Lonmin slashes metal estimate amid job cuts

PLATINUM producer Lonmin has slashed its estimate for the amount of metal it is able to sell this year by almost nine per cent to between 685,000 and 700,000 ounces, down from 750,000 as previously forecast.

Ongoing strikes at its Marikana mine have left the firm unable to produce platinum.

Lonmin warned in August it would likely breach its debt covenants before a funding test on 30 September, and said it would consider a rights issue to raise cash.

While no decision has been made on the rights issue, it is understood that talks between Lonmin and the banks to extend its covenants are in an advanced stage, and further details are expected in the next seven to 10 days.

The precious metal miner has closed its K4 shaft, one of 11 shafts at Marikana, leading to 1,200 miners having their contracts cancelled.

Negotiations over wages restarted yesterday afternoon after an initial offer made by the company was rejected last week.

Wildcat protestors at Marikana are demanding a wage increase to 12,500 rand a month, around three times the South African national average.

The country’s government is now putting pressure on the miners to get back to work, as the situation has now spread to many other precious metal producers, including Goldfields, Anglo American Platinum, Aquarius Platinum and Xstrata.