Glim­mer of hope

Finweek English Edition - - Market Place -

Lon­min re­ported a de­cent trad­ing up­date that saw the stock surge some 35% for the week. The costs are now ac­tu­ally below the miner’s cost guid­ance, but un­for­tu­nately the price it is re­ceiv­ing is still below its cost of pro­duc­tion. The com­pany needs a weaker rand or higher plat­inum price, which are both be­yond its con­trol and un­likely to hap­pen in the short term. Im­por­tantly, its net cash im­proved markedly but it re­mains on the edge. The bot­tom line is that this is a bet­ter-than-ex­pected up­date that of­fers a glim­mer of hope. But I still do not like the sec­tor in gen­eral and this stock in par­tic­u­lar.

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