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Fall in losses at platinum miner Lonmin

Published 16/05/2016

Lonmin specialise in platinum used in catalytic converters
Lonmin specialise in platinum used in catalytic converters

Platinum miner Lonmin said it had "delivered on our promise" to cut costs as the firm's losses narrowed in first six months of the year.

The London-listed business posted pre-tax losses of 21 million US dollars (£14.6 million) in the first half of its year to March 31 as it slashed jobs, compared to a loss of 118 million (£82.2 million) US dollars a year ago.

The South African-based miner said it cut 5,433 posts over the period, and plans to make a total of £31 million in savings over the rest of the year.

The firm launched a 400 million US dollar (£279 million) rights issue in November as a result of plunging platinum prices and rising costs.

Lonmin is the world's third largest producer of platinum, and much of its ouput is used to make catalytic converters which cut car emissions

It said refined platinum production jumped 33% to 348,885 ounces over the period, compared to a year ago.

Chief executive Ben Magara said: "These results reflect the positive momentum in Lonmin, we have delivered on our promise to restructure and cut high cost production in this oversupplied market while simultaneously reducing costs and improving cashflows."

"There is still a lot of hard work ahead as we squeeze out more costs and drive operational improvements and our key risks remain safety and its related stoppages and relationships."

The South African platinum mining industry went through a bitter five-month strike in 2014, which eventually raised wages.

The firm said it expected vehicle and chemical demand for the metal to remain firm this year "despite current concerns over the diesel market and the economic headwinds in China".

Shares in Lonmin jumped more than 18% in early trading today, though they have lost more than 80% of their value compared to a year ago.

Shore Capital analyst Yuen Low said: "Full-year sales guidance appears do-able, a little more work needed on costs; ship turning around, but needs favourable price and foreign exchange winds to go anywhere fast."

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