Lonmin PLC US$407 million Rights Issue (9488E)

TIDMLMI

RNS Number : 9488E

Lonmin PLC

09 November 2015

NOT FOR RELEASE, PUBLICATION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES PART OF THIS ANNOUNCEMENT.

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 PROVISIONAL ALLOTMENT LETTER, NIL PAID RIGHTS, FULLY PAID RIGHTS, LETTERS OF ALLOCATION AND/OR NEW SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED.

9 November 2015

Lonmin Plc

US$407 million Rights Issue

The Board of Lonmin Plc ("Lonmin", "the Company" and, together with its subsidiaries, "the Group") today announces an underwritten Rights Issue to raise gross proceeds of approximately US$407 million.

HIGHLIGHTS

-- 46 for 1 underwritten Rights Issue of 26,997,717,400 New Shares at 1.00 pence per New Share (or, in the case of

Qualifying South African Shareholders, ZAR 0.214 per New Share) to raise net proceeds of approximately US$369

million (after payment of fees and expenses relating to the Rights Issue and the Amended Facilities Agreements).

-- The Public Investment Corporation, which holds approximately seven per cent. of the issued share capital of

Lonmin, has irrevocably committed to take up its entitlement in full in the Rights Issue and has sub-underwritten a

material portion of the Rights Issue in excess of its entitlement.

-- The net proceeds of the Rights Issue will be used to fund the implementation of the Business Plan, thereby

improving the Group's ability to withstand potential adverse movements in external factors, specifically a

continuation of the weak PGM pricing environment, and repositioning the Group on the South African PGM

industry cost curve; and for general corporate purposes, including as additional working capital, strengthening the

balance sheet and allowing the Group to meet its obligations and commitments as they fall due and reducing the

Group's borrowings.

-- Upon the Underwriting Agreement with respect to the Rights Issue becoming wholly unconditional and certain

customary conditions being met, the Amended Facilities Agreements which the Company has entered into with its

existing lending syndicate will come into effect providing:

(i) an extension of maturity of the Existing US Dollar Facility from May 2016 to May 2020 (assuming

Lonmin exercises its option to extend the term up until this date) and a reduction in the amount of

the Amended US Dollar Facilities to US$225 million (as compared to US$360 million for the Existing

US Dollar Facility); and

(ii) an extension of maturity of the Existing Rand Facilities from June 2016 to May 2020 (assuming

Lonmin exercises its option to extend the term up until this date).

Brian Beamish, Chairman of Lonmin, said: "In order to be able to deal effectively with the effects of a continuation of current low PGM prices, the Board and management have developed the Business Plan with the aim to achieve positive cash flow after capital expenditure. The Rights Issue is expected to raise approximately US$407 million in gross proceeds and is designed to strengthen the Group's balance sheet and allow the implementation of the Business Plan, whilst preserving the long-term value of the Group. The Board remains confident in the potential of the Group, with its high-quality asset base and long-term mining rights, and in the medium to long term fundamentals of the PGM industry and is focused on preserving and enhancing value for all Shareholders."

DETAILS OF THE RIGHTS ISSUE

The Rights Issue, which is conditional on, amongst other things, Shareholder approval, will result in the issue of 26,997,717,400 New Shares (representing 97.87 per cent. of the enlarged issued share capital of Lonmin) at a price of 1.00 pence per New Share, in respect of Qualifying Shareholders (other than Qualifying South African Shareholders) or, in the case of Qualifying South African Shareholders, ZAR 0.214 per New Share, payable in full on acceptance. The Rights Issue will be on the basis of:

46 New Shares for every 1 Existing Share

The New Shares will, when issued and fully paid, be ordinary shares ranking pari passu in all respects with the Existing Shares, including the right to receive all future dividends and other distributions declared, made, paid or declared after the date of their issue. The only difference will be that while the Existing Shares have a nominal value of US$1.00 per Share, the New Shares will have a nominal value of US$0.000001 per share.

The UK Issue Price of 1.00 pence per New Share, which is payable in full by Qualifying Shareholders (other than Qualifying South African Shareholders) on acceptance by no later than 11.00 a.m. (London time) on 10 December 2015, represents, in effect:

   --     a 93.85 per cent. discount to the closing price of an Existing Share; and 
   --     a 24.50 per cent. discount to the theoretical ex-Rights price of an Existing Share, 

in each case based on the closing middle-market price of 16.25 pence on the London Stock Exchange on 6 November 2015, the last business day prior to the publication of the Prospectus.

The SA Issue Price of ZAR0.214 per New Share represents:

   --     a 94.28 per cent. discount to the closing price of an Existing Share; and 
   --     a 25.96 per cent. discount to the theoretical ex-Rights price of an Existing Share, 

in each case based on the closing price of ZAR3.74 on the JSE on 6 November 2015, the last business day prior to the publication of the Prospectus.

The Rights Issue is being underwritten by HSBC, J.P. Morgan Cazenove and Standard Bank, save in respect of New Shares which the Directors have irrevocably undertaken to take up.

The Board has received financial advice from Greenhill in relation to the Rights Issue.

This summary should be read in conjunction with the full text of this announcement. Further, this summary contains extracts from the Prospectus, which extracts are qualified and/or contextualised by, and should be read with, the Prospectus. Defined terms shall have the same meaning as given in the Prospectus, unless the context requires otherwise.

CONTACTS

 
                                   [phone] 
 Lonmin                                 6007 / 
 Tanya Chikanza (Head 
  of Investor Relations)       [phone] 
----------------------------  ---------------- 
 Greenhill 
  (UK Sponsor and Financial        [phone] 
  Adviser)                                7400 
 David Wyles 
 Gareth Davies 
----------------------------  ---------------- 
 HSBC 
  (Joint Bookrunner and            [phone] 
  Corporate Broker)                       8888 
 Nick Donald 
 Peter Glover 
----------------------------  ---------------- 
 J.P. Morgan Cazenove 
  (Joint Bookrunner and            [phone] 
  Corporate Broker)                       4000 
 Michael Wentworth-Stanley 
  Alexander Large 
----------------------------  ---------------- 
 J.P. Morgan Equities 
  Limited 
  (SA Transaction Sponsor)     [phone] 
 Jako Van Der Walt 
----------------------------  ---------------- 
 Standard Bank 
  (Joint Bookrunner)           [phone] 
 Eric Von Glehn 
 Chris Godman 
----------------------------  ---------------- 
 Cardew Group 
 Anthony Cardew / James            [phone] 
  Clark                                   0777 
 Sue Vey                       [phone] 
----------------------------  ---------------- 
 
----------------------------  ---------------- 
 
----------------------------  ---------------- 
 

SHAREHOLDER ENQUIRIES

UK Shareholders: Contact the UK Shareholder Helpline on 0371 384 2232 (from inside the United Kingdom) or [phone] (from outside the United Kingdom). This Shareholder Helpline is available from 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday (except bank holidays).

South African Shareholders: contact the South African Shareholder Helpline on 0861 LINKSA (0861 546572) (from inside South Africa) or +27 861 LINKSA ([phone]) (from outside South Africa). This Shareholder Helpline is available from 8.00 a.m. to 5.00 p.m. (Johannesburg time) Monday to Friday (except public holidays).

Please note that for legal reasons, the UK Shareholder Helpline and the South African Shareholder Helpline are only able to provide information contained in this announcement or the prospectus relating to the Rights Issue and information relating to Lonmin's register of members and are unable to give advice on the merits of the Rights Issue, or provide legal, financial, tax or investment advice.

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 Provisional Allotment Letter, Form of Instruction, Nil Paid Rights, Fully Paid Rights, Letters of Allocation and/or New Shares (together, the "Securities") should only be made on the basis of information contained in or incorporated by reference into the 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 or to take up any entitlements to Nil Paid Rights in any jurisdiction.

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November 09, 2015 02:10 ET (07:10 GMT)

The information contained in this announcement is not for release, publication or distribution to persons in the United States of America or any 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 the 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 the Provisional Allotment Letter and/or the 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 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 Rights Issue is not being made in the United States of America and neither this announcement, the Prospectus, 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 have not been, and will not be, sent to, and Nil Paid Rights have not been, and 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.

Each of J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("JPMS") and HSBC Bank plc ("HSBC") is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority (the "FCA"). The Standard Bank of South Africa Limited ("Standard Bank") conducts its European investment banking activities through its affiliates which are authorised and regulated in the United Kingdom by the FCA. Greenhill & Co. International LLP ("Greenhill") is authorised and regulated in the United Kingdom by the FCA.

Each of Greenhill, J.P. Morgan Equities South Africa (Pty) Ltd, JPMS, HSBC and Standard Bank (together, the "Banks") is acting solely for Lonmin and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Rights Issue and will not be responsible to anyone other than Lonmin for providing the protections afforded to their respective clients nor for giving advice in connection with the Rights Issue or any other transaction, arrangement or matter referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Banks by the Financial Services and Markets Act 2000 (as amended) or the regulatory regime established thereunder or otherwise under law, none of the Banks accept any responsibility or liability whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by any of the Banks in relation to the contents of this announcement (or whether any information has been omitted from this announcement), including its accuracy, completeness or verification or regarding the legality of any investment in the Securities or any other information relating to the Company, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection herewith, by any person under the laws applicable to such person or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Securities and the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. To the fullest extent permissible each Bank accordingly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement.

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 Rights Issue.

A copy of the Prospectus containing details of the 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 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 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.

(MORE TO FOLLOW) Dow Jones Newswires

November 09, 2015 02:10 ET (07:10 GMT)

In connection with the Rights Issue, HSBC, JPMS and Standard Bank (together, the "Joint Bookrunners") and any of their affiliates, may take up a portion of the Nil Paid Rights, Fully Paid Rights, Letters of Allocation or New Shares in the Rights Issue as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such Nil Paid Rights, Fully Paid Rights, Letters of Allocation or New Shares and other securities of the Company or related investments in connection with the Rights Issue or otherwise. Accordingly, references in the Prospectus, once published, to the Securities being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Joint Bookrunners and any of their affiliates acting as investors for their own accounts. The Joint Bookrunners do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

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.

NOT FOR RELEASE, PUBLICATION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. PLEASE SEE THE IMPORTANT NOTICES ABOVE.

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 NIL PAID RIGHTS, FULLY PAID RIGHTS, LETTERS OF ALLOCATION AND/OR NEW SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED.

9 November 2015

LONMIN PLC

46 FOR 1 RIGHTS ISSUE OF 26,997,717,400 NEW SHARES AT 1.00 PENCE OR ZAR 0.214 PER NEW SHARE

INTRODUCTION

On 21 October 2015, Lonmin announced that it proposed to undertake a Rights Issue to raise approximately US$407 million in gross proceeds. Today, the Group has entered into conditional Amended Facilities Agreements with its existing lenders, which the Directors believe, together with the Rights Issue and the Group's Business Plan, will put the Group in a stronger financial position and enable it to deal with the low PGM pricing environment, whilst at the same time preserving the long-term value of the Group.

The Rights Issue, which is conditional on, amongst other things, Shareholder approval, will be made to all Qualifying Shareholders on the terms set out in the Prospectus, expected to be published today, and will be on the basis of 46 New Shares at 1.00 pence per New Share or, in the case of Qualifying South African Shareholders, ZAR 0.214 per New Share, for every 1 Existing Share held on the relevant Record Date by Qualifying Shareholders. The Rights Issue will involve the issue of 26,997,717,400 New Shares, representing approximately 4,600 per cent. of the Company's share capital in issue as at the date of this announcement.

The UK Issue Price of 1.00 pence per New Share represents a 24.50 per cent. discount to the theoretical ex-Rights price based on the closing middle market price of 16.25 pence per Share, and a 93.85 per cent. discount to the closing middle market price, in each case on 6 November 2015, the last business day prior to the date of the Prospectus. The SA Issue Price of ZAR 0.214 per New Share represents a 25.96 per cent. discount to the theoretical ex-Rights price based on the closing price of ZAR 3.74 per Share, and a 94.28 per cent. discount to the closing price, in each case on 6 November 2015, the last business day prior to the date of the Prospectus.

