Thank goodness for Sibanye-Stillwater. That’s the only conclusion Lonmin (LMI) investors can really draw from the platinum miner’s long-delayed results for the year to September 2017. Although bankers have agreed to waive the tangible net worth covenants with Sibanye’s takeover offer on the table, significant liquidity issues remain. If the acquirer walks away, the situation could be terminal.
Needless to say, 2017 was a dreadful year for the P&L account. Even without an eleventh-hour $1.05bn (£757m) impairment, high unit costs and low prices would have pushed the group to an operating loss. But following the write-down, property, plant and equipment is now valued at just $194m, while net cash has dropped a further $40m since the year-end to just $63m.
Lonmin tried to put a shine on this number, and noted a “reduction in the historical first quarter cash burn rate”, but the liquidity position was already bad enough in September for auditors to flag material uncertainty over the miner’s ability to operate as a going concern. Consequently, lenders have set two preconditions for their blessing of the deal: cancellation of $66m of loans and a draw-stop on a $150m revolving credit facility. Sibanye has also been asked to repay this term loan once the takeover completes, a date for which has not yet been set.
| LONMIN (LMI) | ||||
| ORD PRICE: | 85p | MARKET VALUE: | £240m | |
| TOUCH: | 84.9-85.6p | 12-MONTH HIGH: | 187p | LOW: 56p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 128¢ | NET CASH: | $103m^ | |
| Year to 30 Sep | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share ($)* | Dividend share (¢) |
| 2013 | 1.50 | 0.14 | 3.73 | nil |
| 2014 | 0.97 | -0.33 | -3.97 | nil |
| 2015 | 1.29 | -2.26 | -34.4 | nil |
| 2016 | 1.12 | -0.36 | -1.37 | nil |
| 2017 | 1.17 | -1.17 | -3.53 | nil |
| % change | +4 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.39. ^Fallen to $63m as of 31 Dec 2017. *Adjusted for 2015's 46-for-one rights issue and share consolidation. | ||||
