Lonmin surges as Q3 production jumps

Michele Maatouk WebFG News | 17 Jul, 2017 11:11 - Updated: 11:11 | | |

platinum
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17:25 21/11/17
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17:30 21/11/17

Lonmin shares surged on Monday as it reported a 3.8% jump in production on the year in the quarter to 30 June.

Production rose to 2.7m tonnes, which is a 13.2% increase from the second quarter of 2017, while net cash improved to $86m from $75m at the end of the second quarter.

Tonnes mined from the company's Generation 2 shafts, which generate 84% of its output, were up 9% to 2.2m tonnes compared with the prior year period and 18.6% higher versus the second quarter. Sales of 180,348 platinum ounces increased by 10.8% on the prior year period and the platinum miner maintained its full-year sales guidance of 650,000 ounces to 680,000 ounces.

Lonmin added that as a result of "the much improved mining performance", unit costs fell by 4.7% quarter-on-quarter to R11,278 per platinum group metal ounce and increased 6.4% year-on-year, slightly above inflation.

Chief executive officer Ben Magara said: "We had a pleasing operational performance all round and continue with our decisive work and aim to be at least cash neutral even at current low PGM prices and a strong rand. I am pleased that with the right team in place, our mining turnaround has been sustained. I am grateful to our employees who have worked hard to produce the results we are seeing.

"We continue to find levers to pull, in this 'lower prices for longer' environment and to make the improvement of our performance a priority. I am particularly pleased that our net cash has improved. Despite the difficult global macro-economics and the complex and challenging socio political operating environment, we are still able to find common ground for Lonmin to deliver this sustained improved performance."

Shore Capital said production was better than expected but suggested that the improved cash position may have been at the expense of capex and longer-term production.

At 1110 BST, the shares were up 8.5% to 73.25p.

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