicles in 2015. Platinum demand was supported by buying on price dips in late 2014 and early 2015.

After significant growth, Chinese jewellery demand is forecast to fall by 7% this year. Sales have been affected by the falling local stock market, fewer weddings and lower platinum jewellery marketing expenditure. Fabricators did not use the weaker price environment as an opportunity to stock up throughout the year. However, the strongest buying was evident in September, giving leave for cautious optimism for a recovery as retailers destock.

Sales

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In 2015 Lonmin sold 751,560 ounces of Platinum into the market. Platinum sales contributed 64% of our turnover. Palladium was the second highest contributor to the revenue basket with the 347,942 ounces, sold constituting 19% of Lonmin's income. Combined sales of Rhodium, Ruthenium and Iridium contributed a further 9% and Gold and Base Metals made up the balance.

PGM Prices

During the financial year platinum underperformed both palladium and gold. The recovery of platinum supply, combined with downgrades to global growth and the softening in jewellery sales were primary reasons for platinum's underperformance.

At the start of the 2015 financial year, the platinum spot price traded at $1,274/oz but ended the year at $904/oz, a drop of 29%. Compared to 2014, average prices were down 20% at $1,134/oz for the year.

Rhodium performance also impacted the PGM basket, with excess selling resulting in a 38% decline during the financial year to end $760/oz.

Palladium outperformed on a relative basis, but was hit by news of slowing growth in China impacting car sales and therefore palladium demand. Prices were down 6% compared to the previous year and fell 13% during the course of 2015. The announcement of stimulus measures by China and the possibility of increased gasoline vehicle sales owing to the VW scandal saw prices recover from below $600/oz to close to $700/oz by financial year end.

Market Outlook 2016

Reporting of how the VW diesel crisis might effect PGMs has been varied. The story broke in the US and added to the negative view of diesels that has prevailed in Europe for much of the past year. However, the crisis highlights the need for tightened and harmonised legislation worldwide which would require more platinum demand.

The diesel market is vital for platinum, but less so for palladium and rhodium. The platinum used in heavy duty diesels is largely 'captive demand', as diesel powertrains are expected to be the dominant choice for the foreseeable future. The risk applies only to light duty vehicles, where gasoline vehicles with much lower platinum content are a ready substitute. Nonetheless, diesel remains essential to meet stringent CO(2) targets in Europe. Furthermore, outside Europe the fundamentals remain in place for growing platinum autocatalyst demand, as half of the world's vehicles still do not comply with the latest emissions legislation, which would benefit demand for platinum.

Supply in 2015

The global primary supply forecast is 5.8 Moz for 2015, a 17% recovery on 2014, but continuing the downward production trend since 2006. South African supply is forecast to increase by 32% y-o-y to 4.1 Moz, while output from Zimbabwe drops 10% y-o-y to 363 koz and price-induced guidance revisions in North America may result in a 4% decrease in production.

The basket price has fallen below the 50(th) centile of the cost curve of production; an unsustainable level. In 2015, around 4% of global primary supply has been closed or deferred, with substantial capital expenditure postponed. So far, producers have cut CAPEX and announced delays to shafts and some closures.

Forced closures of mines or shafts may be inevitable across the industry in 2016, as minor adjustments to supply will not be enough to rebalance the market if current low prices were to prevail.

Demand in 2015

Autocatalysts remain the main end use for platinum, palladium and rhodium, driven by tightening emissions legislation and rising vehicle ownership around the world. Total autocatalyst demand (diesel + gasoline + non-road) is just ahead of jewellery, but jewellery in 2015 is expected to surpass diesel autocatalyst demand.

MINERAL RESOURCES AND MINERAL RESERVES

2015 Mineral Resources

Main features of the Lonmin Mineral Resources as at 30 September 2015:

-- Attributable Mineral Resources were 182.9 million ounces of 3PGE+Au in 2015, an increase of 3.8 million ounces from 2014.

-- Revisions to the South African Mineral Resource estimates were confined to the Marikana, Pandora and Akanani properties. The Mineral Resources at Marikana (excluding tailings) decreased by 0.48 million ounces 3PGE+Au in 2015. This is attributed to the net effect of an increase in the Merensky Mineral Resources (0.09 million ounces) being offset by a decrease of the UG2 Mineral Resources (0.57 million ounces). The Merensky Measured and Indicated Mineral Resources decreased by 0.32 million ounces whereas Inferred Mineral Resources increased by 0.41 million ounces, due to re-evaluation after consideration of depletions. The decrease in UG2 Mineral Resources of 0.57 million ounces is the net result of mining depletion (0.96 million ounces), an increase of 0.68 million ounces from additions and reassessment of geological losses, and a decrease of 0.29 million ounces as a result of orebody re-evaluation.

-- The Pandora Mineral Resource increased by 1.7 million ounces of 3PGE+Au, the result of Lonmin's increase in the attributable proportion from 34.85% to 41.00% which was offset by mining depletion.

-- The Akanani Mineral Resources increased by 2.6 million ounces of 3PGE+Au in 2015, the result of re-evaluation of the geological structure and grade estimates.

-- The Marikana Tailings, Limpopo and Loskop Mineral Resources were unchanged during 2015.

-- Revisions to the non-South African platinum Mineral Resources have been reported for the Denison 109 Footwall deposit in Canada. Changes to the Mineral Resource classification were made by converting 35,000 ounces of attributable 2PGE+Au metal from the Inferred to the Indicated confidence category.

-- The Mineral Resources for the Bumbo base metal and gold in Kenya have been reported unchanged in 2015.

2015 Mineral Reserves

Main features of the Lonmin Mineral Reserves as at 30 September 2015:

-- Attributable Mineral Reserves were 36.3 million ounces of 3PGE+Au in 2015, a decrease of 6.1 million ounces from 2014. The change is attributed to depletions at Marikana and the removal of the Mineral Reserves at Limpopo.

-- The Marikana attributable Mineral Reserves for 2015 are 34.7 million ounces of 3PGE+Au, a decrease of 0.8 million ounces with a corresponding decrease of 13.7 million tonnes ore material.

-- The Proved Mineral Reserve category increased by 0.4 million ounces of 3PGE+Au. The net effect is attributed to conversions from the Probable to the Proved confidence category. The increase in the Saffy shaft primary reef development had a notable influence in the Proved Mineral Reserve category.

-- The latest version of the Lonmin Long Term Plan (LTP) was approved in July 2015 and thus applied in determining the Mineral Reserves for reporting in 2015. This LTP accounted for capital deferrals and curtailments where relevant.

-- A decision to curtail the Hossy shaft operations due to economic considerations has led to the downgrading of c.3.8 million tonnes of ore material in 2015 of the deeper section of the Hossy Sub Incline Mineral Reserve that was reported in 2014. Study work is ongoing to assess feasibility for future classification.

-- Limpopo has been on care and maintenance since 2009. The reporting of Mineral Reserves in prior years was pending the outcome of study work. The current depressed economic conditions have resulted in no progression of the study, and consequently, the entire Mineral Reserves of 5.32 million ounces of 3PGE+Au contained in 51.7 million tonnes of ore material has been removed in 2015. Inclusion of future Mineral Reserves will depend on the progression of the mining study and favourable commodity prices.

-- The Pandora attributable Mineral Reserve increased by 0.1 million ounces to a total of 0.9 million ounces 3PGE+Au. This is due to the increase in the attributable portion to Lonmin Plc from 34.85 to 41.00%.

PGE Mineral Resources (Total Measured, Indicated & Inferred)1, 4, 5

 
                             30-Sep-2015                      30-Sep-2014 
-----------------  -------------------------------  ------------------------------- 
                               3PGE+Au                          3PGE+Au 
-----------------  -------------------------------  ------------------------------- 
 Area                    Mt    g/t     Moz      Pt        Mt    g/t     Moz      Pt 
                                               Moz                              Moz 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Marikana             742.2   4.92   117.4    70.6     751.9   4.87   117.8    71.0 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Limpopo(2)           128.8   4.07    16.8     8.4     128.8   4.07    16.8     8.4 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Limpopo Baobab 
  shaft                46.1   3.91     5.8     3.0      46.1   3.91     5.8     3.0 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Akanani              233.1   3.90    29.2    12.0     216.0   3.84    26.7    10.9 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Pandora JV            77.3   4.65    11.5     7.0      65.8   4.65     9.8     6.0 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Loskop JV(3)          10.1   4.04     1.3     0.8      10.1   4.04     1.3     0.8 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Sudbury PGM 
  JV(3)                 0.2   5.86    0.04    0.02       0.4   6.30    0.07    0.04 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Tailings Dam(3)       22.5   1.10    0.80     0.5      22.5   1.10     0.8     0.5 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 Total Resource     1,260.2   4.51   182.9   102.3   1,241.4   4.49   179.1   100.5 
-----------------  --------  -----  ------  ------  --------  -----  ------  ------ 
 

Notes:

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1) All figures are reported on a Lonmin Plc attributable basis, the relative proportions of ownership per project.

   2)    Limpopo(2) excludes Baobab shaft. 

3) Loskop and Sudbury PGM JV exclude Rh, due to insufficient assays, and therefore 2PGE+Au are reported. Tailings Dam exclude Au, due to assay values below laboratory detection limit, and therefore are reported as 3PGE.

   4)    Resources are reported inclusive of Reserves. 

5) Quantities and grades have been rounded to one or two decimal places, therefore minor computational errors may occur.

PGE Mineral Reserves (Total Proved & Probable)1, 3

 
                           30-Sep-2015                  30-Sep-2014 
-----------------  ---------------------------  --------------------------- 
                             3PGE+Au                      3PGE+Au 
-----------------  ---------------------------  --------------------------- 
 Area                  Mt    g/t    Moz     Pt      Mt    g/t    Moz     Pt 
                                           Moz                          Moz 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Marikana           263.8   4.10   34.7   21.2   277.5   3.98   35.5   21.7 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Limpopo(2)           0.0      -    0.0    0.0    42.4   3.20    4.4    2.2 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Limpopo Baobab 
  shaft               0.0      -    0.0    0.0     9.4   3.16    1.0    0.5 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Pandora JV           6.6   4.09    0.9    0.5     6.0   4.11   0.79    0.5 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Tailings Dam(4)     21.1   1.10    0.7    0.5    21.1   1.10    0.7    0.5 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 Total Reserve      291.5   3.87   36.3   22.2   356.4   3.70   42.4   25.3 
-----------------  ------  -----  -----  -----  ------  -----  -----  ----- 
 

Notes:

1) All figures are reported on a Lonmin Plc attributable basis, the relative proportions of ownership are per project.

   2)    Limpopo excludes Baobab shaft. 

3) Tailings Dam exclude Au, due to assay values below laboratory detection limit, and therefore are reported as 3PGE.

4) Quantities and grades have been rounded to one or two decimal places, therefore minor computational errors may occur.

FINANCIAL REVIEW

Overview

The 2015 financial year was underpinned by a solid operational performance which saw the Group achieve the highest platinum sales in eight years. This was achieved despite the impact of Section 54 safety stoppage challenges and the shutdowns in our smelter complex during the first half of the year. The financial benefit of this strong performance was, however, significantly diluted by the sustained low PGM price environment which has persisted throughout the financial year, putting immense pressure on the Group's profitability and cash flows.

The significant increase in sales volume when compared to the strike-impacted 2014 financial year was therefore somewhat offset by the impact of the decline in PGM prices. The focus on cost containment in the low PGM price environment continued during the year. The cost of production per PGM ounce reduced year on year by 23.6% to R10,339 compared to R13,538 for the strike-impacted prior year. When comparing the 2015 cost of production per PGM ounce to 2013, the unit cost reflects a compounded annual increase of only 6.1% despite above inflation wage increases as well as an increase in production losses associated with safety stoppages. The Group's continued focus on cash conservation measures and robust cost control system is evident in the reported unit cost for the year, especially the reduction in the unit cost for the fourth quarter to R9,841 per PGM ounce. Our net debt position at 30 September 2015 amounted to $185 million, well within the available debt facilities of $543 million.

We, the Board and executive management have reviewed the Group's business and capital structure and developed the Business Plan in order to be able to deal effectively with the impacts of a continuation of current low PGM prices. Key elements of the Business Plan are the reduction of fixed cost expenses, removal of high cost production and the minimising of capital expenditure while preserving the ability of the business to increase production when PGM prices improve. The restructuring costs associated with the implementation of the Business Plan which largely consist of retrenchment costs have been separately disclosed as special costs in the 2015 financial year.

The reduced production profile and revised PGM price outlook in the Business Plan have resulted in the downward revision of estimated future cash flows from the Marikana operations resulting in the value in use declining below the carrying amount of the non-financial assets of the operations. As a result a special impairment charge of $1,465 million is reflected in the financial statements. Furthermore, similar impairment assessments on our Limpopo and Akanani assets have resulted in full impairment of these assets, with a further special impairment charge of $346 million being reflected in the financial statements.

The Board's review of the Group's capital structure has resulted in significant steps being taken to strengthen our financial position. The announcement of our results coincides with the launch of a Rights Issue seeking to raise $407 million in gross proceeds, before deducting share issue costs and foreign exchange charges. In addition, the terms of our debt facilities will be revised, subject to a successful Rights Issue. Details of the Rights Issue are included in our Rights Issue Prospectus and proposed amendments to debt facilities are included below.

Income Statement

The $186 million movement between the underlying operating loss of $134 million for the year ended 30 September 2015 and the underlying operating profit of $52 million for the year ended 30 September 2014 is analysed as follows:

 
                                                   $m 
  Year to 30 September 2014 reported 
   operating loss                                  (255) 
  Year to 30 September 2014 special 
   items                                             307 
                                                -------- 
  Year to 30 September 2014 underlying 
   operating profit                                   52 
                                                -------- 
       PGM volume                                    541 
   PGM price                                       (259) 
   PGM mix                                            24 
   Base metals                                        22 
                                                -------- 
  Revenue changes                                    328 
  Cost changes (net of positive foreign 
   exchange impact of $117 million)                (514) 
 
    Year to 30 September 2015 underlying 
    operating loss                                 (134) 
  Year to 30 September 2015 special 
   items                                         (1,884) 
                                                -------- 
  Year to 30 September 2015 reported 
   operating loss                                (2,018) 
                                                -------- 
 

Revenue

Total revenue for the year ended 30 September 2015 was $1,293 million, an increase of $328 million or 34%, compared to prior year revenue of $965 million.

There was an increase in sales volumes compared to the strike impacted prior year. The impact of this volume increase was an increase in revenue of $541 million.

PGM prices continued to decline during the year under review. The impact on the Group's average prices achieved on the key metals sold is shown below:

 
                                       Year ended 30 
                                           September 
                                       2015     2014 
                                       $/oz     $/oz 
 Platinum                             1,095    1,403 
 Palladium                              718      775 
 Rhodium                                998    1,050 
                                    -------  ------- 
 PGM basket (excluding by-product 
  revenue)                              849    1,013 
                                    -------  ------- 
 

The US Dollar PGM basket price (excluding base metals) was 16% lower compared to the 2014 average price. This resulted in a $259 million reduction in revenue. However, the Rand basket price (excluding by-products) reduced only by 4% as a result of the relatively weaker Rand.

