JOHANNESBURG - Mining company Lonmin said it swung into an operating profit of US$70 million in the first six months of the 2019 financial year after a loss of $32 million during the same period last year, driven by higher platinum group metals (PGM) prices and a weaker rand.
Lonmin also reported unaudited interim earnings before interest, tax and depreciation (EBITDA) of $78 million compared with a loss before interest, tax and depreciation of $26 million during the first half of 2018.
In line with a strategy to reduce high cost production, the company said its workforce had been reduced by four percent year-on-year to 29,812 as at March 31, from 31,040 at the same time last year. The job cutting process initiated in March was still ongoing, Lonmin added.
While historically production during the first half had always been lower than the second half, this year operational performance was heavily impacted by low morale and high management turnover due to the extended timeline a takeover by Sibanye-Stillwater caused by a court appeal by labour union AMCU.
"Accordingly, mining production for Q2 2019 was 2.1 million tonnes, down 8.4 percent on Q2 2018, while mining production for the first six months of FY 2019 was 4.3 million tonnes or 7.7 percent down on H1 2018," the company said.
CEO Ben Magara said the return to profitability and a new $200 million forward metal sale facility had improved Lonmin’s liquidity in the short term, with the early settlement of a term loan of $150 million in full and cancellation of all its other pre-existing undrawn facilities.
"However, despite the progress made, this does not provide a long-term solution to the capital structure challenges faced by Lonmin, as it is still inadequate to invest in the new projects necessary to avoid shaft closures and job losses and maintain our production profile," Magara said.
"The company’s available liquidity is also still vulnerable when considering its working capital requirements and continuing exposure to volatile currency and metal markets."
"Accordingly, we remain convinced that consolidation through the announced offer from Sibanye-Stillwater creates the best way forward for our shareholders and all our stakeholders," Magara added.
- African News Agency (ANA)