Lonmin's quarterly production exceeds targets despite strikes

Lonmin, the world's third largest platinum producer, posted quarterly production ahead of targets despite strikes that hit the South African mining sector last year.

Lonmin, the world's third largest platinum producer, posted quarterly production ahead of targets despite strikes that hit the South African mining sector last year.

The FTSE 250 company has spent the past few months working on resuming output at the Marikana mine following strikes in August and September that left 46 people dead, including 34 who were shot by police.

Lonmin had to turn to investors in November to raise $817m to avoid breaching lending terms. The company is also without a Chief Executive after Ian Farmer announced his resignation in December due to an ongoing illness.

However, the group said performance has exceeded planned ramp up with a slight drop in platinum production for last three months of 2012.

The business produced 174,253 troy ounces of platinum in concentrate in the quarter, down 2.1% from a year earlier.

"This demonstrates the successful execution of the operational plans we put in place for the safe re-start and ramping up of production following the labour unrest that preceded the period," the group said.

Quarterly platinum sales rose 16.7 % to 108,576 ounces while total platinum group metals (PGM) sales decreased by 3.7% to 182,576 ounces.

Safety-related work stoppages caused the company to lose 19,000 ounces in the first quarter, down from 177,000 ounces lost for the same period the year earlier.

Lonmin repaid its $700m bank debt facilities, cancelling a $300m term loan facility and leaving a $400m revolving credit facility available to be drawn when required.

Due to a successful resumption of production so far, Lonmin is maintaining its forecast for full-year output of 680,000 ounces and sales of 660,000 ounces.

It is also maintaining capital expenditure guidance for the year of around $175m, absent of any material safety or industrial relations stoppages.

"Our operations delivered a strong performance in the quarter ahead to exceed our planned ramp up targets," Lonmin stated.

"Encouragingly, the second quarter is proceeding well with the momentum of the first quarter having already been re-established. We remain focused on embedding the safety protocols that have underpinned the successful start up reflected in our solid production results."

Shares were up 9.43% to 344.70p at 10:04 Thursday.

Recommended

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Investing in drugmakers: uncommon profits from curing rare diseases
Share tips

Investing in drugmakers: uncommon profits from curing rare diseases

Treatments for medical conditions with only a small number of sufferers can still be very attractive for pharmaceutical companies and investors becaus…
20 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022
Delivering profits: should you buy Royal Mail shares?
Share tips

Delivering profits: should you buy Royal Mail shares?

The volume of parcels delivered by Royal Mail soared during the pandemic, and so did its profits. But it has been coming under pressure lately. So, as…
19 May 2022

Most Popular

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
18 May 2022
Aviva: a share for income investors to tuck away
Share tips

Aviva: a share for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
18 May 2022
Despite the crypto crash, bitcoin still has a bright future
Bitcoin & crypto

Despite the crypto crash, bitcoin still has a bright future

Cryptocurrencies have crashed hard, with bitcoin down by more than 50% from its peak. But, says Dominic Frisby, bitcoin still has a future – it is the…
19 May 2022