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Lonmin improves financial position ahead of Sibanye takeover

Nov 29 2018 20:03
Sibongile Khumalo

Lonmin, which is on the verge on a takeover by Sibanye-Stillwater reported improved operating profit of $101m, compared to a $1,079m loss seen in 2017 after impairment.

The financial results for the six months ended September 30 could be Lonmin’s final reporting, if the R5.1bn deal which is expected to be finalised in the first quarter of 2019 is successfully concluded. The company lifted its net cash position to $114m, up from $103m in 2017. 

CEO Ben Magara told PowerFM on Thursday afternoon that the platinum miner had turned a profit for the first time in four years.

The growth in operating profits will enable Lonmin to pay its first Employee Profit Sharing to employees.

Debt-hit Lonmin, which is one of world’s third largest platinum producers had battling financial constraints and describes the proposed transaction as being “in the best interest” of the company.

“I am extremely mindful, however, of the liquidity constraints we continue to face and the significant investment needed in our mines to preserve and prolong their lifespan. We recognise that Lonmin would be better placed  as part of a stronger, enlarged  and  diversified group,” said Magara.

“We therefore remain focused on completing the Transaction with Sibanye-Stillwater, which will provide a stronger platform for Lonmin's shareholders and other stakeholders, and a more sustainable business better able to withstand uncontrollable conditions.

Last week, the Competition Tribunal approved the merger with conditions, which includes plans to save jobs that would have been lost as a result of the merger. The deal is now subject to approval by shareholders and sanction by the courts of England and Wales.

The deal has received a nod from the South African Reserve Bank.

Lonmin which is listed on the JSE and London said revenue increased by $179m, driven by higher Platinum Group Metals (PGM) prices, although platinum market remained depressed during the financial year.

Platinum's contribution to Lonmin's PGM basket revenues reduced from 58% to 45%, while palladium improved to 23% and rhodium increased to 16% of the total revenue basket.

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