The mix of metals sold resulted in a positive impact of $24 million mainly due to the higher proportion of platinum sold compared to other refined metals. Base metal revenue increased by $22 million primarily as a result of the increase in volumes sold.

Operating costs

Total underlying operating costs for the year increased by $514 million primarily as a result of the increase in production levels compared to the strike-impacted prior year. This increase was partially offset by the positive foreign exchange movements on the back of the weaker Rand during this period. A track of these changes is shown in the table below.

 
                                                 $m 
 Year ended 30 September 2014 - underlying 
  cost                                          913 
 
   Increase / (decrease): 
                                             ------ 
 Marikana underground mining                    286 
 Marikana opencast mining                      (13) 
 Limpopo mining                                 (1) 
 Concentrating, smelting and refining            87 
 Overheads                                       15 
 Idle fixed production costs excluded 
  from underlying costs in 2014                 289 
                                             ------ 

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 Operating costs                                662 
 Ore, concentrate and other purchases            16 
 Metal stock movement                          (62) 
 Foreign exchange                             (117) 
 Depreciation and amortisation                   14 
                                             ------ 
 Cost changes (net of the positive 
  foreign exchange impact)                      514 
 
 Year ended 30 September 2015 - underlying 
  costs                                       1,427 
                                             ------ 
 

Marikana underground mining costs increased by $286 million, or 47%, primarily as a result of the increase in volumes produced during the year compared to the strike impacted prior year. The Marikana opencast mining costs reduced by $13 million or 62% due to the decrease in production as this operation depleted and mining ceased at the end of September 2015.

Concentrating, smelting and refining costs increased by $87 million or 41% compared to the strike-impacted prior year, mainly due to the increase in ounces milled and refined during the period as well as cost escalations.

Idle production costs incurred during the strike in the prior year were classified as special.

Ore, concentrate and other purchases increased by $16 million or 43% as the volume produced in the prior year was impacted by the strike action. The increase in volumes purchased in 2015 was partially offset by a decline in metal prices.

The decrease of $62 million in metal stock is mainly due to the $69 million write down of stock to net realisable value as result of the decline in PGM prices. The $62 million comprises a $17 million stock decrease in 2015 which was offset by a $79 million stock decrease in 2014.

During the year, the Rand weakened against the US Dollar averaging ZAR12.01 to US$1 compared to an average of ZAR10.55 to US$1 in the 2014 financial year resulting in a $117 million positive impact on operating costs.

Depreciation is calculated on a unit of production basis, spreading costs in relation to proven and probable reserves. Due to increased production levels, depreciation and amortisation also increased by $14 million compared to the 2014 financial year.

Cost of Production per PGM Ounce

The cost of production per PGM ounce for the 2015 financial year decreased by 23.6% to R10,339 compared to R13,538 for the year ended 30 September 2014. The prior year was impacted by the five month strike, and therefore included idle production costs. When comparing the 2015 cost of production to the 2013 financial year, the unit cost reflects a compounded annual increase of only 6.1% per annum despite above inflation wage increases being granted as well as an increase in production losses associated with safety stoppages. The Group's continued focus on cash conservation measures and robust cost control system is evident in the reported unit cost for the year, especially the reduction in the unit cost for the fourth quarter to R9,841 per PGM ounce.

Further details of unit costs can be found in the Operating Statistics.

Special Operating Costs

Special operating costs for the year ended 30 September 2015 are made up as follows:

 
 
                                           Year ended 30 September 
                                                              2015       2014 
                                                                $m         $m 
 Impairment of non-financial 
  assets                                                     1,811          - 
 Restructuring costs                                            59          - 
 BEE transaction                                                14          - 
 Strike related costs 
 
   *    Idle fixed production costs                              -        287 
 
   *    Contractors' claims                                      -          3 
 
   *    Security costs                                           -         10 
 
   *    Other strike related costs                               -          7 
                                      ----------------------------  --------- 
                                                             1,884        307 
                                      ----------------------------  --------- 
 
 

The reduced production profile and revised PGM price outlook in the Business Plan have resulted in the downward revision of estimated future cash flows from the Marikana operations resulting in their value in use declining below the carrying amount of the non-financial assets of the operations of $3,100 million. The recoverable amount of the Marikana CGU was $1,635 million. As a result, a special impairment charge of $1,465 million is reflected in the financial statements. Furthermore, similar impairment assessments on our Limpopo and Akanani assets which had carrying amounts of $127 million and $219 million respectively, have resulted in full impairment of these assets with a further special impairment charge of $346 million being reflected in the financial statements which brings the total impairment of non-financial assets to $1,811 million. Refer to note 10 for details.

The restructuring costs of $59 million incurred during the period include retrenchment costs of $56 million, and consulting and advisory fees of $3 million incurred in relation to the restructuring. BEE transaction costs amounted to $14 million with $13 million being the lock-in premium paid to the Bapo. Legal and consulting costs incurred on this transaction amounted to $1 million.

Idle production overheads incurred during the strike period in 2014 for which there was no associated production output, as well as costs arising directly as a result of the strike action were classified as special items. The total of these strike related costs amounted to $307 million. The major portion of the costs comprised idle fixed production costs incurred during the strike period which totalled $287 million. The cost of additional security amounted to $10 million. Costs relating to contractors not being able to fulfil their obligations as a result of the disruption amounted to $3 million. Other costs included legal, communication, medical and various other start-up costs.

Net Finance Costs

 
                                         Year ended 30 
                                           September 
                                        2015        2014 
                                          $m          $m 
 Net bank interest and fees             (25)        (25) 
 Capitalised interest payable 
  and fees                                19          13 
 Foreign exchange gains on 
  net (debt)/cash                         12          10 
 Dividends received from investment        1          10 
 Unwinding of discount on provision     (10)        (10) 
 Other                                   (1)           - 
                                      ------       ----- 
 Underlying net finance costs            (4)         (2) 
 HDSA receivable                       (235)        (62) 
 Net finance costs                     (239)        (64) 
                                      ------       ----- 
 

Total net finance costs increased by $175 million to $239 million for the year ended 30 September 2015 compared to $64 million incurred in the prior year. The most significant component of total net finance costs for the 2015 and 2014 financial years was the impairment of the HDSA receivable of $227 million and $80 million respectively.

Net bank interest and fees incurred in the 2015 financial year remained flat at $25 million compared to the prior year. Interest capitalised in 2015 was higher than the prior year as interest incurred during the strike period in the prior year did not qualify for capitalisation.

Dividends received relate to dividends from our investment in Petrozim Line (Private) Limited.

The Historically Disadvantaged South Africans (HDSA) receivable, being the Sterling loan to Shanduka Resources (Proprietary) Limited (Shanduka) decreased by $235 million during the year as a result of an impairment charge of $227 million and foreign exchange losses of $28 million which were partially offset by interest accrued of $20 million. The impairment charge of $227 million in the current year which brings the total accumulated impairment on the receivable to $307 million is as a result of the value of the security for the loan falling below the carrying amount of the receivable primarily due to the decline in long term PGM price assumptions applied in the valuation models of the Marikana CGU and Akanani CGU. The receivable is secured on the HDSA's shareholding in Incwala, whose only asset of value is its underlying investment in WPL, EPL and Akanani. The value of the security is driven by the values of WPL, EPL and Akanani. The movement of $62 million in the prior year comprised an impairment charge of $80 million which was partially offset by interest accrued of $18 million. The balance of the receivable at 30 September 2015 was $102 million (2014 - $337 million).

Taxation

Reported tax for the current financial year was a credit of $363 million compared to a credit of $123 million in the 2014 period. The tax credit of $363 million includes special exchange gains on the retranslation of Rand denominated deferred tax liabilities of $48 million and the tax impact of special items of $280 million.

Our philosophy on taxation is to comply with the tax legislation of all the countries in which we operate by paying all taxes due and payable in those countries in terms of the applicable tax laws. Transactions entered into by the Group are structured to follow bona fide business rationale and tax principles. We recognise that in order to be a sustainable and responsible business, the Group must have appropriate tax policies that are adhered to and managed properly. We seek to maintain a proactive and cooperative relationship with local tax authorities in all our business and tax transactions and conduct all such transactions in a transparent manner.

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With the Group's primary operations being in South Africa, the tax liability follows such activity which has the effect that the majority of the Group's taxes are paid in that country. Following the financial crisis of 2008, the events at Marikana of 2012, the five month industry-wide strike and more recently the decline in metal prices, all of which have adversely impacted profitability, the level of corporate tax has reduced. However, the Group continues to pay significant amounts in respect of other forms of tax including:

   --     Employee taxes 
   --     Customs and excise duties 
   --     Value Added Tax 
   --     State royalties 

Our philosophy on transfer pricing is that related party transactions should be charged at arm's length prices. Transfer pricing studies were performed by transfer pricing specialists on all our related party transactions and such transactions were found to be within acceptable norms compared to comparable transactions in similar companies. Lonmin inherited a number of companies in tax haven jurisdictions from previous unbundling and acquisition transactions. These companies are dormant entities and therefore do not receive any income. Furthermore, Lonmin does not pay any of its income to any of the dormant tax haven companies in these inherited structures.

Cash Generation and Net Debt

The following table summarises the main components of the cash flow during the period:

 
                                             Year ended 30 
                                                September 
                                       2015                     2014 
                                         $m                       $m 
 Operating loss                     (2,018)                    (255) 
 Depreciation, amortisation 
  and impairment                      1 966                      142 
 Changes in working capital              63                       18 
 Other non-cash movements                 4                      (5) 
 Cash flow generated from 
  /(utilised in) operations              15                    (100) 
 Interest and finance costs            (24)                     (16) 
 Tax paid                               (3)                        - 
-------------------------------    --------  ----------------------- 
 Trading cash outflow                  (12)                    (116) 
 Capital expenditure                  (136)                     (93) 
 Dividends paid to minority 
  shareholders                         (19)                     (37) 
---------------------------------  --------  ----------------------- 
 Free cash outflow                    (167)                    (246) 
 Contribution to joint venture          (7)                      (1) 
 Issue of other ordinary 
  share capital                           3                        1 
 Cash outflow                         (171)                    (246) 
 Opening net (debt)/cash               (29)                      201 
 Foreign exchange                        17                       13 
 Unamortised fees                       (2)                        3 
---------------------------------  --------  ----------------------- 
 Closing net debt                     (185)                     (29) 
---------------------------------  --------  ----------------------- 
 
 Trading cash flow (cents 
  per share)                         (2.1)c                  (20.4)c 
---------------------------------  --------  ----------------------- 
 Free cash flow (cents per 
  share)                            (28.7)c                  (43.2)c 
---------------------------------  --------  ----------------------- 
 

Cash flow generated by operations in the year ended 30 September 2015 increased by $115 million from an outflow of $100 million in the prior year to an inflow of $15 million in the year under review. The cash outflow for the 2014 financial year was largely driven by lower sales volumes. The net inflow in the current year was mainly a result of positive movements in working capital on the back of a reduction in our closing stocks compared to the prior year. The increase in sales volumes in the year under review which was partly offset by the impact of the lower PGM prices also had a positive impact on the cash flow generated by operations.

Trading cash outflow for the year decreased by $104 million to $12 million compared to the prior year trading cash outflow of $116 million. The cash outflow on interest and finance costs increased by $8 million largely due to the timing of payments over the two periods under review. The trading cash outflow per share was 2.1 cents at 30 September 2015 compared to a cash outflow of 20.4 cents in the prior year.

Capital expenditure at $136 million was $43 million (or 46%) higher than the prior year spend. The Group's capital investment programme was severely impacted in the prior year as a result of the strike. The current year spend was lower than the guidance of $250 million as a result of the ongoing cost containment.

An advance dividend payment of $19 million was paid by WPL, a subsidiary of Lonmin Plc, to Incwala Platinum (Proprietary) Limited during 2015. This brings the accumulated advanced dividends paid to Incwala to $135 million (R1,309 million) as at 30 September 2015. The amount paid to Incwala will be recovered by reducing future dividends that would otherwise be payable to all shareholders.

Contributions to the Pandora Joint Venture during the year under review amounted to $7 million.

Key Financial Risks

The Group faces many risks in the operation of its business. The Group's strategy takes into account known risks, but risks will exist of which we are currently unaware. The financial review focuses on financial risk management.

Financial Risk Management

The main financial risks faced by the Group relate to the availability of funds to meet business needs (liquidity risk), the risk of default by counterparties to financial transactions (credit risk) and fluctuations in interest, foreign exchange rates and commodity prices (market risk). Factors which are outside the control of management which can have a significant impact on the business remain, specifically, the fluctuations in the Rand/US Dollar exchange rate and PGM commodity prices.

These are the critical factors to consider when addressing the issue of whether the Group is a Going Concern.

Liquidity Risk

The policy on liquidity is to ensure that the Group has sufficient funds to facilitate all ongoing operations. The Group funds its operations through a mixture of equity funding and borrowings. The Group's philosophy is to maintain an appropriately low level of financial gearing given the exposure of the business to fluctuations in PGM commodity prices and the Rand / US Dollar exchange rate. We ordinarily seek to fund capital requirements from equity.

As part of the annual budgeting and long-term planning process, the Group's cash flow forecast is reviewed and approved by the Board. The cash flow forecast is amended on an ongoing basis for any significant changes in the key assumptions identified during the year.

Where funding requirements are identified from the cash flow forecast, appropriate measures are taken to ensure these requirements can be satisfied. Factors taken into consideration are:

   --     the size and nature of the requirement; 

-- preferred sources of finance applying key criteria of cost, commitment, availability, security / covenant conditions;

   --     recommended counterparties, fees and market conditions; and 
   --     covenants, guarantees and other financial commitments. 

As mentioned above in the Overview section, the Board and executive management have reviewed the Group's business and capital structure and developed the Business Plan in order to be able to deal effectively with the impacts of a continuation of the current low price environment.

Consequently, the announcement of these results coincides with the launch of a Rights Issue which is conditional on, amongst other things, shareholder approval. The Group proposes to raise approximately $407 million, before deducting share issue costs and foreign exchange charges, as well as amend the existing debt facilities.

The amended debt facility agreements which were entered into on 9 November 2015 will become effective only once the Underwriting Agreement in respect of the Rights Issue has become wholly unconditional and the satisfaction of customary conditions precedent.

Following the amendment, the Group's debt facilities going forward are summarised as follows:

-- Secured revolving credit facilities totalling $75 million and a $150 million term loan, at a Lonmin Plc Level, which mature in May 2020 (assuming Lonmin exercises its option to extend the term up until this date)

-- Secured revolving credit facility totalling R1,980 million, at a Western Platinum Limited level, which matures in May 2020 (assuming Lonmin exercises its option to extend the term up until this date).

