Lonmin seeks 457 million dollars after net loss
LONDON: British mining group Lonmin said on Monday it was seeking 457 million US dollars (335 million euros) from shareholders after suffering a first-half net loss amid the global economic downturn.
Lonmin said in a results statement that it faced a net loss of 112 million dollars in the six months to the end of March, compared with a net profit of 283 million dollars in the same period of the previous fiscal year.
Revenues collapsed by 51 percent to 436 million dollars as the miner was hammered by weak demand arising from the worldwide economic slump.
The world's third-biggest platinum miner also blamed volatile metal prices and unfavourable foreign exchange rates for the poor performance.
"The board of Lonmin today announces an underwritten rights issue to raise net proceeds of approximately 457 million US dollars," Lonmin said in a statement released alongside its interim results.
"The net proceeds of the rights issue will be used to substantially strengthen the company's overall financial position at a time of unpredictable prices and foreign exchange rates," it said.
The issue price of 900 pence per new share represented a 44.5 percent discount to Friday's closing share price. Lonmin added that major shareholders Xstrata and M&G have agreed to take up 35.97 percent of the sale.
The global downturn has sent commodity prices plunging, hitting the mining industry where thousands of jobs have been lost.
Lonmin, like other platinum producers, has been hit hard by the global economic slowdown and tumbling demand from the automotive sector, which uses the metal to manufacture catalytic converters for exhaust systems.
Earlier this year, Lonmin slashed up to 5,500 jobs in South Africa in a major restructuring.
"With the PGM (platinum group metals) demand outlook remaining uncertain, we have acted decisively to achieve improvements in productivity, reduce our cost profile and to adopt a more conservative capital structure," said Lonmin Chief Executive Ian Farmer on Monday.
"We have successfully completed a major restructuring programme at our operations which will improve our cost profile.
"We have also strengthened our financial position by extending our banking facilities, thereby reducing our financing risk. Additional financial headroom and enhanced balanced sheet flexibility will be delivered through the rights issue launched today."