Lonmin's rights issue flops leaving underwriters on the hook

Strike: Miners at Lonmin's Marikana site stopped work over pay

Mujahid Saodien/AFP/Getty Images

Russell Lynch11 December 2015

Struggling platinum miner Lonmin’s deep-discounted $400 million (£264 million) rescue cash-call has flopped, leaving underwriters on the hook for almost a third of the new shares.

Lonmin — which has been battered by a tumbling platinum price and a five-month miners’ strike over pay last year — said that only 71% of the new shares on offer were sold, leaving HSBC, JP Morgan Cazenove and Standard Bank to find buyers for the rest or stump up themselves.

The shares were offered at just 1p — a 94% discount.

“The sizeable proportion of shareholders not following the majorly dilutive issue is saying something,” broker Investec said.

The crisis brought the company close to collapse this year before its third rights issue in six years.

Writedowns on its Marikana mine in South Africa, where dozens of striking miners were shot by police in 2012, pushed the firm to pre-tax losses of more than $2.2 billion.

Platinum is meanwhile trading at levels last seen in 2008, hobbled by slowing demand in China.

Shore Capital’s Yuen Low said: “If anything else goes wrong, Lonmin could quickly be back in trouble.”