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Lonmin flags further asset sales to weather South African platinum slump

Citing adverse economic conditions and inflationary pressures on the platinum sector in South Africa, Lonmin Plc announced additional measures to generate additional cash flow by selling off certain assets and cutting costs, according to an Aug. 7 news release.

The company intends to sell up to 500,000 ounces of excess annual platinum processing capacity. It is also considering selling or introducing partners to its Limpopo and Akanani platinum group metals projects following a review of major development capital requirements.

Lonmin will also explore options to introduce funding partners to the Rowland MK2 project and the mothballed K4 shaft at the Marikana mine in South Africa.

It is planning to cut at least 500 million South African rand in annual overhead costs by the end of the year ending Sept. 30, 2018, with the majority of it coming from non-production functions. Lonmin will also continue to identify further overheads and cost savings.

"Lonmin continues to be concerned by the persistent adverse macroeconomic conditions and the inflationary cost pressures confronting the platinum mining industry in South Africa. Therefore, despite having already taken significant measures to reduce costs, Lonmin is announcing further measures to ensure that its operations generate sufficient cash to support a sustainable business," the company said.

The aim of the exercise is for the company to reach positive cash flow after capital investment.

Lonmin also said South Africa's Department of Mineral Resources has approved an application to acquire the remaining 7.5% equity stake the Pandora platinum joint venture from Northam Platinum Ltd. unit Mvelaphanda Resources Pty. Ltd. for 45.6 million rand.