Lonmin Plc

Ian Farmer, Chief Executive Officer

8 February 2012

Mining Indaba – Cape Town

PGMs…..a Changing Industry

2

A Challenging Investment Decision

Investing to exploit PGM demand recovery

Inflection point

is when….not if!

Cashflow negative

Investing for growth

Cost pressures

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Re

al U

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Time

Unit Turnover Unit Cost Unit Cost &Capex

Maximising return on

investment

PGM Market – Strategic for South Africa

3

South African Mineral Sales

Contribution to Mining GDP – 2010

Source: Stats SA

World Primary Platinum

Production - 2010

Source: SFA (Oxford)

Structural issues in PGM industry has potential to directly impact

PGM physical availability

4

Operational Challenges to South African PGM

producers

• Safety

• Labour costs and management

• Skills

• Transformation and equity ownership

• Social pressures

• Resource nationalism

• Power

A producer’s ability to manage these factors will drive its performance

5

Lonmin of the Future

The pillars to building a healthy PGM business

Growth

• LTP

• Leverage Marikana

• Productivity

• HR Development

• Other assets

• B/Sheet Capacity

SCALE, GROWTH, LOW COST, BALANCE SHEET

PGMs

Global

Economy

SA

Environment

Costs

• Productivity

• Growth

• Systems

Social

• Sustainability

• Safety

• SLP / Transformation

•Employee Relations

• Culture / Values

Macro

• Markets

• Global Risks

• Communications

• Energy & Water

6

Safety Performance and Journey

Sustained commitment to our journey

2005 6

2006 6

2007 3

2008 3

2009 3

2010 3

2011 6

2012 YTD 1

Industrial Fatalities

7

Safety Journey

• Rate of fatalities

• Increase in frequency and length of

S54 safety stoppages

• Consequent impact on production,

margins and SA as an investment

destination

• Best LTIFR for Lonmin – 4.71

• 5 million FFS for Lonmin Mining

• Play a leading role in health and safety

in the industry

• Dupont Leadership training

• Contractor Safety Management

Framework

• Self inflicted operational stoppages

• Ongoing dialogue and collaborative

approach with the DMR and industry

participants

Sustained commitment to safety improvement journey

Issues to Manage Lonmin’s Response

8

Labour Relations, Productivity and Costs

• Structural unit cost inflation in mining

• Deteriorating trend in productivity

• Impact of social discontent

• Initiatives launched over past few years

to improve delivery and productivity

• Line of sight management system to

track productivity

• Comprehensive approach to wellbeing of

employees

• Alignment of bonus structures with safe

production

• Regular dialogue with unions and

employees to enable early identification

of issues

• Management of interdependence of

socio factors and productivity

Arresting declining productivity

Issues to Manage Lonmin’s Response

9

Skills

• Skills shortage

• Impact of the changing social

framework

• Addressing historical legacy

• Holistic HRD strategy developed

• Response aimed at attracting,

developing and retaining a skilled

workforce

• Committed to investing in education and

training programmes to close technical

skills shortage gap

• Artisan training and bursaries for higher

education

• Particular focus on HDSA employees

• Availing opportunities to labour pool in

Lonmin communities

Holistic approach to addressing a historical legacy

Issues to Manage Lonmin’s Response

10

Transformation and Equity Ownership

• New targets in the revised Mining Charter

• Differing perceptions of transformation

progress

• Achieving Phase 2 Mining Charter equity

ownership requirements

• 26% BEE equity ownership and credits

by 2014

• Transformation sub committee of the Board

• 2014 Social Labour Plan targets aligned

• Accelerated spend and commitment to

community projects, education and health

• HDSA targets remain on track but achieving

WIM and 40% HDSA at all management

levels is challenging

• Roadmap to 26% equity ownership submitted

to DMR

• Broad based equity structure for employees

and communities

• Complete transaction with Shanduka on our

Limpopo Division

• Regular DMR and KPMG audits.

