PLATINUM miner Lonmin yesterday said it was planning an $800m (£497m) rights issue to shore up its balance sheet in the wake of a violent five-week strike over the summer.
The world’s third-largest platinum miner had previously warned of the possibility of an equity raising, after the strike at its Marikana mine in South Africa hit output.
The proposed rights issue will reduce indebtedness and increase the miner’s financial strength, Lonmin said yesterday.
It will be underpinned by a standby underwriting agreement.
Lonmin also said it had tweaked a deal with its lenders to remove earnings-related covenants.
The company’s debt covenants are due to be formally tested in early November, although Lonmin said yesterday that it was unlikely that they would be breached.
Employees at Marikana have now returned to work, following Lonmin’s increased pay offer last month, and the firm said the ramp up to full platinum production was “going better than expected”.
Platinum output for the fourth quarter was down 45.7 per cent year-on-year due to the industrial action which crippled production throughout August. Around 110,000 ounces of mined platinum were lost due to the strike, Lonmin said.
Chairman Roger Phillimore said that following the events at Marikana, the miner needed “solid financial foundations” for the future.
“With the standby underwriting and amended debt facilities signed we have taken two decisive steps on our way to delivering that.
“We are confident about our financial security,” he said.
Lonmin shares closed up 6.98 per cent yesterday at 507.04p.