The Rights Issue is being underwritten (save in respect of those New Shares which the Directors have irrevocably undertaken to take up) by HSBC, J.P. Morgan Cazenove and Standard Bank.

The Public Investment Corporation, which holds approximately seven per cent. of the issued share capital of Lonmin, has irrevocably committed to take up its entitlement in full in the Rights Issue and has sub-underwritten a material portion of the Rights Issue in excess of its entitlement.

The purpose of this announcement is to explain to you the background to and reasons for the Rights Issue and to explain why the Directors consider that the Rights Issue is in the best interests of the Company and Shareholders as a whole and why the Directors recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting on 19 November 2015 at 9:30am (London time) to facilitate the Rights Issue. This announcement contains extracts from the Prospectus, which extracts are qualified and/or contextualized by, and should be read with, the Prospectus.

BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE

   1.            Introduction 

The Group is the third largest primary producer of platinum in the world, with mines located in the Bushveld Igneous Complex in South Africa, which according to the SFA Report contains approximately 70 per cent. of the world's known platinum resources and is projected to account for over half of the global primary supply of PGMs in 2015. The Group operates a vertically integrated business model with an established infrastructure. The Directors believe that the average depth of the Group's current mining activities is shallower than that of the Group's principal competitors in South Africa and that there is a cost advantage in mining at shallower depths from decreased underground air-cooling requirements and transit times, lower electricity consumption and lower capital costs. The Group's mineral resources provide a source of supply that is expected to last for decades at its current and anticipated future rates of mining.

The Group's business model remains to create long-term value for Shareholders through the discovery, extraction, refining and marketing of PGMs through the economic cycle.

The Directors are confident in the potential of the Group, with its high-quality asset base and long-term mining rights, and in the medium to long-term fundamentals of the PGM industry. The Group is highly geared to the PGM pricing environment and to the Rand/US dollar exchange rate. In addition to the operational and cost containment achievements of the Group over the last twelve months, 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.

   2.            Recent events 

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November 09, 2015 02:10 ET (07:10 GMT)

The 2014 Strike Action reduced the Group's sales of metal below levels previously expected, such that significant fixed costs could not be recovered as production effectively stopped for approximately five months. The impact of the 2014 Strike Action was exacerbated by weakness in the PGM pricing environment, which further deteriorated during the year ended 30 September 2015. As a result, the Group has experienced operating losses in each of the last two financial years, which has resulted in a deterioration in the Group's net debt position. The Group had operating losses of US$2,018 million (including a special impairment charge of US$1,811 million related to the Group's Marikana, Akanani and Limpopo assets largely driven by a decline in long-term PGM price assumptions and changes in assumptions regarding production levels and other factors under the Business Plan) and US$255 million for the years ended 30 September 2015 and 2014, respectively, and had net debt (defined as current and non-current interest bearing loans and borrowings less cash and cash equivalents) of US$185 million and US$29 million as at 30 September 2015 and 2014, respectively.

Moreover, as at 30 September 2015, the Group had total contractual obligations and commercial commitments due within one year of US$567 million, which comprised primarily US$360 million due in May 2016 under the Group's Existing US Dollar Facility and US$143 million due in June 2016 under the Group's Existing Rand Facilities. In addition, in the course of negotiations regarding the Amended Facilities Agreements and in consideration for the Group's existing lenders agreeing to suspend the testing of the tangible net worth covenants under the Existing Facilities, on 26 October 2015 the Group agreed not to transfer cash held by the Company to its operating subsidiaries until 20 November 2015 (which is expected to be the effective date of the Amended Facilities Agreements, provided that all of the Resolutions are passed by Shareholders and the Rights Issue proceeds).

   3.            Response to changing circumstances 

In order to address these risks and to improve the Group's ability to operate in a low PGM pricing environment and position the Group to benefit from any recovery in PGM prices in the medium to long term:

-- the Group has adopted the Business Plan, which the Directors believe provides an appropriate basis for the

Group to continue to focus on its objective of reducing costs and improving cash flows;

-- companies in the Group have entered into the Amended Facilities Agreements with the Group's existing

lenders, so as to extend the maturity of the Existing US Dollar Facility and Existing Rand Facilities to May 2020

(in each case, assuming Lonmin exercises its option to extend the term up until this date); and

   --     Lonmin is undertaking the Rights Issue. 

The Directors believe that the receipt of proceeds from the Rights Issue, when taken together with the implementation of the Business Plan and the Amended Facilities Agreements, will strengthen the Group's financial position.

The Amended Facilities Agreements were signed on 9 November 2015, but remain conditional on the Underwriting Agreement becoming wholly unconditional and satisfaction of customary conditions precedent (including payment of fees and expenses and delivery of certificates and other documents). The Amended Facilities Agreements provide for (i) an extension of maturity of the Existing US Dollar Facility from May 2016 to May 2020 (assuming Lonmin exercises its option to extend the term up until this date) and a reduction in the amount of the Amended US Dollar Facilities to US$225 million (as compared to US$360 million for the Existing US Dollar Facility); and (ii) an extension of maturity of the Existing Rand Facilities from June 2016 to May 2020 (assuming Lonmin exercises its option to extend the term up until this date).

   4.            The Business Plan 

The Directors believe that the low PGM pricing environment, which has weakened further in 2015, may continue to prevail in the short to medium term. The Directors have reviewed the Group's business and capital structure and developed a comprehensive response incorporating necessary protective measures, whilst maintaining the Group's ability to increase production in the future, with the aim of safeguarding the long-term interests of Shareholders, employees and other key stakeholders.

The Directors have undertaken a detailed assessment of the Group's cost structure, shaft profitability and capital requirements in order to establish an appropriate structure for the Group to operate in the continuing low PGM pricing environment. This comprehensive exercise has 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:

-- reducing fixed cost expenses by reducing the size of the Group's workforce and reducing overhead costs and

support service structures;

-- removing high-cost PGM production ounces which no longer meet their marginal cost of production and,

importantly, eliminating associated fixed and variable costs;

-- reducing capital expenditure to the minimum required to sustain the efficient running of the Group's

operations whilst 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; and

   --     continuing to improve relationships with key stakeholders. 

In response to the low PGM pricing environment, the Directors have accelerated the implementation of the Group's published strategy of ultimately operating only its large, long-life and low-cost shafts. As described below, the Business Plan aims to maintain broadly flat unit costs per PGM ounce in nominal terms for the next three financial years (as compared to the year ended 30 September 2015).

SRK Consulting (UK) Ltd was commissioned by Lonmin to undertake, inter alia, an independent technical review of the Business Plan. In its report, SRK Consulting (UK) Ltd provides assurances to the Board of Directors of the Company that the ore reserves and the technical-economic assumptions underlying the Business Plan (including forecasts of production, operating expenditure and capital expenditure), as provided by the Company and reviewed (and, where appropriate, modified) by SRK Consulting (UK) Ltd, are reasonable, given the information currently available.

   4.1          Reducing fixed cost expenses 
   4.1.1      Reducing the size of the Group's workforce 

As a result of reduced profitability, the Group has announced a retrenchment programme and has embarked on a section 189 consultation process with relevant stakeholders. As at 6 November 2015, approximately 2,120 employees (leaving through the voluntary separation programme that was launched in May 2015) and 1,016 contractors had left the Group, which should result in a large reduction of overhead costs. In total, approximately 6,000 employees, including contractors, are expected to leave the Group 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. The Group charged special costs of US$59 million for the year ended 30 September 2015 related to the one-off retrenchment and associated restructuring costs that the Group expects to incur in connection with these departures.

The Group employed approximately 38,000 people, including contractors, as at 30 September 2014 and through the South African Chamber of Mines is a signatory to the Mining Leadership Declaration Agreement to limit job losses. It is the Directors' objective to protect the majority of those jobs over the long term by ensuring that the Group can deal with the sustained low pricing PGM environment.

The Group continues to work closely with key stakeholders, particularly its unions and the South African government, in connection with the planned 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 consultation processes within the section 189 legislative framework in parallel-one with AMCU, the Group's majority union, and one 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 AMCU 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 continues to work closely with all key stakeholders during this process.

   4.1.2      Reducing overhead costs and support service structures 

The Group is reducing overhead costs and support service structures 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.

In addition, the Directors expect to implement the following measures as part of the fixed cost expenses reduction element of the Business Plan:

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-- the waiver of cash annual bonuses to management level employees for the year ended 30 September 2015,

resulting in a cost reduction of ZAR120 million for the year ended 30 September 2015. In addition, no salary

increases have been granted for the year ending 30 September 2016. Moreover, the Group is in the process of

revising its bonus and incentive schemes for the year ending 30 September 2016 with the aim of ensuring that

cash payments under such schemes are self-funding in the current low PGM pricing environment through

productivity and efficiency improvements;

-- the reduction of marketing and promotional expenses, as well as discretionary spending on training. In

addition, the Group is in discussions with Platinum Guild International and World Platinum Investment Council

to reduce the marketing costs the Group incurs by up to 30 per cent.; and

-- the amalgamation, in the pursuit of operational and administrative efficiencies, of EPL and WPL into a single

operating entity. The elimination of royalty payments by EPL to the Bapo Community from December 2014 has

enabled this simplification to be achievable.

   4.2          Removing high-cost production 

Following a shaft-by-shaft analysis, the Directors have decided to reduce high-cost PGM production ounces to improve the Group's profitability and cash flows. Specifically, the Directors have decided to take the following actions.

-- 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 with employees. However, the Hossy shaft remains the Group's highest cost Generation 2 Shaft and the Directors have 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 use the immediately available ore reserves that have been built up at the shaft during its turnaround, whilst limiting capital expenditure to essential levels.

-- 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. The Directors plan 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.

-- Closure and placement on care and maintenance of the 1B shaft: Overall, the 4B/1B combined shaft has remained profitable despite the weak PGM pricing environment. However, the 1B part of the shaft has produced high-cost ounces and the Directors expect that its closure and placement on care and maintenance will result in improved performance metrics as direct and associated costs are removed.

-- On-going 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 has proposed a plan that the Directors believe will be cash generative. In light of this development, the Group is renegotiating the ore purchase agreement with the contractor to include more favourable terms which, if concluded and subject to a favourable outcome of the Section 189 Consultation Process, the Directors believe will allow mining at these shafts to continue for the year ending 30 September 2016. The Directors plan to reassess the viability of continuing to mine these shafts at the end of the year ending 30 September 2016.

-- K4 shaft to remain on care and maintenance: The Directors have concluded that the K4 shaft should remain on care and maintenance and that all related capital expenditure in respect of that shaft should be suspended. The Directors believe that K4 continues to be one of the Group's best projects in South Africa and plan to reopen the shaft when market conditions improve.

The Directors expect 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. The Directors expect 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.

The Directors believe that the Group has already started to benefit from the implementation of the Business Plan initiatives. The Directors 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 ZAR0.7 billion in real terms in the year ending 30 September 2016 (as compared to the annual cost base for the year ended 30 September 2015) and a further cost reduction of approximately ZAR1.6 billion in real terms in the year ending 30 September 2017 (as compared to the forecast annual cost base for the year ending 30 September 2016), thereby potentially improving the Group's cost per PGM ounce produced in comparison with some competitors. The Group's unit cost per PGM ounce produced was ZAR10,339 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. Based on current information, the SFA Report forecasts 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. The Directors believe that 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.

   4.3          Reducing capital expenditure 

A comprehensive assessment of capital projects has been undertaken by the Group's management. Planned capital expenditure for the next two financial years has been limited to:

-- capital expenditure sufficient to keep the Group's existing assets in operation and to comply with legislative, environmental 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; 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 most valuable ore reserve development and expansion projects that are available to the Group. 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, the Directors believe that this is a necessary measure in order to improve the Group's cash flows and liquidity in the short term.

Pursuant to the Business Plan, the Group expects to limit its total capital expenditure to approximately US$132 million and US$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 US$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 development of the Middelkraal resource that the Group plans to extract via its existing, profitable Rowland shaft, as well as the further deepening of the existing, profitable K3 shaft. The Directors believe 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.

The Group's planned capital expenditure also includes expansion capital expenditure for the Group's bulk tailings treatment ("BTT") project which was deferred earlier in the year ended 30 September 2015. 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 US$29 million and US$14 million are included for the BTT project in the total planned capital expenditure for the years ending 30 September 2016 and 2017, respectively.

