MARIKANA, South Africa, Nov 11 (Reuters) – As loss-making platinum producer Lonmin appeals for cash from shareholders and slashes costs, many of its mine workers are eager to grab redundancy deals and leave a company battling to stay afloat.
Battered by strikes, rising costs and weak platinum prices, Lonmin is seeking to raise $407 million in a share issue – priced at a 94 percent discount this week – and another $370 million in loans. It says the money is crucial for its survival.
The company, which operates in South Africa, is also closing or mothballing several mine shafts and cutting 6,000 jobs, or 15 percent of its workforce. The cuts, announced in July, were expected to be a hard sell in a country where the jobless rate is over 25 percent and unions have reacted to lay-offs with wildcat strikes in the past.
But so far more than 3,000 staff have left of their own volition, keen to snap up the voluntary redundancy and early retirement packages on offer, and others are seeking to follow.
“Some of us don’t want to wait until we die to get the money. I am a licensed rock drill operator so chances that I would be rehired at some point are high,” a miner at Lonmin’s Rowland shaft in Marikana, about 120 km (75 miles) northwest of Johannesburg, told Reuters.
He is set to leave a company whose shares have tumbled over 90 percent this year and which has knocked $1.8 billion off the value of its assets. The 106-year-old firm is now fighting to convince the market it can be a viable business.
“Am not sure Lonmin will exist in five years’ time,” said Bernstein Research analyst Paul Gait.
“How can you have the levels of wage inflation in South Africa, coupled with increasing mine depth against the backdrop of zero productivity increases, and believe that is going to give you a sustainable future for the mining operations.”
1 PENCE A SHARE
Lonmin’s plight was illustrated on Monday when it priced its rights issue at just 1 pence a share – a huge discount to the stock’s closing price of 16.25 pence on the previous Friday.
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