Lonmin commits to Sibanye deal following $200m purchase pact

Platinum producer Lonmin sealed a $200m metal purchase agreement with Chinese outfit Jiangxi Copper to provide the miner with better liquidity while it waits for South African rival Sibanye-Stillwater's takeover to be finalised.

The London-listed outfit told investors it would use the cash to fund operations and repay a $150m loan, which had risked derailing the takeover.

However, Lonmin's chief executive Ben Magara said its new facilities with Jiangxi, the largest copper producer in mainland China, did do not address "fundamental business challenges facing Lonmin and do not offer an opportunity to avoid the announced retrenchments and shaft closures."

Lonmin, which of has struggled with finding cash, revealed its intention to cut 12,600 jobs, including another 890 merger-related layoffs, when Sibanye agreed to acquire the firm back in December.

Sibanye's all-share deal was green-lighted by South Africa's competition watchdog back in September. However, the regulator insisted Sibanye enter into three short-term projects as part of an attempt to avoid over 3,000 job losses.

Net cash at Lonmin improved 10% year-on-year to $114m after average sale prices increased 20.4% to $1,016 per basket, including by-product revenue.

Magara said: "Despite tough market conditions, except the favourable Rand, we have delivered more than we promised in all areas of our business. These pleasing results demonstrate once again that despite these uncertain times, we can dig deep and use all levers within our control to maintain our net cash position."

"The board of Lonmin remains focused on completing the Sibanye-Stillwater all share transaction, which we firmly believe provides a sustainable solution and is in the best interest of all our stakeholders."

As of 1220 BST, Lonmin shares had slipped 0.47% to 53p.