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Xstrata urges Lonmin shake-up

Nov 16 2012 07:55
AFP
Zurich - Swiss commodities giant Xstrata called on Thursday for a management shake-up at Lonmin [JSE:LON], in which it is a major shareholder, citing serious financial problems at the platinum mining group.

The development comes after Lonmin announced a $800m rights issue, which Xstrata chief executive Mick Davis agreed was necessary, in view of the "strategic and operational challenges that Lonmin faces".

Violent strikes that disrupted work for nearly six weeks at Lonmin's Marikana platinum mine in South Africa left 46 people dead, including 34 who were killed by police gunfire, and the British company financially weakened.

"Given the dire financial position of Lonmin, we concur that a substantial recapitalisation of the business is required," the Xstrata chief said in a statement.

"However that recapitalisation must be backed by a suitable management team and business plan," he added.

Xstrata could vote against the proposed recapitalisation at the forthcoming Lonmin annual general meeting, Davis said, but this would most likely hinder Lonmin's recovery.

"We want Lonmin to begin its recovery from this difficult time as soon as possible," Davis said, adding that Xstrata nonetheless had a responsibility to its shareholders and "cannot passively lend our financial support to a strategy that we believe is flawed.

"We will, therefore, be seeking change to the Board and management promptly following completion of the rights issue."

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