Lonmin shares tumble due to faulty furnace

 
Suzie Neuwirth
SHARES in FTSE 250-listed miner Lonmin plunged more than seven per cent yesterday afternoon, after the company announced that a furnace would be shut down after an incident.

The company has a history of problems with its smelters and the news comes at a time when another furnace is down for a planned upgrade.

Repairs on the furnace will take 30 to 40 days, the miner said.

However, other furnaces, which have around 50 per cent of the company’s capacity requirements, continue to operate.

“Lonmin has always faced these issues with smelters,” Alison Turner, analyst at Panmure Gordon, told City A.M.

“However, they are still getting ore out of the mine and they have a significant amount of back-up capacity now.”

The South African platinum miner has not yet given a view on whether the incident will impact its full-year production guidance.

“We will be assessing the options…and we will update the market in due course,” the firm said.

“We need more information from the company, but I think some refined output might be pushed into next year,” commented Turner.

Lonmin also announced yesterday that following a fatality in a mine last week, drilling and blasting operations in that shaft have been suspended until an investigation, in partnership with all stakeholders, is complete.

The company appointed Anglo American Platinum’s Ben Magara as its new chief executive earlier this month, effective from 1 July, replacing Ian Farmer who stepped down due to illness last December.

Shares closed down 5.7 per cent at 269p yesterday.