Bank of America: Lowered Lonmin Guidance Was Expected

Bank of America published a research report Monday on Lonmin

commenting on the company's reduced guidance. In the report, Bank of America wrote, "As expected, Lonmin has reduced its FY12 platinum sales guidance to between 685oz and 700koz, on the back of the ongoing illegal strike at Marikana (guidance pre-strike was 750koz). We had previously reduced our sales forecast to 694koz, which is within the revised guidance. Consequently, Lonmin's guidance of a unit cost increase of 8.5% is likely to be exceeded. With the timing of a resolution still uncertain and Lonmin not benefitting from the increase in PGM prices (due to the lack of production), the company's net debt level continues to worsen, which increases the likelihood of a rights issue, in our view." Bank of America maintained its Underperform rating on Lonmin, which is currently trading up 5.40 percent from Friday's $10.00 closing price.