JOHANNESBURG (miningweekly.com) – The share price of dual-listed platinum miner Lonmin rose on Thursday morning as the company outlined the progress made in restructuring the business and cutting costs in the quarter ended December 31.
Lonmin stated that it was making good progress towards achieving the targeted R700-million in cost savings through reducing the size of its workforce and cutting overhead costs and total cost of ownership of projects.
At the end of the first quarter of the 2016 financial year, labour costs were R194-million lower than in the first quarter of the prior year, while total cost of ownership savings had reached R12-million.
“A further benefit of R84-million has been realised as a result of permanently reducing our metal-in-process stock,” stated Lonmin.
It further pointed out that, by January 27, 5 077 workers had left the group, representing 84.6% of the planned headcount reduction, while the removal of high-cost production had advanced with the shutdown of the 1B shaft.
Lonmin lifted its refined platinum production by 22.6% year-on-year to 171 441 oz in the December quarter, while platinum group metal (PGM) production rose 25% year-on-year to 331 294 oz.
Platinum sales were 2.4% higher year-on-year at 150 420 oz, while PGM sales rose 5.8% year-on-year to 290 475 oz.
Lonmin, which expected the weak PGM pricing environment to continue, noted that the average rand basket price of R10 859/oz for the December quarter was 5.5% lower than in the first quarter of the prior year.
Unit costs for the quarter were contained at R10 949/oz, a 5.5% year-on-year increase notwithstanding the 8.2% year-on-year increase in labour costs agreed to in the multiyear wage agreement signed in 2014.
“Unit costs in the first quarter are seasonally high owing to the distorting impact of the holiday period in December and unit costs are expected to reduce over the course of the year in line with guidance of R10 400/oz for the full year,” the company said in a statement.
Lonmin maintained its sales guidance for the full-year at around 700 000 oz, as well as its capital expenditure guidance for the year of around $132-million.
The miner’s shares rose by as much as 8.9% on the JSE on Thursday morning, while its shares on the LSE rose nearly 7%.