Lonmin full-year loss narrows

Lonmin said losses in the year to the end of September narrowed thanks in part to the restructuring of the business, a continued focus on cost management and the weakening of the rand against the US dollar.

In the year to the end of September, the pre-tax loss came in at $355m compared to a loss of $2.26bn the year before, but revenue dropped to $1.12bn from $1.29bn.

Underlying operating profit rose to $7m from a loss of $134m the year before.

Lonmin said it sold 735,747 ounces of platinum into the market in 2016, which was ahead of its sales guidance of 700,000, supported by its smelter clean-up and metal release from improved processing technology.

Meanwhile, palladium was the second highest contributor to the revenue basket with the 334,319 ounces sold, constituting 18% of Lonmin's income.

The miner said it expects platinum sales in 2017 to be between 650,000 and 680,000 ounces, with unit costs in the range of 10,800 rand to 11,300 rand per platinum group metal ounce.

Chief executive officer Ben Magara said: “During 2016 we strengthened our balance sheet and renewed our bank facilities, closed unprofitable shafts, reorganised the business without labour disruptions, reduced costs and enhanced profitability. We are now well placed to drive essential and sustained improvements in productivity.

“I am pleased that we ended the year with net cash of $173m and increased total liquidity to $537m. I am also pleased that we signed a multi-year wage agreement without labour or production disruption. We have now repositioned the business, not only to withstand the current low PGM price environment, but also to seize opportunities to maximise value for shareholders and all our stakeholders."

At 1055 GMT, Lonmin shares were up 5.5% to 205.75p.