By Kevin Crowley
(Bloomberg) — Lonmin Plc, the world’s third-largest platinum miner, said it was cash-positive in the first half of the year as it implements a cost-cutting plan to save the business.
Net cash was $114 million at March 31, compared with net debt of $185 million at Sept. 30, the Johannesburg-based company said in a statement Monday. Even so, the producer made a loss of 1.8 cents per share in the half year, compared with a $1.65 loss a year earlier.
Lonmin, with the highest costs of the world’s three major platinum producers, was bailed out last year by shareholders, who injected $400 million as the company sought to survive a 40 percent drop in the price of the precious metal since 2011. Lonmin has been cutting costs and trimmed more than 5,400 jobs in an attempt to become profitable once again.
The financial results “reflect the positive momentum in Lonmin,” Chief Executive Officer Ben Magara said in the statement. “We have delivered on our promise to restructure and cut high-cost production.”
Platinum has rallied 19 percent this year to $1,057.62 an ounce this year, following a precious-metal rally and a shortfall in supply.
The basket price of platinum-group metals has climbed 15 percent to 13,913 rand an ounce. Lonmin’s production costs were 10,668 rand an ounce in the first half and are forecast to be 10,400 rand for the full year.
The company reduced its forecast for capital expenditure for the full year to $105 million from $132 million.
Miner Lonmin reports core profit after cost savings
By Barbara Lewis and Mamidipudi Soumithri
LONDON/BENGALURU, May 16 (Reuters) – South Africa-focused platinum producer Lonmin reported a core profit on Monday after cost savings, and said it expected firm chemical and car industry demand for the rest of the year despite the Volkswagen diesel emissions scandal.
Its shares rose more than 14 percent in early trading, outperforming the wider mining sector, which was around 2 percent higher.
Lonmin’s shares have lost around 90 percent of their value over the last year, hit by a strike, rising costs and plunging platinum prices. In December, the company raised $400 million from selling new shares.
In its first-half results statement, Lonmin said it had cut losses per share to 1.8 cents from a loss of 164.6 cents the same time a year ago, and reported a core profit of $36 million versus a loss of $6 million in the first half of 2015.
Cost-cutting is ahead of schedule, with close to 70 percent of the full-year target of savings of 700 million rand ($45 million) already achieved.
Net cash improved to $114 million at the end of March, compared with $185 million net debt at the end of September.
CEO Ben Magara said in a conference call he did not anticipate further job cuts at current market conditions, but added conditions may change.
Volkswagen’s admission last year that it cheated U.S. diesel emissions tests could, analysts have warned, hit sales of diesel cars, which need platinum for catalytic converters.
But Lonmin predicted emerging markets would spur demand as they seek to catch up with the “ever tightening emission standards of developed markets”.
It also said it saw firm chemical industry demand, while the jewellery market could remain static during the year.
