Lonmin : Report on Payments to Governments

Report on Payments to Governments for the year ended 30 September 2016

Introduction

This report sets out payments made by Lonmin Plc and its subsidiaries to governments during the financial year ended 30 September 2016 (FY2016). This disclosure is required by the Reports on Payments to Government Regulations 2014 (as amended in December 2015) (the Regulations), which partially comprise the UK's implementation of the EU Accounting Directive (Directive 2013/34/EU).

The Regulations apply to UK-incorporated organisations which are mining, quarrying or logging undertakings, and which are publicly traded on a regulated market in the EU (In Lonmin Plc's case, the London Stock Exchange) or exceed certain thresholds as to their balance sheet, net turnover and number of employees. The Regulations require such organisations to publish a report for each financial year which describes payments made to governments for relevant extractive activities. FY2016 is the first financial year in respect of which Lonmin is required to comply, and so this report is the first of its kind to be published by Lonmin Plc.

Basis of preparation and definitions

Legislation

This report is prepared in accordance with the Reports on Payments to Government Regulations 2014, as amended by the Reports on Payments to Governments (Amendment) Regulations 2015. Publication of this report is also intended to satisfy Lonmin Plc's obligations under DTR 4.3A of the FCA's Disclosure Guidance and Transparency Rules.

Reporting entities

This report sets out payments made to Governments during FY2016 by Lonmin Plc and its subsidiaries in connection with relevant activities (defined below). Payments have been disclosed at entity level, rather than at project level. Payments made during FY2016 were not made in connection with specific projects (i.e. operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement and form the basis for payment liabilities with a government).

Relevant activities

This report contains disclosures of payments made by Lonmin Plc or its subsidiaries in connection with any activities involving the exploration, prospection, discovery, development or extraction of minerals or other materials.

Government

The term 'government' means any national, regional or local authority of a country, and includes a department, agency or undertaking that is a subsidiary undertaking where the authority is the parent undertaking.

Payment types

In accordance with the Regulations, this report discloses payments to governments, whether in cash or in kind, which fall within the following categories:

· Taxes. This category includes payments of taxes levied on income, production or profits, but excludes any taxes levied on consumption (such as value added taxes and personal income or sales taxes).

· Royalties. Royalties are payments made for exercise of rights to extract minerals or other resources, often based on a proportion of the revenue associated with the extraction.

· Production entitlements. This category consists of payments made to a government in accordance with production sharing agreements. There were no reportable production entitlement payments made during FY2016.

· Dividends. This category consists of dividend payments to a government, but excludes any such dividends paid to a government in its capacity as a shareholder, provided that the dividend is paid to the government on the same terms as other shareholders, and is not paid in lieu of production entitlements or royalties. There were no reportable dividend payments made during FY2016.

· Bonuses. This category consists of signature, discovery and production bonuses paid to a government. There were no reportable bonus payments made during FY2016.

· Fees. This category consists of fees paid to a government in consideration for access to an area in which relevant activities are performed, and includes licence fees, rental fees, entry fees and other considerations for licences or concessions. There were no reportable payments of such fees during FY2016.

· Payments for infrastructure improvements. This category includes any payments to a government in connection with improvements being made to infrastructure, other than in circumstances where the infrastructure is primarily dedicated to the paying entity's operational activities. The Regulations do not require disclosure of social or community payments (for details of Lonmin's contributions to local communities, please refer to the 2016 Sustainable Development Report, available on the Company's website atwww.lonmin.com). There were no reportable payments for infrastructure improvements during FY2016.

Materiality threshold

In accordance with the Regulations, payments with a value of less than £86,000 (whether as a single payment or a connected series of payments) have not been included in the report.

Exchange rate

All payments disclosed in this report were made in South African Rand, and converted for the purposes of this report to US dollars using the closing ZAR: USD exchange rate on 30 September 2016 of 13.71:1.

Rounding

The payments shown in this report are rounded to the nearest USD thousand. In the following tables because of rounding, totals may not agree exactly with the sum of their component parts. Exact amounts are shown in the data submitted and available on the UK Companies House website.

Payments to the Government of South Africa during year ended 30 September 2016

No reportable payments were made to any other government, either in South Africa or internationally, by Lonmin Plc or its subsidiaries during FY2016.