The following covenants apply to these facilities:

-- The consolidated tangible net worth of the Group on or after 31 March 2016 will not be at any time less than US$1,100 million.

-- The consolidated debt of the Group on or after 31 March 2016 will not at any time exceed an amount equal to 35% of consolidated tangible net worth of the Group

-- the liquidity for the Group will not, for any week from 1 January 2016, be less than $20,000,000;

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-- The capital expenditure of the Group (excluding any Bulk Tailings Agreement) shall not exceed the limits set out in the table below. The Company shall also have the option to carry forward or back up to 10% of the limits set out in the table below.

 
 
   Financial Year                                 Capex Limit 
-----------------------------------------------  ----------------- 
 1 October 2015 - 30 September 2016 (inclusive)   ZAR1,338 million 
 1 October 2016 - 30 September 2017 (inclusive)   ZAR1,242 million 
 1 October 2017 - 30 September 2018 (inclusive)   ZAR2,511 million 
 1 October 2018 - 30 September 2019 (inclusive)   ZAR3,194 million 
 1 October 2019 - 31 May 2020 (inclusive)         ZAR4,049 million 
 

There is also additional limit on capital expenditure in relation to any Bulk Tailings Agreement as set out below:

 
 Financial Year                                   Bulk Tailings Capex Limit 
-----------------------------------------------  -------------------------- 
 1 October 2015 - 30 September 2016 (inclusive)   ZAR370 million 
 1 October 2016 - 30 September 2017 (inclusive)   ZAR182 million 
 

The limit on capital expenditure in relation to any Bulk Tailings Agreement after 30 September 2017 will be zero.

In addition to the above, the Group's existing lenders agreed on 26 October 2015 to suspend the testing of the tangible net worth covenants under the existing facilities until the amended facilities agreements become effective, failing which, the covenants would be tested under the existing facilities.

Credit Risk

Banking Counterparties

Banking counterparty credit risk is managed by spreading financial transactions across an approved list of counterparties of high credit quality. Banking counterparties are approved by the Board and consist of the ten banks that participate in Lonmin's bank debt facilities. These counter-parties comprise: BNP Paribas S.A., Citibank, N.A., London Branch, HSBC Bank Plc, J.P. Morgan Chase N.A., London Branch, Lloyds Bank Plc, The Royal Bank of Scotland Plc., and Standard Chartered Bank.

Trade Receivables

The Group is exposed to significant trade receivable credit risk through the sale of PGMs to a limited group of customers.

This risk is managed as follows:

   --     age analysis is performed on trade receivable balances and reviewed on a monthly basis; 

-- credit ratings are obtained on any new customers and the credit ratings of existing customers are monitored on an ongoing basis;

   --     credit limits are set for customers; and 
   --     trigger points and escalation procedures are clearly defined. 

It should be noted that a significant portion of Lonmin's revenue is from two key customers. However, both of these customers have strong investment grade ratings and their payment terms are very short, thereby reducing trade receivable credit risk significantly.

HDSA Receivables

HDSA receivables are secured on the HDSA's shareholding in Incwala Resources (Pty) Limited. Refer to notes 8 in the financial statements for details on the valuation of this security and the resulting impairment charge.

Interest Rate Risk

Although the Group is in a net debt position, this risk is not considered to be high at this point in time. The interest position is kept under constant review in conjunction with the liquidity policy outlined above and the future funding requirements of the business.

Foreign Currency Risk

The Group's operations are predominantly based in South Africa and the majority of the revenue stream is in US Dollars. However, the bulk of the Group's operating costs and taxes are paid in Rands. Most of the cash received in South Africa is in US Dollars. Most of the Group's funding sources are in US Dollars.

The Group's reporting currency is the US Dollar and the share capital of the Company is based in US Dollars.

During the year under review Lonmin did not undertake any foreign currency hedging.

Commodity Price Risk

Our policy is not to hedge commodity price exposure on PGMs, excluding gold, and therefore any change in prices will have a direct effect on the Group's trading results.

For base metals and gold, hedging is undertaken where the Board determines that it is in the Group's interest to hedge a proportion of future cash flows. The policy allows Lonmin to hedge up to a maximum of 75% of the future cash flows from the sale of these products looking forward over the next 12 to 24 months. The Group did not undertake any hedging of base metals under this authority in the period under review and no forward contracts were in place in respect of base metals at the end of the period.

In respect of gold, Lonmin entered into a prepaid sale of 75% of its current gold production for the next 54 months in March 2012. In terms of this contract Lonmin will deliver 70,700 ounces of gold over the period with delivery on a quarterly basis and in return received an upfront payment of $107 million. The upfront receipt was accounted for as deferred revenue on our balance sheet and is being released to profit and loss as deliveries take place at an average price of $1,510/oz delivered.

Contingent Liabilities

The Group provided third party guarantees of $7 million (2014 - $9 million) to Eskom as security to cover estimated electricity consumption for three months. The Group also provided guarantees to the Department of Mineral Resources for an amount of $45 million (2014 - $55 million). At 30 September 2015, total guarantees amounted to $53 million (2014 - $65 million) which included $1 million provided to various other third parties.

Simon Scott

Chief Financial Officer

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL REPORT AND ACCOUNTS

We confirm that to the best of our knowledge:

-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

-- the management report required by DTR 4.1.8R (contained in the Strategic Report and the Directors' Report) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

   Brian Beamish                                                   Simon Scott 
   Chairman                                                            Chief Financial Officer 

9 November 2015

Operating statistics

5 year review

 
                                                      Units         2015      2014        2013        2012        2011 
--------------  -----------------  ----------------  -------  ----------  --------  ----------  ----------  ---------- 
 Tonnes          Generation 
  mined (1)       2                 K3 shaft            kt         2,713     1,484       3,101       2,646       2,750 
   Rowland 
    shaft                              kt                          1,872     1,005       1,781       1,599       2,082 
                                                                          --------  ----------  ----------  ---------- 
   Saffy shaft                         kt                          1,758       782       1,150         898       1,110 
                                                                          --------  ----------  ----------  ---------- 
   4B/1B shaft                         kt                          1,628       891       1,845       1,622       1,643 
                                                                          --------  ----------  ----------  ---------- 
   Hossy shaft                         kt                            953       609       1,051         864         793 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Generation 
    2                                  kt                          8,923     4,771       8,928       7,628       8,379 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
  Generation 
   1                 Newman shaft               kt                   765       428         948         919       1,197 
 ----------------- 
   W1 shaft                            kt                            180       102         170         126         154 
 
   East 1 shaft                        kt                            148       104         390         496         536 
 
   East 2 shaft                        kt                            390       279         426         397         484 
 
   East 3 shaft                        kt                             68        28          94         104         153 
 
   Pandora 
    (100%) (2)                         kt                            544       299         571         435         394 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Generation 
    1                                  kt                          2,095     1,240       2,599       2,476       2,920 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   K4 shaft                            kt                             49         -           4         117          45 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Total 
    Underground                         kt                        11,067     6,012      11,531      10,221      11,344 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Opencast                            kt                            230       333         528         443         601 

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  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Total 
    Underground 
    & Opencast                         kt                         11,297     6,345      12,058      10,663      11,944 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
                 Limpopo 
                  (3)               Underground         kt             -         6           -           -           - 
--------------  -----------------  ----------------  -------  ----------  --------  ----------  ----------  ---------- 
 Lonmin                              Total Tonnes 
  (100%)                              mined             kt        11,297     6,351      12,058      10,663      11,994 
   % tonnes 
    mined from 
    UG2 reef 
    (100%)                              %                           75.1      74.1        73.9        71.7        73.2 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
  Lonmin             Underground 
   (attributable)     & Opencast                kt                11,016     6,180      11,730      10,413      11,718 
 -----------------  ----------------  ----------------------  ----------  --------  ----------  ----------  ---------- 
                 Lonmin 
 Ounces           excluding 
  mined (4)       Pandora           Platinum            oz       668,319   371,651     717,882     635,346     695,474 
  Pandora 
   (100%)            Platinum                   oz                36,458    20,327      40,917      30,714      25,342 
                 Limpopo            Platinum            oz             -       255           -           -           - 
                -----------------  ----------------  -------  ----------  --------  ----------  ----------  ---------- 
  Lonmin             Platinum                   oz               704,776   392,233     758,799     666,060     720,816 
 
  Lonmin 
   excluding 
   Pandora           Total PGMs                 oz             1,280,964   707,913   1,340,678   1,174,776   1,306,082 
  Pandora 
   (100%)            Total PGMs                 oz                71,861    40,044      78,353      58,300      48,420 
                 Limpopo            Total PGMs          oz             -       572           -           -           - 
                                   ----------------  -------  ----------  --------  ----------  ----------  ---------- 
  Lonmin             Total PGMs                 oz             1,352,825   748,529   1,419,032   1,233,076   1,354,501 
 -----------------  ----------------  ----------------------  ----------  --------  ----------  ----------  ---------- 
 Tonnes 
  milled 
  (5)            Marikana           Underground         kt        10,930     5,389      10,854       9,936      10,896 
   Opencast                            kt                            318       422         393         450         748 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
   Total                               kt                         11,248     5,810      11,248      10,386      11,643 
  Pandora 
   (100%) 
   (6)               Underground                kt                   562       281         574         432         394 
 -----------------  ----------------  ----------------------  ----------  --------  ----------  ----------  ---------- 
                 Limpopo 
                  (7)               Underground         kt             -        27           -           -           - 
                -----------------  ----------------  -------  ----------  --------  ----------  ----------  ---------- 
  Lonmin 
   Platinum          Underground                kt                11,491     5,696      11,428      10,367      11,290 
   Opencast                            kt                            318       422         393         450         748 
   Total                               kt                         11,810     6,118      11,822      10,817      12,037 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
 Milled 
  head           Lonmin             Underground        g/t          4.51      4.48        4.60        4.56        4.54 
 grade (8)       Platinum           Opencast           g/t          3.08      3.20        2.92        3.01        2.23 
   Total                               g/t                          4.47      4.39        4.54        4.49        4.40 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
 Concentrator    Lonmin             Underground         %           86.8      87.0        87.0        86.1        85.4 
 recovery 
  rate (9)       PPlatinum          Opencast            %           85.1      84.5        85.3        85.9        81.6 
   Total                                %                           86.7      86.9        87.0        86.1        85.3 
  ----------------  ----------------------------------------  ----------  --------  ----------  ----------  ---------- 
 

Operating statistics

5 year review

 
                                       Units         2015      2014        2013        2012        2011 
-----------------------  -----------  -------  ----------  --------  ----------  ----------  ---------- 
 Metals-in-concentrate 
  (10)                    Platinum       oz       696,489   355,926     706,012     646,393     694,149 
 Marikana                 Palladium      oz       323,177   164,960     323,622     295,409     324,655 
  Gold                       oz                    16,503     9,879      17,664      16,925      17,471 
  Rhodium                    oz                   101,435    49,908      95,241      83,144      91,659 
  Ruthenium                  oz                   165,689    81,693     144,304     127,269     144,369 
  Iridium                    oz                    32,416    16,143      33,059      27,610      31,294 
  Total 
   PGMs                      oz                 1,335,710   678,508   1,319,902   1,196,750   1,303,597 
 -----------  -------------------------------  ----------  --------  ----------  ----------  ---------- 
 Limpopo                  Platinum       oz             -     1,121           -           -           - 
                          Palladium      oz             -       974           -           -           - 
                          Gold           oz             -        93           -           -           - 
                          Rhodium        oz             -       114           -           -           - 
                          Ruthenium      oz             -       161           -           -           - 
                          Iridium        oz             -        44           -           -           - 
                          Total 
                           PGMs          oz             -     2,508           -           -           - 
-----------------------  -----------  -------  ----------  --------  ----------  ----------  ---------- 
 Pandora                  Platinum       oz        37,553    18,913      41,117      30,625      25,241 
  Palladium                  oz                    17,496     8,960      19,190      14,261      11,847 
  Gold                       oz                       131        54         315         228         179 
  Rhodium                    oz                     6,383     3,226       6,563       4,743       3,865 
  Ruthenium                  oz                    10,466     5,168       9,764       7,135       6,070 
  Iridium                    oz                     1,988       916       1,773       1,195         996 
  Total 
   PGMs                      oz                    74,019    37,237      78,721      58,188      48,199 
 -----------  -------------------------------  ----------  --------  ----------  ----------  ---------- 
 Lonmin Platinum 
  before                  Platinum       oz       734,042   375,960     747,129     677,019     719,390 
 Concentrate 
  Purchases               Palladium      oz       340,673   174,894     342,812     309,670     336,502 
  Gold                       oz                    16,635    10,026      17,979      17,153      17,650 
  Rhodium                    oz                   107,818    53,248     101,803      87,886      95,524 
  Ruthenium                  oz                   176,156    87,022     154,067     134,404     150,439 
  Iridium                    oz                    34,405    17,103      34,832      28,805      32,290 
  Total 
   PGMs                      oz                 1,409,729   718,253   1,398,623   1,254,938   1,351,796 
 -----------  -------------------------------  ----------  --------  ----------  ----------  ---------- 
 Concentrate 
  purchases               Platinum       oz         6,273     4,398       3,813       2,802           - 
  Palladium                  oz                     1,869     1,242       1,132         973           - 
  Gold                       oz                        18        14          14          10           - 
  Rhodium                    oz                       816       531         421         329           - 
  Ruthenium                  oz                     1,079       546         428         404           - 
  Iridium                    oz                       338       224         172         129           - 
  Total 
   PGMs                      oz                    10,394     6,955       5,980       4,647           - 
 -----------  -------------------------------  ----------  --------  ----------  ----------  ---------- 
 Lonmin Platinum          Platinum       oz       740,315   380,359     750,942     679,821     719,390 
  Palladium                  oz                   342,542   176,136     343,944     310,643     336,502 

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  Gold                       oz                    16,653    10,040      17,993      17,163      17,650 
  Rhodium                    oz                   108,634    53,779     102,225      88,216      95,524 
  Ruthenium                  oz                   177,235    87,567     154,495     134,808     150,439 
  Iridium                    oz                    34,743    17,327      35,004      28,934      32,290 
  Total 
   PGMs                      oz                 1,420,122   725,208   1,404,603   1,259,585   1,351,796 
  Nickel 
   (11)                      mt                     3,669     2,092       3,743       3,489       3,537 
  Copper 
   (11)                      mt                     2,250     1,314       2,340       2,226       2,223 
 -----------  -------------------------------  ----------  --------  ----------  ----------  ---------- 
 

