Hard work needs to be done at Lonmin
Lonmin is addressing the reasons for its disappointing first-quarter performance, which has spooked the market
Lonmin CEO Ben Magara has taken direct operational control to turn around the group’s alarming first-quarter production performance after the resignation of respected COO Ben Moolman on March 6. The group’s shares fell 24% to about R13.60 in the five days after Moolman’s departure and have almost halved in the month since the first-quarter report. Apart from the influence of a weaker platinum price, the market appeared to fear that Moolman had encountered intractable problems in turning production around. The biggest contributor to lower December production was poor labour relations at the K3 shaft, which accounts for about a quarter of total group output. Investec’s mining team says in a note that Moolman’s resignation will increase negative sentiment towards Lonmin and unless it is able to improve productivity it will find itself in financial and operational difficulties. Leon Esterhuizen, precious metals analyst at Nedbank Corporate & Investment Banking (CIB), says that Lonmin’s ...
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