Lonmin warns on sales as takeover drags on

(Sharecast News) - Lonmin warned annual sales would be at the lower end of expectations on Friday after production fell and the platinum miner was disrupted by delays to its planned takeover. Mining production in the three months to the end of March fell 89.4% to 2.1m tonnes from a year earlier and total platinum production fell 12.3% to 125,803 ounces, Lonmin said in a trading update.As a result, sales this year will be near the bottom of Lonmin's earlier guidance of 640,000 to 670,000 platinum ounces.Annual unit costs will be higher than expected at between 13,600 rand and 14,400 rand per PGM ounce, up from between 12,900 rand and 13,400 rand per PGM ounce.Operating profit for the first six months of 2019 was $70m compared with a loss of $32m a year earlier. The improvement was driven by higher prices and a weaker rand-dollar exchange rate.Lonmin, which has said it is not financially strong enough to weather market turbulence on its own, accepted a £285m bid from South Africa's Sibanye-Stillwater in December. The deal has been held up because of legal proceedings over industrial action at Sibanye-Stillwater's platinum mines.Lonmin said its production would normally pick up in the second half but that operational performance was hit during the first half by low morale and high management turnover caused by its protracted takeover by Sibanye-Stillwater. This affected safety and production, safety stoppages and power outages.Ben Magara, Lonmin's chief executive, said: "Despite the progress made, this does not provide a long-term solution to the capital structure challenges faced by Lonmin, as it is still inadequate to invest in the new projects necessary to avoid shaft closures and job losses and maintain our production profile."The company's available liquidity is also still vulnerable when considering its working capital requirements and continuing exposure to volatile currency and metal markets."He urged shareholders to accept Sibanye-Stillwater's bid at a meeting on 28 May.Lonmin shares fell 1.3% to 64.92p at 0930 BST.