Lonmin Share Discussion Threads

[mj19] 19/3/2014 13:53

Johannesburg - Platinum mining companies are reverting to involving traditional leaders to end the wage dispute, the Association of Mineworkers and Construction Union (Amcu) said on Tuesday.

"That trick will never be successful. Traditional leaders cannot mediate in the wage dispute," union president Joseph Mathunjwa told union members in Johannesburg.

"Their involvement will only result in ethnic violence in the platinum belt."

Mathunjwa was addressing Amcu members who braved the rain in the city centre to march to Anglo American Platinum [JSE:AMS] (Amplats) headquarters.

He said the union wrote a letter to Police Minister Nathi Mthethwa, warning that mining companies and Contralesa would be accountable should violence erupt in Rustenburg in the platinum belt.

"Only an agreement can end the strike - not traditional leaders," said Mathunjwa to the applause of the crowd.

In a memorandum to Amplats, the union demanded that the company meet its R12 500 entry level pay.

Congress of Traditional Leaders of SA (Contralesa) president Kgosi Setlamorago Thobejane led a delegation of traditional leaders to a meeting with mineworkers in Rustenburg on Sunday.

Thobejane told Sapa that traditional leaders were involved in the dispute because the strike was no longer an employee-employer issue.

"It is now a societal issue... its impact on families and business will soon retrench workers because the economy does not flow like before," he said.

He denied that the traditional leaders were being used to end the strike.

"We told mining companies to give our people what they deserve. If they [the union] were in that meeting they could have heard our stance."

Thobejane said union leaders like to portray workers as being united.

"On the ground, things are different. Individual workers want to go to work. They want to pay their debts and provide for their families," he said.

"Our people deserve to be paid better, we need to do things in a respectable manner while waiting for better lives."

Another meeting would be held at the Olympia Park stadium in Rustenburg on Wednesday.

He said traditional leaders were intervening in the strike to avoid another Marikana.

Forty-four people were killed in Marikana in 2012 during a wage strike at Lonmin. 34 mineworkers were killed on August 16, 2012 when police fired at them.

Ten people, including two policeman and two security guards, were killed in the preceding week.

Mathunjwa advised Amplats to stop sending messages to workers and to pull television and radio adverts about the strike.

"The money could have been used to better mineworkers' pay."

He said the strike was about the huge inequalities in the mining sector.

"The deeper a mine worker goes underground the more his pay remains small contrary to executives, the more they climb stairs in this building the more their pay rises."

He said Amplats was able to pay its CEO R17.6m a year but could not afford to pay mineworkers R12 500.

Company representatives took delivery of the memorandum, and said Amplats was committed to finding a solution to end the strike.

Amcu members at Amplats, Lonmin [JSE:LON] and Impala [JSE:IMP] went on a strike on January 23, demanding a basic monthly salary of R12 500. They were bused in from Rustenburg in North West and Northam in Limpopo to participate in the march.

Mathunjwa promised to hire buses for them to take them home for the Easter holiday.

"You will be with your families this Easter. There will be buses for you.

[mj19] 17/3/2014 09:10

Platinum firms feeling strike heat
Mar 09 2014

Johannesburg - The Association of Mining and Construction Union (Amcu) strike has finally come down to something like negotiation as platinum stockpiles dwindle and companies lose the incentive to maintain a united front.

Amcu has now played the hand it has been hinting at for weeks: revising its demand for R12 500 "at a go" into a progressive realisation by 2016.

Although the concession was rejected out of hand by all three major platinum companies, this in effect marks the beginning of bargaining after six weeks of striking.

While the mines are sticking to their "final" offer, which was made on January 29, they have also started talking about negotiating "within a feasible settlement zone".

The key development on the employers' side is that Lonmin [JSE:LON] on Wednesday became the first of the three companies to publicly cut its sales forecast due to the strike.

That likely means the company has exhausted its inventories and the strike may now actually start to affect the platinum market.

Most importantly, thin cracks are appearing in the united front the three mining companies have thus far presented to Amcu and the world, raising the possibility of a breakaway deal that would leave the other two under massive pressure.

The most astonishing thing about the strike has been its apparent lack of any influence on investors.

"The market seems to be ignoring [or even forgotten about] the strike," says Peter Montalto, a researcher at financial services company Nomura.

The three companies' share prices are following no particular trend. Anglo American Platinum [JSE:AMS] (Amplats) shares have risen by almost 15% this year, while Lonmin shares are pretty much where they started out. Only Impala Platinum [JSE:IMP] has really lost value, about 8%.