Operating statistics

5 year review

 
                                    Units         2015      2014        2013        2012        2011 
--------------------  -----------  -------  ----------  --------  ----------  ----------  ---------- 
 Refined production    Platinum       oz       759,005   431,683     707,665     648,414     686,877 
 Lonmin refined 
  metal                Palladium      oz       350,040   208,756     319,841     310,558     323,907 
 production            Gold           oz        18,232    12,299      18,676      18,398      18,013 
  Rhodium                  oz                  102,372    76,940      79,124     110,896      86,702 
  Ruthenium                oz                  181,803   107,166     171,052     153,394     164,374 
  Iridium                  oz                   32,180    27,991      28,068      32,844      26,337 
  Total 
   PGMs                    oz                1,443,633   864,835   1,324,426   1,274,503   1,306,210 
 -----------  ----------------------------  ----------  --------  ----------  ----------  ---------- 
 Toll refined 
  metal                Platinum       oz           689     4,501       1,364      38,958      44,396 
 production            Palladium      oz           280     1,765         662      21,043      49,119 
  Gold                     oz                       14       116         289         729       2,879 
  Rhodium                  oz                       95     1,546       1,837       4,717      14,402 
  Ruthenium                oz                    2,093     7,417       6,519       7,907      24,408 
  Iridium                  oz                      560     1,914       1,012       1,944       5,249 
  Total 
   PGMs                    oz                    3,731    17,259      11,683      75,299     140,453 
 -----------  ----------------------------  ----------  --------  ----------  ----------  ---------- 
 Total refined 
  PGMs                 Platinum       oz       759,695   436,184     709,029     687,372     731,273 
  Palladium                oz                  350,320   210,521     320,503     331,601     373,026 
  Gold                     oz                   18,246    12,415      18,965      19,128      20,892 
  Rhodium                  oz                  102,467    78,486      80,961     115,613     101,103 
  Ruthenium                oz                  183,896   114,583     177,571     161,300     188,782 
  Iridium                  oz                   32,740    29,905      29,081      34,788      31,586 
  Total 
   PGMs                    oz                1,447,364   882,094   1,336,109   1,349,802   1,446,662 
                       Nickel 
 Base metals            (12)          mt         3,720     2,387       3,532       3,786       4,188 
  Copper 
   (12)                    mt                    2,276     1,480       2,168       2,153       2,454 
 -----------  ----------------------------  ----------  --------  ----------  ----------  ---------- 
 Sales                 Platinum       oz       751,560   441,684     695,803     701,831     720,783 
 Refined metal 
  sales                Palladium      oz       347,942   212,500     313,030     335,849     372,284 
  Gold                     oz                   19,199    13,100      18,423      19,273      19,417 
  Rhodium                  oz                   92,520    81,120      77,625     119,054     102,653 
  Ruthenium                oz                  192,549   121,904     168,266     170,751     187,189 
  Iridium                  oz                   30,114    29,778      28,828      37,187      33,603 
  Total 
   PGMs                    oz                1,433,883   900,087   1,301,973   1,383,945   1,435,929 
  Nickel 
   (12)                    mt                    3,656     2,251       3,586       3,843       4,180 
  Copper 
   (12)                    mt                    2,131     1,448       2,130       2,197       2,448 
  Chrome 
   (12)                    mt                1,440,901   747,881   1,388,761   1,209,643     730,278 
 -----------  ----------------------------  ----------  --------  ----------  ----------  ---------- 
 
 

Operating statistics

5 year review

 
                                 Units      2015     2014     2013     2012     2011 
---------  -------------------  -------  -------  -------  -------  -------  ------- 
 Average 
  prices    Platinum              $/oz     1,095    1,403    1,517    1,517    1,769 
  Palladium                  $/oz            718      775      715      630      752 
  Gold                       $/oz          1,487    1,509    1,508    1,597    1,405 
  Rhodium                    $/oz            998    1,050    1,097    1,274    2,145 
  Ruthenium                  $/oz             45       57       74      103      168 
  Iridium                    $/oz            524      521      946    1,042      938 
  Basket price 
   of PGMs (13)              $/oz            849    1,013    1,100    1,095    1,299 
  Full Basket price 
   of PGMs (14)              $/oz            902    1,072    1,167    1,163    1,389 
  Basket price 
   of PGMs (13)              R/oz         10,207   10,654   10,291    8,807    9,109 
  Full Basket price 
   of PGMs (14)              R/oz         10,829   11,277   10,921    9,304    9,716 
  Nickel (12)                $/MT         10,512   13,053   12,772   14,330   21,009 
  Copper (12)                $/MT          5,584    6,810    7,113    7,201    8,612 
  Chrome (12)                $/MT             17       18       19       20       27 
 -------------------  -----------------  -------  -------  -------  -------  ------- 
 

Footnotes:

 
 1    Reporting of shafts are in line with our operating strategy 
       for Generation 1 and Generation 2 shafts. 
 2    Pandora underground and opencast tonnes mined represents 
       100% of the total tonnes mined on the Pandora joint venture 
       of which 42.5% for October and November 2014 and 50% 
       thereafter is attributable to Lonmin. 
 3    Limpopo underground tonnes mined represents low grade 
       development tonnes mined whilst on care and maintenance. 
 4    Ounces mined have been calculated at achieved concentrator 
       recoveries and as from 2014 with Lonmin standard downstream 
       processing recoveries to present produced saleable ounces. 
 5    Tonnes milled exclude slag milling. 
 6    Lonmin purchases 100% of the ore produced by the Pandora 
       joint venture for onward processing which is included 
       in downstream operating statistics. 
 7    Limpopo tonnes milled represent low grade development 
       tonnes milled. 
 8    Head Grade is the grammes per tonne (5PGE + Au) value 
       contained in the tonnes milled and fed into the concentrator 
       from the mines (excludes slag milled). 
 9    Recovery rate in the concentrators is the total content 
       produced divided by the total content milled (excluding 
       slag). 
 10   As from 2014, metals-in-concentrate have been calculated 
       at Lonmin standard downstream processing recoveries to 
       present produced saleable ounces. 
 11   Corresponds to contained base metals in concentrate. 
 12   Nickel is produced and sold as nickel sulphate crystals 
       or solutions and the volumes shown correspond to contained 
       metal. Copper is produced as refined product but typically 
       at LME grade C. Chrome is produced in the form of chromite 
       concentrate and volumes shown are in the form of chromite. 
 13   Basket price of PGMs is based on the revenue generated 
       in Rand and Dollar from the actual PGMs (5PGE + Au) sold 
       in the period based on the appropriate Rand / Dollar 
       exchange rate applicable to each sales transaction. 
 14   As per footnote 13 but including revenue from base metals. 
 

Operating statistics

5 year review

 
                                            Units        2015      2014       2013       2012       2011 
----------------  -----------------------  -------  ---------  --------  ---------  ---------  --------- 
 Capital                                      Rm        1,641       992      1,500      3,296      2,907 
 Expenditure 
  (1)                                         $m          136        93        159        408        410 
-----------------------------------------   ------  ---------  --------  ---------  ---------  --------- 
 Employees 
  and              Employees as 
  contractors       at 30 September           #        26,968    28,276     28,379     28,230     27,796 
  Contractors as 
   at 30 September                    #                 8,701    10,016     10,042      8,293      9,564 
 -----------------------  ------------------------  ---------  --------  ---------  ---------  --------- 
 Exchange          Average rate 
  rates             for period (2)           R/$        12.01     10.55       9.24       8.05       6.95 
                        GBP/$                            0.65      0.60       0.64       0.63       0.62 
  Closing rate                       R/$                13.83     11.29       9.99       8.30       8.05 
                        GBP/$                            0.66      0.62       0.62       0.62       0.64 

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  ------------------------------------------------  ---------  --------  ---------  ---------  --------- 
 Underlying 
  cost             Mining                     $m        (785)     (622)      (919)      (877)      (995) 
 of sales          Concentrating              $m        (145)     (107)      (159)      (168)      (187) 
                   Smelting and 
 PGM operations     refining (3)              $m        (120)     (106)      (133)      (147)      (172) 
 segment           Shared services            $m         (71)      (74)      (101)      (100)       (97) 
  Management and 
   marketing services                 $m                 (25)      (24)       (26)       (35)       (32) 
 
  Ore, concentrate 
   and other purchases                $m                 (48)      (38)       (64)       (48)       (46) 
  Limpopo mining                     $m                   (2)       (3)        (7)        (9)        (7) 
 
  Special item 
   adjustment                        $m                     -       287          -        121          - 
                   ESOP and community 
                    trusts donations           $m         (1)         -          -          -          - 
  Royalties                          $m                   (9)       (5)        (6)        (8)       (12) 
  Shared based 
   payments                          $m                  (14)      (15)       (13)       (12)       (13) 
  Inventory movement                 $m                  (84)      (79)        203      (140)       (12) 
  FX and Group 
   Charges                           $m                    51        25         44         14          5 
                          ------------------------  ---------  --------  ---------  ---------  --------- 
  Total PGM operations 
   segment                           $m               (1,253)     (761)    (1,181)    (1,412)    (1,567) 
                          ------------------------  ---------  --------  ---------  ---------  --------- 
  Evaluation - 
   excluding FX                      $m                     -         -          1          2          - 
  Exploration - 
   excluding FX                      $m                   (7)       (6)        (4)        (5)        (1) 
  Corporate - excluding 
   FX                                $m                   (2)       (2)       (10)        (4)          4 
  FX                                 $m                  (10)       (1)        (4)        (2)          6 
                          ------------------------  ---------  --------  ---------  ---------  --------- 
  Total underlying 
   cost of sales                     $m               (1,272)     (771)    (1,199)    (1,421)    (1,559) 
                          ------------------------  ---------  --------  ---------  ---------  --------- 
 
  Mining                             Rm               (9,414)   (6,556)    (8,545)    (7,079)    (7,002) 
  Concentrating                      Rm               (1,731)   (1,121)    (1,469)    (1,346)    (1,297) 
  Smelting and 
   refining (3)                      Rm               (1,426)   (1,119)    (1,235)    (1,183)    (1,203) 
  Shared services                    Rm                 (810)     (786)      (928)      (805)      (679) 
  Management and 
   marketing services                 Rm                (294)     (256)      (243)      (287)      (217) 
 
  Ore, concentrate 
   and other purchases                Rm                (574)     (402)      (597)      (385)      (318) 
  Limpopo mining                     Rm                  (25)      (31)       (61)       (76)       (50) 
 
  Special item 
   adjustment                        Rm                     -     3,028          -        966          - 
                   ESOP and community 
                    trusts donations           $m        (10)         -          -          -          - 
  Royalties                          Rm                 (103)      (52)       (55)       (68)       (82) 
  Shared based 
   payments                          Rm                 (164)     (148)      (121)       (99)       (87) 
  Inventory movement                 Rm                     6     (480)      2,145      (842)      (119) 
  FX and Group 
   Charges                           Rm               (2,659)   (1,117)    (1,247)      (218)      (517) 
                          ------------------------  ---------  --------  ---------  ---------  --------- 
                         Rm                          (17,203)   (9,040)   (12,356)   (11,424)   (11,572) 
  ------------------------------------------------  ---------  --------  ---------  ---------  --------- 
 
 

Operating statistics

5 year review

 
                                                  Units         2015       2014        2013        2012        2011 
--------------------  ------------------------  --------  ----------  ---------  ----------  ----------  ---------- 
 Cost of production    Mining                      Rm        (9,414)    (6,556)     (8,545)     (7,079)     (7,002) 
 (PGM operations       Concentrating               Rm        (1,731)    (1,121)     (1,469)     (1,346)     (1,297) 
 segment)              Smelting and 
  (4)                   refining (3)               Rm        (1,426)    (1,119)     (1,235)     (1,183)     (1,203) 
 Cost                  Shared services             Rm          (810)      (786)       (928)       (805)       (679) 
  Management and 
   marketing services                     Rm                   (294)      (256)       (243)       (287)       (217) 
                                                          ----------  ---------  ----------  ----------  ---------- 
                            Rm                              (13,674)    (9,838)    (12,420)    (10,701)    (10,399) 
                                                          ----------  ---------  ----------  ----------  ---------- 
 
                       Mined ounces 
 PGM Saleable           excluding ore 
  ounces                purchases                   oz     1,280,964    707,913   1,340,678   1,174,776   1,306,082 
  Metals-in-concentrate 
   before concentrate 
   purchases                              oz               1,409,729    715,746   1,398,623   1,254,938   1,351,796 
  Refined ounces                         oz                1,447,364    882,094   1,336,109   1,349,802   1,446,662 
  Metals-in-concentrate 
   including concentrate 
   purchases                              oz               1,420,122    722,701   1,404,603   1,259,585   1,351,796 
 
 Cost of production    Mining                     R/oz       (7,349)    (9,261)     (6,373)     (6,026)     (5,361) 
  Concentrating                         R/oz                 (1,228)    (1,567)     (1,051)     (1,073)       (960) 
  Smelting and 
   refining (3)                         R/oz                   (985)    (1,269)       (925)       (877)       (832) 
  Shared services                       R/oz                   (570)    (1,087)       (661)       (639)       (503) 
  Management and 
   marketing services                    R/oz                  (207)      (355)       (173)       (228)       (161) 
                                                          ----------  ---------  ----------  ----------  ---------- 
                           R/oz                             (10,339)   (13,538)     (9,182)     (8,843)     (7,815) 
                                                          ----------  ---------  ----------  ----------  ---------- 
 
 % increase 
  in cost              Mining                       %          20.6%     (45.3)       (5.8)      (12.4)      (15.4) 
 of production         Concentrating                %          21.6%     (49.2)         2.1      (11.8)      (10.6) 
  Smelting and 
   refining (3)                          %                     22.4%     (37.3)       (5.4)       (5.4)         5.8 
  Shared services                        %                     47.5%     (64.5)       (3.3)      (27.2)      (12.8) 
  Management and 
   marketing services                     %                    41.7%    (104.9)        24.1      (41.9)         7.0 
                                                          ----------  ---------  ----------  ----------  ---------- 
                             %                                 23.6%     (47.4)       (3.8)      (13.1)      (11.4) 
                                                          ----------  ---------  ----------  ----------  ---------- 
 
 

Footnotes:

 
 1   Capital expenditure is the aggregate of the purchase 
      of property, plant and equipment and intangible assets 
      (includes capital accruals and excludes capitalised interest). 
 2   Exchange rates are calculated using the market average 
      daily closing rate over the course of the period. 
 3   Comprises of Smelting and Refining costs as well as direct 
      Process Operations shared costs. 
 4   It should be noted that with the implementation of the 
      revised operating model in 2014 and 2015 the cost allocation 
      between business units has been changed and, therefore, 
      whilst the total is on a like-for-like basis, individual 
      line items are not totally comparable. 
 

