Lonmin surges as cash improves after cost cuts

Johannesburg - Lonmin climbed the most in more than three months as the platinum miner kept costs down in the latest quarter, helping it generate cash even as the metal’s price declined.

The stock rose as much as 12% in London after the Johannesburg-based company said on Monday that net cash increased 15% to $86m as of June 30. The producer cited improving performance of its newer so-called Generation 2 shafts, which make up most of its output.

By 13:14 on the JSE, the stock traded 10.63% higher at R12.39.

Lonmin was up 8.25% at 73.25 pence by 13:14 in London, curbing this year’s decline to 48%.

With the highest costs of the top three platinum producers, Lonmin is battling to stay cash positive amid an almost 50% plunge in platinum prices in the past six years.

Concerns about slowing demand for the metal due to growth of electric cars and lower sales of diesel vehicles in Europe have pressured prices, while supply has been stable in top producer South Africa.

Platinum-group metals are mainly used to curb harmful car emissions, and also used in jewelry and other industrial products.

“We continue to find levers to pull, in this ‘lower-prices-for-longer’ environment and to make the improvement of our performance a priority,” CEO Ben Magara said in a statement on Monday.

Costs were lower than expected, falling 4.7% from the previous quarter to R11 278 an ounce in the three months to June 30. Revenue totalled R11 506 per ounce of platinum-group metals.

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