Lonmin Share Discussion Threads

[sanks] 20/9/2012 11:57

Thats why i have a £1.17 buy order target

[leoneobull] 20/9/2012 08:45

624.00 -27.50 (-4.22%)
Real-time: 8:44AM GMT+01:00
LON real-time

Time for a RI?

[aleks_atanasov] 19/9/2012 11:30

are you sure its on Marikana?

09:48 *DJ S Africa Police Disperse Protesters At Anglo Platinum with Tear Gas, Rubber Bullets

[vanunu] 19/9/2012 11:02

Sky news reporting SA police firing rubber bullets at Marikana mine... again.

[leoneobull] 19/9/2012 09:25

Sanks!

.

get out now while u can?!

found this on Alphaville FT

Now, you have to dig quite far into the note to find the detail on Lonmin.

Which is largely tables giving what Caz itself calls an optimistic scenario

But here's the upshot.

At Lonmin, we have modeled in the group's latest disclosures. We have (albeit optimistically) assumed that the ongoing strike at its Marikana mine is resolved in the first week of Sep-12, and that the mine takes 6 months to get back to a run-rate of 750kozpa Pt. Our models indicate that this will cause the group to breach its debt covenant (Net Debt:EBITDA above 4.0x at end-Sep 2012). We note that Lonmin management has given indications of the same in its latest disclosures.

BE

We assume the group raises $1.25bn by way of a rights issue, at an assumed discount of approximately 30% to its 31-Aug-12 closing price. A level that we feel may be appropriate – we accept this as a risk to the "per share" DCF valuation work that we present later.

PM

blinkin eck

PM

So youve got the house broker saying its going to breach covenants - on an optimistic scenario

BE

With friends like these ........

BE

We recognise that there is a risk here with regards to the pricing of the rights issue if Lonmin's share price continues to decline. Also, while we believe the group will have little choice but to raise capital from its shareholders, it may manage to refinance its balance sheet with corporate debt and further bank debt (an outside chance in our view). We present this scenario as a separate valuation case below (The High Road scenario).

BE

"The High Road scenario" ...... Hm.

BE

Lonmin's market cap as it stands is £1.1bn

BE

And Caz thinks it needs to raise $1.25bn at, say, a 30% discount ....

PM

Sounds like we should be looking at a London style approach, rather than a rights

PM

ie, debt for equity swap territory

PM

You can't do a rights with what is still going on in SA

BE

And while your CEO's sadly incapacitated.

[leoneobull] 19/9/2012 09:20

Smudgeroo 19 Sep'12 - 08:45 - 995 of 999

Absolutely, another opportunity for the hedge funds to add to their shorts before the forthcoming rights issue.

AGREE 100%

[ch1ck] 19/9/2012 09:15

shorters got burned this morning and will do again over the next few weeks. I have switched to go long, you have to know when to change your opinion

[smudgeroo] 19/9/2012 08:55

I'm a trend follower so don't really set profit targets, just get out when my trailing stop gets hit. However should it fall that far then around the all time low would be a nice level, circa £2.

Note how price is currently sitting at the long term trend line hence the bounce.

[dusseldorf] 19/9/2012 08:49

I'm short again, not much £5/pt from this am. They've basically just RNS'd that a profits warning is coming.... news of debt funding requirement will soon be revealed IMO

[abcd1234] 19/9/2012 08:46

whats yur target share price ??

[smudgeroo] 19/9/2012 08:45

Absolutely, another opportunity for the hedge funds to add to their shorts before the forthcoming rights issue.

[aleks_atanasov] 19/9/2012 08:41

lol 700p makes no sense at all... it was at that level before it get nasty... conviction short.

edit: Striking South Africa platinum miners agree deal with Lonmin

[leoneobull] 18/9/2012 22:12

The company has cut its production forecast for this year because of the violent strikes at its mines, which so far have cost 45 lives. It expects to produce 685,000 to 700,000 tonnes of platinum ore in the year to September 30, compared with its target of 750,000. As a result, per-unit costs will rise by more than the 8.5 per cent. Lonmin expects to breach the terms of its bank loans this month and could launch an emergency share issue within weeks.