FINANCIAL STATEMENTS

Consolidated income statement

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November 09, 2015 02:59 ET (07:59 GMT)

for the year ended 30 September

 
                                                                    Special                            Special 
                                                             2015     items       2015          2014     items      2014 
                                                       Underlying     (note               Underlying     (note 
                                                              (i)        3)      Total           (i)        3)     Total 
                                              Note             $m        $m         $m            $m        $m        $m 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 Revenue                                       2            1,293         -      1,293           965         -       965 
==========================================  ======  =============  ========  =========  ============  ========  ======== 
 
 (LBITDA) / EBITDA 
  (ii)                                                         21      (73)       (52)           194     (307)     (113) 
 Depreciation, amortisation 
  and impairment                               10           (155)   (1,811)    (1,966)         (142)         -     (142) 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 Operating (loss) 
  / profit (iii)                                            (134)   (1,884)    (2,018)            52     (307)     (255) 
 Impairment of available 
  for sale financial 
  assets                                       8                -         -          -             -       (1)       (1) 
 Finance income                                4               16        20         36            26        18        44 
 Finance expenses                              4             (20)     (255)      (275)          (28)      (80)     (108) 
 Share of loss of 
  equity accounted 
  investments                                                 (5)         -        (5)           (4)       (2)       (6) 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 (Loss) / profit 
  before taxation                                           (143)   (2,119)    (2,262)            46     (372)     (326) 
 Income tax credit 
  (iv)                                         5               35       328        363           (5)       128       123 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 (Loss) / profit 
  for the year                                              (108)   (1,791)    (1,899)            41     (244)     (203) 
==========================================  ======  =============  ========  =========  ============  ========  ======== 
 
 Attributable to: 
   *    Equity shareholders of Lonmin Plc 
 
                                                             (94)   (1,567)    (1,661)            31     (219)     (188) 
   *    Non-controlling interests                            (14)     (224)      (238)            10      (25)      (15) 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 
   Loss per share                              6                              (285.5)c                           (33.0)c 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 Diluted loss per 
  share (v)                                    6                              (285.5)c                           (33.0)c 
------------------------------------------  ------  -------------  --------  ---------  ------------  --------  -------- 
 

Consolidated statement of comprehensive income

for the year ended 30 September

 
                                                             2015     2014 
                                                            Total    Total 
                                                   Note        $m       $m 
----------------------------------------------  -------  --------  ------- 
 Loss for the year                                        (1,899)    (203) 
 Items that may be reclassified subsequently 
  to the income statement 
 - Change in fair value of available for sale 
  financial assets                                 8          (4)      (1) 
 - Foreign exchange loss on retranslation 
  of equity accounted investments                             (8)      (3) 
----------------------------------------------  -------  --------  ------- 
 Total other comprehensive expenses for the 
  period                                                     (12)      (4) 
==============================================  =======  ========  ======= 
 Total comprehensive loss for the period                  (1,911)    (207) 
==============================================  =======  ========  ======= 
 
  Attributable to: 
    *    Equity shareholders of Lonmin Plc 
 
                                                          (1,672)    (192) 
    *    Non-controlling interests                          (239)     (15) 
----------------------------------------------  -------  --------  ------- 
                                                          (1,911)    (207) 
==============================================  =======  ========  ======= 
 

Footnotes:

 
 i     Underlying results are based on reported results excluding 
        the effect of special items as defined in note 3. 
 ii    (LBITDA) / EBITDA is operating (loss) / profit before 
        depreciation, amortisation and impairment of goodwill, 
        intangibles and property, plant and equipment. 
 iii   Operating (loss) / profit is defined as revenue less 
        operating expenses before impairment of available for 
        sale financial assets, finance income and expenses and 
        share of (loss) / profit of equity accounted investments. 
 iv    The income tax credit substantially relates to overseas 
        taxation and includes net exchange gains of $48 million 
        (2014 - $42 million) as disclosed in note 5. 
 v     Diluted (loss) / earnings per share is based on the weighted 
        average number of ordinary shares in issue adjusted by 
        dilutive outstanding share options. 
 

Consolidated statement of financial position

as at 30 September

 
                                                       2015    2014 
                                               Note      $m      $m 
-------------------------------------------  ------  ------  ------ 
 
 Non-current assets 
 Goodwill                                      10         -      40 
 Intangible assets                             10        94     457 
 Property, plant and equipment                 10     1,477   2,882 
 Equity accounted investments                            26      28 
 Royalty prepayment                                      38       - 
 Other financial assets                         8        19      27 
-------------------------------------------  ------  ------  ------ 
                                                      1,654   3,434 
-------------------------------------------  ------  ------  ------ 
 
 Current assets 
 Inventories                                            281     373 
 Trade and other receivables                             71      76 
 Tax recoverable                                          1       2 
 Other financial assets                         8       102     337 
 Cash and cash equivalents                      9       320     143 
-------------------------------------------  ------  ------  ------ 
                                                        775     931 
-------------------------------------------  ------  ------  ------ 
 
 Current liabilities 
 Trade and other payables                             (208)   (244) 
 Provisions                                            (39)       - 
 Interest bearing loans and borrowings          9     (505)    (86) 
 Deferred revenue                                      (23)    (27) 
                                                      (775)   (357) 
-------------------------------------------  ------  ------  ------ 
 Net current assets                                       -     574 
-------------------------------------------  ------  ------  ------ 
 
   Non-current liabilities 
 Interest bearing loans and borrowings          9         -    (86) 
 Deferred tax liabilities                               (9)   (376) 
 Deferred royalty payment                               (3)       - 
 Deferred revenue                                         -    (23) 
 Provisions                                           (122)   (141) 
-------------------------------------------  ------  ------  ------ 
                                                      (134)   (626) 
-------------------------------------------  ------  ------  ------ 
 Net assets                                           1,520   3,382 
===========================================  ======  ======  ====== 
 
   Capital and reserves 
 Share capital                                          586     570 
 Share premium                                        1,448   1,411 
 Other reserves                                          88      88 
 (Accumulated loss) / retained earnings               (493)   1,164 
-------------------------------------------  ------  ------  ------ 
 Attributable to equity shareholders 
  of Lonmin Plc                                       1,629   3,233 
 Attributable to non-controlling interests            (109)     149 
-------------------------------------------  ------  ------  ------ 
 Total equity                                         1,520   3,382 
===========================================  ======  ======  ====== 
 

The financial statements of Lonmin Plc, registered number 103002, were approved by the Board of Directors on

9 November 2015 and were signed on its behalf by:

Brian Beamish Chairman

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Simon Scott Chief Financial Officer

Consolidated statement of changes in equity

for the year ended 30 September

 
                                                                                 Equity interest 
                                                             ------------------------------------------------------- 
                                                                Called 
                                                                    up      Share 
                                                                 share    premium        Other     Retained            Non-controlling      Total 
                                                                                      reserves     earnings                  interests 
                                                               capital    account          (i)         (ii)    Total             (iii)     equity 
                                                                    $m         $m           $m           $m       $m                $m         $m 
-----------------------------------------------------------  ---------  ---------  -----------  -----------  -------  ----------------  --------- 
 
 At 1 October 2013                                                 569      1,411           88        1,341    3,409               201      3,610 
 Loss for the year                                                   -          -            -        (188)    (188)              (15)      (203) 
 Total other comprehensive 
  expenses:                                                          -          -            -          (4)      (4)                 -        (4) 
                                                             ---------  ---------  -----------  -----------  -------  ----------------  --------- 
 
   *    Changes in settled cash flow hedges released to the 
        income statement                                             -          -            -          (1)      (1)                 -        (1) 
 
   *    Foreign exchange loss on retranslation of equity 
        accounted investments                                        -          -            -          (3)      (3)                 -        (3) 
 Transactions with 
  owners, recognised 
  directly in equity:                                                1          -            -           15       16              (37)       (21) 
                                                             ---------  ---------  -----------  -----------  -------  ----------------  --------- 
 
   *    Share-based payments                                         -          -            -           15       15                 -         15 
 
   *    Shares issued on exercise of share options                   1          -            -            -        1                 -          1 
 
   *    Dividends (refer to note 7)                                  -          -            -            -        -              (37)       (37) 
 
 At 30 September 2014                                              570      1,411           88        1,164    3,233               149      3,382 
===========================================================  =========  =========  ===========  ===========  =======  ================  ========= 
 
 
                                                                                    Equity interest 
                                                               --------------------------------------------------------- 
 
                                                                                                      Retained 
                                                                  Called 
                                                                      up      Share                  earnings/ 
                                                                   share    premium        Other      (Accumu-             Non-controlling      Total 
                                                                                                         lated 
                                                                                        reserves         loss)                   interests 
                                                                 capital    account          (i)          (ii)     Total             (iii)     equity 
                                                                      $m         $m           $m            $m        $m                $m         $m 
-------------------------------------------------------------  ---------  ---------  -----------  ------------  --------  ----------------  --------- 
 
 At 1 October 2014                                                   570      1,411           88         1,164     3,233               149      3,382 
 Loss for the year                                                     -          -            -       (1,661)   (1,661)             (238)    (1,899) 
 Total other comprehensive 
  expenses:                                                            -          -            -          (11)      (11)               (1)       (12) 
                                                               ---------  ---------  -----------  ------------  --------  ----------------  --------- 
 
   *    Change in fair value of available for sale financial 
        assets                                                         -          -            -           (4)       (4)                 -        (4) 
 
   *    Foreign exchange loss on retranslation of equity 
        accounted investments                                          -          -            -           (7)       (7)               (1)        (8) 
 Transactions with 
  owners, recognised 
  directly in equity:                                                 16         37            -            15        68              (19)         49 
                                                               ---------  ---------  -----------  ------------  --------  ----------------  --------- 
 
   *    Share-based payments                                           -          -            -            15        15                 -         15 
 
   *    Shares issued on exercise of share options (iv)                3          -            -             -         3                 -          3 
 
   *    Share capital and share premium recognised on the BEE 
        transaction (v)                                               13         37            -             -        50                 -         50 
 
   *    Dividends (refer to note 7)                                    -          -            -             -         -              (19)       (19) 
 
 At 30 September 2015                                                586      1,448           88         (493)     1,629             (109)      1,520 
=============================================================  =========  =========  ===========  ============  ========  ================  ========= 
 

Footnotes:

 
 i     Other reserves at 30 September 2015 represent the capital 
        redemption reserve of $88 million (2014 - $88 million). 
 ii    (Accumulated loss) / retained earnings include a $17 
        million debit of accumulated exchange on retranslation 
        of equity accounted investments (2014 - $9 million debit) 
        and $nil of accumulated credits in respect of fair value 
        movements on available for sale financial assets (2014 
        - $4 million accumulated credits). 
 iii   Non-controlling interests represent a 13.76% shareholding 
        in each of Eastern Platinum Limited, Western Platinum 
        Limited and Messina Limited and a 19.87% effective shareholding 
        in Akanani Mining (Proprietary) Limited. 
 iv    During the year 3,120,687 share options were exercised 
        (2014 - 1,206,465) on which $3 million of cash was received 
        (2014 - $1 million). 
 v     In December 2014, Lonmin concluded a series of shareholding 
        agreements with the Bapo ba Mogale Traditional Community 
        (the Bapo) which enabled Lonmin to meet its BEE equity 
        ownership target as required under the Mining Charter. 
 

Consolidated statement of cash flows

for the year ended 30 September

 
                                                             2015    2014 
                                                   Note        $m      $m 
-----------------------------------------------  ------  --------  ------ 
 Loss for the year                                        (1,899)   (203) 
 Taxation                                           5       (363)   (123) 
 Share of loss of equity accounted investments                  5       6 
 Finance income                                     4        (36)    (44) 
 Finance expenses                                   4         275     108 
 Impairment of available for sale financial 
  assets                                                        -       1 
 Non-cash movement on deferred revenue                       (27)    (20) 
 Depreciation, amortisation and impairment                  1,966     142 
 Change in inventories                                         92      76 
 Change in trade and other receivables                          6       7 
 Change in trade and other payables                          (38)    (51) 
 Change in provisions                                           3    (14) 
 Share-based payments                                          15      15 
 Loss on disposal of property, plant                            3       - 
  and equipment 
 BEE charge                                                    13       - 
 Cash inflow / (outflow) from operations                       15   (100) 
 Interest received                                              3      15 
 Interest and bank fees paid                                 (27)    (31) 
 Tax paid                                                     (3)       - 
-----------------------------------------------  ------  --------  ------ 

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 Cash outflow from operating activities                      (12)   (116) 
-----------------------------------------------  ------  --------  ------ 
 
 Cash flow from investing activities 
 Contribution to joint venture                                (7)     (1) 
 Purchase of property, plant and equipment                  (134)    (91) 
 Purchase of intangible assets                                (2)     (2) 
 Cash used in investing activities                          (143)    (94) 
-----------------------------------------------  ------  --------  ------ 
 
 Cash flow from financing activities 
 Dividends paid to non-controlling interests        7        (19)    (37) 
 Proceeds from current borrowings                   9         391     605 
 Repayment of current borrowings                    9        (60)   (518) 
 Proceeds from non-current borrowings               9           -      88 
 Issue of other ordinary share capital                          3       1 
 Cash inflow from financing activities                        315     139 
-----------------------------------------------  ------  --------  ------ 
 Increase / (decrease) in cash and cash 
  equivalents                                       9         160    (71) 
 Opening cash and cash equivalents                  9         143     201 
 Effect of foreign exchange rate changes            9          17      13 
-----------------------------------------------  ------  --------  ------ 
 Closing cash and cash equivalents                  9         320     143 
===============================================  ======  ========  ====== 
 

Notes to the accounts

1. Statement on accounting policies

Basis of preparation

The financial information presented has been prepared on the basis of International Financial Reporting Standards (IFRSs) as adopted by the EU.

Going concern

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

The financial performance of the Group is dependent upon the wider economic environment in which the Group operates. Factors exist which are outside the control of management which can have a significant impact on the business, specifically, volatility in the Rand / US Dollar exchange rate and PGM commodity prices. Despite the operational and cost containment achievements of the Group over the last 12 months, the declining PGM price environment has put the Group's cash flows and profitability under pressure. The Directors have determined that the Group needs to take further decisive measures to improve its ability to operate in the current PGM pricing environment and to enable the Group to benefit from any recovery in PGM prices in the medium to long term. The Board and executive management have reviewed the Group's business and capital structure and developed the Business Plan in order to be able to deal effectively with the effects of a continuation of the current low PGM price environment. Key elements of the business plan are the reduction of fixed cost expenses, removal of high cost production and the minimising of capital expenditure while preserving the ability of the business to increase production when PGM markets improve.

The Board's review of the Group's capital structure has resulted in significant steps being taken to strengthen our financial position. As noted in note 11, the Company entered into an agreement with J.P Morgan Securities plc, HSBC Bank plc and The Standard Bank of South Africa Limited to fully underwrite approximately $407 million of the planned Rights Issue (before issuance costs and other charges). In conjunction with the planned Rights Issue, the Company has negotiated certain amendments to the terms of the Group's existing debt facilities which are detailed in note 11. The Amended Facilities will only come into effect upon the underwriting agreement in respect of the Rights Issue going unconditional and the satisfaction of customary conditions precedent.

