Lonmin profit triples as platinum surges
MARK BENDEICH, London | Wednesday
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SOUTH Africa's third largest platinum miner, Lonmin Plc, has tripled its annual pre-tax profit, almost doubled its dividend and said the good times should continue to roll.
Lonmin raised its seven-year platinum production target by seven percent to 870 000 ounces and said the accelerated expansion would bring it close to being the world's second largest producer behind number one Anglo American Platinum.
Lonmin said the expansion would require capital investment of $550m, but made clear that a virtually debt-free balance sheet and a spring tide of cash could comfortably fund this and other investments, including acquisitions.
Lonmin's newly appointed chief executive, Edward Haslam, said he was "extremely optimistic" on the outlook for platinum prices and said tighter controls on car emissions underpinned demand for the precious metal.
Platinum is used in catalytic converters to remove pollutants from car exhausts and also is finding its way increasingly into new uses, such as fuel cell technology.
He said Lonmin was considering expanding its reserves in South Africa, home to over 70% of the world's platinum production, but did not rule out acquisitions.
Lonmin, which has restated its 1999 results to reflect the disposal of its non-precious-metals portfolio, reported pre-tax earnings before exceptional items of $392m for the year ended September 30, on the high side of market expectations.
The result was 209% up on its restated 1999 result of $127m and double the actual 1999 result of $190m. It raised the dividend by 96% to a full-year total of 35 pence or 50 cents, a rise of 72% in US currency terms.
Lonmin has no corporate debt and has been under pressure to return cash to shareholders as it reaps the benefit of a platinum price which has risen, on average, 28% between 1998/99 and 1999/00.
Lonmin produced 610 000 ounces of platinum in 1999/00 and raised its production target to 870 000 ounces by 2007. The earlier target was to reach 810 000 ounces by 2007. - Reuters
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