Johannesburg - Lonmin, the world’s third-largest platinum producer, is producing cash and is able to withstand prices for the metal, which have fallen 20 percent since the start of last year.
“Our mantra is to be cash-positive including capex at these current prices,” Chief Executive Officer Ben Magara said in an interview at a mining conference in Johannesburg. “After the removal of high-cost production, the costs are in the right direction.”
Lonmin has cut its workforce by almost 20 percent, or more than 5 400 people, as it attempts to reduce unprofitable production following the December $407 million rights issue, sold at a 94 percent discount. Along with the world’s two biggest platinum miners, Lonmin was hit hard by a five-month strike over pay in South Africa two years ago.
It previously raised $457 million from shareholders in 2009 and a further $817 million in 2012 after police opened fire on striking miners near one of its shafts in Marikana.
After the December rights issue, Lonmin had $69 million of cash once it had paid debts, Magara said. “We moved that number to $114 million by May. That number continues to get better.”
The company is prioritising capital on mature, stable, long-life shafts that produce 85 to 90 percent of its output.
“Lonmin has 22 months of developed ground and developed inventory waiting for mining,” he said. “That gives us the optionality if the market turns. We could recruit more people, bring in contractors.”
BLOOMBERG