Lonmin returns to profit as output increases

Lonmin, the world’s third- largest platinum producer, returned to profit after output of the metal exceeded the company’s forecast and cost increases were below South African inflation.

Earnings were 31 cents in the year ended September 30, compared with a 202 cent loss in the previous 12 months, the Johannesburg-based company said on Monday in a statement. The median of 21 analyst estimates in a Bloomberg survey was for profit of 13 cents a share.

While sales fell 1 per cent to 696 000 ounces, they exceeded the company’s forecast of 660 000 ounces. Costs rose 3.8%, less than the 6% September annual inflation rate in South Africa, where Lonmin mines its metal.

"We regard our solid performance in 2013 as the foundation to build on," chief executive Ben Magara said.

Lonmin, a quarter held by Glencore Xstrata, cut capital expenses and raised $817-million from shareholders in the past year as it recovered from a six-week strike in 2012 during which at least 44 miners died, including 34 in a clash with police.

Lonmin forecast annual platinum sales of more than 750 000 ounces in the year through September, and said unit costs will increase by less than wage inflation. The company plans capital spending of $210-million this fiscal year, it said.

Magara, former head of engineering and capital projects at Anglo American Platinum, took over as chief executive on July 1. – Bloomberg

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Andre Janse
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Van Vuuren
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