Lonmin Share Discussion Threads

[goldenfish2010] 31/7/2015 10:52

LMI’s tangible net asset value stands at 280p, if a take over offer comes then it should be close to 150p-200p imo.

[careful] 31/7/2015 10:40

long term there is a business here, it is just a question of rightsizing the overheads.
if they produce 1m oz at say $1000/oz they have an income of $1bn, after closing the shafts and reducing staff as proposed.
these are close to the numbers they have recently published.

to justify to todays market cap of £300m they need to make about £30m profit pre tax.
a good little business which a modest increase in platinum price will transform.

p.s.why the hell do we have to wait until November for the strategic review.
have these guys any urgency?

[goldenfish2010] 31/7/2015 10:14

I see share price reversing only if there will be an interest to buy out LMI's mines. you never know. maybe there will be an investor taking advantage of the situation and buys in for the long term.

[goldenfish2010] 31/7/2015 10:12

noone doubts that the assets are worth much more than current mcap. markets are irrational and they anticipate worst times coming hence the share price collapse IMO.

[goldenfish2010] 31/7/2015 10:09

with platinum prices below £1000 all SA producers are loss making.

LMI has the most inflexible assets vs its peers. They have to refinance debt at the worst moment where balance sheet is getting very ugly. their efforts to sustain the business is critical as they need money and time to implement them.

UBS came out saying that even if the platinum prices start rising still LMI will be in a difficult position!

[dealy] 31/7/2015 10:07

I don't see the parallel with Afren. The latter had disasterous financial controls, huge debts and nascent production and still required the execution of a huge capex program. Lonmin is not in that situation. It is a mature company with well developed operating processes. It is suffering at present from a weak platinum price but it has the ability to cut costs.

I think this is overdone.

[ravenna23] 31/7/2015 09:10

Commodity value US$. Production cost SA Rand. In US$ terms POG price has tanked but then so have production costs as they are in SA Rand. Who is selling US/UK pension funds. Who is shorting US/UK proprietary traders. Who is buying SA pension funds. At the end of the day all commodities are finite. This is an example of the commodity cycle. Look at the strength of the commodity producing countries currencies, South Africa, Australia, Brazil all are falling v US$ and will continue to do so as US interest rates threaten to rise. Global terms of trade are cycling.
The question here is whether Lonmin as a business enterprise, ie a miner, is sound. Is it selling large future contracts at current prices, in which case it well may do an Australian 'Sons of Gwalia" and go bust. Is it going to cut production to reasonable levels, given current prices, to ride out the storm. Is there a long term demand for POG?
In the meantime it seems to me that US/UK investors are selling assets cheaply, but then I take a long term view.

[pro_better] 31/7/2015 09:08

dealy

I know its hard to accept the reality. I 've been there, done that (AFR)

the sooner you realize, the less harm you do to your wallet.

[lazyhisnibs] 30/7/2015 18:17

Northam Platinum - wage deal

hxxp://www.fin24.com/Companies/Mining/NUM-signs-wage-deal-with-Northam-Platinum-20150730

[dealy] 30/7/2015 18:05

Shorts think it is a certainty that a deeply discounted RI is on the cards. They think it's their right to make easy money out of eve ts that are normal course of business events as opposed to complete disasters. I do not believe the company is in dire straits or that a 70% share plunge from already discounted levels is warranted quindell syle bounce coming here soon

[dealy] 30/7/2015 18:05

Shorts think it is a certainty that a deeply discounted RI is on the cards. They think it's their right to make easy money out of eve ts that are normal course of business events as opposed to complete disasters. I do not believe the company is in dire straits or that a 70% share plunge from already discounted levels is warranted quindell syle bounce coming here soon

[goldenfish2010] 30/7/2015 16:22

sure.

there are a lot of mines up for sale for some time with better economics than those of LMI's and still they are unsold.

unfortunately cannot see an alternative to a RI in the teens.

[lazyhisnibs] 30/7/2015 16:09

goldenfish,

You might be surprised to learn that I wouldn't be that surprised after watching POG play out. The trading day before their management announced the salient terms which included a discounted price of 5p on a 15 to 1, the share price had closed at about 20p. (It had been about one and a half times that before they gave the RI heads up a few weeks before but without the most salient of terms.)

Lots of people have leant about these nasty situations the hard way so it becomes a vicious circle. Things go wrong. The share price comes down in steps. More things don't work out. More steps down. Anxiety builds as cold realisation visits more and more holders. Then the big falls to levels that seem crazy. (Usually there are more notable bounces though.)