4.4 Maintaining operational and strategic flexibility through sufficient immediately available ore reserves

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The Directors 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 US$388 million of capital expenditure incurred in aggregate in the years ended 30 September 2015, 2014 and 2013 for the Group's total operations. 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 the Directors believe provides the Group with operational and strategic flexibility. The Group plans to reduce the rate of development for the years ending 30 September 2016 and 2017 as part of its cost saving initiatives under the Business Plan.

   4.5          Retaining long-term expansion opportunities 

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.

   4.6          Continuing to improve relationships with key stakeholders 

The Group plans to continue to focus on improving relationships, and promoting the alignment of interests, with its key stakeholders. The Directors believe that the Group has been successful in improving its relationship with its employees, the unions that represent its employees and the communities in localities where the Group operates. A major component of the Group's approach is to continue to engage with all key stakeholders on a regular basis and to proactively participate in industry-led initiatives. The Directors believe that the successful completion of the three BEE transactions announced on 26 November 2014 and 4 December 2014, which resulted in an increase in the shareholding of the Group's employees, local communities and the Bapo Community in WPL and EPL and the issue of shares in the Company to the Bapo Community, has also contributed to better alignment of interests with key stakeholders.

   5.            Historical background and the Group's achievements under difficult circumstances 
   5.1          The 2012 rights issue and renewal plan 

In 2012, following the tragic Events at Marikana, Lonmin developed a renewal plan aimed at extracting the Group's long-life, high-quality resources and raised total proceeds of US$767 million (after costs and loss on settlement of forward exchange contracts) through a rights issue. The 2012 rights issue was expected (alongside amendments to the Group's debt facilities, which were entered into at the same time) to stabilise the Group's financial position by reducing its level of indebtedness and increasing its balance sheet strength. The renewal plan set out a strategy of modest capital expenditure in the short term, followed by large capital investment to materially increase the Group's production capacity in the medium to long term, when a sustained improvement in PGM demand and pricing was expected to occur. In particular, Lonmin expected to increase the Group's capital expenditure to develop a number of its main, large shafts (namely K4, Hossy and Saffy) and to undertake certain processing projects. From the net proceeds of the 2012 rights issue, the Group repaid the outstanding balance of its committed facilities during the year ended 30 September 2013 and the remaining balance of the net proceeds was used to fund working capital and capital expenditure. Following the Events at Marikana, the Group successfully ramped up production and maintained operational momentum through to December 2013. The Group generated EBITDA of US$304 million for the year ended 30 September 2013, as the Group established strong immediately available ore reserves and excellent operational performance.

   5.2          The 2014 Strike Action and sustained weakness in PGM prices 

Beginning in January 2014, the Group experienced a five-month strike action by members of AMCU, which also affected the two other largest PGM producers in South Africa. The 2014 Strike Action disrupted the Group's production from January to June 2014, resulting in the Group losing an estimated 391,000 equivalent saleable platinum ounces, and had a severe impact on the Group's results of operations for the year ended 30 September 2014, with the Group incurring special costs of US$307 million. On 24 June 2014, a wage agreement effective until 30 June 2016 was reached for a return to work. A relationship charter was also established with AMCU including a commitment from AMCU that there would be no further industrial action in respect of the issues covered by and ancillary to the wage agreement.

The impact of the 2014 Strike Action has been exacerbated by sustained weakness in the PGM pricing environment.

   5.3          Achievements under difficult circumstances 

Despite these difficult circumstances, the Directors believe that the Group has made a number of notable achievements in recent periods by managing variables that are within the Group's control.

-- Successful post-2014 Strike Action ramp-up: In anticipation of the end of the 2014 Strike Action in June 2014, management planned and applied a disciplined approach to the safe and successful ramp-up in production. The Group achieved a successful ramp-up to normal production within two months of the end of the strike, which the Directors believe was faster than the Group's principal competitors in South Africa, due to a combination of early planning, good working relationships and the Group's strong immediately available ore reserves. In particular, the Group prioritised re-starting the most cash generative shafts first.

-- Operational and cash preservation achievements: The Directors believe that the Group has had a number of notable operational achievements, including the following.

o The Group aspires to operate to the safest standards and achieved a South African industry record of a

period of 18 months without a fatality from November 2013 to April 2015. The Group subsequently

experienced a setback between May and October 2015 as four employees died as a result of injuries

sustained in separate incidents with no common cause or factor. The Group continues to focus on safety

training and improving safety performance.

o The Group has focused its resources into developing its larger Generation 2 Shafts, particularly at the Saffy

shaft. Additional stoping crews were deployed to Saffy from depleting shafts and its immediately available

ore reserves have been increased. The shaft has reached steady state, as planned, by 30 September 2015,

with consequently improved efficiency and reduced unit costs for the shaft and the Group.

o The Group produced 759,695 platinum ounces for the year ended 30 September 2015, its highest

production in eight years, against market guidance of 750,000 platinum ounces. The Group also achieved

sales of 751,560 platinum ounces for the year ended 30 September 2015, above market guidance of 730,000

platinum ounces.

o The underlying unit cost per PGM ounce at ZAR10,339 per PGM ounce for the year ended 30 September

2015 was achieved, well within the original market guidance of ZAR10,800 per PGM ounce, as a result of the

robust cost containment measures undertaken by the management team. Based on current information,

the SFA Report forecasts 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, having shifted from the third

quartile since 2013.

o The Group has effectively contained its capital expenditure in a liquidity constrained environment and

successfully reduced its capital expenditure for the year ended 30 September 2015 to US$136 million (as

compared to its initial guidance of US$250 million).

o The Group has maintained healthy immediately available ore reserves. 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.

o The Group has maintained the resilience of its processing plants and its concentrators continue to achieve

levels of PGM recoveries which are amongst the best in the Group's history and, the Directors believe, the

South African PGM industry. The Directors believe that the Group has also benefited from the flexibility its

smelter capacity provides.

o The Group announced in 2014 that it aimed to achieve ZAR2 billion of value benefits over the three years

ending 30 September 2017, of which approximately ZAR526 million of net value benefits have already been

achieved in the year ended 30 September 2015. The Directors believe that this demonstrates the focused

cost management actions that have been undertaken by the Group. The Group continues to look at ways of

enhancing efficiencies and productivity. Despite a challenging labour landscape, the Group's retrenchment

programme has remained on schedule and as at 6 November 2015 approximately 2,120 employees (leaving

through the voluntary separation programme that was launched in May 2015) and 1,016 contractors had left

the Group.

-- Empowerment achieved: On 26 November 2014 and 4 December 2014, the Group announced that it had

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successfully completed three BEE transactions, thus achieving the target of 26 per cent. HDSA ownership in line with the requirements of the Mining Charter. These empowerment transactions are aligned with the Group's commitment and values to support the improvement and development of the communities where the Group operates, as well as to align the interests of employees and host communities with those of Shareholders. In connection with the Bapo Transaction, the Bapo Community was granted the opportunity to participate in ZAR200 million of the Group's procurement and business value-chain activities. Separately the Group has engaged in a range of activities and initiatives with its employees and local communities, which are aimed at improving the lives of its employees, their families and communities. The Directors believe that the Group has been successful at maintaining on-going engagement with community leaders to ensure alignment on safety and sustainability issues that affect all stakeholders.

-- Employee relationships: The Group has focused on drawing on lessons learned from the 2014 Strike Action to engage and rebuild relationships with employees and unions, thereby reducing the risk of prolonged and reoccurring industrial action. Management has increased its efforts to engage directly with employees as it strives to reclaim its role as the primary source of communication. Initiatives such as cultural surveys are being rolled out in an attempt to promote better alignment. The Group's employees hold a 3.8 per cent. equity interest in EPL and WPL, the Group's principal operating companies in South Africa, through an employee profit share scheme, which the Directors believe aligns more closely the interests of employees and Shareholders.

The Group has initiated a relationship building programme with its unions. The Group and its majority union,

AMCU, have together established a relationship charter which outlines the nature of the relationship that the

parties aim to build. The Directors believe that this has significantly improved the sharing of information, aided

understanding and improved the interaction between the Group and its unions. The Group also participates in

industry-wide initiatives and is part of the mining leadership declaration agreement which aims to minimise

section 54 production disruptions.

-- Work with government and communities: The rebuilding and protection of the Group's relationships with key stakeholders is important and has received significant attention from the management team. Whilst this is an on-going process, there have been some worthwhile achievements-for example, the Group 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.

   5.4          Fulfilling the Group's social licence to operate 

Alongside the Group's legal and regulatory obligations, the Directors believe that it is necessary to earn its social licence to operate from the people and communities which host its operations. The Group has therefore over the years, engaged with and invested in its local communities. The Group's New Order Mining Rights include detailed obligations set out in social and labour plans agreed with the DMR. 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 on behalf of the Bapo Community. The royalty stream was subsequently converted into equity ownership as part of the three BEE transactions which were announced on 26 November 2014 and 4 December 2014. In connection with the Bapo Transactions, the Bapo Community was also granted the opportunity to participate in ZAR200 million of the Group's procurement and business value-chain activities. The Bapo Community therefore forms an important 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 that 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 per cent. of the students it supports and sponsors have been drawn from the local community.

   6.            Market dynamics 
   6.1          Strong long-term PGM fundamentals 

PGMs have a wide range of industrial and technological applications as a result of their physical and chemical properties and the Directors believe that the well-established performance of PGMs across numerous technical applications poses a significant technological challenge to substitution.

The largest application for PGMs is in the manufacture of catalytic converters in which one or more of platinum, palladium and rhodium are coated onto a substrate housed in the exhaust system of internal combustion engines and act as catalysts to reduce emitted levels of carbon monoxide, hydrocarbons and oxides of nitrogen to within legislated levels. Over 85 per cent. of all new on-road vehicles sold globally each year are fitted with catalysts containing PGMs, according to the SFA Report. Gross autocatalyst demand for platinum is expected to increase over the long term, driven primarily by the roll-out and further tightening of emissions standards in emerging markets and increases in the sales of diesel cars in India and in light commercial vehicles and heavy-duty diesel vehicles outside Western Europe, the United States, India and Japan, according to the SFA Report. Assuming fallout from the recent Volkswagen diesel scandal is contained and steady economic growth continues, Western Europe, with its high diesel share and stringent emissions standards, is expected to continue to be the main contributor to autocatalyst demand, according to the SFA Report.

The jewellery industry comprises another significant source of demand for PGMs, principally platinum. China is the world's largest platinum jewellery market, as well as home to much of the global jewellery manufacturing capacity and, therefore, demand for PGMs is affected by economic, social and political conditions and other factors affecting levels of consumer spending in China. The SFA Report forecasts that India should become the world's second largest platinum jewellery market by later this decade. Overall, global platinum jewellery consumption is expected to remain relatively steady over the coming years, cushioned by the resilience of the long-established markets of Japan, the United States and Europe, according to the SFA Report.

Significant demand for PGMs also comes from a variety of industrial applications, including their use in the magnetic layers of hard-disk drives, in the manufacture of speciality glass such as flat screen televisions and in catalytic processes in the petroleum, agrochemical and chemical industries. Demand for industrial uses of PGMs has been, and is likely to continue to be, reliant to a large degree on general macroeconomic conditions. Industrial demand is expected to increase over the long term as a result of demographic trends along with rising per capita wealth and urbanisation in emerging markets, according to the SFA Report.

Overall, the SFA Report forecasts a long-term PGM supply deficit driven primarily by expected PGM mineral reserve depletion affecting primary supply from South Africa and expected demand growth due primarily to the roll-out and further tightening of emissions standards in emerging markets and increases in the sales of diesel cars in India and in light commercial vehicles and heavy-duty diesel vehicles outside Western Europe, the United States, India and Japan.

In light of the above, the Directors continue to believe in the medium to long-term fundamentals for platinum and other PGMs and expect prices to improve in the medium to long term. The Directors believe that the Business Plan will enable the Group to become a more efficient business that can better sustain continued weakness in PGM prices and will better position the Group to benefit from any recovery in PGM prices in the medium to long term.

