Lonmin expects to report full-year operating loss but record production

Lonmin on Monday said it expects to report an annual operating loss as the miner recovers from labour strikes in South Africa, rising costs and weak platinum prices.

The company, which posts its full-year results on 9 November, said it forecasts an operating loss of $207m, before impairment charges of $1.85-$2.05bn.

"The impairment charge is primarily driven by lower platinum group metals (PGM) prices and the business plan which has an impact on future discounted cash flows over the life of mine business plan across the group's operations," Lonmin said in a statement.

On the upside, the group said its refined platinum has hit an eight-year high in the year to end-September, rising 74% to 759,695 ounces from the prior year.

Amid the challenges of labour unrest and lower platinum prices, the company last month said it was planning to raise $400m in a rights issue of new shares and will slash 6,000 jobs.

"As announced on 21 October 2015, Lonmin is taking decisive action to mitigate the effects of the current low PGM pricing environment as demonstrated by the tight control of capital expenditure in the year ended 30 September 2015 to minimise capital spent to $136m from the original guidance of $250m," the firm said.

"The group is also removing high-unit cost PGM production and associated overhead costs."

Lonmin’s shares fell 1.96% to 25p at 1057 GMT.