Lonmin plc (lon:lmi)
Lonmin The Lonmin Plc Interim Report / 2017 Is Very Difficult To Digest

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Title: Lonmin The Lonmin Plc Interim Report / 2017 Is Very Difficult To Digest
Company: LMI - Lonmin plc
Share Price Then: 0p
Author: Ian Smith
Date: Thu 20 Jul 2017
Comments: Lonmin are a South African Platinum miner, they had a share price peak in 2007-2008 and since then it has been up and down, unfortunately more downs than ups.

No dividends since the start of 2012 and a big low of a rights issue at the end of 2015 which raised $407m and had a 70% take up by shareholders.

There has been a recent interim report and sometimes I look at reports and wonder if the report has been deliberately written to be confusing.

This one has such wonderful things as

Productivity assumptions planned at time of the 2015 Rights Issue are proving to be challenging

Lonin are not a new company or operating in a new area, so why?

The debt facilities available to the Group are subject to financial covenants, which include that the consolidated tangible net worth (TNW)
.... Should a further impairment in the future result in the TNW falling below $1,100 million this debt covenant would be breached which could reduce the liquidity of the Group. The external auditors in their review report draw attention to this material uncertainty.

Surely we are not being prepared for another share issue?

I also find the report confusing as it swaps between US Dollars for sales price and South African Rand for costs. This does of course make sense and the sell in Dollars and much of their costs are in Rand.

Labour relations in the South African platinum mining industry are not good in general, and both the history of strikes and the likelihood of pay increases worry me.

As does the long term demand for platinum, if we see a take up of electric cars then its usage in exhaust systems will decrease. Electric only cars will not need catalytic converters and hybrids will get a much longer life from theirs due to less combustion engine usage.

Given platinum's high price and the volume of used catalytic converters recycling cats seems to be a good area for the recycling industry.

I do need to reread the report to fully understand it, but it seems to be a long winded way of saying we are not making money.
Read Count: 41/19

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