It will come as no surprise that Lonmin has seen significant drops its production and revenue for its third quarter thanks to strikes, safety stoppages and a weak platinum price.

On the plus side, the world’s third largest platinum producer’s operational performance in the third quarter continued to exceed its renewal plan despite momentum in the mining operations being hampered by an increase in Section 54 safety stoppages and intermittent labour disruptions which started to emerge during the second quarter of 2013.

As a consequence, 2.9 Mt were mined in total during Q3, 2013, down 3.6% on the prior year period but representing an increase of 4.1 % on Q2, 2013.

During the quarter, Lonmin produced 186 456 oz of platinum concentrate. Platinum sales, at 81 382 oz, were impacted by the smelter capacity constraints following the incident at the Number Two furnace and the planned shutdown of the Number One furnace.

For the nine months to 30 June 2013, the company produced 552 515 oz of platinum metal in concentrate and achieved platinum sales of 407 523 oz.

On 1 July 2013 Lonmin announced that repairs to the Number Two furnace had been completed as planned and that both the Number One and Number Two furnaces had successful matte taps after their re-builds and are currently operating normally.

The cumulative results for the nine months to 30 June 2013, together with the successful re-start of the furnaces, give us confidence to maintain our platinum metal in concentrate guidance in excess of 700 000 oz and platinum sales of 660 000 oz.

The company’s underground mining operations produced 2.8 Mt during the third quarter, a decrease of 3.6% from the prior year period. This was due to the production losses experienced as a result of Section 54 safety stoppages at Karee and Westerns operations as well as intermittent labour disruptions across our portfolio of shafts in the period under review.

Production at Karee decreased by 85 000 t, down 6.7% on the prior year period as a Section 54 safety stoppage halted drilling and blasting operations at K3 following the fatal accident in the Merensky section on 26 April. The losses were also compounded by labour disruptions and slightly increased levels of absenteeism amongst the workforce. Production at Karee was also impacted by K4, which contributed 48 000 t in the prior year period, being idle as it was placed on care and maintenance.

Similarly production at Westerns decreased by 66 000 t or 8.8% on the prior year period. This was as a result of Section 54 safety stoppages, labour disruptions as well as the ore reserve and infrastructure challenges we highlighted in the last quarter negatively impacting momentum at Rowland. Newman continued with its planned depletion, although output was further negatively impacted by adverse ground conditions.

Production at Middelkraal continued to increase, up 91 000 t or 18.5% on the prior year, mostly as a result of continued improvement at Saffy and ramp up in stope crew efficiency. This was in spite of challenges experienced with poor ground conditions and infrastructure constraints related to the remaining mechanised mining legacy issues.

Hossy’s production also showed some improvement despite the continued challenges faced with the lower than expected efficiency of the extra low profile suite of mining equipment. Production at Easterns decreased by 50 000 t or 17.1% on the back of sporadic labour disruptions, increased levels of absenteeism and the planned depletion of East 1 shaft as it approaches the end of its life.

Production from the Merensky opencast operations decreased by 5% on the prior year period. Pandora attributable production increased by 8 000 t or 14.2% on the prior year period.

In total, 234 000 t of production was lost during the quarter, of which 112 000 t was as a result of Section 54 safety stoppages and an additional 123 000 t due to labour stoppages. This compared to a total of 81 000 t lost in the prior year period of which 40 000 was due to Section 54 safety stoppages.

Platinum sales for the quarter were down 45.9% to 81,382 oz and PGM sales were down 34.5% to 195 999 oz. The lower sales in the period were due to the incident at the Number Two furnace and the initial planned shutdown of the Number One furnace that are now back to full operation. The US dollar basket price (excluding base metal credit) at $976/oz during the quarter was 5.9% less than the prior year period while the corresponding ZAR basket price was 8.8% higher than the prior quarter on the back of ZAR weakness.

Although Lonmin’s operations continue to exceed our renewal plan, the company remains alert to the risks to production associated with safety stoppages and the uncertain labour relations landscape. “We maintain our platinum metals in concentrate guidance of in excess of 700 000 oz and our sales guidance of 660 000 oz. Unit cost guidance remains below 8% and capex guidance of US$175 million is maintained,” the company reported in its results announcement.