Lonmin looks at dividend as profits return

 
City A.M. Reporter
LONMIN, the world’s third-biggest platinum producer, is to resume dividend payments after posting a better-than-expected swing to full-year profit yesterday as prices and output recovered.

Investors were heartened that the London-listed company met its annual sales target despite repeated processing problems and targeted platinum sales growth of seven per cent this fiscal year.

Shareholders had suffered repeated disappointments over the past several years as a troublesome furnace kept causing shutdowns and new mechanised mining failed to meet targets.

“The time is now right to recommence dividends,” said chief executive Ian Farmer.

Lonmin, which operates in South Africa, recommended a payout of 15 cents per share and launched a new dividend policy.

The company will pay one dividend a year, seeking to maintain the initial level and increase payouts through special dividends.

Lonmin posted earnings per share of 70.2 cents (43.7p) for the financial year to the end of September compared with a loss of 59 cents last year.

Lonmin sold 706,000 ounces of refined platinum compared with guidance of 700,000 ounces and last year’s level of 682,955 ounces.

It met its sales target despite being forced to close its troublesome number one furnace again in May shortly after being repaired and had to send material to be processed by rivals, adding to costs.

The furnace, which was rebuilt last year, has a history of problems and shutdowns and has often forced the firm to cut sales guidance.

Lonmin set a sales target of 750,000 ounces for the current fiscal year, but warned that costs would be a challenge.