If you thought matters couldn't get worse for Lonmin (LMI), they just have. The South Africa-focused miner shed around 27 per cent of its market value in just two days this week. That means around half of Lonmin's value has evaporated over the past month. Lonmin's shares took a beating on the back of a downgrade by analysts at HSBC. The outlook on the stock was downgraded to 'hold' from 'buy' and the price target was slashed from 222p to 82p.
The analysts obviously weren't swayed by details of a restructuring plan released last week. Lonmin has decided to cut its losses by cutting up to 6,000 employees and closing or mothballing a number of its mine shafts. In total, Lonmin plans to take around 100,000 ounces out of annual production and cut costs by 15-20 per cent.