Platinum miner Lonmin cuts costs, builds cash
Platinum miner Lonmin cut more costs and improved its mining performance in its third quarter, it said on Monday, but falling metal prices continued to weigh.
Shares in the South Africa-focused company were up 7 percent in London by 0920 GMT, outpacing the wider sector.
Lonmin has been struggling with shrinking profit margins due to high costs, operational issues and stubbornly low platinum prices.
In the previous quarter, a $146 million impairment brought the company close to breaching its debt covenants as its liquidity shrank.
Lonmin showed signs of improvement in the three months to the end of June as unit costs fell 4.7 percent compared to the previous quarter. But costs rose 6.4 percent from the same period a year ago.
Total tonnes mined rose 3.8 percent to 2.7 million tonnes compared with the same period a year ago and up 13.2 percent versus the previous quarter.
Net cash improved to $86 million from $75 million at the end of the previous quarter.
"We continue to find levers to pull, in this 'lower prices for longer' environment and to make the improvement of our performance a priority," Chief Executive Ben Magara said.
The average basket price for its metals fell in the quarter, down 3 percent compared to a year ago, concerning analysts.
"Despite the better than expected results, we maintain that the company will continue to face significant headwinds in terms of lower rand basket price, increasing costs and liquidity concerns," Citi said in a note.