With a history spanning over 100 years, Lonmin is one of the world’s largest primary producers of platinum group metals (PGMs), holding resources of over 183 million ounces. Platinum accounts for 60-70% of revenue, with gold, copper, nickel, chrome and cobalt also contributing.

The company’s core operations consist of 11 shafts and inclines within the Bushveld Igneous Complex of South Africa. The Marikana mine is the group’s flagship operation, accounting for 95% of Lonmin’s output, with the adjacent Pandora mine accounting for the remaining 5%. Lonmin is in possession of a new order mining licence for their core operations, which runs to 2037 and is renewable to 2067.

In addition to exploration projects in South Africa, the group has also decided to buy into small exploration projects in Canada and Ireland through joint ventures. Lonmin shares are for sale on both the London Stock Exchange and the Johannesburg Stock Exchange (JSE). The group recorded revenue of US$1.3 billion in 2015, with Lonmin share price suffering from the challenging conditions within the mining trade.

Lonmin share price and performance have been severely hampered by unprecedentedly low metal prices, labour unrest and maturing of existing bank credit facilities.

The company suffered a $1.3 billion loss in the 2015 financial year. Following a period of extensive restructuring and downsizing, the company consolidated slightly in the six months ended March 2016, recording an $11 million loss for the period. The group achieved much improved platinum sales of 361 000 ounces compared to 95 000 ounces the previous year, and weak PGM prices were somewhat offset by the weakness of the rand against the dollar. The group realised cost savings of R469 million for the period, representing 67% of the annual 2016 target of R0.7 billion, which will be achieved through reduction in workforce, overhead costs and total cost of ownership projects. Focus is also being placed on minimising capital expenditure.

Benefits from the reorganisation of the group are expected to be seen in the coming months, with a stated aim of keeping the business cash flow positive whilst maintaining optionality to grow production when pricing improves.

Lonmin has been something of a sinking ship for shareholders over the past few years and has not been a popular stock to buy. As the group emerges from
restructuring, management has said that the new business plan will give them a stable platform to buy into any opportunities once platinum prices strengthen.

Most investment analysts agree, however, that Lonmin share price will continue to underperform the market, with many suggesting that shareholders sell their stakes in the company. With numerous difficulties to overcome, it will be a long time before Lonmin share price can recover to its heyday. At present, investors will find little reason to buy Lonmin shares.

Materials

Metals & Mining

Precious Metal Mining

We have made it simple to buy JSE listed firm shares online. The easiest way to buy Lonmin Group shares or stocks is to; start by submitting the ‘BUY THIS SHARE’ form. Next, one of our experienced and certified stock brokers will personally get in contact with you to discuss your custom stock request. Finally, a stock advisor will confirm the amount of shares you are looking to invest in Lonmin Group and assist you with the setup and management of your stock portfolio account.

1. Start by Filling in the BUY THIS SHARE form.
2. Insert your name, email, telephone number and monthly remuneration.
3. Then, Indicate the amount you are looking to invest in Lonmin Group.
4. Click the “ INVEST NOW” button
5. Once we have received your info, a dedicated stock advisor will personally call you back to discuss your personal share request.
6. Lastly, your newly appointed personal stock advisor will handle all account setups and reporting as stipulated by the financial services board of South Africa (FSB)

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