Lonmin, the South African platinum producer set to be acquired by a local rival, slumped to a $1bn loss last year.

In the 12 months to September, Lonmin, which has been battling low platinum prices and rising costs, reported a loss of $1.17bn after it was forced to take a $1bn impairment charge.

Excluding the writedown, Lonmin’s underlying loss was $26m, against a profit of $13m in the same period a year ago. Revenues were $1.1bn.

Lonmin recently recommended a $285m all-stock offer from Sibanye, an acquisitive South African rival. However, the deal is yet to be approved by shareholders and the regulators in South Africa, where Lonmin produces its platinum.

“During the offer period, our strategy continues to focus on operational performance in particular and cost control, maintaining at least a cash neutral business to preserve cash, as we focus on liquidity,” said Lonmin chief executive Ben Magara.

Lonmin delayed the publication of its results for several months because the impairment charge, announced on Monday, meant that it would breach its banking covenants. Last week, the company got a covenant waiver from its lenders so that it could complete the deal with Sibanye.

In a production report, which Lonmin also published on Monday, the company said its net cash position at the end of December was $63mm, down from $103m. Lonmin said it expected to sell 650,000 - 680,000 ounces of platinum this year.

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