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Lonmin’s platinum sales up but significant deterioration in asset value

Lonmin plc has guided that it will more than halve its asset value and take an impairment charge of between US$1.85-2.05 billion when it releases it results for the financial year ended 30 September 2015, on 9 November. This follows the company’s adoption of a new business plan and financial restructuring that concentrates on lower cost operations and contains measure to cut operating and capital costs and refinance its balance sheet (article 21 October).

Notwithstanding a declining sales profile over the next three years, in FY 15 the company sold 752 koz of refined platinum, the highest level of sales since 2007.Mine production was only 705 koz and the excess sales are due to material that was stockpiled in the March quarter being processed at the end of the year.

In FY 2016, Lonmin expects platinum sales to decline to approximately 700 koz and further to 650 koz for FYs 2017 and 2018.

The proposed financial restructuring, to weather the low PGM price environment, involves a US$400 million rights issue, a US$400 million new equity issue and an amendment of its existing debt facilities to replace the US$543 million, which matures in H1 2016. The new debt facility will be for US$370 million with maturity in May 2020.

Lonmin’s platinum sales up but significant deterioration in asset value: LMI

 

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