The Directors have prepared cash flow forecasts for a period in excess of 12 months. Various scenarios have been considered to test the group's resilience against operational risks including:

-- Adverse movements in the rand/dollar exchange rate and PGM commodity prices or a combination thereof;

   --      Failure to meet forecast production targets. 

The Directors have concluded that the Group's new capital structure, after a successful Rights Issue and debt facilities amendments, provides sufficient headroom to cushion against downside operational risks and reduces the risk of breaching new debt covenants under the Amended Facilities.

The planned Rights Issue is conditional upon the Resolution being passed by the Company's shareholders at the General Meeting on the 19 November 2015, on Admission of the New Shares to the premium listing segment of the Official List, Admission of the Nil Paid Rights to trading on the LSE, Admission of the Letters of Allocation and New Shares to trading on the JSE and on the Underwriting Agreement becoming unconditional. Therefore, if the Resolution is not passed by the Company's shareholders at the General Meeting on the 19 November 2015, or any of these events do not occur, the planned Rights Issue will not proceed. If the planned Rights Issue does not proceed the Amended Facilities will not come into effect.

Although the Group would have some options available to it that, in the event that the Proposed Rights Issue is not completed and the Amended Facilities Agreements do not come into effect, might potentially reduce the risk that the Group would be unable to meet its obligations as they fall due, no assurance can be given that any such options would be successful, particularly given the limited time that would be available to the Group. Such options might include:

-- seeking to agree with the Group's existing lenders or other parties an alternative refinancing of the Existing Facilities; and

-- seeking to dispose of some or all of the Group's assets or a merger or acquisition transaction involving the Company (although there is no certainty that such sales or transactions could be realised in the available timeframe on acceptable terms, or at all).

As these actions require the participation, agreement or approval of external parties, the Directors are not confident that any such alternative courses of action could be achieved in the limited time available, or that they ultimately would be successful. Accordingly, the Directors believe that the successful completion of the planned Rights Issue and implementation of the Amended Facilities Agreements represents the best option available to the Company. The need for shareholder approval of the planned Rights Issue therefore represents a material uncertainty that may cast significant doubt about the Group's and Company's ability to continue as a going concern such that the they may be unable to realise their assets and discharge their liabilities in the normal course of business.

Nevertheless, based on the Group's expectation that the conditions of the planned Rights Issue will be met, in addition to the Group's current trading and forecasts, the Directors believe that the Group will be able to comply with its financial covenants under the Amended Facilities, and be able to meet its obligations as they fall due, and accordingly have formed a judgment that it is appropriate to prepare the financial statements on a going concern basis. Therefore, these financial statements do not include any adjustments that would result if the going concern basis on preparation is inappropriate.

New standards and amendments in the year

The following revised IFRS's have been adopted in these financial statements. The application of these IFRS's did not have any material impact on the amounts reported for the current and prior years:

-- IFRS 10, IFRS 11 and amendments to IAS 28 regarding Consolidated Financial Statements, Joint Arrangements and Investments in Associates and Joint Ventures did not have a material impact on the amounts reported for the current and prior years. IFRS 12 - Disclosure of Interests in Other Entities did have a disclosure impact on the Group's financial statements.

-- IAS 32 - Offsetting financial assets and financial liabilities. The amendments clarify when an entity can offset financial assets and financial liabilities.

-- IAS 39 - Financial Instruments: Recognition and Measurement requires an entity to discontinue hedge accounting if the derivative hedging instrument is novated to a clearing counterparty, unless the hedging instrument is being replaced as part of the entity's original documented hedging strategy.

-- IFRC 21 - Levies. Levies have become more common in recent years, with governments in a number of jurisdictions introducing levies to raise additional income. IFRIC 21 provides guidance on accounting for levies in accordance with IAS 37 Provisions, Contingent Liabilities and Assets.

There were no other new standards, interpretations or amendments to standards issued and effective for the year which materially impacted the Group's financial statements.

2. Segmental analysis

The Group distinguishes among three reportable operating segments being the Platinum Group Metals (PGM) Operations segment, the Evaluation segment and the Exploration segment.

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The PGM Operations segment comprises the activities involved in the mining and processing of PGMs, together with associated base metals, which are carried out entirely in South Africa. These operations are integrated and designed to support the process for extracting and refining PGMs from underground. PGMs move through each stage of the process and undergo successive levels of refinement which result in fully refined metals. The Chief Executive Officer, who performs the role of Chief Operating Decision Maker (CODM), views the PGM Operations segment as a single whole for the purposes of financial performance monitoring and assessment and does not make resource allocations based on margin, costs or cash flows incurred at each separate stage of the process. In addition, the CODM makes his decisions for running the business on a day to day basis using the physical operating statistics generated by the business as these summarise the operating performance of the entire segment.

The Evaluation segment covers the evaluation through pre-feasibility of the economic viability of newly discovered PGM deposits. Currently all of the evaluation projects are based in South Africa.

The Exploration segment covers the activities involved in the discovery or identification of new PGM deposits. This activity occurs on a worldwide basis.

No operating segments have been aggregated. Operating segments have consistently adopted the consolidated basis of accounting and there are no differences in measurement applied. The Other segment covers mainly the results and investment activities of the corporate Head Office. The only intersegment transactions involve the provision of funding between segments and any associated interest.

 
                                                Year ended 30 September 2015 
                       ------------------------------------------------------------------------------ 
                                PGM                                                  Inter- 
                         Operations     Evaluation     Exploration                  segment 
                            Segment        Segment         Segment     Other    Adjustments     Total 
                                 $m             $m              $m        $m             $m        $m 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
 
 Revenue (external 
  sales by product): 
       Platinum                 823              -               -         -              -       823 
       Palladium                250              -               -         -              -       250 
       Rhodium                   92              -               -         -              -        92 
       Gold                      29              -               -         -              -        29 
       Ruthenium                  8              -               -         -              -         8 
       Iridium                   16              -               -         -              -        16 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
       PGMs                   1,218              -               -         -              -     1,218 
       Nickel                    39              -               -         -              -        39 
       Copper                    12              -               -         -              -        12 
       Chrome                    24              -               -         -              -        24 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
                              1,293              -               -         -              -     1,293 
=====================  ============  =============  ==============  ========  =============  ======== 
 
 
                                                       Year ended 30 September 2015 
                              ------------------------------------------------------------------------------ 
                                       PGM                                                  Inter- 
                                Operations     Evaluation     Exploration                  segment 
                                   Segment        Segment         Segment     Other    Adjustments     Total 
                                        $m             $m              $m        $m             $m        $m 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 Underlying (i) : 
 EBITDA / (LBITDA) 
  (ii)                                  40              7             (5)      (21)              -        21 
 Depreciation, amortisation 
  and impairment                     (155)              -               -         -              -     (155) 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 Operating (loss) 
  / profit (ii)                      (115)              7             (5)      (21)              -     (134) 
 Finance income                         17              -               -        13           (14)        16 
 Finance expenses                     (48)              -               -        14             14      (20) 
 Share of loss of 
  equity accounted 
  investments                          (5)              -               -         -              -       (5) 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 (Loss) / profit 
  before taxation                    (151)              7             (5)         6              -     (143) 
 Income tax credit                      34              -               -         1              -        35 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 Underlying (loss) 
  / profit after taxation            (117)              7             (5)         7              -     (108) 
 Special items after 
  tax (note 3) (iii)               (1,380)          (173)               -     (238)              -   (1,791) 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 Loss after taxation               (1,497)          (166)             (5)     (231)              -   (1,899) 
============================  ============  =============  ==============  ========  =============  ======== 
 
 Total assets (iv)                   2,117             60               3     1,724        (1,475)     2,429 
 Total liabilities                 (1,800)          (134)            (56)     (394)          1,475     (909) 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 Net assets / (liabilities)            317           (74)            (53)     1,330              -     1,520 
============================  ============  =============  ==============  ========  =============  ======== 
 
 Share of net assets 
  of equity accounted 
  investments                           26              -               -         -              -        26 
 Additions to property, 
  plant, equipment 
  and intangibles                      159              2               -         -              -       161 
 
   Material non - cash 
   items - share-based 
   payments                             14              -               -         1              -        15 
----------------------------  ------------  -------------  --------------  --------  -------------  -------- 
 
 
                                                Year ended 30 September 2014 
                       ------------------------------------------------------------------------------ 
                                PGM                                                  Inter- 
                         Operations     Evaluation     Exploration                  segment 
                            Segment        Segment         Segment     Other    Adjustments     Total 
                                 $m             $m              $m        $m             $m        $m 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
 
 Revenue (external 
  sales by product): 
       Platinum                 620              -               -         -              -       620 
       Palladium                165              -               -         -              -       165 
       Rhodium                   85              -               -         -              -        85 
       Gold                      21              -               -         -              -        21 
       Ruthenium                  7              -               -         -              -         7 
       Iridium                   15              -               -         -              -        15 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
       PGMs                     913              -               -         -              -       913 
       Nickel                    29              -               -         -              -        29 
       Copper                    10              -               -         -              -        10 
       Chrome                    13              -               -         -              -        13 
---------------------  ------------  -------------  --------------  --------  -------------  -------- 
                                965              -               -         -              -       965 
=====================  ============  =============  ==============  ========  =============  ======== 
 
 
 
 Underlying (i) : 
 EBITDA / (LBITDA) 
  (ii)                             204       5    (6)     (9)         -     194 
 Depreciation, amortisation 
  and impairment                 (142)       -      -       -         -   (142) 

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----------------------------  --------  ------  -----  ------  --------  ------ 
 Operating profit 
  / (loss) (ii)                     62       5    (6)     (9)         -      52 
 Finance income                     15       -      -      21      (10)      26 
 Finance expenses                 (19)       -      -    (19)        10    (28) 
 Share of loss of 
  equity accounted 
  investments                      (4)       -      -       -         -     (4) 
----------------------------  --------  ------  -----  ------  --------  ------ 
 Profit / (loss) 
  before taxation                   54       5    (6)     (7)         -      46 
 Income tax expense                (5)       -      -       -         -     (5) 
----------------------------  --------  ------  -----  ------  --------  ------ 
 Underlying profit 
  / (loss) after taxation           49       5    (6)     (7)         -      41 
 Special items after 
  tax (note 3) (iii)             (181)       -      -    (63)         -   (244) 
----------------------------  --------  ------  -----  ------  --------  ------ 
 (Loss) / profit 
  after taxation                 (132)       5    (6)    (70)         -   (203) 
============================  ========  ======  =====  ======  ========  ====== 
 
 
 Total assets (iv)               3,767     277      1   1,546   (1,226)   4,365 
 Total liabilities             (1,940)   (185)   (48)    (36)     1,226   (983) 
----------------------------  --------  ------  -----  ------  --------  ------ 
 Net assets                      1,827      92   (47)   1,510         -   3,382 
============================  ========  ======  =====  ======  ========  ====== 
 
 Share of net assets 
  of equity accounted 
  investments                       28       -      -       -         -      28 
 Additions to property, 
  plant, equipment 
  and intangibles                  109       2      -       -         -     111 
 
   Material non-cash 
   items - share-based 
   payments                         14       -      -       1         -      15 
----------------------------  --------  ------  -----  ------  --------  ------ 
 

Notes to the accounts (continued)

2. Segmental analysis (continued)

 
 
   Revenue by destination is analysed by geographical area 
   below: 
--------------------------------------------------------------- 
                                Year ended           Year ended 
                              30 September         30 September 
                                      2015                 2014 
                                        $m                   $m 
--------------------  --------------------  ------------------- 
 The Americas                          260                  118 
 Asia                                  240                  247 
 Europe                                559                  426 
 South Africa                          234                  174 
--------------------  --------------------  ------------------- 
                                     1,293                  965 
====================  ====================  =================== 
 

The Group's revenue is all derived from the PGM Operations segment. This segment has two major customers who contributed 58% ($505 million) and 16% ($204 million) of revenue in the 2015 financial year (2014 - 60% ($580 million) and 25% ($241 million)).

Metal sales prices are based on market prices which are denominated in US Dollars. The majority of sales are also invoiced in US Dollars with the exception of certain sales in South Africa which are invoiced in South African Rand based on exchange rates determined in accordance with the contractual arrangements.

Non-current assets, (excluding financial instruments), of $1,635 million (2014 - $3,407 million) are all situated in South Africa.

Footnotes:

 
 i     Underlying results are based on reported results excluding 
        the effect of special items as defined in note 3. 
 ii    EBITDA / (LBITDA) and operating (loss) / profit are 
        the key profit measures used by management. 
 iii   The impairment of the HDSA receivable to the value of 
        $227 million (2014 - $80 million) and of non- financial 
        assets of $1,811 million (2014 - $nil) are shown as 
        special items in the segmental analysis. The HDSA receivable 
        forms part of the "Other" segment. The impairment of 
        non-financial assets are allocated to the PGM Operations 
        Segment and the Evaluation Segment. 
 iv    The assets under "Other" include the HDSA receivable 
        of $102 million (2014 - $337 million) and intercompany 
        receivables of $1,475 million (2014 - $1,226 million). 
        Available for sale financial assets of $7 million (2014 
        - $11 million) forms part of the "Other" segment and 
        the balance of $4 million (2014 - $4 million) forms 
        part of the PGM Operations Segment. 
 

3. Special Items

'Special items' are those items of financial performance that the Group believes should be separately disclosed on the face of the income statement to assist in the understanding of the financial performance achieved by the Group and for consistency with prior years.

