Karee outage hits Lonmin shares

[miningmx.com] — SHARES in Lonmin lost ground on Friday following a downward revision of the company’s production target, coupled with an upward adjustment of unit costs.

Lonmin said its Karee shaft would only reach full operating capacity in August, following a protracted unprotected strike in May which saw a large proportion of the shaft’s 9,000 employees being dismissed.

The group has now completed a recruitment process and resumed production.

“Management has concluded that full year sales guidance will be negatively impacted by around 30,000 platinum ounces,’ read a company statement.

“Consequently, Lonmin is reducing its full year guidance for the year.to sales of around 720,000 platinum ounces. Unit costs will be negatively impacted due to the lower production, and the guidance of an 8% increase in unit costs for the full year will be exceeded.’

National Union of Mineworkers (Num) spokesperson Lesiba Seshoka said at the time workers were caught up in a union branch leadership dispute which had nothing to do with the employer.

“Unfortunately, the company cannot have such people and has to let them go,’ he said.

Lonmin reported platinum sales of close to 318,000oz during its interim period to end-March, but initially said it could still achieve its 750,000oz sales target for the full year. The lower production figures were the result of several safety stoppages during the reporting period.

“We have put this one off event behind us and anticipate having safely ramped back up to normal operating levels by August,’ said CEO Ian Farmer.

Lonmin’s JSE-listed shares closed at R163.11, down 4.84% for the day. During late trading on Friday afternoon, the group’s LSE-listed shares traded down 5.4% at 1,460 pence.