Commodity Online
JOHANNESBURG: South African platinum miner Lonmin has increased its quarterly production and refinanced much of its near-term debt, in a sign that it is beginning to reap benefits from a radical restructuring programme started last year after demand for the precious metal plummeted.

The company, which missed targets last year as it fought a hostile bid from Xstrata, reiterated its target of producing about 700,000 ounces of platinum for the year to September, after producing 318,200 ounces in the six months to March.

Production rose 40 per cent in the last quarter compared with the prior period.

The rise in production came two months after Lonmin said it would cut 5,500 jobs in South Africa and shut down some operations at its platinum mines.

Soon after announcing the plans, the company said its strategy for the restructuring was to do it once, do it deep, get all the pain behind you and move on, suggesting that the company would see strong gains in the second half of the fiscal year.

Investors seemed to agree that the company was positioned on a leaner operational footing, with the shares closing up 118p at £13.57.

That rise follows gradual gains this year in the spot platinum price, which collapsed from record highs in the final months of 2008. Prices are now approaching $1,200 an ounce, which is considered a rough break-even point for integrated platinum producers, most of which are in South Africa.

Lonmin will help show how firming platinum prices are translating to the bottom line of the stricken platinum sector with its interim results on May 11.

On Sunday Lonmin also completed a $575m fundraising to refinance debt.

The majority of the new debt facilities mature in November 2012.

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