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After having this headache of an issue I decided to share this, as for some reason there is almost no info about this on the internet.
My first issue after buying the Mini was oil pressure loss, which after a bit of personal research is mainly due to the fact that the Mini does not have a low oil level sensor, while the exact same engine in Peugeots and Citroens have one. They are mainly run out of oil because of owners that do not check the oil manually.
Long story short, mine was also ran out of oil by the previous owner and started to loose oil pressure while warm, It needed machining the crankshaft, new main and rod bearings, and a new head, as the camshaft caps were heavily scored. I decided to find a used head, which was very hard to find in good state, because they are almost all starved out of oil at least once in their life.
It ran happily for a month until I decided to drive it pretty hard on a twisty uphill road. After letting it idle it started misfiring for a few minutes and all of the sudden it cleared up and ran like a charm again. This was first happening just a few times a month when it was driven very hard. After a few months this started happening whenever the engine reaches operating temperature (when warm it switches from full lift of 9.5mm to valvetronic mode, which varies the lift all the way from 0.18 to 9.5mm).
I tried the usual swap of coils, plugs and injectors without the misfire following. Whenever you unplugged the eccentric shaft sensor or a cam sensor, it would revert to full lift of 9.5mm and used the throttle body for running in emergency mode. I found tons of threads online about similar issues but no one seemed to have a definite information on how they fixed this in the end.
After speaking with a couple of machine shops, and even a couple of PSA and MINI dealer techs, they all heard about similar issues but it was only fixable by replacing the cylinder head, they never had any explanation what happens to the head.
I brought my head to a few machine shops which ran a vacuum test on the valves and it tested all out okay, they said that my issue is definitely not my head. I found another machine shop pretty far away from me which told me the N12s like to start dropping the valve seats, which you can never see when the head is disassembled and cold. When they warm up they start dropping the seats very slightly, hence the engine not running on low valve lift, but runs fine on a bigger valve lift. It seems like if the valve seats drops even slightly, on idle the valves on that cylinder would not open at all because of the low lift. My friend which runs a machine shop told me there is absolutely not way that the valve seat could have moved but not dropped out completely, and he tried to turn me away from this.
N14s on the other hand have the same valve seat dropping issues, but as they do not have the valvetronic system, they do not have any symptoms, their valve lift is fixed.
Even after they told me the pretty big cost of replacing all of the 16 seats, I decided that I did not have any solution, so I sent it off to them hoping for the best.
After I assembled the repaired head, the engine ran like it never did, no misfires, butter smooth.
I decided to share this as I felt hopeless with my issue, it would also be good if we could create a sticky with all common issues that plague our N12,14,16,18 engines, I could provide input about my research about the N12.