[miningmx.com] – LONMIN said it was considering an employee share ownership plan in order to meet black economic empowerment targets which oblige the company to have sold 26% of its shares by 2014.
“We are looking at how we share 8% [of the company] with employees and our community,” said Ben Magara, CEO of Lonmin since April who added that winning over the “hearts and minds” of employees was a priority.
It was at Lonmin’s Marikana mine that on August 16 in 2012, 35 miners were shot dead by police services following wage-related protests. “All stakeholder have a shared desire for Lonmin to succeed,” said Magara.
He was commenting following the publication of the platinum firm’s full-year financial and operational figures in which the company booked a 31.2 US cents per share bottom line profit yet continued to burn cash.
There was a free cash outflow equal to 28c/share, an improvement on the 41.8c/share outflow in the previous financial year, but a worry for Lonmin nonetheless given the emphasis investors now placed on yield over production growth.
“Our renewal plan anticipates positive free cash flow from the 2014 financial year onwards,” said Magara in notes to the financial statement. “The return to stronger earnings and cash flows will permit the resumption of dividends,” he said.
The market liked the figures, however. Shares in Lonmin were about 3.5% higher in early Johannesburg trade. The R30bn company has gained 64% since its 12-month low recorded in November.
Commenting on outstanding empowerment targets, Magara said the company was “deeply engaged in examining ways in which the remaining 8% we need to achieve might be apportioned.
“There is clearly a balance to be struck between delivering this for our employees and communities and doing so in a way which is sustainable, fair and equitable to our present shareholders.”
He said share ownership schemes were one area of the company’s thinking, “… although not the only one, and our ability to explore those actively is facilitated by the signing of our recent union recognition agreement”.
In terms of South Africa’s mining charter, companies are required to have 26% of their shares with black-owned partners, in addition to a number of other requirements related to employment equity, procurement and environmental sustainability.
The pressure is on Lonmin to find a solution in relatively short order. Mark Cutifani, the outgoing president of the Chamber of Mines of SA disclosed last week that an audit on empowerment compliance has been started by the mineral resources department. Any company not in compliance runs the risk of losing its mining permit.
Magara said wage talks were continuing with the Assocation of Mining & Construction Union (AMCU), the majority union at the company, and others regarding wage proposals. AMCU has declared a dispute and may strike at the mine. Magara characterised the discussions as “tough”, but believed there was “a shared desire for Lonmin to succeed”.
