Lonmin to breach debt covenants after violence

Troubled platinum miner Lonmin has said that it is looking at options to 'strengthen its financial structure', after a week-long violent protest culminated with dozens of employee deaths; the subsequent impact on production means that the company will breach its bank covenants, it announced on Tuesday afternoon.

After rising strongly for most of the day, gains for Lonmin were pared late on after the miner revealed that just a third of its 28,000-strong workforce at the Marikana project have turned up for work. Nevertheless, the company assured that the situation on the ground now remains "calm".

"The Government of South Africa, Lonmin and the unions are in agreement that the best way to start to rebuild trust is to return to something closer to normality, albeit gently and carefully and in tandem with counselling and support work, and including the financial and logistical support for those affected, that Lonmin and others are undertaking.

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"We are working alongside the unions as they also want their members to report for work. Given the traumatic events of the last 10 days this is a delicate process and it will take time for people to come to terms with what has happened. Nothing is being done to risk the continued calm on the ground. Safety and public order are the priorities of everyone involved in this process."

The company has been monitoring its existing bank debt facilities and said that covenants with its banks will likely be breached at the next test date on September 30th. The firm said that it is "reviewing all the options available to strengthen its financial structure, including possible access to the equity capital markets."