Lonmin closes project financing for bulk tailings project

Lonmin managed to clinch project financing for its Bulk Tailings Treatment Project, which analysts said would allow the miner to add low-cost production as it progresses on restructuring the business.

An unnamed party agreed to provide the platinum producer with $50m through a project finance metal streaming arrangement.

A first $9m tranche of funding had been received and work had started, the company said in a statement.

The BTT project envisaged the reprocessing of 26m tonnes of tailings material at a rate of 300,000 tonnes per month, with commissioning and full production ramp-up expected in financial year 2018.

Once at steady-state BTT would produce approximately 29,000 ounces of platinum a year or some 55,000 ounces of primary group metals.

BTT was expected to produce the lowest-cost ounces in its portfolio, Lonmin said.

"When it comes into production the tailings treatment project will deliver low cost production which, although relatively small compared to the current 700,000oz pa guidance for 2016, is a welcome reaffirmation of Lonmin’s intention to deliver profitable platinum ounces as it restructures the business," analysts at SP Angel said.

As of 16:06 BST shares in Lonmin were up by 0.33% to 230.25p and the spot price of platinum was gaining 0.80% to $1,127,50/oz., according to Bloomberg data.