Jitters in the mining industry as Lonmin’s downward spiral continues
Stock loses 6.3% after Friday’s free fall
LONMIN shares yesterday continued their downward spiral despite chief executive Ben Magara’s charm offensive to assure investors that the miner’s underlying business was “robust”.
Lonmin shares shed a further 5.93 percent on the JSE yesterday to close at R13.17 following a free fall that started on Friday, which saw the stock diving 28 percent spooked by the company’s decision to delay the release of the annual results. Yesterday Magara told journalists that his real emphasis was on how the underlying assets were performing.
“We have had record production in some of our assets. Our shafts are doing good, our cash position is good,” Magara said. “The implication on the share price is something shareholders and the public can judge. The underlying business is robust,” he said, during an interview on the sidelines of a ceremony to hand over health and infrastructure projects to the North West province in line with its social and labour plan.
Magara announced on Friday that Lonmin would no longer release its annual financial results next Monday as management was busy with an operational review which would have a material impact on the results.
The operational review comprises the disposal of Akanani, the non-core project in Limpopo, and cut R500 million in overheads by next September. It also included exploring options to introduce funding partners for the K4 shaft and the MK2 project, which was necessary for extending the life of the Rowland mine.
“I guess it is never a good thing to move annual results, but the board took a very considered view about uncertainties we are facing,” Magara said. “They are nothing we did not raise at the interim results in May, when we said that we are looking at the uncertainties of the potential going concern. Once the board realised how busy management is in terms of running the operational review process and the implications on the results, we decided to move the results.”
Magara’s assurances come as the miner faces a potential union recognition strike by its skilled workforce as early as next month.
Trade union Solidarity yesterday said its members had voted overwhelmingly in favour of the strike to force its recognition by the company.
Magara said Lonmin had hit tough times owing to the depressed commodity environment. He said the platinum price had more than halved to $930 (R13 213) an ounce from $2 400 in 2008, which had resulted in the cutting of 6 000 jobs in 2016. A total of 1 139 jobs are due to be shed by Christmas.
Lonmin donated 17 ambulances and a patient transporter, formerly converted panel vans as well as two school health mobiles to the provincial department of health.
“This move was prompted by our concern that emergency medical services are not always readily available in the greater Lonmin communities,” said Lonmin’s executive vice president for stakeholder engagement and regulatory affairs, Thandeka Ncube.
Lonmin constructed and upgraded the 1km stretch of the Skoonplaas Road as well as the 0.72km stretch of the Modderfontein Road .