Lonmin shares slide on production update

Platinum producer Lonmin announced its production results for the quarter ended 30 June on Monday, and provided a business update.

“[This was] another good quarter in a challenging operating environment,” said chief executive Ben Magara.

“Again I am pleased that we continue to focus and execute on our committed strategy.”

The firm’s lost time injury frequency rates improved by 4.5%, although two employees were still fatally injured.

Lonmin declared and held a Tripartite Safety Day on 14 July, in conjunction with the South African Department of Mineral Resources and the Association of Mineworkers and Construction Union.

Mined Platinum ounces were up 3.3% during the quarter to 166,581, notwithstanding the rationalisation of the workforce by 19% year-on-year, and concentrator recoveries continued to be “industry leading” at 87%.

The company produced 2.6 million tonnes from underground mining, broadly flat on Q3 2015, although the generation 2 shafts production was up 8.7% to 2 million tonnes, with productivity up 6%.

Unit costs reduced by 2.2% year-on-year to ZAR 10,596 per PGM ounce despite South African CPI inflation of 6.3% and increased safety stoppages.

The average rand full basket price, including base metals, went up 9.2% on Q3 2015, at ZAR 11,864 per PGM ounce

Lonmin said refined production of 173,512 and sales of 162,725 Platinum ounces was on track to achieve full-year guidance

The company had net cash of $91m as at 30 June, after working capital and capital expenditure investment of $51m, with total Liquidity of $451m at period end.

At 1500 BST, shares in Lonmin were down 3.57% to 229.75p.