The platinum price first fell by $60 (R636), then rose by $60, showing that no one believes platinum supply is at risk of falling short of demand just yet.

The rand, which should theoretically weaken when such a key export sector is lying mostly idle, has been strengthening throughout the strike.

All of that might change if the two larger producers follow Lonmin and declare themselves to be out of ready-to-sell platinum. Amplats is estimated to have started the strike with up to eight weeks worth of platinum stockpiles, leaving it with about a week's breathing room.

Impala Platinum had the means to keep supplying international customers up to the end of March, Bloomberg reported last week.

Mining as a whole comprises 5% of GDP and platinum is more than a quarter of that, meaning mines contributing about 1% of GDP are currently shut down.

Survival: All for one?

During the wage talks and strike, the platinum companies took a page out of their gold mining peers' book and maintained a strong show of unity.

But as the strike drags on, this united front is growing increasingly fragile, something reflected in the wildly different performances of their shares during the strike.

Added to that, the companies pay different wages, meaning Amcu's demands in rand terms rather than percentages are in effect different for each company.

The companies are also holding up differently.

Amplats still has all its most profitable operations up and running, especially its Mogalakwena mine in Limpopo.

Having all the loss-making operations shut down might explain why the company's shares are doing so well out of the strike.

Like Amplats, Impala also has mines in Zimbabwe.

But Lonmin is completely shut down.

Wage Facts: R2 009 versus R640

Amcu is now in effect asking for the R12 500 basic wage only by 2016 after revising its demand twice. First it asked for the politically charged sum to be achieved over three years. By Tuesday evening, this was four years.

There is speculation that it may be paving the way for a five-year scheme. At the same time, the union says it is willing to drop all other demands relating to the allowances mine workers receive on top of the basic wage.

As the talks are meant to replace the wage deal that already expired in September last year, it will result in a backdated agreement for the first hike, with the second one implemented in September this year and R12 500 achieved at the end of 2016, according to Amcu's proposal.

The companies still stick by their offer to increase wages for the lowest earners by 9% last year (backdated), 8% this year and 7.5% next year. In rands and cents, the difference between Amcu's demand and the offer on the table is stark.

Under Amcu's proposal, Lonmin would be raising the lowest-paid employees' total guaranteed pay by R2 090 a year to R10 250 on a cost-to-company basis, including provident fund contributions and bonus accruals.

At Amplats, that would be roughly R2 300 to reach about R9 400 in year one. In contrast, the companies' current offer for the first year amounts to something in the region of R640.

The difference comes from varying current wages. Amplats pays the lowest basic wages of R5 000, Lonmin pays the highest (R5 713) and at Impala it is R5 500. Even after the employers' proposed increase in year one, Amplats will still be paying less than Lonmin is currently paying.

- City Press

[mj19] 11/3/2014 15:19

looks good been holding up well.

Platinum miner Lonmin |(LON:LMI) has been upgraded to 'neutral' from 'sell' by Goldman Sachs

The shares have been knocked by the low price for the precious metal and a strike across the industry in South Africa.

The strike is into its eighth week, but in a normal operating environment Lonmin has improved its positioning due to cost reduction and an improved production outlook, Goldman says.

While the strike is without doubt a setback on the path to a full recovery the recent underperformance has taken the shares to a level where Goldman does not see any more significant downside.

[penandnen] 10/3/2014 17:00

Same old punters pushing the price down here. This time on news of the failure of the arbitration process on pay.
The miners' union (AMCU) had convinced miners that a doubling of pay was a simple demand. Reality is: Six weeks without pay is now hurting their families and a community where there is already 25% unemployment. Miners now accept their claim is unrealistic in the current economic climate.

IMO this strike looks as though it will settle quickly and without the massive pay hike miners were led to expect by the AMCU.
With platinum supply/demand now tight and production costs back under control - be prepared for a swift lift in the price here.
Anybody betting against this view?

[ginty the brave] 06/3/2014 21:02

I read on cnbc that the us mint is selling 1 ounce platinum coins to investors. platinum is also just short of $1500 per ounce. I reckon once the strike finishes then 400p + wont take too long.

