Newspaper article The Evening Standard (London, England)

Lonmin 'Is Vulnerable' after Output Shortfall

Newspaper article The Evening Standard (London, England)

Lonmin 'Is Vulnerable' after Output Shortfall

Article excerpt

Byline: MICKEY CLARK

THE world's third-largest platinum producer, Lonmin, found itselflooking vulnerable today after the shares slumped to more than 300p as itmissed production targets.

Lonmin says it has cut its full-year production target to 860,000 ounces ofplatinum following a shortfall in the first quarter and a revised estimate ofthe impact of the Easter break in March. The group is still confident of astrong operational performance in the second half but warned this was at riskfrom further safety stoppages or any significant escalation of power supplyinterruptions.

Last October, the company said it expected sales in 2008 to be about 900,000ounces, against the then market consensus of 1.03 million. Total refinedproduction was 154,526 ounces of platinum, a drop of 19% on the prior year.

Production was affected by a shutdown in October, a one-day safety strike inDecember and higher-than-expected absenteeism in the week before Christmas.

Dealers say the bearish news leaves Lonmin, whose shares tumbled 56p to 2990p,vulnerable to takeover. It has often been tipped as takeover target with thesharp rise in platinum making it attractive to other mining sompanies.

Rival Rio Tinto was driven a further 130p higher to 4289p anticipatingincreased terms from BHP Billiton, up 50p at 1320p.

The rest of the market responded positively to the late rally on Wall Streetovernight. The FTSE 100 index rose 174.4 to 5783.7p but dealers warn thattrading conditions are likely to remain volatile.

Fresh talk of a takeover boosted Prudential 4012p to 67312p. Only yesterday theshares were lifted by talk of a possible bid from Ping An, China'ssecondbiggest life assurer, which has just raised [pounds sterling]11 billion.

Rank Group stood out with a rise of 414p to 8914p following reports it hasagreed to sell its [pounds sterling]700 million pension scheme to Goldman Sachs. …

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