   6.2          The Group's operational exposure to PGM pricing and foreign exchange movements 

The Group's policy is not to hedge commodity price exposure on PGMs, excluding gold, and therefore any change in prices has a direct effect on the Group's results of operations. The following table sets forth the effects on the Group's operating profit of a 10 per cent. movement in the average metal prices achieved by the Group in the year ended 30 September 2015 for platinum (US$1,095 per ounce), palladium (US$718 per ounce) and rhodium (US$998 per ounce).

 
                               Year ended 30 September 2015 
                            --------------------------------- 
                             Platinum    Palladium   Rhodium 
                            ----------  ----------  --------- 
 Impact on operating 
  profit of 10 
  per cent. movement 
  in average price           +/- US$82   +/- US$25   +/- US$9 
  achieved................    million     million     million 
 

These sensitivities are estimated calculations based on costs incurred and volumes sold in the period and assume all other variables, including foreign exchange rates, remain constant.

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In addition, the Group's trading results are sensitive to fluctuations in foreign exchange rates, specifically between the US dollar and the Rand. The majority of the Group's revenues are derived from sales denominated in US dollars, whilst the majority of the Group's operating costs, capital expenditure and taxes are paid in Rand. Therefore, a strengthening of the Rand against the US dollar has an adverse effect on profits and margins. A 10 per cent. movement in the Rand to US dollar average exchange rate in the year ended 30 September 2015, which was ZAR12.01 to US$1.00, would have impacted the Group's underlying operating profit by (+/-) US$111 million for the year ended 30 September 2015. These sensitivities are estimated calculations based on prices achieved, costs incurred and volumes sold in the period and assume all other variables remain constant.

   7.            Amended Facilities Agreements 

Companies in the Group entered into the Amended Facilities Agreements with the Group's existing lenders on 9 November 2015. The Amended Facilities Agreements provide for (i) an extension of maturity of the Existing US Dollar Facility from May 2016 to May 2020 (assuming Lonmin exercises its option to extend the term up until this date) and a reduction in the amount of the Amended US Dollar Facilities to US$225 million (as compared to US$360 million for the Existing US Dollar Facility); and (ii) an extension of maturity of the Existing Rand Facilities from June 2016 to May 2020 (assuming Lonmin exercises its option to extend the term up until this date). The Amended Facilities Agreements remain conditional on the Underwriting Agreement becoming wholly unconditional and satisfaction of customary conditions precedent (including payment of fees and expenses and delivery of certificates and other documents).

Under the terms of the Existing Facilities, the Group would have been required to certify to the Group's existing lenders whether it was in compliance with the financial covenants under the Existing Facilities once the Group's financial statements for the year ended 30 September 2015 were available. The Group and its existing lenders were concerned that the Group would be in breach of certain of these financial covenants, the effect of which would be an event of default under the Existing Facilities. Accordingly, in the course of negotiations regarding the Amended Facilities Agreements, the Group's existing lenders agreed on 26 October 2015 to suspend testing of the tangible net worth covenants under the Existing Facilities, subject to certain conditions, until the Amended Facilities Agreements become effective. On 26 October 2015, the Group also agreed to reduce the total size of the Existing US Dollar Facility to US$360 million (from US$400 million) and not to transfer cash held by the Company to its operating subsidiaries (it being acknowledged by the lenders that the Company could approach them for consent to transfer cash to allow the funding of its operating subsidiaries if necessary). The restriction on the transfer of cash from the Company to its operating subsidiaries will terminate on 20 November 2015 (which is expected to be the effective date of the Amended Facilities Agreements, provided that all of the Resolutions are passed by Shareholders and the Rights Issue proceeds).

   8.    Use of proceeds 

The Rights Issue is expected to raise approximately US$407 million (in gross proceeds). The Rights Issue and Amended Facilities, taken together, are expected to strengthen the Group's financial position and to result in immediate and long-term benefits to the Group, and in particular are expected to:

-- enable the Group to execute and deliver on the Business Plan, thereby improving the Group's ability to withstand

potential adverse movements in external factors, specifically a continuation of the weak PGM pricing

environment, and repositioning the Group on the South African PGM industry cost curve; and

-- strengthen the balance sheet, allow the Group to meet its obligations and commitments as they fall due and

reduce the Group's borrowings.

The net proceeds of the Rights Issue will be used:

   --    to fund the implementation of the Business Plan, including inter alia: 

o planned capital expenditure of approximately US$132 million for the year ending 30 September 2016; and

o one-off retrenchment and associated restructuring costs of approximately US$59 million related to the

expected reduction in the size of the Group's workforce by approximately 6,000 employees, including

contractors; and

-- for general corporate purposes, including as additional working capital for the Group's business.

In addition, a portion of the gross proceeds of the Rights Issue will be used for fees and expenses relating to the Rights Issue (approximately US$26 million) and the Amended Facilities Agreements (approximately US$12 million).

   9.    Details of the Capital Reorganisation 

At the General Meeting, Shareholders will be asked to approve a two-stage Capital Reorganisation comprising the Sub-division and the subsequent Consolidation.

9.1 Overview of, and reasons for, the Capital Reorganisation

   9.1.1      Sub-division 

Given that the Shares have traded at a discount to their nominal value of US$1.00 for a significant period of time, the Issue Price of 1.00 pence is at a discount to the current nominal value. Section 580 of the Companies Act prohibits the allotment of shares at a discount to their nominal value. In order to appropriately reduce the nominal value of the Shares in order to undertake the Rights Issue and the Bapo BEE Placing, Shareholders will be asked at the General Meeting to approve the Sub-division of each of the Company's Existing Shares into:

-- one Intermediate Ordinary Share of US$0.000001 nominal value (being a price that is considered appropriate to

facilitate the pricing of the Rights Issue and the Bapo BEE Placing as described below

   --     one 2015 Deferred Share of US$0.999999 nominal value. 

The 2015 Deferred Shares are being issued solely to facilitate the reduction in the nominal value of the Shares to US$0.000001.

If approved, it is expected that the Sub-division will be implemented after the General Meeting and prior to Admission and South African Admission.

The Existing Shares, the Intermediate Ordinary Shares and the New Shares to be issued pursuant to the Rights Issue will have the same rights and be subject to the same restrictions and ranking on the same basis, save that the Existing Shares have a nominal value of US$1.00 whereas the Intermediate Ordinary Shares and the New Shares will have the lower nominal value of US$0.000001.

It is intended that, subject to the Resolutions being passed at the General Meeting, the Intermediate Ordinary Shares will be admitted to the Official List of the FCA and to trading on the main market of the London Stock Exchange and to listing and trading on the Main Board of the JSE.

The 2015 Deferred Shares which will be created on the Sub-division becoming effective will have no voting or dividend rights and will not carry any entitlement to receive notice of any general meeting of the Company or to attend, speak or vote at any general meeting of the Company. The 2015 Deferred Shares will only be entitled to a payment on a return of capital or winding up of the Company after payment of the capital paid up on any or all Shares or Sterling Deferred Shares and the further distribution of US$500 billion. The 2015 Deferred Shares will not be listed on the Official List or admitted to trading on the London Stock Exchange, the JSE or any other investment exchange. As such, the 2015 Deferred Shares will be effectively valueless as they will carry very limited rights.

Under the terms of the 2015 Deferred Shares, the Company will have the ability to:

   --    buy back the 2015 Deferred Shares for aggregate consideration of US$0.01; and/ or 

-- transfer all of the 2015 Deferred Shares to the secretary of the Company for nil consideration,

in each case without obtaining the sanction of the holder or holders of the 2015 Deferred Shares.

The Company will make a decision as soon as reasonably practicable following completion of the Rights Issue as to whether the 2015 Deferred Shares will be bought back or transferred to the Secretary of the Company. The Company will notify the holders of the 2015 Deferred Shares of such decision.

The Rights Issue is conditional upon, amongst other things, completion of the Sub-division.

   9.1.2      Consolidation 

A very large number of New Shares will need to be issued under the Rights Issue. As a result, it is expected that the number of Shares in issue following the implementation of the Rights Issue will mean that a small movement in the Company's share price could result in large percentage movements and considerable volatility.

In order to address this, Shareholders will be asked at the General Meeting to approve the Consolidation of the Shares in issue at the Consolidation Record Date. The Consolidation will reduce the number of Shares in issue on the Consolidation Record Date on the basis of a ratio of existing Shares to post-Consolidation Shares (the "Consolidation Ratio"), determined with a view to ensuring that the Consolidation results in a share price more appropriate for the Company and more attractive to a greater number of investors. The Directors have determined that the Consolidation Ratio will be 100:1.

If approved, it is expected that the Consolidation will be implemented after the allotment of New Shares pursuant to the Rights Issue.

Do not exercise your Rights and purchase your entitlement of New Shares if you hold fewer than 3 Existing Shares. Notwithstanding the Sub-division, holdings of less than 3 Existing Shares will fall below the ratio needed to receive one Consolidated Ordinary Share (the Consolidation Ratio) and will therefore be sold, with the proceeds of such sale being paid to the relevant Shareholder.

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9.2 The effect of the Reorganisation on Lonmin's capital structure, the listing of the Shares and the Group's net assets

Subject to the effects of the treatment of the fractions following the Consolidation and the issue of New Shares pursuant to the Rights Issue, the proportion of Lonmin's issued share capital held by each Shareholder immediately following the Sub-division and the subsequent Consolidation will remain unchanged. The Sub-division will change only the nominal value of Shares. The Consolidation will change only the nominal value of Shares and the total number of Shares in issue (subject to the treatment of fractions arising from the Consolidation, as discussed below). In addition, each Intermediate Ordinary Share and each Consolidated Ordinary Share will carry the same rights as set out in the Articles of Association that apply to the Existing Shares (including in relation to voting, dividends and rights on a return of capital), save as to the nominal value.

The number of ordinary shares of Lonmin listed on the Official List and admitted to trading on the London Stock Exchange's main market for listed securities and on the Main Board of the JSE will change as a result of the Consolidation. However, the Capital Reorganisation will not affect the Group's or Lonmin's net assets. A request will be made to the FCA, the London Stock Exchange and the JSE Ltd to reflect, on the Official List and the JSE's Main Board, respectively, the Sub-division and, subsequently, the Consolidation.

The last day of trading on the London Stock Exchange and on the JSE in the Existing Shares is expected to be 19 November 2015. The Sub-division is expected to become effective on 20 November 2015 and the Consolidation is expected to become effective on 18 December 2015.

The Intermediate Ordinary Shares will continue to trade on the London Stock Exchange and the JSE with the existing ISIN and SEDOL. Following the Consolidation, the Consolidated Ordinary Shares will be admitted to trading on the London Stock Exchange and the JSE on 18 December 2015 with ISIN: GB00BYSRJ698 and SEDOL: BYSRJ69.

9.3 Treatment of fractional entitlements under the Consolidation

Where the Consolidation Ratio results in any Shareholder being entitled to a fraction of a Consolidated Ordinary Share, that Shareholder's shareholding would still be consolidated, and this will result in them no longer being a member of Lonmin in relation to that holding. Arrangements will be put in place for any such fractional entitlements arising from the Consolidation to be aggregated and sold in the market on behalf of the relevant Shareholders. It is expected that proceeds of fractional entitlements will be distributed to Shareholders by 31 December 2015. As a result of the Consolidation, Shareholders with a small shareholding in Lonmin may no longer hold Shares in Lonmin as a result of the Rights Issue.

For purely illustrative purposes, an example of the effect of the Consolidation is set out below:

 
 Intermediate       Consolidated       Fractional Entitlement(1) 
  Ordinary Shares    Ordinary Shares 
 1                  0                  0.01 
 99                 0                  0.99 
 150                1                  0.50 
 1,000              10                 0.00 
 46,521             465                0.21 
 100,000            1,000              0.00 
 

_______________

(1) The fractional entitlement represents the fraction of a Share which will be sold on behalf of a relevant Shareholder at the time of the Consolidation.

Although Shareholders would hold fewer ordinary shares than before, their shareholding as a proportion of the total number of ordinary shares in issue and therefore their ownership in Lonmin, will be the same before and after the Consolidation, subject to adjustments to reflect fractional entitlements arising from the Consolidation and the Rights Issue.

