[miningmx.com] – SHARES in Lonmin fell under renewed pressure after the UK group announced up to $2.1bn in asset impairments for the year ended September 30.
Lonmin fell just over 4% by midday in Johannesburg whereas its peer group, including Anglo American Platinum, Impala Platinum and Northam Platinum were in the green. Lonmin has a market capitalisation of about R3.5bn.
Announcing its fourth quarter and full year production results, Lonmin also said it was roughly halfway through a restructuring programme that would see its workforce fall by 6,000 jobs while production for 2016 would not exceed 700,000 platinum ounces.
“The group’s net assets attributable to equity shareholders were expected to be valued between $1.6bn to $1.8bn following significant impairment charge of $1,85bn to $2,1bn for the year ended 30 September 2015,” it said in its announcement.
It added that its right-sizing was now 50% complete within six months with 2,978 workers having exited the business. The retrenchments to date consisted of 1,978 employees and 1,000 contractors. As of the year-end, Lonmin employed 35,669 people compared to 38,292 individuals as at 30 September 2014.
“The key dial mover for the costs will be closure of the high-cost shafts (as proposed) together with the retrenchments of the associated workforce,” said Goldman Sachs in a note to clients.
“This we believe will not be easy given the challenge from the government and the workers,” it said.
“The key news flow to look out for in the coming days will be any communication on the terms of the rights issue – announcement is expected to be on November 9 with the 2015 financial results,” the bank said.
“Until then we expect the stock to trade in line with platinum group metal prices. We expect limited impact on the stock post today’s announcement,” it added.
Lonmin said on October 21 that it would it would implement a $400m rights issue and seek to amend its debt facilities to raise a further $370m which would mature in May 2020 as essential ingredients of a radical recapitalisation plan.
It also said it would set capital expenditure for the year at $136m, almost half the original guidance of $250m. Going forward capex was aimed to be around $110m in 2016 and $188m in 2017. In addition, net debt is expected have fallen to $185m, from the $282m reported for the half year to March 31.
