Lonmin says delays in Sibanye-Stillwater deal to hurt sales
Platinum miner Lonmin , which is in the process of being taken over by Sibanye-Stillwater, expects full-year sales to be at the lower end of its target range, it said on Friday after reporting a drop in output.
The London-based company, which operates in South Africa, said total platinum production tumbled 10.3% to 276,020 ounces for the six months ended March 31.
Lonmin’s first half was hampered by what it called “low morale and high management turnover” due to delays in closing the Sibanye-Stillwater deal, as well as safety stoppages and power outages related to South African power supplier Eskom.
Owing to that, Lonmin said full-year sales would be at the lower end of a target range of 640,000-670,000 platinum ounces, and it raised cost guidance to 13,600-14,400 rand per ounce produced, from the 12,900-13,400 rand it had earlier expected.
Lonmin has been cutting thousands of jobs and reigning in costs to weather tough market conditions. In April it agreed to a revised all-stock deal with Johannesburg-listed Sibanye-Stillwater.
However, Lonmin reported an operating profit of $70 million for the first half compared with an operating loss of $32 million a year earlier, thanks to a pick-up in prices and a weaker rand-to-dollar exchange rate.
The company, which has warned on liquidity earlier this year, said it did not have adequate capital to invest in the new projects that were needed to avoid shaft closures and job losses, adding it still lacked a long-term solution to the capital challenges it faces.
“We remain convinced that consolidation through the announced offer from Sibanye-Stillwater creates the best way forward for our shareholders and all our stakeholders,” Chief Executive Officer Ben Magara said in a statement.
(Reporting by Muvija M in Bengaluru and Zandi Shabalala in London; editing by Gopakumar Warrier)