Lonmin Share Discussion Threads

[lazyhisnibs] 27/7/2015 17:51

In the media regarding the proposed/planned job losses:

The NUM gave their initial reaction on Friday. I don't know about the other union.

As it did when Anglo Platinum tried to lay off about 14 000 in 2012 the ANC is getting involved and a meeting is to be organised by the President's office.

It has been said that the cap value of Lonmin right now would only equate to the cost of sinking a single new mine shaft. On the other hand it was also said that there might not be the confidence in this platinum market to build even a single mine shaft. (I may have misinterpreted this as I think it is Impala Platinum which is refurbishing one and building (or commissioning) two new ones but then again its decisions would have made long before the platinum price got down here.)

O/T - Today on China's Composite:



Anyway, Anglo and Lonmin are in the news mostly because of announced job cuts.

[goldenfish2010] 27/7/2015 16:27

last bell!

[careful] 27/7/2015 15:55

there will be no real sellers at this price.
just traders following the trend.

[goldenfish2010] 27/7/2015 15:47

closing at 50p today?

[bernieboy] 27/7/2015 15:43

Dealy I agree. But I thought it was cheap at 105! :@

[goldenfish2010] 27/7/2015 15:42

as you say : 'was'....

now is another story...

[dealy] 27/7/2015 15:37

The company was in pretty good shape prior to the recent drop in the platinum price. Its balance sheet has been strengthened with a large equity injection 3 years ago. The company is well managed and in a "good" year could generate 200m in Ebitda. It has carte blanche to cut headcount now due and it will do it. It is operating within its debt facilities. It also has a strong institutional shareholder base.

I think the sell off is overdone.

[goldenfish2010] 27/7/2015 14:57

rights issue is on the cards I hear.

this can halve from here IMHO

[bad robot] 27/7/2015 14:10

a spike down to 45p is coming today

[bad robot] 27/7/2015 14:09

dealy

not as crazy your jarvis? Are long you been out of broadmoor?

[audigger] 27/7/2015 12:48

Fortune favours the brave...I have bought some more......we have to hit the bottom soon!

[worm_c] 27/7/2015 09:43

I may be forced to eat my words but sub 60p seems very cheap. Just tucked a few away in my SIPP. Let's see what happens in a few years time.

Balance sheet is relatively healthy and things will look a lot brighter if platinum prices start to recover.

[lazyhisnibs] 25/7/2015 16:54

FT - Reversal of the Commodities Supercycle



-----------------------dealy----------------------------

The falls of late may be a set up for a bounce but really who knows over a few days. I can't see how the bounce will get far with a debt structuring being put together.

But in response to your remark two posts above, in Joburg on percentage terms Lonmin's fall exceed that of the resources sector by a multiple of about five on Friday.

London's more relevant to us so if anyone knows how much the resources sector fell Friday on the LSE please share.

---------------------------BBC article---------------------------



Extracts:

But Lonmin said despite the increase in production the weaker price of the precious metal and the weakness of the South African rand had continued to hurt profits.


South Africa's National Union of Mineworkers (NUM) said on Friday it was shocked by the decision to cut so many jobs. "As the NUM, we are going to fight against any job losses. It is very painful to see that these mining companies take the decisions of cutting jobs easy," the union said.

[rock star] 24/7/2015 21:05

The writing was on the wall. Don't back high cost producers when it comes to commodities.

The commodities to be looking at right now are lithium and iodine.


Rock Star 17 Mar'15 - 19:36 - 1619 of 1885 0 0 edit

Word of warning. People in the industry are saying at current prices there is no way Lonmin can survive as they are the highest cost producer. Someone needs to cut production to push prices up but the other major producers know if they production up then Lonmin will go to the wall.

Apologies to be negative but in the commodities game you don't want to be invested in the highest cost producer. Glencore haven't walked away for nothing.....

[dealy] 24/7/2015 18:49

Sector capitulation today. This is why this tanked.

[lazyhisnibs] 24/7/2015 17:13

Nice, not

This article after the close on Thursday but before today's open.

Based on what a stock broker once said to me (just before immediately back peddling)and the time of the article firms up my beliefs about when and how info often leaks. I'm not typing it here either as who knows for sure.


hxxp://news.sky.com/story/1524237/lonmin-to-extend-job-cuts-amid-platinum-slump

I picked the above up from a Lonmin BB on another Investment site and there's a positive one there too, more of a relief for holders that other one.

[lazyhisnibs] 24/7/2015 14:25

PRODUCTION

The tone of this document and that of the analysts' question time record (that I posted a couple of weeks ago from May) are starkly different. Safety's the best of reasons but perhaps they could build-in more minuses for that and load shedding. Then there might be some nice surprises going forward.