 
                                                     2015    2014 
                                                       $m      $m 
-----------------------------------------------  --------  ------ 
 
 Operating loss:                                  (1,884)   (307) 
                                                 --------  ------ 
 Strike related costs 
 - Idle fixed production costs                          -   (287) 
 - Security costs                                       -    (10) 
 - Contractors' claims                                  -     (3) 
 - Other costs                                          -     (7) 
 BEE transaction (i) 
 - BEE charge                                        (13)       - 
 - Consulting fees                                    (1)       - 
 Restructuring and reorganisation costs (ii)         (59)       - 
 Impairment of non-financial assets (iii) 
 - Impairment of goodwill                            (40)       - 
 - Impairment of intangibles                        (358)       - 
 - Impairment of property, plant and equipment    (1,413)       - 
 
 Impairment of available for sale financial 
  assets                                                -     (1) 
 Share of loss of equity accounted investments          -     (2) 
 
 Net finance expenses:                              (235)    (62) 
                                                 --------  ------ 
 - Interest accrued from HDSA receivable 
  (iv)                                                 20      18 
 - Foreign exchange loss on HDSA receivable          (28)       - 
  (iv) 
 - Impairment of HDSA loan receivable (iv)          (227)    (80) 
 
 Loss on special items before taxation            (2,119)   (372) 
 Taxation related to special items (note 
  5)                                                  328     128 
-----------------------------------------------  --------  ------ 
 Special loss before non-controlling interest     (1,791)   (244) 
 Non-controlling interests                            224      25 
-----------------------------------------------  --------  ------ 
 Special loss for the year attributable to 
  equity shareholders of Lonmin Plc               (1,567)   (219) 
===============================================  ========  ====== 
 

Footnotes:

 
 i     In December 2014, Lonmin concluded a series of shareholding 
        agreements which enabled Lonmin to meet its BEE equity 
        ownership target of 26% as required under the Mining 
        Charter. This gave rise to a BEE charge of $13 million 
        relating to the premium paid for the Bapo baMogale Traditional 
        Community (The Bapo) to maintain their shareholding 
        for a period of 10 years. Consulting fees to the amount 
        of $1 million were also incurred in relation to the 
        transaction. 
 ii    These costs relate to the one-off redundancy costs ($56 
        million) and associated restructuring costs ($3 million) 
        in respect of the restructuring process undertaken as 
        part of the Business Plan. A total of $39 million remains 
        outstanding at 30 September 2015 and is included in 
        current provisions. 
 iii   As explained more fully in note 10, the Group's non-financial 
        assets were impaired by $1,811 million (2014 - $nil). 
 iv    During the year ended 30 September 2010 the Group provided 
        financing to assist Lexshell 806 Investments (Proprietary) 
        Limited, a subsidiary of Shanduka Resources (Proprietary) 
        Limited (Shanduka) to acquire a majority shareholding 
        in Incwala, Lonmin's Black Economic Empowerment partner. 
        This financing gave rise to foreign exchange movements 
        and the accrual of interest. The loan was impaired by 
        $227 million as explained in note 8. 
 
 

4. Net finance expenses

 
                                                        2015   2014 
                                                          $m     $m 
----------------------------------------------------  ------  ----- 
 
 Finance income:                                          16     26 
                                                      ------  ----- 
 - Interest receivable on cash and cash equivalents        3      6 
 - Dividend received from investment (i)                   1     10 
 - Foreign exchange gains on net (debt) / cash 
  (ii)                                                    12     10 
                                                      ------  ----- 
 
 Finance expenses:                                      (20)   (28) 
                                                      ------  ----- 
 - Interest payable on bank loans and overdrafts        (20)   (19) 
 - Bank fees                                             (8)   (12) 
 - Capitalised interest (iii)                             19     13 

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 - Other finance expenses                                (1)      - 
 - Unwinding of discount on provisions                  (10)   (10) 
 
 Special items (note 3):                               (235)   (62) 
                                                      ------  ----- 
 - Interest on HDSA receivable (note 8)                   20     18 
 - Foreign exchange loss on HDSA receivable             (28)      - 
  (note 8) 
 - Impairment of HDSA loan receivable (note 
  8)                                                   (227)   (80) 
 
 Net finance expenses                                  (239)   (64) 
====================================================  ======  ===== 
 

Footnotes:

 
 i     Dividend received relates to dividends accruing from 
        investment in Petrozim Line (Private) Limited which 
        were remitted during the year. The investment in Petrozim 
        Line (Private) Limited has a $nil carrying value as 
        it has been fully impaired. 
 ii    Net (debt) / cash as defined by the Group comprises 
        cash and cash equivalents, bank overdrafts repayable 
        on demand and interest bearing loans and borrowings 
        less unamortised bank fees, unless the unamortised bank 
        fees relate to undrawn facilities in which case they 
        are treated as other receivables. 
 iii   Interest expenses incurred have been capitalised on 
        a Group basis to the extent that there is an appropriate 
        qualifying asset. The weighted average interest rate 
        used by the Group for capitalisation is 3.8% (2014 - 
        3.0%). 
 

5. Taxation

 
                                                       2015    2014 
                                                         $m      $m 
---------------------------------------------------  ------  ------ 
 Current tax charge (excluding special items): 
 United Kingdom tax expense                               -       - 
                                                     ------  ------ 
 Current tax expense at 20.5% (2014 - 22%) 
  (i)                                                     -       - 
 Less amount of the benefit arising from double 
  tax relief available                                    -       - 
                                                     ------  ------ 
 
 Overseas current tax expense at 28% (2014 
  - 28%)                                                  4       2 
                                                     ------  ------ 
 Corporate tax expense - current year                     4       1 
 Adjustment in respect of prior years                     -       1 
 
 Deferred tax (credit) / charge (excluding 
  special items): 
 Deferred tax expense - UK and overseas                (39)       3 
                                                     ------  ------ 
 Origination and reversal of temporary differences     (39)       3 
 
 Tax credit on special items - UK and overseas 
  (note 3):                                           (328)   (128) 
 Foreign exchange on deferred taxation (ii)            (48)    (42) 
 Tax on special items impacting profit before 
  tax                                                 (280)    (86) 
                                                     ------  ------ 
 
 Actual tax credit                                    (363)   (123) 
===================================================  ======  ====== 
 
   Tax (credit) / charge excluding special items 
   (note 3)                                            (35)       5 
===================================================  ======  ====== 
 
   Effective tax rate                                   16%     38% 
===================================================  ======  ====== 
 
   Effective tax rate excluding special items 
   (note 3)                                             24%     11% 
===================================================  ======  ====== 
 
 

A reconciliation of the standard tax credit to the actual tax credit was as follows:

 
                                             2015    2015   2014    2014 
                                                %      $m      %      $m 
------------------------------------------  -----  ------  -----  ------ 
 Tax credit on loss at standard tax 
  rate                                         28   (626)     28    (91) 
 Tax effect of: 
 - Unutilised losses (iii)                    (1)      27    (2)       7 
 - Foreign exchange impacts on taxable 
  profits                                       2    (37)      7    (21) 
 - Disallowed expenditure                    (15)     316    (6)      19 
 - Expenses not subject to tax                  -       5    (2)       5 
 Foreign exchange revaluation on deferred 
  tax                                           2    (48)     13    (42) 
------------------------------------------  -----  ------  -----  ------ 
 Actual tax credit                             16   (363)     38   (123) 
==========================================  =====  ======  =====  ====== 
 

The Group's primary operations are based in South Africa. The South African statutory tax rate is 28% (2014 - 28%). Lonmin Plc operates a branch in South Africa which is also subject to a tax rate of 28% on branch profits (2014 - 28%). The aggregated standard tax rate for the Group is 28% (2014 - 28%). The dividend withholding tax rate is 15% (2014 - 15%). Dividends payable by the South African companies to Lonmin Plc are subject to a 5% withholding tax benefitting from double taxation agreements.

Footnotes:

 
 i     Effective from 1 April 2015, the United Kingdom tax 
        rate changed from 21% to 20% and will change from 20% 
        to 19% from 1 April 2017 and from 19% to 18% from 1 
        April 2020. This does not materially impact the Group's 
        recognised deferred tax liabilities. 
 ii    Overseas tax charges are predominantly calculated based 
        in Rand as required by the local authorities. As these 
        subsidiaries' functional currency is US Dollar this 
        leads to a variety of foreign exchange impacts being 
        the retranslation of current and deferred tax balances 
        and monetary assets, as well as other translation differences. 
        The Rand denominated deferred tax balance in US Dollars 
        at 30 September 2015 is $177 million (30 September 2014 
        - $268 million). 
 iii   Unutilised losses reflect losses generated in entities 
        for which no deferred tax is provided as it is not thought 
        probable that future profits can be generated against 
        which a deferred tax asset could be offset or previously 
        unrecognised losses utilised. 
 

6. (Loss) / earnings per share

Loss per share (LPS) has been calculated on the loss attributable to equity shareholders amounting to $1,661 million (2014 - loss of $188 million) using a weighted average number of 581,712,484 ordinary shares in issue (2014 - 569,649,750 ordinary shares).

Diluted loss per share is based on the weighted average number of ordinary shares in issue adjusted by dilutive outstanding share options in accordance with IAS 33 - Earnings Per Share. As at 30 September 2015 outstanding share options were anti-dilutive and so were excluded from diluted loss per share.

 
                                      2015                                 2014 
                      ------------------------------------  --------------------------------- 
                                                               Loss 
                                                                for 
                        Loss for        Number   Per share      the        Number   Per share 
                        the year            of      amount     year            of      amount 
                              $m        shares       cents       $m        shares       cents 
--------------------  ----------  ------------  ----------  -------  ------------  ---------- 
 Basic LPS               (1,661)   581,712,484     (285.5)    (188)   569,649,750      (33.0) 
 Share option 
  schemes                      -             -           -        -             -           - 
--------------------  ----------  ------------  ----------  -------  ------------  ---------- 
 Diluted LPS             (1,661)   581,712,484     (285.5)    (188)   569,649,750      (33.0) 
====================  ==========  ============  ==========  =======  ============  ========== 
 
                                      2015                                 2014 
                                                             Profit 
                                                                for 
                        Loss for        Number   Per share      the        Number   Per share 
                        the year            of      amount     year            of      amount 
                              $m        shares       cents       $m        shares       cents 
--------------------  ----------  ------------  ----------  -------  ------------  ---------- 
 Underlying (LPS) 
  / EPS                     (94)   581,712,484      (16.2)       31   569,649,750         5.4 
 Share option 
  schemes                      -             -           -        -     5,917,508           - 
--------------------  ----------  ------------  ----------  -------  ------------  ---------- 
 Diluted Underlying 
  (LPS) / EPS               (94)   581,712,484      (16.2)       31   575,567,258         5.4 
====================  ==========  ============  ==========  =======  ============  ========== 
 

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Underlying earnings per share has been presented as the Directors consider it important to present the underlying results of the business. Underlying earnings per share is based on the earnings attributable to equity shareholders adjusted to exclude special items (as defined in note 3) as follows:

 
                                      2015                                    2014 
                    --------------------------------------- 
                                                                 (Loss) 
                       Loss for                   Per share    / profit                   Per share 
                       the year        Number        amount         for        Number        amount 
                             $m            of         cents         the            of         cents 
                                       shares                      year        shares 
                                                                     $m 
------------------  -----------  ------------  ------------  ----------  ------------  ------------ 
 Basic LPS              (1,661)   581,712,484       (285.5)       (188)   569,649,750        (33.0) 
 Special items 
  (note 3)                1,567             -         269.3         219             -          38.4 
------------------  -----------  ------------  ------------  ----------  ------------  ------------ 
 Underlying (LPS) 
  / EPS                    (94)   581,712,484        (16.2)          31   569,649,750           5.4 
==================  ===========  ============  ============  ==========  ============  ============ 
 

Headline loss and the resultant headline loss per share are specific disclosures defined and required by the Johannesburg Stock Exchange. These are calculated as follows:

 
                                                  Year ended      Year ended 
                                                30 September    30 September 
                                                        2015 
                                                          $m            2014 
                                                                          $m 
--------------------------------------------  --------------  -------------- 
 Loss attributable to ordinary shareholders 
  (IAS 33 earnings)                                  (1,661)           (188) 
 Add back loss on disposal of property,                    3               - 
  plant and equipment 
 Add back impairment of assets (note 
  3)                                                   1,811               1 
 Tax related to the above items                        (261)               - 
 Non-controlling interests                             (224)               - 
--------------------------------------------  --------------  -------------- 
 Headline loss                                         (332)           (187) 
============================================  ==============  ============== 
 
 
                                    2015                                  2014 
                    ------------------------------------ 
                          Loss                                  Loss 
                           for        Number   Per share         for        Number   Per share 
                      the year            of      amount    the year            of      amount 
                            $m        shares       cents          $m        shares       cents 
------------------  ----------  ------------  ----------  ----------  ------------  ---------- 
 Headline LPS            (332)   581,712,484      (57.1)       (187)   569,649,750      (32.8) 
 Share option 
  schemes                    -             -           -           -             -           - 
------------------  ----------  ------------  ----------  ----------  ------------  ---------- 
 Diluted Headline 
  LPS                    (332)   581,712,484      (57.1)       (187)   569,649,750      (32.8) 
==================  ==========  ============  ==========  ==========  ============  ========== 
 

7. Dividends

No dividends were declared by Lonmin Plc for the financial years ended 30 September 2015 and 30 September 2014.

A subsidiary of Lonmin Plc, WPL, made advance dividend payments of $19 million (R228 million) (2014 - $37 million (R408 million)) to Incwala Platinum (Proprietary) Limited (IP). IP is a substantial shareholder in the Company's principal operating subsidiaries. Total advance dividends made between 2009 and 2015 amount to R1,309 million ($135 million). IP has authorised WPL to recover these amounts by reducing future dividends that would otherwise be payable to all shareholders.

These advance dividends are adjusted for in the non-controlling interest of the Group.

8. Other financial assets

 
                                 Restricted   Available 
                                       cash    for sale   HDSA receivable   Total 
                                         $m          $m                $m      $m 
------------------------------  -----------  ----------  ----------------  ------ 
 At 1 October 2014                       12          15               337     364 
 Interest accrued                         1           -                20      21 
 Movement in fair value                   -         (4)                 -     (4) 
 Foreign exchange differences           (5)           -              (28)    (33) 
 Impairment loss                          -           -             (227)   (227) 
------------------------------  -----------  ----------  ----------------  ------ 
 At 30 September 2015                     8          11               102     121 
------------------------------  -----------  ----------  ----------------  ------ 
 
 
                                 Restricted   Available 
                                       cash    for sale   HDSA receivable   Total 
                                         $m          $m                $m      $m 
------------------------------  -----------  ----------  ----------------  ------ 
 At 1 October 2013                       14          17               399     430 
 Interest accrued                         1           -                18      19 
 Movement in fair value                   -         (1)                 -     (1) 
 Foreign exchange differences           (3)           -                 -     (3) 
 Impairment loss                          -         (1)              (80)    (81) 
------------------------------  -----------  ----------  ----------------  ------ 
 At 30 September 2014                    12          15               337     364 
------------------------------  -----------  ----------  ----------------  ------ 
 
 
      2015   2014 
        $m     $m 
---  -----  ----- 
 

Current assets

 
 Other financial assets      102   337 
--------------------------  ----  ---- 
 

Non-current assets

 
 Other financial assets      19   27 
--------------------------  ---  --- 
 
 
 Restricted cash deposits are in respect of mine rehabilitation 
  obligations. 
 
 Available for sale financial assets include listed investments 
  of $7 million (2014 - $11 million) held at fair value using 
  the market price on 30 September 2015. 
 No available for sale financial assets were impaired in 
  the 2015 financial year (2014 - $1 million). 
 On 8 July 2010, Lonmin entered into an agreement to provide 
  financing of GBP200 million to Lexshell 806 Investments 
  (Proprietary) Limited, a subsidiary of Shanduka Resources 
  (Proprietary) Limited, to facilitate the acquisition, at 
  fair value, of 50.03% of shares in Incwala Resources (Proprietary) 
  Limited from the original HDSA shareholders. The terms 
  of the financing provided by Lonmin Plc to the Shanduka 
  subsidiary include the accrual of interest on the HDSA 
  receivable at a fixed rate based on a principal value of 
  GBP200 million which is repayable on demand, including 
  accrued interest. 
 
