Shares in South African platinum miner Lonmin (LMI) jumped 7 per cent on the day that its full-year results and production figures appeared - these exceeded analysts' expectations.
Lonmin produced 751,000 ounces of platinum in the period, which beat previous company guidance of over 700,000 ounces and represented a 10.5 per cent increase year-on-year. Moreover, increased mining volumes and improved metal recoveries meant cash costs rose just 3.8 per cent year-on-year to R8,832 (£533) an ounce - despite a 14 per cent hike in the wage bill and a 12 per cent jump in power costs. Platinum group metal (PGM) prices, based in US dollars, were essentially flat year-on-year at $1,100 (£688) an ounce, but increased 17 per cent in rand terms as the South African currency weakened.
Looking ahead, Lonmin's new chief executive, Ben Magara, remains "cautious about the [PGM] markets in the near and medium term", but believes "the longer-term fundamentals of the PGM markets remain robust". Lonmin is guiding towards platinum sales in excess of 750,000 ounces in 2013-14 with unit costs again increasing by less than wage inflation.
Prior to these figures, Investec Securities was expecting adjusted EPS of 39.1¢ for 2014 (from 20.5¢ in 2013) and set a 266p price target - but these estimates are under review.
LONMIN (LMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 351p | MARKET VALUE: | £2.0bn | |
| TOUCH: | 350-351p | 12-MONTH HIGH: | 386p | LOW: 243p |
| DIVIDEND YIELD: | nil | PE RATIO: | 18 | |
| NET ASSET VALUE: | 599¢* | NET CASH: | $201m | |
| Year to 30 Sep | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢)** | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.06 | -272 | -87.3 | nil |
| 2010 | 1.59 | 240 | 30.4 | 15 |
| 2011 | 1.99 | 293 | 71.2 | 15 |
| 2012 | 1.61 | -698 | -108 | nil |
| 2013 | 1.52 | 140 | 31.2 | nil |
| % change | -6 | - | - | - |
*Includes intangible assets of $502m, or 88¢ a share **Adjusted to reflect December 2012's nine-for-five rights issue £1=$1.60 | ||||