When the management(not just this one)finally bites the bullet (in a long-winded and technical process) the resulting RI discount and even more so the level of dilution is a shock even for those half expecting it.

I acknowledge that management may still surprise us with a more nuisanced solution and in the mean time there will would generally be quite exciting bounces. Perhaps mostly of the short covering variety.

Time will tell and the PIC's input shouldn't be easily dismissed by anyone in my view.

[pro_better] 30/7/2015 16:04

thanks George,

well I guess the discount will be really huge since even big IIs are not keen for share sale, undertake RI.

I don't see any other way to raise funds, since market is not at its best for mergers and acquisitions.


UKGeorge
30 Jul'15 - 15:56 - 1959 of 1959 0 0

[ukgeorge] 30/7/2015 15:56

with regard rights issue

Lonmin’s Largest Holder Averse to Share Sale for Raising Funds
2015-07-30 13:38:07.287 GMT


By Andre Janse van Vuuren and Janice Kew
(Bloomberg) -- Lonmin Plc’s largest shareholder, South
Africa’s Public Investment Corp., said the platinum producer
should find alternatives to a share sale as a way of refinancing
debt amid a rout in metal prices.
The world’s third-biggest platinum miner is reviewing its
capital structure and looking for ways to renegotiate about $563
million in debt facilities that will expire in the first half of
next year. It’s operating at a loss as prices for platinum, used
to clean the emissions of gasoline-fueled vehicles and for
jewelry, plunged to a six-year low this month.

While the market may be factoring in a rights offer, “the
Public Investment Corp. is of the view that Lonmin should look
at other ways of addressing their balance-sheet challenges,”
Daniel Matjila, chief executive officer of the Pretoria-based
state pension-fund manager, said in an e-mailed response to
questions Thursday. The PIC holds a 9.9 percent stake in the
metal producer
Lonmin fell 2.9 percent to 54 pence at 2:16 p.m. in London,
extending the decline this year to 70 percent. It’s 2015’s worst
performer on the 646-member FTSE All-Share Index and on the
broadest stocks gauge in Johannesburg, which has 170
constituents and where it’s fallen 66 percent.
Lonmin declined to comment to e-mailed questions. The
company “is considering the full range of options available to
secure long-term capital” and expects to provide an update on
its plans by November, it said July 24. The producer’s net debt
at March 31 was $282 million.

The possibility of a share sale shouldn’t be a surprise to
the market, Neill Young, a money manager at Coronation Asset
Management (Pty) Ltd., Lonmin’s fifth-largest shareholder,
according to data compiled by Bloomberg.
“It was always quite a real risk -- they’ve got some debt
that is maturing,” Young said by phone from Cape Town. “There
is going to be some overhang on the share” until Lonmin
announces how it will refinance the debt, he said.

[pro_better] 30/7/2015 15:44

True. at this pace late Aug/beg Sept share price will be in the mid 30s. Then RI at say 50%-70% discount and you get the picture!

[goldenfish2010] 30/7/2015 15:33

lazyhisnibs

at current market conditions I cannot see anyone willing to pay 20-25p tops for RI.

however at such share price pace then when RI is agreed the actual price might be ridiculously low( in the teens for instance).

[pro_better] 30/7/2015 15:15

blimey!


"The situation is critical. Raising capital now will put pressure on the share price and as the highest-cost of the big producers, Lonmin is the first to feel the pain and the need to restructure."

At current spot prices, Lonmin is burning cash at a rate of $240 million per year and might end this financial year with a debt of $380 million, according to Deutsche Bank analysts.''

[lazyhisnibs] 30/7/2015 15:14

One best left to its own devices awhile unless very good with TA which I'm not.

As usual apart from the house brokers perhaps, the broking community is in the gradual process of adjusting their targets down so as not to be even more out of line with the share price whilst quoting changed fundamentals.

Assuming management are not more creative than the market anticipates then the scale and terms of an RI will be impacted by a slashed share price and the discount they'll have to build-in. Not as bad as Petropavlovsk I shouldn't think but I can't see it being tame as it wasn't last time.

It'll be interesting to see if belief in long term value is evidenced by most on the BoD following their rights.

[goldenfish2010] 30/7/2015 14:53

It is a falling knife.

[the_insider] 30/7/2015 14:49

hmmm. it is not about maintaining break even as many have thought. it has all become about surviving!

[goldenfish2010] 30/7/2015 14:38

I hope i will get it wrong but I feel the RI will be close to $800m.