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Lonmin's Road to Renewal Includes New CEO

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The past eight months have probably been the toughest in platinum mining giant Lonmin’s (LSE:LMI) history.  Losing CEO Ian Farmer to illness and suffering through the death of 34 men during labor riots at its Marikana mine virtually at the same time has been difficult to say the least.

In an ADVFN article “Lonmin Closes Painful Chapter” published on 09 November 2012,  the company said “There is no way to begin our Annual Report this year without addressing the terrible events which took place at Marikana in August and September,” which was a reminder that there really is no way to close that chapter.  It will always be there as a reminder that things can go wrong.  In a preceding story on 30 October 2012 ADVFN reported “Strike Cost Lonmin $165 Million in Lost Revenue.”

Acting CEO Simon Scott led the company to an unexpected production of 185,497 salable ounces of platinum versus the forecasted 174,523 ounces for the first quarter as reported on 31 January 2013, causing its share price to increase by 12% to 352.80 that day.

The company announced this morning that Ben Magara, currently the Executive Head of Engineering and Capital Projects at Anglo Platinum has agreed to come on board as CEO effective 01 July 2013.

Roger Phillimore, Company Chairman said, “The Company is performing well and our safety record is better than it has ever been. Our renewal plan is on track and progress is being made towards the better definition and achievement of our initiatives to improve both the working and living environment of all Lonmin employees for the benefit of all stakeholders and shareholders.”  Simon Scott will return to his role as CFO one Mr. Magara reports for duty.

Whilst conditions at South African mines are currently quiet, to say that they are stable might be a bit of overstatement.  Aside from 22 years at the world’s largest platinum miner, Magara is a native of Zimbabwe, which should be a calming factor for the local miners.  But labor issues are not the only pressing matters that will be on Magara’s plate.  Demand for platinum is down and, therefore, so is the price.  The Wall Street Journal noted that car makers are using less platinum to help trim their own costs.

I’m sure that if Lonmin had a magic wand, it would wave it over the entire company, but that’s not the way things work, and they know it.  As the old saying goes, “You’ve got to admire a company that gets knocked down, but keeps on getting back up.”

Lonmin shares were down 1.90 pence today (0.65%) to 289.00.

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