[miningmx.com] – A COMBINATION of above inflation wage increases and zero productivity could sink Lonmin in the long-term, said Reuters citing the comments of Paul Gait, an analyst for Bernstein Research.
“Am not sure Lonmin will exist in five years’ time,” said Gait. “How can you have the levels of wage inflation in South Africa, coupled with increasing mine depth against the backdrop of zero productivity increases, and believe that is going to give you a sustainable future for the mining operations,” he told the newswire.
Lonmin is hoping shareholders on November 19 approve a rights issue in which it will raise just over $400m gross – enough liquidity to give bankers security to extend dollar and rand-denominated bonds due to mature in 2016.
“I suspect supporting the rights is the only course of action for shareholders as the current equity is probably worthless without it,” said a top-30 investor in Lonmin told Reuters.
Click here to read the full article
