Lonmin sees ‘early signs of improvement’ in platinum

Finance

Lonmin smelter in South Africa. Photo: Bloomberg

Publishing Date: 16 Nov 2009 12:20pm GMT
Author: Mining Journal

Lonmin plc sees signs of improvement in the industry, with the possibility of a "slow" recovery this fiscal year and supply shortages in the following two years.

"Perhaps we see a gradual and slow improvement in 2010," Chief Executive Officer Ian Farmer said in an interview from London today, followed by "supply shortages in 2011 and 2012."

Lonmin today posted a fiscal full-year net loss of US$38 million, compared with profit of US$455 million a year earlier.

Output of platinum-group metals dropped 6.6% to 1.24Moz in the year ended September 30 after safety shutdowns and closings of unprofitable mines, the company said in October.

Farmer took over as chief executive in September 2008 after his predecessor Brad Mills quit amid a £5 billion (US$8.4 billion) hostile bid from Xstrata plc. Xstrata dropped the offer after platinum prices plunged.

The metal, which has rebounded 51% this year, is still 39% below the record US$2,301/oz touched in March 2008. Lonmin rose £0.92, or 5.8%, to £16.84 in London trading.

Lonmin last month forecast sales in the year ending September 30, 2010, of 700,000oz of platinum, after selling 682,955oz last year, above its earlier forecast of 680,000oz.

There are "early signs of improvement," Farmer said, adding the company will resume dividend payments, which have been halted for two years, when "the market improves."

Bloomberg (November 16)