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Johannesburg - Lonmin [JSE:LON] dropped to the lowest level on record in London trading as platinum is set for the biggest weekly decline since October and UBS Group AG cut its recommendation on the world’s third-largest producer of the metal to sell.
Lonmin fell as much as 11% to R15.90, the lowest intraday level since at least September 1988, and traded 8.5% down at 85.05 pence at 13:15 in London, giving the company a market value of £499m (approx R9.66bn).
READ: Platinum shares hit multi-year lows
While platinum gained 0.6% to $1 031.07 (approx R12 878) an ounce, it’s still set for a 4.8% loss this week, the biggest decline since October. The metal, used mainly in pollution- control devices for cars and for jewellery, sank to $1 010.26 (approx 12 618) on Wednesday, a six-year low. UBS reduced its recommendation from neutral.
Lonmin in May cut its capital expenditure forecast for this fiscal year to $160m (approx R2bn) from $185m (approx R2.31bn) and capped annual spending through September 2017 as it battles the price slump while salaries and costs climbed.
“It’s really just down to the underlying commodity-price environment: it’s pretty brutal and Lonmin is a very marginal producer,” said Edward Sterck, a BMO Capital Markets analyst in London.
“The South African PGM producers, they’re all in a very challenged position.”
About 4.4 million Lonmin shares changed hands in London, or more than twice the daily average over the past three months.
