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Lonmin's reputation takes a knock
Allan Seccombe
Posted: Tue, 05 Sep 2006

[miningmx.com] -- WORLD number three platinum producer Lonmin took another blow to it reputation on Tuesday when it said a fire at its precious metals refinery could defer the sale of 25,000 oz of platinum to its 2007 financial year.

Lonmin, which has had major incidents at its smelter this year and in 2004, told investors there had been a “minor” fire at the refinery, which could take between five and seven days to bring back to full operation.

“We are investigating the impact on full year sales which could result in the deferring of up to 25,000 ounces of platinum sales for 2006 into the first quarter of the 2007 financial year,” Lonmin said in a statement.
a reputation blow for Lonmin
Lonmin has already downgraded its 2006 platinum sales forecast to between 950,000 and 960,000 oz because of an 11-day shutdown at its smelter in April when a slag leak was detected.

“It is more of a reputation blow for Lonmin. They’ve had so many problems with their smelter and now their refinery,” said a platinum analyst who declined to be named. “It is painful but it’s not a disaster. They’re just postponing sales.”

The revised platinum sales forecast will be further reduced by the deferred sales of 25,000 oz, said Lonmin spokeswoman Alex Shorland-Ball.

The fire, which was detected in the early hours of Tuesday morning, would not disrupt a project to bring automation to the pure platinum and palladium processing streams scheduled to be completed this month. The three phase automation project at the refinery is designed to improve recoveries and reduce costs. The project will be completed in 2007.

Lonmin was seen as pushing as much metal through their plants as possible to make up for production lost in the smelter shutdown. The end of September marks the end of 2006 financial year.
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“This refinery has been running at top-notch capacity to push as many metal sales through the system before the year end and that’s why it’s a bit of a blow,” the analyst said.

“It’s a bit of a knock to confidence that they have their systems under control. It’s not related to the smelter.”

Lonmin’s shares were last down 0.7% at R378.50 each in mid-afternoon trade on the JSE despite platinum trading around an eight-week high of $1,260. The South African platinum index was up 0.3%. In London, the shares were down nearly 0.9%.