* Over 91 pct of voting shareholders back rights issue
* Must raise $700 mln by end-Dec to meet lenders' conditions
* Battered shares recover, up over 9 pct in London (Writes through with quotes, details)
By Clara Ferreira-Marques
LONDON, Nov 19 Shareholders in Lonmin grilled the South African mining company's board over strategy, leadership and its overall future on Monday, as they approved an $817-million cash call to slash debt and patch up the balance sheet.
The world's third-largest platinum producer has been under financial pressure for months, squeezed by high costs and weak platinum prices. But it was stretched to breaking point after a wave of deadly strikes that hit South African mines.
Strikes and violence paralysed Lonmin's Marikana mine for six weeks from mid-August, leaving 46 people dead and forcing the firm to announce last month it would make a rights issue.
"This company is coming back," Chairman Roger Phillimore told investors in London on Monday. "But it is not easy."
Shareholders had been expected to approve the heavily discounted rights issue after Lonmin's biggest shareholder, fellow mining group Xstrata, gave its support last week, despite continued criticism of management and calls for change.
In the end - faced with the prospect of breaching agreements with lenders if Lonmin does not raise at least $700 million by December - more than 91 percent of votes cast supported the cash call, Lonmin said. More than three quarters of investors voted.
But meeting in a gilded hall in central London on Monday, small shareholders grilled Phillimore, forcing him to defend the board as they questioned lacklustre earnings, Lonmin's failure to predict union trouble even after a strike at its Karee operation a year earlier, and evern the company's very survival.
"The figures just look very, very sick and I don't know where we go from here. All right, you have the assets in the ground, but - oh boy," said private shareholder Robert Muriel.
Investors present included Josie Rowland, widow of Tiny Rowland, the buccaneering British tycoon who built the company, then known as Lonrho.
Rowland criticised a board she said lacked sufficient executive directors to "drive" the group and questioned why it was unable to remain abreast of union issues, despite the presence on the board of businessman Cyril Ramaphosa, a former leader of the influential National Union of Mineworkers (NUM).
Phillimore said: "This was in many respects a perfect storm - I am the first to admit that in some respects we were less than able to deal with it immediately in a perfect fashion.
"But we dealt with it quickly, resolutely and effectively."
BACK FROM BRINK
Lonmin shares rose more than 9 percent in London and 6 percent in Johannesburg, recovering some of their lost ground after a torrid year, but analysts and investors alike said the rights issue did not solve Lonmin's fundamental problems - including high costs, lacklustre platinum demand and the absence of a permanent CEO.
The position has been filled on a temporary basis by Simon Scott since chief executive Ian Farmer stepped aside for medical treatment three months ago.
Lonmin has been forced to cut back a previous spending plan that would have reduced costs at its more expensive shafts.
After Nomura raised its rating on Lonmin shares to "buy", its analyst Tyler Broda said: "The rights issue is going to allow shareholders to avoid a very bad scenario - the company going bankrupt. It will not, at this point, shift their long-term competitive position in our view."
A rights issue, patching up the miner's finances, should also pave the way for an eventual fresh approach from Xstrata, whose proposals - including a reverse takeover plan - have so far been rejected by Lonmin's management, several sources familiar with the matter said.
Xstrata holds a 25-percent stake as a result of a failed 2008 takeover bid and has demanded management change.
A source close to one top-10 shareholder said: "It is important that the rights issue is completed.
"But it is the beginning of a much longer recovery plan." (Additional reporting by Anjuli Davies; Editing by Andrew Callus and Alastair Macdonald)
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