Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
The final count is in. Two months after the dramatic events at South Africa’s Rustenburg mining district sparked a series of labour unrest across the country’s mining sector, the firm where it all began – the world’s third largest platinum producer Lonmin plc (LSE:LMI) – has released its full year production report that includes the last quarter performance, which was practically put to a stop by the events that unfolded in the dark days of August until the end of the period.
Speaking of the events, Lonmin’s Chairman, Roger Phillimore, said the “tragic events… are indelibly etched in Lonmin’s corporate memory and will shape thinking for years to come both at Lonmin and more broadly in South Africa”.
For the corporate side of Lonmin, the disaster was equivalent to around 110,000 ounces of platinum, or at least US$165 million in lost revenue, and for the human side, a loss of 40 lives from its employees as a result of violence brought about by the disgruntled rock drill operators who downed tools until they get a pay increase.
“The Board was deeply saddened by the violent unrest which took place during this time and continues to express its profound sympathy to those affected, including the families, friends and colleagues of those who died,” Lonmin stated in its report submitted today.
Six weeks after the strikes began, a wage hike was agreed by all stakeholders on 20th September, including the workers’ union representatives, the government, and the firm’s management, who struck a deal to increase workers’ salaries to as much as 11,000 South African Rand (£792) a month.
The company said full operations resumed on 1st October and the first produce following the resumption of operations will be on the 31st of this month. Prior to that, however, Lonmin only produced half of last year’s mined ore, at 1.7 million tonnes or 48% lower during the same period.
Thanks to its stockpile, the company was able to sell a little over 700,000 ounces of platinum during the fourth quarter, 3.7% lower than it did a year ago, although, unfortunately at a price 20.6% lower than in 2011.
Weak platinum price however, has lagged the company’s profit, and with the exception of the period when the strikes were ongoing that saw a brief surge in platinum prices, the catalytic converter component to reduce emission was priced at an average of around US$1,500 an ounce.
But with gross sales reaching over a billion US dollars for the year, investors trading on the London Stock Exchange were still upbeat of Lonmin’s profitability as over 1.6 million shares were sold to 3.7% rise in share price, at £4.98 by 1:00 PM GMT.
Lonmin plans to raise US$800 million by way of a Rights issue, the date of which is still not set.
