Lonmin Stock Drops on Output Shortfall Fears
By Charlotte Mathews
06 Jun 2008 at 11:06 AM GMT-04:00
resourceinvestor.com
JOHANNESBURG (Business Day) -- Platinum producer Lonmin’s [LSE:LMI; JSE:LON] shares dropped as much as 3.6% to R503.38 on the JSE yesterday on fears of another shortfall in production next year.
Bloomberg reported that Goldman Sachs had said after an analysts’ visit to Lonmin’s operations this week that the company was likely to produce only 850,000 ounces of platinum in its next financial year, not 885,000 ounces as previously forecast, because of a slower ramp-up from the fully mechanised Saffy and Hossy shafts at the Marikana mine near Rustenburg.
Bloomberg also reported two other brokerages, Liberum and Citigroup, as saying the promised recovery in production at Lonmin was not being met.
Lonmin CE Brad Mills, who has been described as a “mechanisation zealot,” said last month during the group’s interim results presentation that the ramp-up of mechanised mining at Marikana had been slower than anticipated.
Mechanised mining contributed 11% of underground production and would be 13% for the year, against a target of 17%. But Lonmin spokes- woman Alex Shorland-Ball yesterday denied industry rumours that Lonmin would abandon the target of 100% mechanisation at Saffy and Hossy because it caused grade dilution.
It was rumoured Lonmin would revert to conventional mining at part of those shafts. Mechanised mining means using machines, as opposed to conventional mining, which is labour-intensive. Mechanisation is safer but is not always possible depending on the characteristics of the ore deposit.
Shorland-Ball said the two shafts were fully mechanised.
“The shafts are behind targeted production due to a combination of factors which are typical to the implementation of new technology and which we are addressing,” she said in an e-mailed response.
“These include better planning and increasing productivity around each suite and we also have not yet implemented continuous operations which we had assumed in our targets for the year. Grade is lower currently as we are in ramp-up and taking a large proportion of development ore out, which is a wider cut with fewer ounces.” |
