That Lonmin was the biggest faller in the FTSE 100 index of leading stocks on Monday, losing almost 7 per cent, shows the extent of investors’ surprise at its downbeat trading update.

In May the company forecast a strong second half of the year. On Monday this was dramatically reversed with the news that Lonmin had slashed its platinum production target from between 980,000 and 1m ounces to between 820,000 and 840,000 ounces. This was because of an earlier than expected shift to mining the east side of its main Marikana deposit, where the ore is lower grade, leading to lower platinum production and higher costs.

Lonmin admitted that its productivity was suffering because of bottlenecks at its processing facilities and a shortage of skilled workers in South Africa, where all of its mines are located.

South Africa-based analysts said it was the latest in a string of poor results from Lonmin, the world’s third-largest platinum producer.

“It is a very disappointing result,” said Cara Geffen, a platinum analyst at Investec Asset Management.

“We used to see Lonmin as a company that under- promised, over-delivered, was a fantastic operator and where things seemed to be going pretty well. And the wheels just seem to be falling off.”

The company has been dogged for several years by problems at its new smelter at Marikana, starting with an explosion in December 2002. Following a third explosion in December last year Lonmin decided to rebuild the smelter, putting it out of action until the end of April.

In May, Brad Mills, Lonmin chief executive, assured investors that the smelter problems had been resolved.

But the troubles seem to have shifted to the group’s mining operations.

“The last announcement we had from Lonmin we had a smelter issue and that put up costs. We are not seeing the growth we should be, and not only out of the flagship Marikana operation,” said Ms Geffen.

The problems at Lonmin seem so far to have little long-term effect on its share price, however, which has soared in line with the price of platinum.

As the only sizeable platinum miner listed on the London market, Lonmin has benefited from investors’ desire to get exposure to the strong growth in demand for the precious metal.

The group’s stock has been driven up by repeated rumours that it will be taken over – most recently by UK-listed Xstrata.

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