Lonmin to miss full-year targets following violent strikes

Platinum group metals (PGMs) producer Lonmin has said things remain relatively calm albeit tense following a 'serious outbreak of violence' at its West Marikana mine operations in South Africa, as reported on Tuesday.

The violence, which erupted following a dispute between rival unions, led to the deaths of eight Lonmin workers and two policemen.

"Lonmin welcomes the increased presence of the South African Police Services (SAPS) at the site of the mine, and is co-operating fully with the authorities to help restore a safe and secure environment for its employees as quickly as possible," the firm said.

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"The striking Rock Drill Operators (RDOs) remain armed and away from work. This is illegal under the Labour Relations Act. Consequently, and in keeping with the terms of a Court Order granted to Lonmin on 11 August 2012, the illegal strikers have today been issued with a final ultimatum to return to work by their next shift on Friday 17 August or face dismissal."

To date the company has lost six days of mined production, equal to around 300,000 tonnes of ore, or 15,000 Platinum equivalent ounces. Consequently, it is unlikely that Lonmin will meet its full-year guidance of 750,000 saleable ounces of platinum, although it did say the extent of the variation from guidance will depend on the timing and speed with which normal operations can safely resume.

"Unit costs will be negatively impacted as well and as a result we expect the guidance of an 8.5% increase in unit costs for the full year to be exceeded," the firm added.

The share price fell 5.25% to 658.50p, down 45% in the past year.

NR