Communications vital

Fundamental element of our licence to operate...the right thing to do

Issues to Manage Lonmin’s Response

11

Social Pressures

• Socio political business disruptions

• Community expectations are on the

increase

• Potential detractor from the running

of operations

• Sympathetic NGOs

• Impact on morale and productivity

• Risk to livelihoods, assets and lives

• Fostering conflict resolution strategies

with the communities where we operate

• Committed to unlocking value for the

Bapo community

• Creating employment for youth in the

community

• Dedicated team focused on Lonmin

communities and accelerated spend

Disruption and morale risk

Issues to Manage Lonmin’s Response

12

Resource Nationalism

• Impact of policy uncertainty on

valuations and ability to attract capital

and cost thereof

• 2012 a year of political change

• Policy uncertainty and regulatory

treacle

• Rumour of tax changes

• Senior management’s presence in SA

enables better understanding and

communication of the issues

• Relationship management

• Involvement in the debates

• Shanduka partnership

• Keysha - remain confident of our

position and will follow judicial process

• Conflict of directors interests to be

addressed

Policy uncertainty is a risk to SA mining’s competitiveness

Issues to Manage Lonmin’s Response

13

Power

• Power – escalating costs

• Working within agreed Eskom

margins

• Creating capacity for the future -

capacity is expected to be

significantly constrained over next two

years

• Optimising use of power within our

margins at our Marikana operations

• Identifying areas in business chain

where further load shedding can be

achieved safely

Sufficient capacity at the Marikana operations

Issues to Manage Lonmin’s Response

14

Supply Forecasts – a Regressing Target

Potential for supply to surprise downwards

Source: SFA

Source: SFA

Key PGM Demand Segments

Platinum Demand, 2011 Palladium Demand 2011.

Auto 48%

Jewellery 26%

Petroleum 3%

Chemical 6%

Electrical 3%

Glass 6%

Medical & Biomedical

3%

Other 3%

Off-road 2%

Auto demand is the primary driver of demand 15

Auto 66%

Jewellery 4%

Chemical 5%

Electrical 17%

Dental 7%

Other 1%

Off-road 0.2%

16 16 16

Automotive Demand

16 Pent up demand may boost sales upturn

0

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Quarterly vehicle sales (rhs '000 oz; lhs '000 units)

Vehicle Sales

Source: SFA (Oxford), Oxford Economics, LMCA

10 quarterdownturn

12 quarterdownturn

5 quarter downturn

17 17 17 17 17 17

Lonmin

View

Opportunities

PGM Market Outlook

Risks

Long term fundamentals for PGMs remain attractive

• Protracted European recession

• China slowdown

• Substitution

• Possible release of pent-up demand and Euro 6 in 2014

• Supply surprising on the downside, tighter market and

higher prices

• Stationary fuel cell and non-road market positive

• Challenging 2012

• Investor activity will continue to strongly influence

price in the short term

• Industrial demand recovery from 2013

• Supply constraints – growing deficits in 2013-2015

period

18

Conclusion

• Managing and delivering on issues within management’s control will be

key – and we are making progress - safety initiatives will remain a focus

• When industrial demand reasserts itself as the price setter….metal price reaction could be acute

• Investing for future growth whilst delivering profitable ounces and maintaining a strong balance sheet

Building for the future

19

Disclaimer This presentation, which is personal to the recipient, has been issued by Lonmin. This presentation includes forward-looking statements. All statements other than statements of historical fact included in this announcement, 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 'ambition', 'may', 'will', 'could', 'would', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek' or 'continue', or negative forms or variations of similar 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‘ 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 presentation after the publication of this presentation. This presentation is for information only and does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any shares in Lonmin or any other securities, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied upon in connection with, any contract or investment decision related thereto. Information supplied by host presenters may not be used, referenced or published without the prior written consent of the author of the presentations.