Lonmin is one impairment away from disaster
KPMG has warned the platinum miner’s future is in jeopardy, as it is close to breaching its debt covenant
Lonmin, the world number three platinum producer, reported a hefty interim loss that reflected a difficult operational performance and a chunky impairment that prompted KPMG to warn of material uncertainty over the company’s future. Lonmin, which is shutting a number of old mines to focus on a handful of newer shafts, reported a $214m loss for the six months to end-March compared with a $6m loss the year before. It reported a $146m impairment, putting its debt covenants under pressure. Lonmin warned that another impairment would be detrimental to the company. “Adverse movements in key assumptions could result in an additional impairment which could impact the company’s compliance with the lending covenants,” it said, prompting the KPMG warning. The caution from Lonmin indicated “the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern”, KPMG said. The covenants governing Lonmin’s debts demand its tangible net wort...
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