An RNS this morning by Lonmin, hopefully brings to an end what has bee a violent six-weeks in the NW Province of SA. A strike atthe worlds No. 3 platinum producer has come to an end with a hefty wage settlement that could stir more strife in South Africa’s restive mining sector. The 11-to-22 percent pay hike deal with striking workers may be a red rag for others in an industry troubled by income disparities and which was laid bare by a wave of violent industrial action in which 45 people died last month.
We suggested a Trading Buy on the stock on the at 658p on the 16th August and, it’s fair to say that this was a little hairy as the stock plumbed the depths of the early 500’s just last week. We think the fundamental underpinnings for the stock intact, that they are a bid candidate, that the debt convenant issues will be resolved and that yes, a rights issue is still likely but as a shareholder, if you are buying ne stock at a discount, unless you cannot afford to take the right up that it is a net positive on a 6 – 12 months view.
In the next edition of our magazine we suggest a Dream Natural Resources portfolio and expand upon our investment case for Lonmin. Don’t miss out – register on the right to receive this for free.