[mj19] 05/3/2014 17:58

March 5 2014 at 04:56pm Comment on this storyIndependent Newspapers.Picture: Boxer Ngwenya.Related StoriesAmcu's move on pay hike fails to impress marketPlatinum talks adjournSix-week platinum strike rumbles onJohannesburg - Lonmin lowered its sales forecast as the world's three largest platinum producers said talks to end a six-week strike over pay in South Africa were suspended indefinitely.Lonmin, the third-largest producer, won't meet its full-year target of at least 750,000 ounces of the precious metal, it said in a filing today.The Johannesburg-based company said it can't estimate the increase in costs caused by the walkout.More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since January 23 in the country that accounts for more than two-thirds of global output of the metal.Anglo American Platinum said employers and the union remain far apart in the deadlocked discussions run by a state mediator.Lonmin fell as much as 3.7 percent to 289.9 pence in London trading, the lowest in more than two months.Amplats, as the biggest producer is known, gained 1.1 percent to 450 rand in Johannesburg by 2:33 p.m. Impala Platinum Holdings Ltd., the second-largest, advanced 0.6 percent to 115.37 rand.The producers have offered annual increases of as much as 9 percent, lifting the existing basic wage of at least 5,000 rand ($466) a month to 6,300 rand to 7,200 rand by 2015.South Africa's rate of inflation was 5.8 percent in January.The Amcu initially demanded immediate increases in basic wages to as much as 12,500 rand.Yesterday, it said it would give the companies three years to meet the target.

[mj19] 05/3/2014 17:56

Until the strike issue is resolved might be hard for it to go up

[ginty the brave] 26/2/2014 18:52

Back under £3 again. Ffs. Pretty sick of this share.

[penandnen] 16/1/2014 18:50

Pimpi, Platinum prices are rising:

Fundamentals still good for LMI.
We still have about 5% of shares declared short but these hedge funds haven't made anything shorting Lonmin in over a year.
If PMG prices continue to track up-wards, these shorters will exit and this will lift the share price further.
An industry-wide strike will reduce supply of platinum at a time when demand is picking up. A solid price rise in platinum and scaling back of production will help the industry long term.

[pimpi] 16/1/2014 18:43

strike will start 23 Jan

[pimpi] 16/1/2014 10:56

what is pushing it?

[mj19] 13/12/2013 17:40

David McKay | Thu, 28 Nov 2013 15:48

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[miningmx.com] – PLATINUM producer, Lonmin, cemented its status as a company on the comeback trail producing more platinum and better full-year earnings than expected earlier this month.

The market loves over-delivery and analysts think that CEO Ben Magara's guidance for 750,000 ounces in the company's current (2014) financial might be slightly conservative, although one can't say for sure. There are risks, of course.

Labour is the Grinch about to spoil Christmas, or the warm glow of its after-effects. As expected, the Association of Mineworkers & Construction Union (AMCU) declined to call a strike over wages this year, but may reprise industrial action after the year-end break.A strike before Christmas would have been shorter than one afterwards which could mean a three to four week hiatus to production at about 75% of South African platinum production is yet to come.

A strike in the dying days of December was always a high risk route for Joseph Mathunjwa, president of AMCU, as workers would have been reticient to sacrifice the pre-Christmas salary. In addition to being shorter, a pre-Christmas strike would also have been more difficult to orchestrate, especially as it's thought AMCU wants to simultaneously strike at Impala, Amplats and Lonmin.

The other risk to Lonmin production in the current financial year is Section 54 issuances. This is the government document somewhat draconically waved about at mine premises for safety breaches of different ilks and instances.

Outside of that, and barring production lapses, Lonmin's future is a much rosier one. "This has been a transition year for the company following last year's refinancing," said Investec Asset Management in a report.

Magara has even raised the prospect of resuming dividend payments.

First, however, he must halt the net cash outflow of 28 cents per share (2012: -41.8c/s) although in its defence there was a $189m negative impact on cash flow owing to significant stock-build in the year as it replenished its pipeline following smelter downtime.

The group has net cash of $201m on its balance sheet and capital expenditure has been guided to $210m. The trick to its immediate future is keeping costs in check. The company reported total costs of R9,182/oz against a basket price of R10,921/oz.

Analysts are sanguine on the stock, however.

"Prices need to improve from there for the stock to perform and with an improving auto market there could be a better chance of this for the next financial year," said John Meyer, an analyst for share price Angel, a UK stockbrokerage.

Hanré Rossouw, head of commodities for frontier and emerging markets at Investec Asset Management, said Lonmin had stolen a march on its rivals.

"The positive for me is that they at least six to 12 months ahead of other major PGM producers when it comes to restructuring and streamlining of their overheads with still further savings to be seen on a full-year basis in 2014.

Said Justin Froneman, an analyst for Standard Bank Group Securities: "The company has transformed itself over the last 12 months after the tragic events at Marikana.

"In our view, the current management team is well positioned to maintain the momentum of the operational turnaround and drive returns for all stakeholders. Shareholders have already come to the party, now it's the turn of organised labour," he said.

