Shares in platinum miner Lonmin climbed 4 per cent as the company achieved its full-year sales forecast of 706,000 ounces of platinum. Mining performance improved quarter by quarter, which helped boost ore reserves by 32 per cent. However, the company still hasn't sorted out the problems with its continually-leaking Number One furnace, which is once more out of action.
The furnace was taken out of operation at the end of October for a scheduled rebuild. Three alternative pyromet furnaces will operate during this period and the company will also toll-refine some concentrate until the furnace is fully operational again. Longer term, Lonmin is building a new pyromet furnace which it expects to be in production in the second half of 2012 at a capital cost of ZAR350m (£31m).
Lonmin expects sales next year of around 750,000 platinum ounces, and expects platinum prices to continue to improve. Costs per ounce are expected to increase by less than 8 per cent, subject to wage settlement. The increase in costs this year was tightly held at 2 per cent, which is within South African inflation, although Lonmin remains a relatively high-cost producer. Prior to these results, Evolution Securities was forecasting pre-tax profits of $218m for the year to 30 September 2011 and EPS of 65¢.
| LONMIN (LMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,813p | MARKET VALUE: | £3.7bn | |
| TOUCH: | 1,811-1,814p | 12-MONTH HIGH: | 2,198p | LOW: 1,344p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 51 | |
| NET ASSET VALUE: | 1,339¢* | NET DEBT: | 12% | |
| Year to 30 Sep | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2006 | 1.86 | 633 | 202 | 92 |
| 2007 | 1.94 | 705 | 189 | 106 |
| 2008 | 2.23 | 779 | 278 | 56 |
| 2009 | 1.06 | -272 | -164 | nil |
| 2010 | 1.59 | 240 | 57 | 15 |
| % change | +49 | - | - | - |
Ex-div: 12 Jan Payment: 11 Feb *Includes intangible assets of $1.09bn, or 539¢ a share £1=$1.611 | ||||
