Is Lonmin Really Turning The Corner?

The embattled miner’s CEO, Ben Magara, thinks better days may lie ahead for the platinum producer, but analysts remain concerned about cash flow.

- David McKay

Analysts remained as sceptical of Lonmin as ever judging by their comments following the platinum producer’s half-year figures earlier in May in which cash in hand fell to $75m from $114m in the six months of the prior year.

There’s even speculation about town that Sibanye Gold will swoop in for the company when the cash runs out and Lonmin asks the market for more funds. Lonmin required a $407m recapitalisation by means of a rights issue at the end of 2015.

It said earlier in May it still had a net worth some $340m above the $1.4bn required as a key debt covenant with lenders, but a major hiccough either to production or platinum group metal (PGM) prices could make for shareholder discomfort. It’s worth remarking that government pensions are exposed to Lonmin: the Public Investment Corporation (PIC) is one of Lonmin’s largest investors.

Lonmin CEO Ben Magara, however, is keeping his chin up. There was enough evidence in March – when the company was at [cash] break-even – to suggest that better days lie ahead, Magara told