Lonmin needs funding for total recovery

Shareholders and money lenders to assist in Lonmin recovery

Lonmin needs funding from shareholders and money lenders
Funding necessary for recovery
After six weeks of disruption, the world’s third-largest platinum miner, Lonmin, commenced production at its Marikana mine this week after striking workers had agreed to an 11% to 22% pay increase. It is losing money and what it faces now is to sort out its balance sheet and for that it needs to go to shareholders and its money lenders to raise cash to keep it going.
Various reports in the local and international media about this year’s labour crisis and violence at South Africa’s platinum and gold mines say that investment in the sector has taken a knock, but analysts take a long term view which is positive now that the platinum price has climbed from around $1400/oz before the Marikana strike to around $1600/oz. 
Key shareholders include Xstrata (25%), and black economic empowerment (BEE) company Inc­wala Resources (18%) whose biggest shareholders are Cyril Ramaphosa's Shanduka (50%) and the Industrial Development Corporation (IDC) and Lonmin (23% each). 
It is not known whether they will exercise their rights in any capital raising exercise. To complicate things, Xastrata is the subject of a takeover bid by commodities trading giant Glencore which, according to reports, this week threatened to walk away from any deal if Xstrata’s shareholders, wanting a better offer, do not accept the deal on the table.
Lonmin has debt facilities totalling about $945-million. One analyst who declined to be named told Reuters he expected Lonmin’s lenders, which include Royal Bank of Scotland and Lloyds Banking Group, to be flexible in the short term.
The end of the strike will give the miner a stronger hand in its refinancing talks with lenders, say analysts.
Lonmin is expected to make a financial statement soon.
comments powered by Disqus


This edition

Issue 35


Mining_Magazine Do we need more nuclear energy going forward? https://t.co/yOmktfT81v https://t.co/Xk04ZUZcjV 6 days - reply - retweet - favorite

Mining_Magazine The Big Time Strategic Group BBQ Awards will be hosted at Emperors Palace, on the 20 October 2017. Read more… https://t.co/R5IdLMb0fm 6 days - reply - retweet - favorite

Mining_Magazine Thandeka Molakeng is the new Head of Sales for BASF’s Performance Material Division in Africa… https://t.co/C4bSDeemNr 11 days - reply - retweet - favorite

  • Bareng Geoffrey Mogorosi
  • Leon Louw
  • Ousi Mthombeni
  • Sanele Mtshali