Lonmin Plc, the world's third-biggest platinum producer, posted a 30 percent rise in second-quarter platinum sales, helped by processing a backlog, and completed a $575 million debt refinancing package.

Lonmin shares, which have gained about 40 percent this year, jumped 3.8 percent to 1,286 pence by 0714 GMT, outperforming a 0.4 percent rise in the UK mining index.

Cazenove upgraded the shares to in-line from underperform.

Today's numbers give us some confidence that an improving trend is emerging on the production side of things and the market will now be watching closely to see how that trend is reflected in unit costs... The immediate balance sheet issues have also been addressed, a note said.

The 30 percent jump in refined platinum sales of 185,651 ounces in the three months to end-March, higher than Investec's forecast of 150,000 ounces, was due to better performance at its flagship Marikana mine and processing of inventories.

The Process Division delivered an excellent performance during the second quarter and, ahead of our expectations, it processed the vast majority of the inventory built up during the planned re-build of the Number One furnace, Lonmin said in a statement.

It reiterated its target of selling 700,000 ounces of refined platinum during the financial year to September, down from 726,918 ounces in 2007-08.


The company, 25 percent owned by mining group Xstrata, has been seeking to gain credibility under new management after repeated cuts in sales targets in recent years.

The debt refinancing consisted of a $250 million revolving credit facility and a $150 million amortising term loan in the UK, both maturing in November 2012, and a $175 million revolving credit facility in South Africa, maturing in November 2010.

This refinancing significantly lengthens the tenure of the company's banking facilities, said Lonmin, listed in London and Johannesburg.

Lonmin, which owns mines in South Africa, said it had largely completed restructuring its Limpopo and Marikana operations -- closing some high-cost areas and cutting costs to survive a market downturn.

Details about annual cost savings and one-off costs will be released when interim results are issued on May 11, it added.

The company said on Feb. 24 it planned to dismiss up to 5,500 workers at its South African operations after demand plummeted due to the global auto industry downturn.

The price of platinum, mainly used in auto catalysts to clean exhaust emmissions, has gained a quarter so far this year, but is still about half the record of $2,290 per ounce, hit in March 2008. It was trading at $1,163 on Thursday morning. (Reporting by Eric Onstad; Editing by Dan Lalor and Simon Jessop)

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