Platinum producer Lonmin keeps output target, cuts spending

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By Silvia Antonioli

LONDON, Jan 29 (Reuters) - South Africa's Lonmin said on Thursday it would maintain its annual production target but cut capital expenditure in 2015 as the third-largest platinum producer battles with low metal prices.

Along with its peers in South Africa, Lonmin (LSE: LMI.L - news) has been battered by labour unrest over wages, rising costs and weak platinum prices.

The stock has lost almost half of its value in the last year and was the worst hit among the three largest miners involved in a 5-month-long industrial action in 2014.

"Because of low dollar metal prices and short-to-medium-term uncertainty around platinum prices we will reduce our expected capital expenditure for 2015 from $250 million to $185 million and will keep this under review," the company said in a statement.

On Thursday, the mining company posted an increase in mined output for the first quarter of its financial year which ended in September.

But technical issues that forced it to stop two furnaces at its South African plant in December are reducing its refined platinum production.

Saleable metal-in-concentrate in the first quarter at 200,170 ounces was up 11.4 percent year on year and its highest first-quarter production since 2007.

Refined platinum production at 139,823 ounces was down 28.8 percent, hit by a furnace stoppage in early December.

"We are disappointed that the repairs and maintenance to both our main furnaces necessitated by the shutdowns have overlapped and caused a temporary bottleneck in our processing operations," the company said. "We expect to process the build-up of concentrate by the end of 2015."

The miner annual target is to produce saleable platinum metal in concentrate in the region of 750,000 ounces and to sell around 730,000 platinum ounces.

As a direct consequence of lower sales in the first half due to the furnaces stoppages the company expects its borrowing to rise. (Editing by David Clarke; editing by Jason Neely)