Lonmin At Last Chance Saloon As Shares Dive

Lonmin (LSE: LMI.L - news) , the South African platinum miner, is entering into a heavily discounted rights issue as the firm's continued existence as a listed company is called into question.

The company will sell 27 billion shares at just 1p per share, equivalent to a 94% discount on Friday's closing price.

Lonmin had already announced to the city that its shares would be issued at a "significant discount".

The miner, which has not paid a dividend in three years, saw its shares plummet 18.5% on Monday as analysts assessed whether a £270m share placing would be sufficient to ensure its survival.

With (Other OTC: WWTH - news) a debt-pile of over £100m and a rapidly falling platinum price, 2015 has proved to be very ugly for Lonmin.

Lonmin's boss Ben Magara said: "2015 has been a tough year for Lonmin, given the adverse pricing environment and the imminent maturity of our debt facilities in mid-2016."

In the year to September the company made an underlying full-year operating loss of £95m as it struggles with escalating costs and continued strike action amongst its workforce.

Its shares have fallen 92% so far this year.

Given that shareholders who fail to take up their rights face a 98% dilution to their existing stake, the underwriting risk is minimal.

This prompted Sky (LSE: BSY.L - news) 's business presenter, Ian King, to question the magnitude of the fees pot - around £28m - which is being earmarked for the investment banks working on the rights issue.