9.4 Share certificates

If the Resolutions are passed, the Company does not propose to issue new share certificates to existing Shareholders following the Sub-division. The existing share certificates which have been issued to Shareholders in respect of their holdings of Existing Shares will remain valid in respect of the Intermediate Ordinary Shares following completion of the Sub-division. Existing share certificates will cease to be valid with effect from the close of business on 17 December 2015 and new share certificates representing Consolidated Ordinary Shares are expected to be despatched to Shareholders on the UK Register who hold shares in certificated form by 31 December 2015 and to Shareholders on the SA Register holding in uncertificated form by 29 December 2015. On receipt of such new share certificates, all ordinary share certificates previously issued can be destroyed. If a Shareholder does not receive a new share certificate and believes they are entitled to one, they can contact Lonmin's UK Registrar or SA Registrar. Share certificates representing 2015 Deferred Shares will not be issued.

Although Shareholders holding Shares in certificated form will not receive share certificates in respect of their Intermediate Ordinary Shares, they will receive a Provisional Allotment Letter or a Letter of Allocation as applicable, and will, subject to the terms and conditions set out in more detail in Section 2 of Part II "Information in Relation to the Rights Issue" of this Prospectus, be entitled to participate in the Rights Issue.

Shareholders who hold their entitlement to Existing Shares in uncertificated form through CREST are expected to have their CREST accounts adjusted to reflect the Sub-division and their entitlement to Consolidated Ordinary Shares on 18 December 2015, but will not have their CREST accounts adjusted to reflect their entitlement to 2015 Deferred Shares.

Shareholders on the SA Register whose Shares are held in uncertificated form are expected to have their CSDP/broker accounts adjusted to reflect their entitlement to Consolidated Ordinary Shares on 28 December 2015, but will not have their CSDP/broker accounts adjusted to reflect their entitlement to 2015 Deferred Shares.

   9.5          American Depositary Receipts 

Further information on any implications of the Capital Reorganisation for ADR Holders will be provided to them by the Depositary in separate communications.

10. Current Trading and Prospects

The Group's published platinum sales target for the year ended 30 September 2015 was approximately 730,000 ounces. Platinum sales for the year ended 30 September 2015, at 751,560 ounces, exceeded the Group's target by approximately 3.0 per cent. This was an increase of 309,876 from the 441,684 ounces sold for the year ended 30 September 2014. The lower sales volume in the prior year was largely attributable to the disruptions in production caused by the 2014 Strike Action. When compared to the year ended 30 September 2013, platinum sales for the year ended 30 September 2015 increased by 8.0 per cent. The Directors expect 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. The Directors expect 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.

The Group effectively contained its capital expenditure in a liquidity constrained environment and successfully reduced its capital expenditure for the year ended 30 September 2015 to US$136 million (as compared to its initial guidance of US$250 million). Pursuant to the Business Plan, the Group expects to limit its total capital expenditure to approximately US$132 million and US$110 million for the years ending 30 September 2016 and 2017, respectively. Stay-in-business, ore reserve development and expansion capital expenditure are expected to account for approximately 45-55 per cent., 25-35 per cent. and 15-20 per cent., respectively, of total capital expenditure for each of the years ending 30 September 2016 and 2017. Based on current information, the Group anticipates that its capital expenditure for the year ending 30 September 2018 will increase to approximately US$188 million, as the Group's investments in stay-in-business and ore reserve development capital expenditure are expected to increase.

The Group achieved underlying unit cost per PGM ounce at ZAR10,339 per PGM ounce for the year ended 30 September 2015, well within the original market guidance of ZAR10,800 per PGM ounce, as a result of the robust cost containment measures undertaken by the management team. Based on current information, the SFA Report forecasts 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, having shifted from the third quartile since 2013. Pursuant to the Business Plan, the Group aims to keep its unit costs in nominal terms broadly flat for the years ending 30 September 2016, 2017 and 2018.

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PGM prices were under downward pressure in the year ended 30 September 2015, with the Group's average PGM basket price, excluding base metal revenue, for the year ended 30 September 2015 declining by 16.2 per cent. to US$849 per ounce from US$1,013 per ounce for the year ended 30 September 2014 and the average price of platinum for the year ended 30 September 2015 declining by 22.0 per cent. to US$1,095 per ounce from US$1,403 per ounce for the year ended 30 September 2014. However, the price weakness in US dollar terms was largely offset by the weakening of the Rand against the US dollar, resulting in the Group's overall Rand PGM basket price, excluding base metal revenue, declining by 4.2 per cent. from the prior year. The SFA Report forecasts a long-term PGM supply deficit driven primarily by expected PGM mineral reserve depletion affecting primary supply from South Africa and expected demand growth due primarily to the roll-out and further tightening of emissions standards in emerging markets and increases in diesel cars in India and in light commercial vehicles and heavy-duty diesel vehicles outside Western Europe, the United States, India and Japan. In light of the above, the Directors continue to believe in the medium to long-term fundamentals for platinum and other PGMs and expect prices to improve in the medium to long term.

As at 31 October 2015, the Group's net debt was US$284 million (unaudited), an increase of US$99 million compared to the Group's net debt of US$185 million as at 30 September 2015. The increase in the Group's net debt since 30 September 2015 reflected a reduction in cash and cash equivalents due primarily to a decrease in revenue during October 2015 largely as a result of:

-- a seasonal decrease in production and sales volumes caused by production stoppages during the annual stock take conducted in October to verify inventory quantities at year end; and

   --     the subdued PGM pricing environment which continued to prevail in October 2015. 

11. Bapo BEE Placing

Under the Mining Charter, Group companies in South Africa are required to ensure economic participation in their assets by groups representing HDSAs through the BEE process.

Retention of the prospecting and mining rights held by certain subsidiary undertakings of Lonmin in South Africa is conditional on the achievement of various targets in connection with BEE. Relevant Group companies were required to be at least 26 per cent. "empowered" (meaning ownership by HDSAs) by 31 December 2014. On 14 August 2014, Lonmin published a circular seeking shareholder approval for a series of transactions for BEE purposes, increasing the shareholding of the Group's employees, local communities and the Bapo Community in WPL and EPL and issuing shares in Lonmin to the Bapo Community. Completion of these transactions was announced on 26 November 2014 and 4 December 2014, on the basis of which the Directors believe that the HDSA target ownership of at least 26 per cent. required under the Mining Charter has been achieved.

The Bapo Community has indicated that it does not have the financial resources to participate in the Rights Issue. The issue of New Shares pursuant to the Rights Issue will dilute the ownership of Existing Shares for all existing Shareholders who do not take up their Rights. Maintaining HDSA equity ownership in Lonmin is one of the factors on which Lonmin and its subsidiaries are assessed by the South African Department of Mineral Resources when considering the Group's ongoing compliance with the Mining Charter, as measured by the Mining Charter Scorecard. Given the Bapo Community will not be able to take up its Rights, the dilutive effect of the Rights Issue on the Bapo Community's proportional interest in Lonmin will reduce the relevant Group companies' empowerment status below the requisite HDSA ownership level of 26 per cent., which could result in Lonmin not being in compliance with the requirements of the Mining Charter and other BEE regulations unless mitigating measures were taken to preserve Lonmin's empowerment status.

In view of the above, the Directors explored all viable options available to preserve Lonmin's empowerment status in Lonmin's current circumstances, including issuing further equity to HDSAs (including the Bapo Community) in relevant Group companies other than Lonmin. In Lonmin's current circumstances, the Directors have concluded that it is in the best interests of Shareholders to issue sufficient new Shares to the Bapo Community in order to maintain its proportional interest in Lonmin on a post-Rights Issue basis at a price per Share that the Bapo Community is able to pay. The Bapo Community has confirmed to the Company that it is unable to pay more than the par value of US$0.000001 per share, which is less than that payable under the Rights Issue and, as at the Latest Practicable Date, represented a discount in excess of 99.99 per cent. to the market price of the Shares. The Directors consider that, given a failure to maintain compliance with the requirements of the Mining Charter and other BEE regulations could result in a potential loss of the Group's prospecting and mining rights, the issue of sufficient Shares to the Bapo Community at this issue price in order to maintain Lonmin's empowerment status is in the best interests of all Shareholders.

It is proposed that the Bapo BEE Shares be issued in a separate placing to the Rights Issue and the Bapo Community has agreed that it will not take up or trade its Rights. The effect of the Bapo BEE Placing will be to maintain the Bapo Community's current minority current holding of less than three per cent. of the Shares following issue of the New Shares pursuant to the Rights Issue. The Bapo BEE Shares will be issued in addition to the offer of New Shares under the Rights Issue and will therefore have a minor dilutive effect on the other Shareholders in Lonmin. The Bapo Community has agreed to accept a ten-year lock-in period with regard to the Bapo BEE Shares acquired by it under the Bapo BEE Placing.

Applications will be made to the FCA and the London Stock Exchange for admission of the Bapo BEE Shares to the premium segment of the Official List and trading on the main market of the London Stock Exchange and to the JSE Ltd for admission to listing and trading on the Main Board of the JSE. It is currently expected that the Bapo BEE Placing Admission will become effective following completion of the Rights Issue.

The Bapo BEE Placing is conditional on Shareholder approval and the approval of all of the other Resolutions. The Board is seeking Shareholders' approval for the Bapo BEE Placing pursuant to Resolutions 3 and 5.

SUMMARY OF THE PRINCIPAL TERMS OF THE RIGHTS ISSUE

The Rights Issue is intended to raise net proceeds of approximately US$369 million. The Rights Issue is being underwritten (save in respect of those New Shares which the Directors have irrevocably undertaken to take up) by HSBC, J.P. Morgan Cazenove and Standard Bank. In the UK, Greenhill is acting as sponsor in relation to the Rights Issue and, in South Africa, J.P. Morgan Equities South Africa (Pty) Ltd is acting as transaction sponsor in relation to the Rights Issue.

Subject to the fulfilment of, amongst others, the conditions described below, the New Shares will be offered for subscription to Qualifying Shareholders (other than Qualifying South African Shareholders) by way of Rights Issue at 1.00 pence per New Share, or, in the case of Qualifying South African Shareholders, ZAR0.214 per New Share, payable in full on acceptance. The Rights Issue will be on the basis of:

46 New Shares for every 1 Existing Share

held by and registered in the names of Qualifying Shareholders (other than, subject to certain exceptions, Qualifying Shareholders resident or with registered addresses in the United States or any of the Excluded Territories) on the relevant Record Date and so in proportion to any other number of Existing Shares each Qualifying Shareholder then holds and otherwise on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders or Qualifying South African Shareholders holding Shares in certificated form (other than, subject to certain exceptions, such Shareholders resident or with registered addresses in the United States or any of the Excluded Territories), the Provisional Allotment Letters or Forms of Instruction respectively.

Entitlements to New Shares will be rounded down to the nearest whole number and fractional entitlements will not be allotted to Shareholders but will be aggregated and issued into the market for the benefit of the Company. Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

Applications will be made for the New Shares to be admitted to listing on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and dealings will commence (nil paid) in the New Shares at 8:00 a.m. (London time) on 20 November 2015 and in the New Shares (fully paid) will commence at 8:00 a.m. (London time) on 11 December 2015.

Application will be made to the JSE Ltd for the Letters of Allocation and the New Shares to be admitted to listing and trading on the Main Board of the JSE. It is expected that South African Admission will become effective and that dealings on the JSE in the Letters of Allocation will commence at 9:00 a.m. (Johannesburg time) on 20 November 2015 and in the New Shares (fully paid) will commence at 9:00 a.m. (Johannesburg time) on 4 December 2015.

Any changes to the timetable of the Rights Issue will be announced by the Company in accordance with applicable rules in the United Kingdom and South Africa.

The Rights Issue is conditional upon:

   (a)     the passing of all of the Resolutions by the Shareholders at the General Meeting; 
   (b)     completion of the Sub-division; 

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(c) Admission being effective no later than 8:00 a.m. (London time) on 20 November 2015 or such later time and/or

date as the Company, the Sponsor and the Joint Bookrunners may agree but provided that the Acceptance Date is

no later than 10 January 2016;

(d) approval by the JSE Ltd of the listing and trading of the Letters of Allocation on the JSE's Main Board by not later

than Admission; and

(e) the Underwriting Agreement otherwise becoming unconditional in all respects and not having been terminated in

accordance with its terms prior to Admission and South African Admission.