[leoneobull] 18/9/2012 21:39

So dispute resolved - was bound to end eventually. Almost 6 weeks strike assuming back Thurs so let's see impact in yr end results (30.09 is their yr end). The reality is: 22% wage hike, production costs were already high, platinum price will fall back broadly to where it was pre-strike i.e. not that profitable. RI needed of 500m US - 1.5bn US$....according to multiple brokers even the house broker. LMI admits covenants will be broken. they need the money for capital investment to bring down av. prod costs which will now leap as result of wage rises...

[leoneobull] 17/9/2012 17:17

Deutsche Bank expects the company will need to raise $700 million via a rights issue if production setbacks at Marikana persist. The final amount depends on whether platinum prices recover from current depressed levels and how quickly Lonmin is able to restore production when the strike does end, and on whether it intends to raise capital just to cover short-term debt obligations or longer term debt obligations as well.

Analysts at Investec said they are assuming the company will have to raise $500 million in 2013 at least to shore up its balance sheet.

"The company's reputation has suffered and may cloud investor sentiment for some time," the Investec mining team said.

But SBG Securities analyst Justin Froneman said the timing of a rights issue isn't as pressing as some market participants may expect.

"They could possibly hold on for another six months or so at current rand PGM [platinum group metals] basket prices, assuming a very near term return to work by striking employees," he noted. He forecast the company may look at raising about $400 million to cover its short-term debt obligations and working capital needs.

Unions, Lonmin management and worker representatives resumed wage talks Monday. Tensions remain high at the mine after 45 people died in strike clashes, including 34 shot by police Aug. 16, and as police step up efforts to track down and arrest those they believe are leading the strike, which has also affected production at Anglo American Platinum Ltd. and Gold Fields Ltd.

[leoneobull] 17/9/2012 16:43

Shares 202.66M
On loan - 40m - 20% which as i ustand is about max permitted...cannot ustand why this is holding up...since as Tgraph pointed out the cost to them will be massive & profits on platinum were minimal +cov's will be breached. the only thing that has changed is platinum prices have gone up but they will fall again once strike over.

[leoneobull] 17/9/2012 16:37

it's odd ---big rise (relief rally?) that they announced they expect 670000-700000 ounces this year but this strike has still dragged on 6 weeks short interest is almost at max limit according to press...covenant breach on cards.

[khitchen] 17/9/2012 08:34

what happend then 12p dive, how can they stay this high they have to plummet soon

[smudgeroo] 17/9/2012 07:46

LMI Short interest courtesy of Data Explorers as of 07.45am 17/09/12:

[oh poodeenyo] 16/9/2012 22:46

South African troops disperse Lonmin mine protest
South African troops have been deployed to crack down on the rebellion at Lonmin's Marikana mines ahead of crucial talks between the London-listed company and its striking workers.

16 Sep 2012

[leoneobull] 16/9/2012 07:10

Ouch cost to Lonim ---£102 Million

[leoneobull] 14/9/2012 19:05

Marikana accounts for more than 90% of Lonmin's output. enough said! u can't QE ur way out!

Lonmin was within months of breaching banking covenants even before the shutdown, analysts said. Platinum prices have collapsed over the past year as demand has dried up from European carmakers, which use the metal in exhaust systems and other components. Lonmin's profits in the first half of the year plunged 90%. With the mine closure now into its second week, the company is being starved of vital income. Marikana accounts for more than 90% of Lonmin's output. Sources close to the situation said Lonmin could launch the fundraising as soon as next month. Xstrata, the FTSE 100 miner that owns a 25% stake in Lonmin, has signalled that it is ready to cover its part of the deal.

The company's key loan requires it to keep net debt at no more than four times annual ebitda - earnings before expenses. In May it reported $75m in ebitda for the six months to March. Net debt came in at $356m, and is on the rise. The company's financial year ends next month, which will prompt a compliance test with its banks.