* Lonmin H1 costs rise, output falls
* Buys remaining stake in Pandora mine
* Shares fall sharply in London and Jo'burg
(Adds detail, shares, quotes)
By Zandi Shabalala
LONDON, May 15 A drop in production and higher
costs forced South Africa-focused platinum producer Lonmin
to make deeper cuts and shift its headquarters
on Monday as a first-half operating loss of $181 million knocked
Lonmin took a write-down of $146 million due to the stronger
rand against the dollar as miners in South Africa pay costs in
the local currency and earn revenue in dollars.
This also reduced Lonmin's liquidity by 6 percent compared
with the previous year to $447 million, troubling some analysts.
"Shrinking liquidity post the write-down is a concerning
indicator as is the increase in cash cost guidance," Investec
analysts said in a note after the results.
London-listed shares in Lonmin fell 8 percent and the stock
was down 12 percent in Johannesburg by 0936 GMT.
Lonmin, which has all its mines in South Africa, reported a
loss per share of 64.4 cents versus 1.8 cents, while unit costs
were higher driven by the weak mining performance.
Lonmin cut its spending plan for the year to a range of 1.4
billion to 1.5 billion rand ($105.1 million to $112.6 million)
from 1.8 billion rand and raised its unit costs target.
As part of cost-saving efforts, the company plans to move
its head office from Johannesburg to its operations in Marikana
by the end of the year, Chief Executive Ben Magara told a
In the three months to March, production from Lonmin's
larger shafts, known as generation 2, fell by 2.8 percent on the
previous year while total refined platinum output fell 7.5
percent to 161,138 ounces.
The company said it bought the remaining 7.5 percent stake
in the Pandora mine from Northam Platinum. Lonmin
purchased 42.5 percent from Anglo American Platinum in
"Longer term, we continue to argue that the company faces
significant structural head winds," Citi analyst Johann Steyn
said in note, adding that Lonmin was its least preferred South
Africa platinum stock.
In a statement on Sunday, Lonmin said its E2 and E3 shafts
remained closed due to protests and the operations have lost
about 56 million rand since the disruption began on May 2.
The company maintained its platinum sales guidance for the
year of 650,000-680,000 ounces.
($1 = 13.3172 rand)
(editing by Jason Neely and Alexander Smith)