The New Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Shares, including the right to receive all future dividends and other distributions declared, made or paid after the date of their issue.

The Rights Issue will result in the issue of 26,997,717,400 New Shares, which will form approximately 97.87 per cent. of the Shares in issue immediately following the Rights Issue.

DIVIDEND POLICY

Whilst the Company's payment of dividends has been suspended, the Directors are conscious of the priority to return cash to Shareholders at the earliest convenience. The Directors continue to have confidence in the demand for PGMs in the medium to long term. The Directors believe that the successful implementation of the Business Plan, together with an increase in PGM prices in the medium to long term, would lead to stronger earnings and cash flows, which may permit the resumption of dividend payments in the future.

DIRECTORS' INTENTION

Each Director who holds Shares has undertaken to take up in full his or her Rights to subscribe for New Shares under the Rights Issue in respect of his or her beneficial holding, which together amount to 198,586 Shares, representing approximately 0.03 per cent. of the issued ordinary share capital of the Company as at the date of this document.

IMPORTANCE OF THE AMENDED FACILITIES AGREEMENT AND RIGHTS ISSUE

The 2014 Strike Action reduced the Group's sales of metal below levels previously expected, such that significant fixed costs could not be recovered as production effectively stopped for approximately five months. The impact of the 2014 Strike Action was exacerbated by weakness in the PGM pricing environment, which further deteriorated during the year ended 30 September 2015. As a result, the Group has experienced operating losses in each of the last two financial years, which has resulted in a deterioration in the Group's net debt position. The Group had operating losses of US$2,018 million (including a special impairment charge of US$1,811 million related to the Group's Marikana, Akanani and Limpopo assets largely driven by a decline in long-term PGM price assumptions and changes in assumptions regarding production levels and other factors under the Business Plan) and US$255 million for the years ended 30 September 2015 and 2014, respectively, and had net debt (defined as current and non-current interest bearing loans and borrowings less cash and cash equivalents) of US$185 million and US$29 million as at 30 September 2015 and 2014, respectively. Moreover, as at 30 September 2015, the Group had total contractual obligations and commercial commitments due within one year of US$567 million, which comprised primarily US$360 million due in May 2016 under the Group's Existing US Dollar Facility and US$143 million due in June 2016 under the Group's Existing Rand Facilities. In addition, in the course of negotiations regarding the Amended Facilities Agreements and in consideration for the Group's existing lenders agreeing to suspend the testing of the tangible net worth covenants under the Existing US Dollar Facility, on 26 October 2015 the Group agreed not to transfer cash held by the Company to its operating subsidiaries until 20 November 2015 (which is expected to be the effective date of the Amended Facilities Agreements, provided that all of the Resolutions are passed by Shareholders and the Rights Issue proceeds).

The Directors believe that the Group's operating cash position is such that, unless the Resolutions are passed, the Rights Issue is completed and the Amended Facilities Agreements come into effect and thus the restriction on the transfer of cash from the Company to its operating subsidiaries is removed, the Group is unlikely to have sufficient funds to meet its obligations and commitments as they fall due. In particular, if the Amended Facilities Agreements do not come into effect and thus the restriction on the transfer of cash from the Company to its operating subsidiaries is not removed, the Group may face a cash shortfall at the operating subsidiary level by December 2015 and as a result the Group may be unable to continue as a going concern at that time. In addition, if the Rights Issue is not completed and the Amended Facilities Agreements do not come into effect, the Group may be unable to repay or refinance its Existing US Dollar Facility due in May 2016 or its Existing Rand Facilities due in June 2016 and as a result the Group may be unable to continue as a going concern at that time. Moreover, if the Amended US Dollar Facilities do not come into effect by 20 November 2015, the suspension of the testing of the tangible net worth covenants will no longer be applicable and, given the substantial special impairment charges recognised by the Group as at 30 September 2015, the Group would then be in breach of the tangible net worth covenants, which would constitute an event of default under the Existing Facilities. In those circumstances, the Group's existing lenders could accelerate the Group's indebtedness under the Existing Facilities and, as a result, the Group may be unable to continue as a going concern from 20 November 2015.

CONCLUSION

In order to address the current risks, to improve the Group's ability to operate in a low PGM pricing environment and position the Group to benefit from any recovery in PGM prices in the medium to long term:

-- the Group has adopted the Business Plan, which the Directors believe provides an appropriate basis for the Group to continue to focus on its objective of reducing costs and improving cash flows;

-- companies in the Group have entered into the Amended Facilities Agreements with the Group's existing lenders, so as to extend the maturity of the Existing US Dollar Facility and Existing Rand Facilities to May 2020 (in each case, assuming Lonmin exercises its option to extend the term up until this date); and

   --     Lonmin is undertaking the Rights Issue. 

The Directors believe that the receipt of proceeds from the Rights Issue, when taken together with the implementation of the Business Plan and the Amended Facilities Agreements, will strengthen the Group's financial position.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS IN THE UNITED KINGDOM

Each of the times and dates in the table below is indicative only and may be subject to change.(3,4,5)

 
 Publication of circular                                                                               2 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Publication of prospectus                                                                             9 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Latest time and date for receipt of Forms of Proxy                                         9:30am on 17 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Restrictions on transfers between UK Register and SA Register begin             Close of business on 17 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record date for entitlement under the Rights Issue for Qualifying CREST 
 Shareholders and Qualifying 
 Non-CREST Shareholders                                                          Close of business on 17 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 General Meeting                                                                         9:30 a.m. on 19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record date for the Sub-division                                                        6:00 p.m. on 19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Despatch of Provisional Allotment Letters (to Qualifying Non-CREST 
 Shareholders only)(1)                                                                                19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Start of subscription period                                                                         20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Effective time of the Sub-division.                                                     8:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Existing Shares marked "ex" by the London Stock Exchange                                8:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Admission/Dealings in New Shares, nil paid, commence on the London Stock 
 Exchange                                                                                8:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 

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 Nil Paid Rights credited to stock accounts in CREST (Qualifying CREST 
 Shareholders only)(1)                                                                   8:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Nil Paid Rights and Fully Paid Rights enabled in CREST                                  8:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Recommended latest time and date for requesting withdrawal of Nil Paid Rights 
 and Fully Paid 
 Rights from CREST (i.e. if your Nil Paid Rights and Fully Paid Rights are in 
 CREST and you 
 wish to convert them to certificated form)                                               4:30 p.m. on 4 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Latest time for depositing renounced Provisional Allotment Letters, nil or 
 fully paid, into 
 CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a 
 CREST stock account 
 (i.e. if your Nil Paid Rights and Fully Paid Rights are represented by a 
 Provisional Allotment 
 Letter and you wish to convert them to uncertificated form)                              3:00 p.m. on 7 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Latest time and date for splitting Provisional Allotment Letters, nil or 
 fully paid                                                                               3:00 p.m. on 8 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Latest time and date for acceptance, payment in full and registration or 
 renunciation of Provisional 
 Allotment Letters                                                                      11:00 a.m. on 10 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Results of the Rights Issue announced(2)                                                7:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Dealings in New Shares, fully paid, commence on the London Stock Exchange               8:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 New Shares credited to CREST stock accounts                                             8:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record date for the Consolidation                                                       6:00 p.m. on 17 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Effective time of the Consolidation                                                     8:00 a.m. on 18 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Consolidated Ordinary Shares credited to CREST accounts                                 8:00 a.m. on 18 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Restriction on transfers between UK Register and SA Register ends               Close of business on 28 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Expected despatch of definitive share certificates for the Consolidated 
 Ordinary Shares in 
 certificated form                                                                   By no later than 31 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 

____________________

(1) The Rights Issue is subject to certain restrictions relating to Shareholders with registered addresses in the United States or the Excluded Territories, details of which are set out in Section 2 of Part II "Information in relation to the Rights Issue" of the prospectus.

(2) The results of the Rights Issue will be announced by way of a simultaneous RIS and SENS announcement at 7:00 a.m. (London time) on 11 December 2015.

(3) The times and dates set out in the expected timetable of principal events above and mentioned throughout the Prospectus may be adjusted by Lonmin in consultation with the Underwriters, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders by way of a simultaneous RIS and SENS announcement.

   (4)          References to times in this timetable are to London time. 

(5) If you have any queries on the procedure for acceptance and payment, you should contact the UK Shareholder Helpline on 0371 384 2232 (from inside the United Kingdom) or [phone] (from outside the United Kingdom). This Shareholder Helpline is available from 8:30 a.m. to 5:30 p.m. (London time) Monday to Friday (except bank holidays). Calls to the UK Shareholder Helpline from outside the United Kingdom will be charged at the applicable rates. Please note that for legal reasons, the UK Shareholder Helpline is only able to provide information contained in the Prospectus and information relating to Lonmin's register of members and is unable to give advice on the merits of the Rights Issue, or provide legal, financial, tax or investment advice.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS IN SOUTH AFRICA

Each of the times and dates in the table below is indicative only and may be subject to change.(4,5,6,7,8)

 
 Publication of circular                                                                               2 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Publication of prospectus                                                                             9 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Latest time and date of receipt of Forms of Proxy                                      11:30 a.m. on 17 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Restrictions on transfers between UK Register and SA Register begin             Close of business on 17 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 General Meeting                                                                        11:30 a.m. on 19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Last day to trade for the Sub-division                                                  5:00 p.m. on 19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Last day to trade Existing Shares on the JSE to qualify to participate in the 
 Rights Issue 
 (cum Rights)                                                                                         19 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Effective time of the Sub-division                                                      9:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Existing Shares marked "ex" by the JSE                                                  9:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Listing of and trading in Letters of Allocation on the JSE begins                       9:00 a.m. on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Despatch of Forms of Instruction to Qualifying South African Shareholders who 
 hold their Shares 
 in certificated form(1)                                                         Close of business on 20 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record date for entitlements under the Rights Issue for Qualifying South 
 African Shareholders                                                                                 26 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record date for the Sub-division                                                        5:00 p.m. on 26 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 In respect of Qualifying South African Shareholders who hold their Shares in 
 certificated 
 form, end of period during which the SA Registrar will not dematerialise 
 Existing Shares                                                                 Close of business on 26 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Qualifying South African Shareholders who hold their Shares in uncertificated 
 form will have 
 their accounts at their CSDP or broker automatically credited with their 
 Letters of Allocation 

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 (Rights Issue opens)(1)                                                                 9:00 a.m. on 27 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Qualifying South African Shareholders who hold their Shares in certificated 
 form will have 
 their Letters of Allocation credited to an account held with the SA Registrar 
 (Rights Issue 
 opens)(1)                                                                               9:00 a.m. on 27 November 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 In respect of Qualifying South African Shareholders who hold their Shares in 
 certificated 
 form wishing to sell all or part of their Letters of Allocation, latest time 
 and date for 
 submission of Form of Instruction to SA Registrar                                        9:00 a.m. on 3 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Last day to trade Letters of Allocation on the JSE to settle trades by the 
 closing date of 
 the Rights Issue in order to participate in the Rights Issue                                          3 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Listing and trading of New Shares on the JSE and dealings in New Shares on a 
 deferred settlement 
 basis commence                                                                           9:00 a.m. on 4 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 In respect of Qualifying South African Shareholders who hold their Shares in 
 certificated 
 form and who wish to exercise all or part of their Nil Paid Rights, latest 
 time and date for 
 submission of completed Form of Instruction (with payment in full) to the SA 
 Registrar                                                                                 12:00pm on 10 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Rights Issue closes                                                                       12:00pm on 10 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 CSDP/broker accounts credited with New Shares and debited with payments due 
 in respect of 
 New Shares in uncertificated form(2)                                                    9:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Results of Rights Issue announced(3)                                                    9:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Results of Rights Issue announced in the press                                          9:00 a.m. on 11 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Last day to trade for the Consolidation                                                 5:00 p.m. on 17 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Effective time of the Consolidation                                                     9:00 a.m. on 18 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Record Date for the Consolidation                                                       5:00 p.m. on 24 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Consolidated Ordinary Shares credited to CSDP or broker accounts                        9:00 a.m. on 28 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Restrictions on transfers between UK Register and SA Register ends              Close of business on 28 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 Expected despatch of definitive share certificates for the Consolidated 
 Ordinary Shares                                                                                   By 29 December 2015 
------------------------------------------------------------------------------  -------------------------------------- 
 

____________________

(1) The Rights Issue is subject to certain restrictions relating to Shareholders with registered addresses in the United States or the Excluded Territories, details of which are set out in Section 2 of Part II "Information in relation to the Rights Issue" of the Prospectus.

