Lonmin turns cash-positive on cost cuts

Lonmin CEO Ben Magara says the company’s latest financial results reflect its “positive momentum”.

Johannesburg - Lonmin, the world’s third-largest platinum miner, said it was cash-positive in the first half of the year as it implements a cost-cutting plan to save the business.

Net cash was $114 million at March 31, compared with net debt of $185 million at September 30, the Johannesburg-based company said in a statement on Monday. Even so, the producer made a loss of 1.8 cents per share in the half year, compared with a $1.65 loss a year earlier.

Lonmin, with the highest costs of the world’s three major platinum producers, was bailed out last year by shareholders, who injected $400 million as the company sought to survive a 40 percent drop in the price of the precious metal since 2011. Lonmin has been cutting costs and trimmed more than 5 400 jobs in an attempt to become profitable once again.

The financial results “reflect the positive momentum in Lonmin”, Chief Executive Officer Ben Magara said in the statement. “We have delivered on our promise to restructure and cut high-cost production.”

Platinum has rallied 19 percent this year to $1,057.62 an ounce this year, following a precious-metal rally and a shortfall in supply.

The basket price of platinum-group metals has climbed 15 percent to 13,913 rand an ounce. Lonmin’s production costs were R10 668 an ounce in the first half and are forecast to be R10 400 rand the full year.

The company reduced its forecast for capital expenditure for the full year to $105 million from $132 million.

BLOOMBERG