Lonmin, world’s No.3 platinum miner, urged shareholders to approve a 400 million US dollars equity cash call at a meeting next week, saying in a document posted on its website the injection was crucial to its survival.
Lonmin’s shares in London fell 6.8 percent to 23.93 pence by 1223 GMT. The Johannesburg-listed stock was down by 8 percent at 5.00 rand.
Battered by strikes, rising costs and weak platinum prices, Lonmin said last month it planned to raise the money and another 370 million US dollars in bank loans to refinance debt due in May 2016. [nL8N12L10V]
The firm, founded in 1909 as the London and Rhodesian Mining and Land Company, said that if shareholders do not approve the rights issue at a meeting on Nov. 19, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.
“As a result, the group may have to cease trading at some point between December 2015 and May 2016 and shareholders could lose the entire value of their investment,” the company said on its website.
Lonmin was hit harder than other producers by the platinum mining strike in 2014, South Africa’s longest and costliest, as unlike its peers, virtually all its operations are concentrated in the strike-affected Rustenburg area.
To try to turn around its fortunes, the miner announced a plan in July to close or mothball several mine shafts, putting thousands of jobs at risk. It employs around 38,000 staff, including contractors.