Given that most of Lonmin' s (LMI) workforce has been on strike for the past four months, it's hardly surprising that the South African platinum miner had an abysmal first half. Platinum production fell by two-fifths year on year, causing $164m (£97m) of "special" strike-related operating costs.
Lonmin is hopeful its employees will return to work later this week. Management has been approaching staff directly by text message and voicemail, leading chief executive Ben Magara to claim he now has the "overwhelming support" of employees. That's despite the Association of Mineworkers and Construction Union (Amcu) having rejected an industry-wide pay offer earlier this month.
Mr Magara, nevertheless, warned that the company will need to cut jobs and an expansion plan if the workers do not return soon. The company's cash burn is currently around $3m a day or $60m-$66m a month, despite cost-cutting efforts. For the time being, however, Lonmin remains in reasonable financial shape; net cash stood at $71m as of 31 March and plenty of headroom remains on the company's credit lines.
Investec has placed its forecasts under review until a reliable timeline for the resumption of operations can be established.
LONMIN (LMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 284p | MARKET VALUE: | £1.6bn | |
| TOUCH: | 283-284p | 12-MONTH HIGH: | 359p | LOW: 250p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 565¢ | NET CASH: | $71m | |
| Half-year to 31 Mar | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 735 | 54 | 13.3 | nil |
| 2014 | 578 | -278 | -35.5 | nil |
| % change | -21 | - | - | - |
£1=$1.69 | ||||
