Lonmin says it rejected a reverse takeover offer from Xstrata, and instead will move ahead with an $817M rights issue to repair its strike-strained balance sheet. Analysts had expected the platinum producer to raise more money to help it meet production targets, but instead it said it is focused on reducing costs, streamlining management and cutting debt.
Platinum futures take a breather after a report that Lonmin workers in South Africa have accepted the company's pay offer and will return to work. Prices in the past 30 trading days have climbed from under $1,500/oz. to above $1,700 before a sudden drop today took prices below $1,620 from over $1,670.
Lonmin signs an agreement to end a four-week strike at its Marikana platinum mine, but key parties didn't participate, undermining the government-backed attempt to end a dispute that has left 44 people dead. Since the dispute began, concerns over supply have pushed spot platinum prices up 14% to a four-and-a-half-month high of $1,587/oz.
Platinum prices jump to four-month highs as spreading labor unrest in South Africa raises the possibility that a further 40% of world production of the metal could be affected. Fears that a two-week standoff at Lonmin's Marikana mine could spread to top platinum producer Anglo-American grow, as Amplats workers have become the latest group of platinum miners to demand higher wages.