(2) CSDPs effect delivery in respect of Qualifying South African Shareholders who hold their shares in uncertificated form on a delivery versus payment method.

(3) The results of the Rights Issue will be announced by way of a simultaneous RIS and SENS announcement at 9:00 a.m. (Johannesburg time) on 11 December 2015.

(4) The times and dates set out in the expected timetable of principal events above and mentioned throughout the Prospectus may be adjusted by Lonmin in consultation with the Underwriters, in which event details of the new times and dates will be notified to JSE Ltd and, where appropriate, Qualifying South African Shareholders and announced by way of a simultaneous RIS and SENS announcement.

   (5)          References to times in this timetable are to Johannesburg times. 

(6) Qualifying South African Shareholders who hold their Shares in uncertificated form are required to inform their CSDP or broker of their instructions in terms of the Rights Issue in the manner and time stipulated in the agreement governing the relationship between the shareholder and their CSDP or broker.

(7) Qualifying South African Shareholders who hold their Existing Shares in uncertificated form will have their accounts at their CSDP or broker automatically credited with their Letters of Allocation and Qualifying South African Shareholders who hold their Existing Shares in certificated form will have their Letters of Allocation credited to an account with the SA Registrar and will be sent a Form of Instruction.

(8) South African Shareholders may not rematerialize or dematerialise their Existing Shares from 19 November 2015 until 26 November 2015 both days inclusive

(9) If you have any queries on the procedure for acceptance and payment, you should contact the South African Shareholder Helpline on 0861 LINKSA (0861 546572) (from inside South Africa) or +27 861 LINKSA ([phone]) (from outside South Africa). This Shareholder Helpline is available from 8:00 a.m. to 5:00 p.m. (Johannesburg time) Monday to Friday (except public holidays). Please note that for legal reasons, the South African Shareholder Helpline is only able to provide information contained in the Prospectus and information relating to Lonmin's register of members and is unable to give advice on the merits of the Rights Issue, or provide legal, financial, tax or investment advice.

ISIN CODES

The ISIN code for the Intermediate Ordinary Shares will be the same as that of the Existing Shares, being GB0031192486. Following the Consolidation, the ISIN code for the Consolidated Ordinary Shares will be GB00BYSRJ698. The ISIN code for the Nil Paid Rights is GB00BYSRJD64 and for the Fully Paid Rights is GB00BYSRJF88.

DEFINITIONS

The following definitions shall apply throughout this announcement unless the context requires otherwise:

 
 "2014 Strike                 the five-month strike action 
  Action"                      started in January 2014 by 
                               members of AMCU, which also 
                               affected the two other largest 
                               PGM producers in South Africa; 
 "2015 Deferred               the deferred shares of US$0.999999 
  Shares"                      each in the share capital of 
                               Lonmin resulting from the Sub-division; 
 "Admission"                  admission of the New Shares 
                               to the premium segment of the 
                               Official List and to trading, 
                               nil paid, on the London Stock 
                               Exchange's main market for 
                               listed securities; 
 "ADRs"                       American Depositary Receipts 
                               evidencing American depositary 
                               shares issued by the Depositary 
                               pursuant to the Deposit Agreement; 
 "Akanani"                    Akanani Mining (Proprietary) 
                               Limited, an exploration and 
                               evaluation asset located on 
                               the Northern Limb of the Bushveld 
                               Igneous Complex in which Lonmin 
                               holds a 74% equity interest; 
 "AMCU"                       the Association of Mineworkers 
                               and Construction Union; the 
                               trade union representing the 
                               largest number of the Group's 
                               employees; 
 "Amended Facilities"         the Amended US Dollar Facilities 
                               and Amended Rand Facilities; 
 "Amended Facilities          the Amended US Dollar Facilities 
  Agreements"                  Agreement and the Amended Rand 
                               Facilities Agreement; 

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 "Amended Rand                the Existing Rand Facilities 
  Facilities"                  as proposed to be amended pursuant 
                               to the Amended Rand Facilities 
                               Agreement 
 "Amended US Dollar           the Existing US Dollar Facility 
  Facilities"                  as proposed to be amended pursuant 
                               to the Amended US Dollar Facilities 
                               Agreement; 
 "Articles of                 the articles of association 
  Association"                 of the Company; 
  or "Articles" 
 "Bapo BEE Placing"           the issue of the Bapo BEE Shares 
                               pursuant to the transaction; 
 "Bapo BEE Placing            admission of the Bapo BEE Shares 
  Admission"                   to the premium segment of the 
                               Official List and to trading 
                               on the London Stock Exchange's 
                               main market for listed securities 
                               and to the Main Board of the 
                               stock exchange operated by 
                               JSE Ltd; 
 "Bapo BEE Shares"            up to 617,581,491 Shares to 
                               be issued pursuant to the Bapo 
                               BEE Placing; 
 "Bapo Community"             the Bapo ba Mogale Traditional 
                               Community, an association of 
                               persons forming an indigenous 
                               tribe under a Kgosi or traditional 
                               leader and constituting a universitas 
                               personarum in law, with locus 
                               standi to sue and to be sued, 
                               and a traditional community 
                               in terms of the Traditional 
                               Leadership and Governance Framework 
                               Act 41 if 2003; 
 "Bapo Transaction"           one of three BEE transactions 
                               announced on 26 November 2014 
                               and 4 December 2014 between 
                               the Group and the Bapo Community, 
                               in which the Bapo Community 
                               swapped its rights to a statutory 
                               royalty on profits together 
                               with its shares in Bapo ba 
                               Mogale Mining Company (Pty) 
                               Limited (which held the Bapo 
                               Community's 7.5 per cent. participation 
                               interest in the Pandora JV) 
                               for shares in Lonmin and a 
                               deferred royalty payment over 
                               a period of five years; 
 "BEE"                        broad-based black economic 
                               empowerment, or black economic 
                               empowerment, which arises as 
                               a result of the following South 
                               African legislation: the Employment 
                               Equity Act No. 55 of 1998; 
                               the Skills Development Act 
                               No. 97 of 1998; the Preferential 
                               Procurement Policy Framework 
                               Act No. 5 of 2000; the BEE 
                               Act; the Broad-Based Black 
                               Economic Empowerment Amendment 
                               Act, No. 46 of 2013; the MPRDA 
                               and the Mining Charter; 
 "BEE Act"                    the Broad-Based Black Economic 
                               Empowerment Act No.53 of 2003; 
 "Board" or "Directors"       the Company's directors; 
 "business day"               a day (excluding Saturday, 
                               Sunday and public holidays) 
                               on which banks generally are 
                               open for business in the City 
                               of London for the transaction 
                               of normal banking business 
                               and on which banks generally 
                               are open for business in South 
                               Africa for the transaction 
                               of normal banking business; 
 "Business Plan"              a new business plan developed 
                               by the Group as a comprehensive 
                               response to prolonged weakness 
                               in PGM prices following a review 
                               of the Group's business and 
                               capital structure, which aims 
                               to reduce fixed cost expenses, 
                               remove high-cost PGM production 
                               ounces and reduce capital expenditure 
                               to the minimum required for 
                               the safe and efficient running 
                               of the Group's operations, 
                               whilst preserving the ability 
                               of the Group to increase its 
                               production as and when PGM 
                               prices improve; 
 "Capital Reorganisation"     the Sub-division and the Consolidation 
 "CCSS"                       the CREST Courier and Sorting 
                               Service established by Euroclear 
                               UK & Ireland to facilitate, 
                               inter alia, the deposit and 
                               withdrawal of securities; 
 "certificated                in relation to a share or other 
  form"                        security, a share or other 
                               security which is not in uncertificated 
                               form (that is, not in CREST 
                               or Strate); 
 "Companies Act"              the Companies Act 2006; 
 "Company" or                 Lonmin Plc, a company registered 
  "Lonmin" or "Issuer"         in England and Wales with registered 
                               number 103002 and registered 
                               as an external company in South 
                               Africa under registration number 
                               1969/000015/10; 
 "Consolidated              the ordinary shares of US$0.000001 
  Ordinary Shares"           each in the share capital of 
                             Lonmin resulting from the Consolidation; 
 "Consolidation"            the proposed consolidation of 
                             100 Intermediate Ordinary Shares, 
                             New Shares and Bapo BEE Shares 
                             into one Consolidated Ordinary 
                             Share; 
 "Consolidation             the ratio of 100:1 existing Shares 
  Ratio"                     to post-Consolidation Shares 
                             to be used in the Consolidation 
                             to reduce the number of Shares 
                             in issue and the ratio referred 
                             to in Resolution 1 of the Notice 
                             of the General Meeting; 
 "Consolidation             (i) in the UK, 6:00 p.m. (London 
  Record Date"               time) on 17 December 2015 and 
                             (ii) in South Africa, 5:00 p.m. 
                             (Johannesburg time) on 24 December 
                             2015 and the ratio referred to 
                             in Resolution 1 of the Notice 
                             of the General Meeting; 
 "CREST"                      the computerised system for 
                               the paperless settlement of 
                               sales and purchases of securities 
                               and the holding of uncertificated 
                               securities operated by Euroclear 
                               UK & Ireland in accordance 
                               with the CREST Regulations; 
 "CSDP"                       a "participant", as defined 
                               in the Financial Markets Act, 
                               being a person authorised by 
                               a licenced central securities 
                               depository to perform custody 
                               and administration services 
                               or settlement services or both 
                               in terms of the central depository 
                               rules; 
 "Deposit Agreement"          The amended and restated deposit 
                               agreement dated 25 February 
                               2002 between the Company, the 
                               Bank of New York Mellon and 
                               ADR Holders; 
 "Depositary"                 the Bank of New York Mellon, 
                               as depositary under the Deposit 
                               Agreement; 
 "Directors"                  the Company's directors; 
 "EBITDA"                     Operating profit before depreciation, 
                               amortisation and impairment 
                               of goodwill, intangibles and 
                               property, plant and equipment; 
 "EPL"                        Eastern Platinum (RF) (Proprietary) 
                               Limited, a private company 
                               duly incorporated in accordance 
                               with the laws of South Africa 
                               under registration number 1987/070294/06, 
                               whose name appears in the records 