 
 The Company holds the HDSA receivable at amortised cost. 
  The receivable is secured on shares in the HDSA borrower, 
  whose only asset of value is its holding in Incwala Resources 
  (Pty) Limited (Incwala). Incwala's principal assets are 
  investments in Western Platinum Limited (WPL), Eastern 
  Platinum Limited (EPL) and Akanani Mining (Pty) Limited 
  (Akanani), all subsidiaries of Lonmin Plc. One of the 
  sources of income to fund the settlement of the receivable 
  is the dividend flow from these underlying investments. 
  Given the current state of the PGM industry there have 
  not been any substantial dividend declared to Incwala 
  in recent times. 
 
  Given the above matters, the Directors have determined 
  that it is likely that a loss event may have occurred. 
  Accordingly, an assessment has been performed to determine 
  the extent of impairment. This assessment has been made 
  based on the value of the security, which is primarily 
  driven by the value of Incwala's underlying investments 
  in WPL, EPL and Akanani. The same valuation models for 
  the Marikana and Akanani CGU's that were prepared to 
  assess impairment of non-financial assets were used as 
  the basis for determining the value of Incwala's investments. 
  Thus, similar judgements apply around the determination 
  of key assumptions in those valuation models. Based on 
  the assessment, the value of the HDSA receivable was 
  determined to be $102 million (2014 - $337 million) which 
  resulted in an impairment charge of $227 million (2014 
  - $80 million). 
 

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Any movements in the key assumptions would affect the value of the security which would lead to further impairment or reversal of a previous impairment of the receivable as follows:

 
 
                                                  Reversal of 
                                                   impairment 
                                                            / 
                           Movement in   (further impairment) 
 Assumption                 assumption          of receivable 
-------------------     --------------  --------------------- 
 
 Metal prices                    +/-5%            $29m/($30m) 
 ZAR:USD exchange 
  rate                           -/+5%            $22m/($24m) 
 Discount                -/+ 100 basis 
  rate                          points            $13m/($12m) 
 Production                      +/-5%            $32m/($65m) 
 
 

9. Net (debt) / cash as defined by the Group

 
                                                                           Transfer 
                                                                      of unmortised 
                                                                          bank fees 
                                                                           to other 
                                                                        receivables 
                                    As at                                        $m           As at 
                                                           Foreign 
                                                          exchange 
                                1 October             and non-cash                     30 September 
                                              Cash 
                                     2014     flow       movements                             2015 
                                       $m       $m              $m                               $m 
---------------------------  ------------  -------  --------------  ---------------  -------------- 
 
 Cash and cash equivalents 
  (ii)                                143      160              17                -             320 
 Current borrowings                  (87)    (331)            (88)                -           (506) 
 Non-current borrowings              (88)        -              88                -               - 
 Unamortised bank 
  fees (iii)                            3        -             (2)                -               1 
                             ------------  -------  --------------  ---------------  -------------- 
 Net debt as defined 
  by the Group (i)                   (29)    (171)              15                -           (185) 
===========================  ============  =======  ==============  ===============  ============== 
 
 
                                                        Foreign         Transfer 
                                                                   of unmortised 
                                                                       bank fees 
                                                                        to other 
                                                                     receivables 
                                    As at              exchange               $m            As at 
                                                            and 
                                1 October     Cash     non-cash                      30 September 
                                     2013     flow    movements                              2014 
                                       $m       $m           $m                                $m 
---------------------------  ------------  -------  -----------  ---------------  --------------- 
 
 Cash and cash equivalents            201     (71)           13                -              143 
 Current borrowings                     -     (87)            -                -             (87) 
 Non-current borrowings                 -     (88)            -                -             (88) 
 Unamortised bank 
  fees (iii)                            -        -            -                3                3 
---------------------------  ------------  -------  -----------  ---------------  --------------- 
 Net cash / (debt) 
  as defined by the 
  Group (i)                           201    (246)           13                3             (29) 
===========================  ============  =======  ===========  ===============  =============== 
 

Footnotes:

 
 i    Net (debt) / cash as defined by the Group comprises 
       cash and cash equivalents, bank overdrafts repayable 
       on demand and interest bearing loans and borrowings 
       less unamortised bank fees, unless the unamortised bank 
       fees relate to undrawn facilities in which case they 
       are treated as other receivables. 
 ii   Current cash and cash equivalents to the value of $6 
       million will be treated as restricted cash to be utilised 
       for rehabilitation obligations. 
 ii   As at 30 September 2015 unamortised bank fees of $1 
       million relating to drawn facilities were offset against 
       net debt (30 September 2014 - $3 million of unamortised 
       bank fees relating to undrawn facilities were included 
       in other receivables). 
 

10. Impairment of non-financial assets

 
 At each financial reporting date, the Group assesses whether 
  there is any indication that these assets are impaired. 
  If any such indication exists, the recoverable amount 
  of the assets is estimated in order to determine the extent 
  of the impairment (if any). Recoverable amount is the 
  higher of fair value less costs to sell and value in use. 
 
 For impairment assessment, the Group's net assets are 
  grouped into CGU's being the Marikana CGU, Akanani CGU, 
  Limpopo CGU and Other. The Marikana and Limpopo CGU's 
  relate to the PGM segment and the Akanani CGU relates 
  to the Exploration segment. 
 
 The Marikana CGU is located in the Marikana district to 
  the east of the town of Rustenburg in the North West Province 
  of South Africa. It contains a number of producing underground 
  mines, various development properties, concentrators, 
  tailings storage facilities and smelting and refining 
  operations. 
 
   The Akanani CGU is an exploration asset and is located 
   on the Northern Limb of the Bushveld Igneous Complex in 
   the Limpopo Province of South Africa. A pre-feasibility 
   study was completed in 2012. 
 The Limpopo CGU is located on the Northern Sector of the 
  Eastern Limb of the Bushveld Igneous Complex in the Limpopo 
  Province of South Africa and comprises two resource blocks 
  (Baobab and Baobab east). The CGU includes mines which 
  were placed on care and maintenance in 2009 and a concentrator 
  complex. 
 
   For Marikana and Akanani, the recoverable amounts were 
   calculated using a value in use valuation. The key assumptions 
   contained within the business forecasts and management's 
   approach to determine appropriate values in use are set 
   out below: 
 Key Assumption           Management Approach 
-----------------------  --------------------------------------------------- 
 PGM                      Projections are determined through a combination 
                           of the views of the Directors, market estimates 
                           and forecasts and other sector information. 
                           The Platinum price is projected to be in 
                           the range of $1,050 to $1,535 per ounce 
                           in real terms over the life of the mine. 
                           Palladium and Rhodium prices are expected 
                           to range between $605 and $840 and $855 
                           and $2,245 respectively per ounce in real 
                           terms over the same period. 
 
 Production volume        Projections are based on the capacity and 
                           expected operational capabilities of the 
                           mines, the grade of the ore, and the efficiencies 
                           of processing and refining operations. 
 
 Production costs         Projections are based on current cost adjusted 
                           for expected cost changes as well as giving 
                           consideration to specific issues such as 
                           the difficulty in mining particular sections 
                           of the reef and the mining method employed. 
 
 Capital expenditure      Projections are based on the operational 
  requirements             plan, which sets out the long-term plan 
                           of the business and is approved by the 
                           Board. 
 
 Foreign currency         Spot rates as at the end of the reporting 
  exchange rates           period are applied. 
 Reserves and resources   Projections are determined through surveys 
  of the CGU               performed by Competent Persons and the 
                           views of the Directors of the Company. 
 
 Discount rate            The discount rate is based on a Weighted 
                           Average Cost of Capital (WACC) calculation 
                           using the Capital asset pricing model grossed 
                           up to a pre-tax rate. The Group uses external 
                           consultants to calculate an appropriate 
                           WACC. 
-----------------------  --------------------------------------------------- 
 
 
 For impairment testing management projects cash flows 
  over the life of the relevant mining operation which is 
  significantly greater than 5 years. For the Marikana CGU 
  a life of mine spanning until 2058 was applied. For the 
  Akanani CGU the life of mine spans until 2049. 
 
 The risk-adjusted pre-tax discount rate applied for impairment 
  testing in the Marikana CGU for 2015 was 15.6% real (2014 
  - 11.8% real). The rate applied for the exploration and 
  evaluation asset in the Akanani CGU for 2015 was 17.9% 

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  nominal (2014 - 16.5% nominal). 
 

The Limpopo CGU was valued on a fair value less cost to sell basis. The latest market transactions and resource multiples were reviewed and given the current PGM environment, it was decided to impair the Limpopo asset to $nil

 
 For the 2015 financial year, the Group's non-financial 
  assets were impaired by $1,811 million primarily due to 
  the reduced production profile and revised PGM price outlook 
  in the Business Plan which have resulted in the downward 
  revision of estimated future cash flows from the Marikana 
  operations. This led to the value in use declining below 
  the carrying amount of the non-financial assets of the 
  operations. The impairment charge was allocated to the 
  different CGU's as follows: 
 
 
                                                  Marikana              Akanani            Limpopo 
                                                       CGU                  CGU                CGU     Total 
 Carrying amount pre-impairment: 
 Goodwill                                               40                    -                  -        40 
 Other intangibles                                     180                  219                 53       452 
 Property, plant and equipment                       2,816                    -                 74     2,890 
 Equity accounted investments                           26                    -                  -        26 
 Royalty prepayment                                     38                    -                  -        38 
                                             -------------  -------------------  -----------------  -------- 
 Total                                               3,100                  219                127     3,446 
                                             =============  ===================  =================  ======== 
 
                                                  Marikana              Akanani            Limpopo 
                                                       CGU                  CGU                CGU     Total 
 Recoverable amount: 
 Goodwill                                                -                    -                  -         - 
 Other intangibles                                      94                    -                  -        94 
 Property, plant and equipment                       1,477                    -                  -     1,477 
 Equity accounted investments                           26                    -                  -        26 
 Royalty prepayment                                     38                    -                  -        38 
                                             -------------  -------------------  -----------------  -------- 
 Total                                               1,635                    -                  -     1,635 
                                             =============  ===================  =================  ======== 
 
                                                  Marikana              Akanani            Limpopo 
                                                       CGU                  CGU                CGU     Total 
 Impairment: 
 Goodwill                                             (40)                    -                  -      (40) 
 Other intangibles                                    (86)                (219)               (53)     (358) 
 Property, plant and equipment                     (1,339)                    -               (74)   (1,413) 
 Equity accounted investments                            -                    -                  -         - 
 Royalty prepayment                                      -                    -                  -         - 
                                             -------------  -------------------  -----------------  -------- 
 Total                                             (1,465)                (219)              (127)   (1,811) 
                                             =============  ===================  =================  ======== 
 
 For the Marikana CGU, the impairment charge was first 
  allocated to goodwill. The remaining balance of the impairment 
  charge was allocated pro-rata to the other non-financial 
  assets, but limited to the assets' recoverable amounts. 
 
 In preparing the financial statements, management has 
  considered whether a reasonably possible change in the 
  key assumptions on which management has based its determination 
  of the recoverable amounts of the CGUs would cause the 
  units' carrying amounts to exceed their recoverable amounts. 
  A reasonably possible change in any of the assumptions 
  used to value the Marikana CGU will lead to a reduction 
  or increase in the impairment charge as follows: 
                                          Movement in              Reversal of impairment/(Further 
 Assumption                                assumption                                  impairment) 
------------------------------     ---   -----------------      ---------------------------------- 
 Metal prices                             +/-5%                                      $329m/($336m) 
 ZAR:USD exchange 
  rate                                    -/+5%                                      $247m/($279m) 
                                          -/+100 basis 
 Discount rate                             points                                    $146m/($137m) 
 Production                               +/-5%                                      $361m/($361m) 
 
 
 

The Akanani CGU was impaired in 2012, and as such a change in any of the key assumptions would lead to further impairment or reversal of the previous impairment. Similar impairment assessments were performed on our Akanani asset. These have resulted in full impairment of the assets in the Akanani CGU, with a further impairment charge of $219 million. Reasonably possible movements in any of the three key assumptions would not result in a reversal of previous impairment.

11. Events after the financial reporting period

The announcement of these results coincides with the launch of a Rights Issue which is conditional on, amongst other things, shareholder approval. The Group proposes to raise approximately $407 million, before deducting share issue costs and foreign exchange charges, as well as amend the existing debt facilities.

The amended debt facility agreements which were entered into on 9 November 2015 will become effective upon the underwriting agreement in respect of the Rights Issue going unconditional the satisfaction of customary conditions precedent.

Following the amendment, the Group's debt facilities going forward are summarised as follows:

-- Revolving credit facilities totalling $75 million and a $150 million term loan, at a Lonmin Plc Level, which mature in May 2020 (assuming Lonmin exercises its option to extend the term up until this date).

-- Revolving credit facility totalling R1,980 million, at a Western Platinum Limited level, which matures in May 2020 (assuming Lonmin exercises its option to extend the term up until this date).

The following covenants apply to these facilities:

-- The consolidated tangible net worth of the Group on or after 31 March 2016 will not be at any time less than US$1,100 million.

-- The consolidated debt of the Group on or after 31 March 2016 will not at any time exceed an amount equal to 35% of consolidated tangible net worth of the Group;

-- The liquidity for the Group will not, for any week from 1 January 2016, be less than $20,000,000;

-- The capital expenditure of the Group (excluding any Bulk Tailings Agreement) shall not exceed the limits set out in the table below. The Company shall also have the option to carry forward or back up to 10% of the limits set out in the table below.

 
 
   Financial Year                                 Capex Limit 
-----------------------------------------------  ----------------- 
 1 October 2015 - 30 September 2016 (inclusive)   ZAR1,338 million 
 1 October 2016 - 30 September 2017 (inclusive)   ZAR1,242 million 
 1 October 2017 - 30 September 2018 (inclusive)   ZAR2,511 million 
 1 October 2018 - 30 September 2019 (inclusive)   ZAR3,194 million 
 1 October 2019 - 31 May 2020 (inclusive)         ZAR4,049 million 
 

There is also additional limit on capital expenditure in relation to any Bulk Tailings Agreement as set out below:

 
 Financial Year                                   Bulk Tailings Capex Limit 
-----------------------------------------------  -------------------------- 
 1 October 2015 - 30 September 2016 (inclusive)   ZAR370 million 
 1 October 2016 - 30 September 2017 (inclusive)   ZAR182 million 
 

The limit on capital expenditure in relation to any Bulk Tailings Agreement after 30 September 2017 will be zero.

In addition to the above, the Group's existing lenders agreed on 26 October 2015 to suspend the testing of the tangible net worth covenants under the existing facilities until the amended facilities agreements become effective, failing which, the covenants would be tested under existing facilities.

12. Statutory Disclosure

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