Lonmin: Low metal prices slash capex by 26%

LONMIN will cut planned capital spending for this year by 26 percent because of low metal prices and as furnace breakdowns curb output by the world’s third-biggest platinum producer. Lonmin would reduce capital expenditure to $185 million for the year through September from $250 million and “will keep this under review”, the company said yesterday. Refined platinum output for the quarter to December fell 29 percent to 139 823 ounces from a year earlier after the producer’s two main furnaces broke down, it said. “We reiterate our production guidance” of 730 000 platinum ounces for the 2015 fiscal year even as the furnace breakdowns “caused a temporary bottleneck in our processing operations”, Lonmin said. The cut in capital spending comes as Lonmin is recovering from a five-month strike at its South African operations in the first half of 2014 by reviewing mines and imposing a hiring freeze as it seeks to preserve cash. Lonmin’s platinum sales increased 9 percent to 146 890 ounces in the first quarter to December from the same period a year earlier, it said. Lonmin’s shares eased 1.8 percent to R28.75 yesterday. – Bloomberg