Lonmin back in the black ahead of takeover

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Lonmin back in the black ahead of takeover

Published Date: 2018-11-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Lonmin back in the black ahead of takeover

The platinum producer says it will be better placed as part of a stronger, enlarged and diversified group due to liquidity constraints and required investment.

Lonmin has returned to profitability just in time for its takeover by larger rival Sibanye-Stillwater. Releasing full-year results yesterday, the platinum producer said it expected Sibanye-Stillwater's all-share offer to close early next year, subject to shareholder approval and court sanction. Last week, the Competition Tribunal approved the merger on the condition that they place a six-month moratorium on retrenchments.

The company reported platinum sales of 681,580 ounces for the year to end-September, slightly above guidance. Unit costs increased by 5.2% to R12,307 and it sold its metal at an average rand full-baste price of R13,447 an ounce, a year-on-year increase of 19.7%. Higher platinum prices resulted in a 15.4% rise in revenue to $1,345 million and it reported an operating profit of $101 million, its first in four years. Last year, it reported an operating loss of $1,079 following an impairment. Earnings per share rose to 14.9c from a 352.7c loss.

Lonmin said its liquidity and funding arrangements had improved since year end through a new $200 million forward metal sale facility, which replaced pre-exist rand and dollar facilities.

Despite its improved position and "an enviable mine-to-market business with strong assets", Lonmin said it continued to face liquidity constraints, with significant investment needed in its mines to prolong their lifespan. It said the group would be better placed as part of a stronger, enlarged and diversified group. It said it remained committed to completing the Sibabye-Stillwater transaction.

Its shares rose 1.1% to R8.10 yesterday.





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