27th Aug 2015 07:10
LONDON (Alliance News) - Lonmin PLC shares rose on Thursday after it said it has cut 1,400 jobs and lowered its cash costs below its guidance as the company continues to restructure the business to deal with the downturn in platinum prices.
Lonmin shares were up 5.2% to 36.26 pence per share on Thursday morning.
The FTSE 250-listed platinum producer in South Africa laid out a plan in July to cut 6,000 jobs and close mine shafts in the country in order to battle the downturn in the market and make the company capable of dealing with depressed platinum prices.
That plan was set to substantially reduce costs, but will also lead to the miner producing around 100,000 ounces less per year over the next two years.
Lonmin is highly geared to platinum group metal prices, and at current metal prices the company is Ebitda negative. Lonmin said the platinum price had fallen more than 14% between March and July 2015.
On Thursday, Lonmin said it had cut 1,400 of the 6,000 jobs and said the ongoing staff reductions are pressing ahead on schedule.
The miner said it has also achieved a cash cost below its original guidance. The company was aiming for a cash cost of ZAR10,800 per ounce, but this has fallen to ZAR10,499 per ounce in the first half of 2015, and Lonmin is expecting its full year cash costs to be below that original guidance.
"The board and management have set the clear objective of containing capital expenditure while cash-harvesting immediately available ore reserves from the Hossy and Newman shafts," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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