TIDMLMI
RNS Number : 2187N
Lonmin PLC
07 August 2017
LEI No: 213800FGJZ2WAC6Y2L94
REGULATORY RELEASE
Not for release, publication or distribution (directly or
indirectly) in whole or in part, in, into or from any jurisdiction
where to do so would constitute a violation of the relevant laws of
such jurisdiction.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
07 August 2017
Lonmin is taking further decisive action to ensure a sustainable
business in a continuing adverse macroeconomic environment
On 17 July 2017, Lonmin Plc ("Lonmin" or the "Company")
announced its third quarter production results and business update,
which reported improved mining performance, reduced unit costs and
increased net cash.
Despite this pleasing performance, Lonmin continues to be
concerned by the persistent adverse macroeconomic conditions and
the inflationary cost pressures confronting the platinum mining
industry in South Africa. Therefore, despite having already taken
significant measures to reduce costs, Lonmin is announcing further
measures to ensure that its operations generate sufficient cash to
support a sustainable business.
In addition to continuing to remove high cost production, Lonmin
is today announcing the initial conclusions resulting from an
on-going review of its operations (the "Operational Review"), which
has the primary objective of preserving value for shareholders and
safeguarding the long-term interests of employees and all key
stakeholders. The Operational Review is focused on optimizing the
cash produced by the business, both from its operations and through
releasing capital from those activities where the Company is
currently bearing the cost of excess capacity and unrealized
development potential. The review is also designed to position the
Company to benefit from any future improvement in the PGM pricing
environment.
The immediate results of the Operational Review include
initiatives to generate cash through the monetization of select
Lonmin assets and to preserve cash by reducing fixed costs. Subject
to receiving the necessary consents and approvals, Lonmin plans to
implement the following:
-- Pursue all options to maximize cash from Lonmin's high
quality downstream processing operations. It is currently intended
to implement this through the sale of excess processing capacity of
up to 500,000 platinum ounces per annum. This would have the
benefit not only of releasing capital for Lonmin, but would also
allow other South African PGM producers who currently operate on a
sale of concentrate basis to access the profit margin benefits of
an integrated beneficiation model.
-- A review of the Company's major development capital
requirements over the next few years. In this regard, Lonmin will
consider selling for cash or introducing joint venture partners
into Limpopo and Akanani together with exploring options to
introduce funding partners into K4.
-- Despite consistent strong performance from Rowland, Lonmin's
current capital position makes it challenging to fund the MK2
project which is necessary to extend Rowland's economic life.
Lonmin believes that the MK2 project will be value accretive and
the Company will explore options to introduce funding partners and
preserve approximately five thousand jobs.
-- The reduction in annual overhead costs by a minimum of ZAR500
million by the end of the year ending 30 September 2018. The
substantial majority of overhead reductions will come from
non-production central functions as the Company seeks to right-size
its overheads to its operations. In addition, Lonmin will continue
to identify further overhead and cost savings.
It is too early to define the ultimate effect of the Operational
Review on the Company, but the overall aim remains for the business
to be cash positive after capital investment. Further announcements
will be made as and when appropriate and Lonmin will engage with
all appropriate stakeholders in relation to these initiatives.
Lonmin is also pleased to announce today the approval by the DMR
of its S11 application to acquire the Pandora JV from Anglo
Platinum which will defer R2.6 billion of capital expenditure and
contribute to the sustainability of the business by potentially
preserving jobs at E3 shaft. Lonmin has already received approval
from the competition tribunal and is in the process of obtaining
lender consent.
- ENDS -
ENQUIRIES
Lonmin Investor Relations:
+44 203 908 1073 / +27 11 218 8358
Tanya Chikanza (Head of Investor Relations)
Andrew Mari (Investor Relations Manager)
Media:
Wendy Tlou +27 83 358 0049
Anthony Cardew / Emma Crawshaw, Cardew Group +44 207 930 0777 /
+44 7770 720 389
Financial Advisers:
Gleacher Shacklock LLP
+44 207 484 1150
Dominic Lee / Jan Sanders / Paul Finlayson
Moshe Capital Proprietary Limited
+27 11 783 9986
Mametja Moshe / Konosoang Asare-Bediako
Financial Adviser and Corporate Broker:
J.P. Morgan Cazenove
+44 207 742 4000
Michael Wentworth-Stanley / Dimitri Reading-Picopoulos
Additional Information
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to the laws of
other jurisdictions should inform themselves of, and observe, any
applicable requirements. Any failure to comply with applicable
requirements may constitute a violation of the securities law of
any such jurisdiction.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
Notes to editors
Lonmin, which is listed on both the London Stock Exchange and
the Johannesburg Stock Exchange, is one of the world's largest
primary producers of PGMs. These metals are essential for many
industrial applications, especially catalytic converters for
internal combustion engine emissions, as well as their widespread
use in jewellery.
Lonmin's operations are situated in the Bushveld Igneous Complex
in South Africa, where more than 70% of known global PGM resources
are located.
The Company creates value through mining, refining and marketing
PGMs and has a vertically integrated operational structure - from
mine to market. Underpinning the operations is the Shared Services
function which provides high quality levels of support and
infrastructure across the operations.
For further information please visit our website:
http://www.lonmin.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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