Johannesburg - Lonmin said it foresees no need to raise funds even as a five-month strike in South Africa wiped out cash, reduced third-quarter platinum sales by 68 percent and will raise costs by more than 60 percent for the year.
A stoppage by 82 percent of Lonmin’s employees that started in January eradicated the Johannesburg-based company’s cash during the three months ended June 30, chief executive Ben Magara said on a conference call today.
Lonmin, the world’s no. 3 platinum producer, held $71 million (R749 million) at the end of March.
It will draw on $589 million of debt facilities as it ramps up to full production by the last three months of 2014 and normalise deliveries to customers, Magara said.
“We really are in a comfortable position,” Magara said.
“We would not imminently need to come back to the market.”
The walkout by more than 70,000 miners at Lonmin, Anglo American Platinum and Impala Platinum cost the companies about 24 billion rand in lost output and workers 10.7 billion rand in wages by the time it ended on June 24.
Lonmin raised $817 million in 2012 by selling shares after a six-week strike halted operations in August and September that year.
Shares in the company rose as much as 2.7 percent and were trading 2.3 percent higher at 234.90 pence by 9:03 a.m. in London.
Lonmin reported no output in the third quarter ended June 30.
The strike affected 192,700 platinum saleable ounces in the period, and resulted in the loss of 348,400 ounces in the nine months through June.
All 11 shafts are back in production and the company is operating at about 30 percent of normal monthly output.
Lonmin will reach 80 percent of normal production by the end of September and a full steady state in the first quarter of fiscal 2015, it said.
Lonmin is “assessing our medium- to long-term options around improving the productivity and profitability of our business, including cost reduction,” Magara said.
The company reduced its capital-spending forecast to $100 million for the fiscal year ending September 30 from $210 million and sees the unit cost per ounce of platinum group metals produced to be more than 60 percent than a year earlier.
This includes costs of $322 million incurred mainly because of idle production and security costs, it said.
Lonmin forecasts production of 340,000 ounces of metals in concentrate for the fiscal year, and sales of 420,000 ounces.
It guided sales of 750,000 platinum ounces for the year prior to the strike.
Lonmin may contemplate buying Anglo American Platinum’s stake in the two companies’ Pandora joint venture, which Lonmin operates, Magara said.
The world’s largest producer is seeking a buyer for the stake and other assets, it said July 21.
“We are the most fitting business to be operating Pandora,” Magara said.
“It is indeed an appropriate asset within Lonmin, but we will consider our options as things unfold.” - Bloomberg News