21 November 2012

South Africa: 91 Percent Support for Lonmin's Balance Recovery

According to mineWeb, shareholders in South African platinum miner Lonmin voted in favour of an $817m rights issue to repair the platinum miner's strike-battered balance sheet and fund its recovery.

Lonmin said more than 91% of votes cast were in favour. The rights issue, essential for Lonmin to meet revised conditions set by its lenders, had been expected to be voted through after its single largest shareholder, miner Xstrata, said last week it would back the cash call.

Initially, Xstrata's position was uncertain after its reverse takeover proposal and moves to eject Lonmin's current management were rejected and made public earlier this month. Xstrata, which holds a 25% stake as a result of a failed 2008 takeover effort, said it was concerned current management could not "ensure a sustainable future". Eventually, Xstrata agreed to back the rights issue but said it would continue to seek management change and a new strategy.

Lonmin, which already had one of the most stretched balance sheets in the sector, was hit in September by strikes at its flagship Marikana mine which saw some of the worst violence in South Africa since the end of apartheid and left 46 people dead, mineWeb reports.

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