Lonmin delays accounts as it battles slump in platinum prices

SPOOKED investors sent shares in platinum producer Lonmin down 31pc yesterday after it warned it would delay publication of its full-year accounts.

The struggling miner said an ongoing review of its assets required “management’s undivided attention” and as such “Lonmin and its auditors require additional time to complete the audit”. The accounts had been due on Nov 13. Lonmin said it would update the market in due course.

The stock slumped 32.25p to 72p. As recently as 2010 it was changing hands for £126 a share.

In 2015 Lonmin undertook a lifesaving rights issue that saw a major South African public sector pension fund take 30pc of its stock.

The miner has been hammered by a prolonged slump in the price of platinum, used in catalytic converters in cars, and by rising costs in South Africa, where it operates, due to the strengthening of the rand against the US dollar.

It has attempted to restructure by closing high-cost mining shafts in favour of lower-cost production and launched its “operational review” in August.

Lonmin confirmed it was looking at which bits of the company it could sell to raise capital, but warned it may breach covenants with its lenders as it determines the size of impairments on some of its assets.

The outcome of these asset sales and its discussions with lenders could have a bearing on whether the accounts are prepared on a going concern basis, Lonmin said.

The warning came as Lonmin reported a 3.6pc rise in sales in the fourth quarter of the year, above its guided range.

Its net cash position improved to $103m (£78.7m) from $86m in June.

Palladium, one of the platinum group metals (PGMS) mined by Lonmin, has enjoyed a surge of late, but its sister metal platinum has been left behind. Lonmin reported an average “basket price” of its products that is barely keeping ahead of its costs, resulting in wafer thin margins.

More worryingly for investors, it said its costs per ounce next year would be higher than the price it currently fetches for its metals.

“We’ll have to see what they present in their operational review – whether they have any levers left to pull to get that cost base down,” said Marc Elliott, analyst at Investec.

“They basically need the rand to collapse or PGMS to rally massively.”

Ben Magara, chief executive, said Lonmin’s mines had made “meaningful progress in this tough operating environment”.