Longer term, management is seeking to shift up to 80% of its production to three or four large, newer and more efficient shafts, a strategic objective that may put pressure on the dividend given the capital requirements.

The K4 project, placed on care and maintenance last year, is a low cost operation, but in the estimation of one analyst it's an initiative that requires a platinum price of $1,800/oz to justify the outlay.

That's well below the $1,455/oz average that UK market research company and autocatalyst manufacturer Johnson Matthey said was likely for the first half of 2014.

Magara has some decisions to make therefore.

The K4 shaft is required as a means of replacing depleted production ounces in about four years time and given that ramp-up of the project could be between three to four years, it will mean an investment decision will be required in the next 12 to 18 month

[mj19] 13/12/2013 17:36

12th dec
Johannesburg - Trade union Amcu has been given permission by the Commission for Conciliation, Mediation and Arbitration (CCMA) to strike at Lonmin over a wage dispute.

"The CCMA issued a certificate of non-resolution," Association of Mineworkers and Construction Union treasurer Jimmy Gama said on Thursday.

Wage talks between the union and the platinum miner deadlocked last month. Amcu demanded a minimum wage of R12,500 across all levels. The matter was then referred to the CCMA.

Gama said a strike could happen in the near future.

"We are still going to consult our members. It (the strike) will probably happen next year."

Lonmin spokeswoman Sue Vey confirmed that Amcu received the certificate, but declined to comment further.

Amcu, which represents 60 percent of Lonmin's workforce, was recognised as the majority union at the company in July. - Sapa

[ginty the brave] 01/12/2013 08:23

I keep the faith as 400p is still looking good to me. just disappointing the share price didn't take off after results day. I was also hoping for a dividend.

[penandnen] 28/11/2013 18:58

Don't worry Ginty. I notice Bocage Capital this week trimmed their short from 1% down to 0.59%. They added to it last month and now they're exiting. Lonmin followed platinum (and gold) price down in the last few weeks but is now holding its price. Any upward move in PMG prices is going to give Lonmin a fairly sharp lift, IMO.
Johnson Matthey latest market analysis still showing shortfall of supply/demand

Also noticed Shaft-sinkers have Lonmin contract to open up more of Karee 3.

[penandnen] 14/11/2013 10:47

Financial Report 2013 summary says:
*Production guidance exceeded
*Tonnes mined 11,730kt (759,000 mined Platinum ounces - including Pandora)
*751,000 Platinum ounces metal in concentrate, the highest in 6 years
*Sales of 696,000 Platinum ounces
*Concentrator recoveries at all-time record levels 87.0%
*Unit cost increase contained to only 3.8% and productivity increased 6%
*Recognition agreement signed with AMCU
.Underlying EPS of 20.5 cents per share, up from 3.9 cents in 2012 (restated for Rights Issue)
*Capital spend at $159 million in line with guidance in Rand terms
*Strengthened financial position - Net cash of $201 million vs. net debt of $421 million at September 2012

[r88ave] 13/11/2013 16:44

Is this company now debt free?
660k oz of platinum per year at say $1500oz is not a bad return. Nearly $1b in revenues
Surely its only matter of time now for a steady rise.

[penandnen] 13/11/2013 16:14

The results are just a bit above my "guess". Analysts at HSBC and City Group were impressed and now have price targets £5.12 and £4.53. Others are setting lower targets, Investec thinks it's a sell. You're right in highlighting PMG prices as a key factor to Lonmin financial performance. Johnson Matthey average platinum price over the accounting year was $1540/oz. So far this year we're around $1440/oz.
Most analysts believe there is a shortfall in supply/demand for platinum but it still doesn't seem to show up in forward prices. I guess that's why a few of the regular shorters of Lonmin have increased their positions in the last month.
Current platinum prices are knocking out other producers so there's a good chance prices will rise early next year.
There's always the wild card here :- What will Glenstrata do to max out its exit from its precious metals holdings? I'm still betting on further consolidation of SA PMG producers.

[collier partnership] 11/11/2013 08:32

Lonmin is hard to predict because your betting on the future price of platinum

SECTOR- Mining
DEBT- Low
CURRENT PRICE- Good Value

#Lonmin

[ginty the brave] 11/11/2013 07:16

anyone care to comment on the numbers.

they look very strong to me. just need the platinum price to go up now.

[ginty the brave] 30/10/2013 13:57

Golden Cross now formed. Bullish sign.

Also, Platinum has climbed quickly to £1480 per ounce.

All in all, the chart looks like the share price is going to test 350 again soon. Perhaps very soon.

Then we have the interims in November.

DYI of course but I am happy to be long.