For Lonmin shareholders it is another year of a deeply disappointing performance, with echoes of its annus horribilis in 2015 when its stock fell to record lows.

The uncertainty in Lonmin remains as it grazed against its debt covenants this year and embarked on an asset disposal and quest to bring in partners or funders for various projects, leading to an indefinite delay in its annual results.

The 52% fall in the value of Lonmin’s shares on the Johannesburg bourse in the year to date eclipses other major platinum miners, with Impala Platinum (Implats) posting a retreat of 28% and Royal Bafokeng Platinum shedding 23%.

There is speculation in the market that Lonmin could again call on shareholders to prop it up, but the likelihood of this is small. In 2015, Lonmin’s shares collapsed to record lows to match the heavily discounted rights issue to raise $400m.

With a market capitalisation of just R3.2bn despite being the world’s third-largest platinum producer with coveted base and precious metal refineries to generate finished metal, Lonmin is a sitting target for any buyer brave enough to take on the company.

Lonmin’s R3.2bn capitalisation is a fraction of those of its peers and nowhere close to the R94bn of the platinum sector’s best performer, Anglo American Platinum (Amplats), which has gained 32% so far in 2017.

Amplats, which is 80% owned by Anglo American, has a crystal clear strategy and had, long before its peers, taken measures to position itself in a lower-for-longer platinum pricing environment, taking the bold steps of closing shafts, cutting its workforce and selling deep-level, expensive mines.

Lonmin is belatedly following suit, with the most interesting asset up for consideration is rented access to spare capacity — estimated by Nedbank analyst Leon Esterhuizen at 500,000oz of platinum — in its processing facilities valued at some $700m a year.

Another company well behind the curve in restructuring its business is Implats, which has now under its new CEO Nico Muller — following the resignation of Terence Goodlace — divided its mines into three categories, with the oldest mines to be harvested for profit and an intense focus by management on the engine-room of its mines around Rustenburg to return them to profit.

This process has contributed to the wariness around Implats evidenced by its nearly one third retreat in value so far in 2017.

Platinum newcomer Sibanye Stillwater is more difficult to compare to other platinum mining firms because of its hefty exposure to gold mines in SA. Its shares have, however, fallen just 1.2% so far in 2017 and its R35bn capitalisation is tenfold the size of Lonmin’s.

Sibanye has long been linked to a takeover of all or part of Lonmin, with the eye of CEO Neal Froneman firmly fixed on Lonmin’s processing facilities.

Whether the debt-laden Sibanye, fresh from its $2.2bn cash takeover of US-based Stillwater Mining palladium and platinum miner and recycler, would have immediate appetite for more corporate action involving Lonmin is debatable.

"We currently cannot see meaningful free cash flow from any of Sibanye’s divisions until 2020, which coupled with a significant debt load of R22bn, leaves us holders of the share on a valuation basis," Deutsche Securities said in a recent note.


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