Platinum producer Lonmin said yesterday it has positioned itself for the conversion of its mining rights to new-order rights under South Africa's new mining legislation, and also stated that it is on track to produce a sustainable 1,1-million ounces of platinum a year from 2010.

The miner, which produced a record 913 263 oz of platinum during the last financial year, said its mining and process engineers have developed a new mine extraction plan which will allow the group to grow production from its core properties to achieve the new target of primary mine-produced platinum - a 20% increase from this year's record.

Reporting financial results for the year ended September 30, the group also indicated that it was seeking new growth opportunities, likely to broaden and diversify the business in geographic and commodity terms.

“Lonmin is a new company today. With the sale of our Ashanti holding and the completion of our buy-out of Impala's holding in our platinum assets, we are now a focused mining company with no legacy entanglements to impede our future growth,” commented Lonmin chief executive Brad Mills.

“During the year, we also completed a ground-breaking black economic empowerment transaction - the sale of 18% of Eastern and Western Platinum to Incwala Resources - this transaction sets us firmly on the path to the conversion of our mining rights to 'new-order' rights under South African legislation.” Mills added that the conversion would guarantee the group long-term access to mineral rights that support its operations.

To further strengthen its operations and ensure that they retain their status as the lowest-cost primary producers of platinum in the industry, Mills said, the group is embarking on a major continuous improvement programme, using the 6 Sigma methodology.

“This will help us eliminate errors, waste and excess costs in our production processes and improve our overall efficiency and productivity,” he stated.

Regarding the company's future prospects, Mills argued that one of the critical issues that has been facing Lonmin is “how best to grow value, given the relatively limited opportunities in the platinum industry”.

“The characteristics that make our business strong are a highly consolidated industry structure with long-term contracts between our customers and ourselves.

“Our customers value continuity of supply; this is critical for their businesses. They need to know that we will meet our commitments to them. Our low-cost operations ensure that we can operate uninterrupted through any price cycle,” he stated.

Mills added that, currently, Lonmin has some of the best platinum assets in the world and is looking to add to this similar quality mineral deposits that have the same kind of customer-supplier relationships in commodities with similar industry dynamics.

“Our core mining skills are readily transferable and our track record of meeting long-term customer expectation is a strategic asset. We are committed to the growth of shareholder value and we will be patient in our efforts to identify opportunities that ensure that we can achieve the core objective of growing cash flow and earnings per share,” he said.