Lonmin to sell off 500,000 platinum capacity

Lonmin

Africa’s largest producer of platinum, Lonmin said it will generate cash sale of the excess processing capacity of up to 500,000 platinum ounces per annum.

The company said the overcapacity benefit not only of releasing capital for Lonmin but would also allow other South African PGM producers who currently operate on a sale of concentrate basis to access the profit margin benefits of an integrated beneficiation model. 

Lonmin said it will review its major development capital requirements over the next few years. Lonmin will consider selling for cash or introducing joint venture partners into Limpopo and Akanani together with exploring options to introduce funding partners into K4.

Lonmin’s current capital position makes it challenging to fund the MK2 project which is necessary to extend Rowland’s economic life. Lonmin believes that the MK2 project will be value accretive and the Company will explore options to introduce funding partners and preserve approximately five thousand jobs.

The reduction in annual overhead costs by a minimum of ZAR500 million by the end of the year ending 30 September 2018. The substantial majority of overhead reductions will come from non‐ production central functions as the Company seeks to right‐size its overheads to its operations. In addition, Lonmin will continue to identify further overhead and cost savings.

The company has also announced that it received approval by the DMR of its S11 application to acquire the Pandora JV from Anglo Platinum which will defer R2.6 billion of capital expenditure and contribute to the sustainability of the business by potentially preserving jobs at E3 shaft.

Lonmin said received approval from the competition tribunal and is in the process of obtaining lender consent.