[lazyhisnibs] 24/7/2015 13:01

("We are reviewing the appropriate capital structure for the Company in the new pricing environment as we consider the need to re-finance our debt facilities. The Board is considering the full range of options available to secure long term capital and expects to update the market by the time of our full year results in November 2015.")

[...]

To argue that the extract in parenthesis above is fully in the price would, in my view, be naïve from past experience even though some of it might be but then that might only help derivatives traders who are good at their art and who get in and out quickly and use hard stops.

Additional fund raising is as good as inevitable as pilling on the debt just because they (appear to still) have the facilities is even worse in a falling sales price environment as it will take the share price down with it. Consider what happened to Petropavlovsk. Look at that one's chart. When POG's management first flagged covenant issues at the end of April 2014 the share price was around 80p. When they first flagged an RI it was in the region of 35 for 40p. The day before they provided the salient details for an RI it was 20p. The share price went on to fall to a low of about 6p. Then the issued share capital jumped from sub three hundred million to more than three billion.


Further, anyone thinking that the company's financial circumstances resulting from platinum market dynamics will make the negotiation of redundancies a lot less fraught should read a bit about the ongoing and difficult wage negotiations in the gold industry.

[deans] 24/7/2015 11:46

Added at 85p the other day and at 63p earlier today. This reminds me of the capitulation in the Lonhro share price in 1992 or thereabouts hoping for the same sort of rebound.

[careful] 24/7/2015 11:32

if you think you can con platinum injured investors to enter into another share in the same sector you are deluding yourself.

market cap now 377m.(amazing)
i dumped 30% of my holding at the open for 73.5p taking a loss.
still involved for the longer term but things look grim.

[nash81] 24/7/2015 09:47

anybody here in JLP - platinum tailing (not deep mine)

Lonmin, and other platinum producers are in deep shaft mine (huge cost and labour intensive) while JLP is focussing on tailing (low cost and profitable), even Tjate mine is shallow mine deep (not so deep as most other mines)

EXCELLENT POST FROM LSE :

for those wondering why Lonmin/amplat etc are cutting cost:

i am sure you are aware, those in JLP and especially those who have done their research, are well aware that platinum price is depressed and at the bottom. Lonmin, aqp and many companies are in problem and are cutting cost etc.

so what make JLP so special? JLP is in tailing dump/surface projects which are very low cost (hopefully you do know what is "tailing dump" ) and this low cost project are very profitable even at low platinum price, even more so when platinum price increasing next year, as expected by many analysts. this project also not labour intensive.

many platinum producers such as Lonmin, Amplat etc are mining in deep mine, down 3000m deep underground, hence huge cost are required. obviously for some deep mine, its not profitable to mine at current price. they are also labour intensive and are affected by strike in SA etc.

however, JLP tailing projects which are low cost, are so profitable that several banks already confirmed to part financing these tailing projects. now waiting legal sign off (see webcast)

in addition to tailing project, JLP also has Tjate, which has huge NPV of around 1.6bn. the good thing about Tjate is its not as deep as other existing mine. you can start mining as shallow as 600m deep (see JLP website)

Leon already confirmed they are in discussion with several parties interested for JV of Tjate, not surprising as i am sure Amplat (for example), can see Tjate will be even more profitable (shallow mine compared to other deep mine) then their existing mature mine. these large firm will not take the risk doing the JV with JLP now as we still havent got the mining licence yet. However, once we get the mining licence (within days i believe - see webcast), the uncertainty is then removed and hence will make it easy to finalise any JV.

but of course, you may not be interested to genuine response to your queries, as your objective is to deramp so that you can buy cheaper.

i will say to you, " good luck"

[worm_c] 24/7/2015 09:27

I agree dealy, all the bad news is already factored into the price. The job cuts will be able to happen now without the fear of more strikes. As someone said recently, whatever gripes the locals have with Lonmin, they don't want to kill the golden goose.

If efficiency can be increased and there's a recovery in PGM prices then it could all look very different in 12 months time.

Remember the volumes are still very low - over 500m shares in circulation so less than 0.5% being traded on an average day.

Add to that the above the ground stocks which are probably worth far more than the £400m capitalisation and I think we've probably found the bottom now.

Not for the faint hearted, but if you're happy to write of a few quid and forget about it for a couple of years this could be a great opportunity.

[dealy] 24/7/2015 08:30

it's all in the price in my opinion. They have the mandate to cut costs (now that they are ebitda negative at current prices) and this will remove obstacles for job cuts. They will be leaner and the platinum price could recover quickly from depressed levels. Does not necessarily have to raise equity given its has room within its debt facilities.

[salpara111] 24/7/2015 08:25

Agreed, I do think it is inevitable that they are going to have to raise more cash and that will come at a discount to the current share price
One day there may be a case for an investment here but that is probably years away.