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Lonmin shares reverse early gains as CEO tries to reassure investors

Last updated: 14:38 06 Nov 2017 GMT, First published: 09:48 06 Nov 2017 GMT

mining truck
Lonmin shares fell 2.08% in the afternoon session to 70.50p

Lonmin Plc (LON:LMI) shares fell following earlier gains after comments intended to reassure investors.

The miner lost almost a third of its value on Friday after delaying annual results amid an ongoing business review.

READ: Lonmin plunges as miner delays full-year accounts while it finishes operational review

Chief executive Ben Magara, speaking at a ceremony in South Africa, claimed that “underlying operations are continuing to perform very well”.

Lonmin shares rose 3.74% to trade at 74.69p in early trading but fell 2.08% in the afternoon session to 70.50p.

Delayed results

Back in August, Lonmin announced plans to slash costs amid concerns about the platinum mining industry in South Africa.

Given that the review “continues to demand management’s undivided” attention, the group said it would “not be appropriate” to publish its annual results on November 13 as previously planned.

Although the preparation of the accounts is ongoing, Lonmin said initial indications are that its tangible net worth at the financial year-end would be around US$1.1bn, which would potentially leave it in breach of one of its covenants.

The company managed to get its lenders to postpone testing the covenant on September 30, although talks are ongoing about what will happen further down the line. The outcome of those discussions could have a “material bearing” on the preparation of the full-year report.

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