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                               of the CIPC as Eastern Platinum 
                               Limited, a subsidiary of the 
                               Group in which Lonmin has a 
                               76.4 per cent. interest; 
 "EU"                         the European Union; 
 "Events at Marikana"         the illegal strike at the Company's 
                               Marikana operations in August 
                               and September 2012; 
 "Excluded Territories"       the Commonwealth of Australia, 
                               its territories and possessions, 
                               Canada, and Japan and "Excluded 
                               Territory" means any one of 
                               them; 
 "Existing Facilities"        the Existing US Dollar Facility 
                               and Existing Rand Facilities; 
 "Existing Rand               the Company's three bilateral 
  Facilities"                  bank debt facilities of ZAR660 
                               million each made available 
                               pursuant to the Existing Rand 
                               Facilities Agreements; 
 "Existing Shares"            the Shares in issue as at the 
                               Record Date; 
 "Existing US                 the US$360 million revolving 
  Dollar Facility"             credit facility made available 
                               pursuant to the Existing US 
                               Dollar Facility Agreement; 
 "FCA"                        the Financial Conduct Authority 
                               acting in its capacity as the 
                               competent authority for listing 
                               in the UK for the purposes 
                               of Part VI of FSMA; 
 "Form of Instruction"        the forms of instruction to 
                               be posted to Qualifying South 
                               African Shareholders who hold 
                               their Existing Shares in certificated 
                               form, in respect of their Letters 
                               of Allocation and reflecting 
                               the entitlement of that Qualifying 
                               Shareholder to Nil Paid Rights; 
 "Fully Paid Rights"          rights to acquire the New Shares 
                               fully paid; 
 "General Meeting"            the general meeting of Lonmin 
                               to be held in connection with 
                               the Rights Issue at The Lincoln 
                               Centre, 18 Lincoln's Inn Fields, 
                               London WC2A 3ED, United Kingdom 
                               on 19 November at 9:30 a.m. 
                               (London time), notice of which 
                               was sent to Shareholders as 
                               part of an explanatory circular 
                               on 2 November 2015 (or any 
                               adjournment thereof); 
 "Generation 1                E1, E2, E3, W1 and Newman shafts; 
  Shafts" 
 "Generation 2                K3, Rowland, Saffy, 4B/IB and 
  Shafts"                      Hossy shafts; 
 "Generation 3                K4 shaft; 
  Shaft" 
 "Greenhill"                  Greenhill & Co. International 
                               LLP; 
 "Group" or "Lonmin           Lonmin and its subsidiary undertakings 
  Group"                       (as defined in the Companies 
                               Act); 
 "HDSAs"                      historically disadvantaged 
                               South Africans, as defined 
                               in the Mining Charter. It refers 
                               to South African citizens who 
                               were disadvantaged by unfair 
                               discrimination before the implementation 
                               of the Constitution of the 
                               Republic of South Africa in 
                               1993; 
 "HSBC"                       HSBC Bank plc; 
 "Intermediate                the ordinary shares of US$0.000001 
  Ordinary Shares"             each in the capital of Lonmin 
                               resulting from the Sub-division; 
 "ISIN"                       International Security Identification 
                               Number; 
 "Issue Price"                the UK Issue Price or the SA 
                               Issue Price, as appropriate; 
 "J.P. Morgan                 J.P Morgan Securities plc (which 
  Cazenove"                    conducts its United Kingdom 
                               investment banking activities 
                               as J.P Morgan Cazenove); 
 "Joint Bookrunners"          J.P. Morgan Cazenove, HSBC 
                               and Standard Bank; 
 "JSE"                        the stock exchange operated 
                               by JSE Ltd; 
 "JSE Ltd"                    JSE Limited, a company incorporated 
                               in accordance with the laws 
                               of South Africa and licensed 
                               to operate a securities exchange 
                               in terms of the Financial Markets 
                               Act; 
 "Latest Practicable          6 November 2015, being the 
  Date"                        latest practicable date for 
                               the inclusion of information 
                               in the Prospectus prior to 
                               the finalisation of the Prospectus; 
 "Letter of Allocation"       a renounceable letter of allocation 
                               issued by the Company in electronic 
                               form conferring Nil Paid Rights 
                               on a Qualifying South African 
                               Shareholder; 
 "Limpopo"                    Limpopo platinum mine; 
 "London Stock                London Stock Exchange plc; 
  Exchange" 
 "Marikana"                   Marikana platinum mine; 
 "Mining Charter"             the Amendment of the Broad-Based 
                               Socio Economic Empowerment 
                               Charter for the South African 
                               Mining and Minerals Industry 
                               published in September 2010 
                               in terms of Section 100(2) 
                               of the MPRDA, including any 
                               amendment, supplement, replacement 
                               or successor thereto, and any 
                               legislation or regulation of 
                               a similar or related nature 
                               adopted in South Africa; 
 "Mining Charter              the scorecard incorporated 
  Scorecard"                   in the Mining Charter, published 
                               pursuant to section 100(2)(a) 
                               of the MPRDA; 
 "net debt"                   current and non-current interest 
                               bearing loans and borrowings 
                               less cash and cash equivalents; 
 "New Order Mining            the Old Order Mining Rights, 
  Rights"                      once they have been converted 
                               to mining rights in terms of 
                               the MPRDA or mining rights 
                               issued under the MPRDA; 
 "New Shares"                 the new Shares of US$0.000001 
                               each to be issued pursuant 
                               to the Rights Issue; 
 "Nil Paid Rights"            in the case of Qualifying Shareholders 
                               (other than Qualifying South 
                               African Shareholders), New 
                               Shares in nil paid form provisionally 
                               allotted to such Qualifying 
                               Shareholders pursuant to the 
                               Rights Issue and, in the case 
                               of Qualifying South African 
                               Shareholders, the right to 
                               subscribe for New Shares at 
                               the SA Issue Price, as represented 
                               by Letters of Allocation automatically 
                               credited to their CSDP or broker 
                               accounts or, in the case of 
                               Qualifying South African Shareholders 
                               who hold their Shares in certificated 
                               form, the account of the SA 
                               Registrar for the benefit of 
                               such Shareholder; 
 "Non-CREST Shareholders"     Shareholders whose Shares are 
                               on the UK Register and are 
                               held in certificated form; 
 "Official List"              the Official List of the FCA; 
 "Pandora"                    Pandora platinum mine; 
 "Prospectus Directive"       Directive of the European Parliament 
                               and of the Council 2003/71/EC 
                               as amended by Directive 2010/73/EU 
                               and includes any relevant implementing 
                               measures in each Member State 
                               of the European Economic Area 
                               that has implemented Directive 
                               2003/71/EC and its amending 
                               Directive 2010/73/EU; 
 "Provisional                 the renounceable provisional 
  Allotment Letters"           allotment letters relating 
                               to the Rights Issue, expected 
                               to be despatched to Qualifying 

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                               Non-CREST Shareholders (other 
                               than, subject to certain exceptions, 
                               Qualifying Non-CREST Shareholders 
                               with registered addresses in 
                               the United States or any of 
                               the Excluded Territories) as 
                               described in Part II "Information 
                               in Relation to the Rights Issue"; 
 "Public Investment           Public Investment Corporation, 
  Corporation"                 a South African state-owned 
  or "PIC (ZA)"                corporation established in 
                               terms of the Public Investment 
                               Corporation Act No. 23 of 2004; 
 "Qualifying CREST            Shareholders whose Shares are 
  Shareholder"                 on the UK Register as at the 
                               UK Record Date and which are 
                               held in uncertificated form 
                               and held through CREST; 
 "Qualifying Non-CREST        Shareholders whose Shares are 
  Shareholder"                 on the UK Register as at the 
                               UK Record Date and which are 
                               in certificated form; 
 "Qualifying Shareholder"     a Qualifying Non-CREST Shareholder, 
                               Qualifying CREST Shareholder 
                               and/or Qualifying South African 
                               Shareholder, as the case may 
                               be (which, for the avoidance 
                               of doubt, does not include 
                               ADR Holders); 
 "Qualifying South            Shareholders on the SA Register 
  African Shareholders"        as at the SA Record Date; 
 "Rand" or "ZAR"              the currency of South Africa; 
 "Record Date"                the UK Record Date and/or the 
                               SA Record Date, as the context 
                               so requires; 
 "Register"                   the UK Register and/or the 
                               SA Register, as the context 
                               so requires; 
 "Registrars"                 the UK Registrar and/or the 
                               SA Registrar, as the context 
                               so requires; 
 "Resolutions"                the resolutions to be proposed 
                               at the General Meeting as set 
                               out in the Notice of the General 
                               Meeting; 
 "Rights"                     the Nil Paid Rights and/or 
                               the Fully Paid Rights (as the 
                               context may require); 
 "Rights Issue"               the 46 for 1 rights issue announced 
                               by the Company on 9 November 
                               2015 
 "SA Issue Price"             the price at which New Shares 
                               will be issued to Qualifying 
                               South African Shareholders 
                               pursuant to the Rights Issue, 
                               being ZAR0.214; 
 "SA Register"                the branch of the register 
                               of members of the Company maintained 
                               in South Africa; 
 "SA Registrar"               Link Market Services South 
                               Africa (Proprietary) Limited 
                               of 13th Floor, Rennie House, 
                               19 Ameshoff Street, Braamfontein, 
                               Johannesburg 2000, South Africa; 
 "SA Transaction              J.P. Morgan Equitieis South 
  Sponsor"                     Africa (Pty) Ltd 
 "SEDOL"                      Stock Exchange Daily Official 
                               List, used in the United Kingdom 
                               and Ireland for clearing purposes; 
 "SENS"                       the Securities Exchange News 
                               Service of the JSE Ltd; 
 "SFA Report"                 a report entitled "The PGM 
                               Market Outlook Report", being 
                               an independent report commissioned 
                               by Lonmin and published in 
                               October 2015 by SFA (Oxford) 
                               Ltd; 
 "Shareholder                 means the relevant helpline 
  Helpline"                    telephone number 
 "Shareholders"               the holders of any Shares from 
                               time to time and "Shareholder" 
                               means any one of them; 
 "Shares"                     (i) prior to the implementation 
                               of the Sub-division, the ordinary 
                               shares of US$1.00 each in the 
                               capital of Lonmin; 
                               (ii) between the implementation 
                               of the Sub-division and the 
                               implementation of the Consolidation, 
                               the ordinary shares of US$0.000001 
                               each in the capital of Lonmin; 
                               and, 
                               (iii) following the implementation 
                               of the Consolidation, the ordinary 
                               shares of US$0.0001 each in 
                               the capital of Lonmin, 
                               which, in each case, for the 
                               avoidance of doubt, do not 
                               include ADRs. 
 "South Africa"               the Republic of South Africa; 
 "South African               the admission of Letters of 
  Admission"                   Allocation and the New Shares 
                               to listing and trading on the 
                               JSE's Main Board; 
 "Sponsor"                    Greenhill; 
 "Standard Bank"              The Standard Bank of South 
                               Africa Limited; 
 "sterling" or                the lawful currency of the 
  "GBP" or "GBP",              United Kingdom 
  or "pence" or 
  "p" 
 "Sub-division"             the proposed sub-division of 
                             the Shares into Intermediate 
                             Ordinary Shares of US$0.000001 
                             nominal value each and 2015 
                             Deferred Shares of US$0.999999 
                             nominal value each; 
 "UK Issue Price"             the price at which New Shares 
                               will be issued to Qualifying 
                               Shareholders (other than Qualifying 
                               South African Shareholders) 
                               pursuant to the Rights Issue, 
                               being 1.00 pence; 
 "UK Listing Authority"       the UK Listing Authority, being 
  or "UKLA"                    the FCA acting as the competent 
                               authority for the purposes 
                               of Part VI of FSMA; 
 "UK Register"                the register of members of 
                               the Company maintained in the 
                               United Kingdom; 
 "UK Registrar"               Equiniti Limited of Aspect 
                               House, Spencer Road, Lancing, 
                               BN99 6DA, United Kingdom; 
 "uncertificated              in respect of a Qualifying 
  form"                        Shareholder other than a Qualifying 
                               South African Shareholder, 
                               describes the form of a share 
                               held by such person in CREST; 
                               and in respect of a Qualifying 
                               South African Shareholder describes 
                               the form of a share held by 
                               such person not evidenced by 
                               a certificate or written instrument, 
                               incorporated into Strate and 
                               entered and recorded in the 
                               Company's South African sub-register 
                               in electronic form in terms 
                               of the Financial Markets Act; 
 "Underwriters"               the Joint Bookrunners; 
 "Underwriting                the underwriting agreement 
  Agreement"                   dated 9 November 2015 entered 
                               into between the Company, the 
                               Underwriters, the Sponsor and 
                               the SA Transaction Sponsor 
                               relating to the Rights Issue; 
 "United Kingdom"             the United Kingdom of Great 
  or "UK"                      Britain and Northern Ireland; 
 "United States"              the United States of America, 
  or "US"                      its territories and possessions, 
                               any state of the United States 
                               of America and the District 
                               of Columbia; 
 "US dollar(s)"               United States dollars and cents, 
  or "dollar(s)"               the currency of the United 
  or "USD" or "US$"            States; 
  or "$" or "US 
  cents" 
 "US Securities               the United States Securities 
  Act"                         Act of 1933; 
 "Volkswagen"                 Volkswagen AG, Audi AG and 
                               Volkswagen Group of America, 
                               Inc; 
 "Website"                    www.lonmin.com, the Group's 
                               website; and 
 "WPL"                        Western Platinum (RF) (Proprietary) 
                               Limited, a private company 

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