Tuesday, 10 Aug 2010
Reuters reported that shares in Lonmin, the world's third biggest platinum producer, fell as much as 5% in London as analysts said a South African government ban on its sales could be a serious threat to its business.

Lonmin said that it had received a letter from South Africa's Department of Mineral Resources ordering it to stop selling nickel, copper and other offshoots of its platinum production due to a dispute over prospecting rights.

A Lonmin spokesman said that "Dialogue with the DMR continues and meetings are scheduled for next week but in the interim period we are continuing down the only route which is available to us at the moment to take legal action."

He added that a legal process had been started in South Africa but declined to comment on whether the company was optimistic the issue would be resolved.

Ms Alison Turner analyst at Panmure Gordon said that she expected the issue to be settled with limited impact on the company but, in the meantime, the DMR's order was very bad news. She added that "Until there is a resolution, the order must be taken at face value and represents a very serious threat to Lonmin's business."

In 2009, associated minerals sales contributed USD 80 million or around 8% of Lonmin's revenue. The dispute has arisen because the company did not explicitly apply to have its licenses for associated minerals transferred to a new mining right set up in 2006.

It finally applied in 2009, by which time an ex board member had already applied for those rights on a small part of the company property.

(Sourced from www.reuters.com)