The PIC wants Lonmin board seats and the JSE to be the miner’s main listing
London — The Public Investment Corporation (PIC) is planning to ask for two seats on the board of Lonmin by the end of 2017 and has suggested the platinum miner move its main listing to Johannesburg, its CEO said.
Lonmin, 30% owned by the PIC and listed in London since 1961, has been hobbled by persistently low platinum prices, rising costs and strikes, forcing it to tap investors three times in the last eight years.
The PIC, which manages $150bn of government employee pensions, raised its stake in Lonmin to 30% from 7% in 2015 after a rights issue was under-subscribed.
"We are a 30% shareholder, so we can ask for at least two board seats. We will do it soon. It has become an urgent matter now," CEO Daniel Matjila told Reuters in an interview in London, adding: "They may put [in] conditions, like asking for more money. We are more concerned about leadership. The chairman and the board should understand the challenges the company is facing and the role of the board and the executive should be clearly defined."
Lonmin spokesperson Wendy Tlou said: "We would not want to comment on any statement the PIC might wish to make as we do engage with the PIC regularly as a shareholder."
Matjila said PIC’s state shareholders, keen to keep jobs in SA’s mining industry, had expressed concern in a recent meeting about its exposure to Lonmin and what action was being taken to "to mitigate risk", saying, "We don’t wish to exit. Let’s put representatives on the board to at least give guidance to management, to start taking the right decisions needed to stabilise the company and take it forward."
Lonmin, which is the world’s third biggest platinum producer with output of 650,000 ounces in 2017, is carrying out an operational review to boost margins by selling off assets and laying off employees. Its shares lost more than a third of their value on November 3 after the firm delayed full-year results to complete the review.
Lonmin said this month that it had enough liquidity to fund the business through the review process, but analysts at Goldman Sachs and Citi, among others, have said Lonmin needs a cash boost urgently to ensure its survival.
Matjila said PIC had also recommended Lonmin de-list from London and move its main listing to Johannesburg, where it now has a secondary listing. "It’s a lot easier. If you can save a few pounds to keep one or two workers. My colleagues have spoken to Ben Magara, the [Lonmin] CEO, about this. The PIC resources team has raised those issues," Matjila said. "The London listing might be at a significant cost — and what are the benefits? Is it liquidity? Is it trading? Is it attracting a lot of interest? I don’t think so."
Lonmin has said it would move its headquarters for its operations to SA to save costs.
The firm’s liquidity crunch has eclipsed improvements in mine performance and a rise in net cash to $103m at the end of September from $86m at the end of June. The 2015 cash-call steadied Lonmin’s finances, but the miner has still struggled since then.
Lonmin’s shares closed at 66p on Tuesday, hovering near their lowest on record. The stock was trading above £12 at the start of 2011.