Lonmin plummets on delay in results
Platinum producer Lonmin says its auditors need more time to assess the impairments of its assets
Lonmin is delaying publishing its results for the year to end-September over the concern that the book value of its assets has fallen under the level agreed with lenders, the platinum miner said in a production update on Friday.
Lonmin’s share price plunged 28.32% to R14 at the close on Friday.
Lonmin was scheduled to release its results on November 13, but said its auditors required additional time to assess the impairments of its assets. A new date will be announced in due course.
"Underlying operational performance, as outlined in the fourth-quarter production report, continues to be strong, while the rand basket price has improved since the announcement of the operational review," CEO Ben Magara said in the statement.
Lonmin had gross cash of $253m at September 30, which its board said provided adequate liquidity to fund the business through its operational review process.
The group increased its platinum production by 7.7% to 185,049oz in the September quarter from the matching period in 2016. But its platinum output for the year declined by 1.3% to 651,307oz. Its platinum sales for the year fell by 4% to 706,030oz, but exceeded its guidance of between 650,000oz and 680,000oz.
Its average rand full basket price for the fourth quarter fell 8.7% to R11,567 per platinum group metals (PGM) ounce due to a stronger rand.
Unit costs for the fourth quarter were R11,524 per PGM ounce. This was an increase of 4.3% on the fourth quarter of 2016 and an increase of 8.9% for the 12 months to September 2017 to R11,701 per PGM ounce. But this was still within the group’s revised unit cost guidance of between R11,300 and R11,800 per PGM ounce. Lonmin did not say how it would rationalise the cost differences.
Its production costs rose 8.9% over the year to R11,701, which was within its guidance of between R11,300 and R11,800 a PGM ounce, the update said. Lonmin warned that it looked as if unit costs were set to rise to between R12,000 and R12,500 per platinum group metal (PGM) ounce in financial 2018.
"Our principal focus for 2017 was to remain at least cash neutral in line with our short-term strategic objective to be able to deal successfully with the continued low PGM pricing environment," Magara said.
"Given the slow start to the year, we are pleased with the way our mining operations have performed throughout the last three successive quarters to compensate for the poor performance in the first four months of the financial year up to January 31 2017."
Wendy Tlou, Lonmin group head of communications and branding, said: “The operational review aimed at addressing the group’s ability to continue as a going concern due to material uncertainty over the existing debt facilities in the weak economic and pricing environment ... has required ... management’s undivided attention and, as a result, the announcement of the audited full-year results has been delayed.”
The group did not specify which assets were affected and said a new date for the release of the results would be announced.