CFO named interim leader at crisis hit Lonmin

MINING GIANT Lonmin has named chief financial officer Simon Scott as its interim leader while chief executive Ian Farmer receives hospital treatment for a serious illness.

Scott takes temporary control as acting chief executive during the worst crisis in the platinum miner’s history which may result in an emergency rights issue.

Lonmin, the world’s third-largest platinum producer, announced on 16 August that Farmer had been diagnosed with a serious illness; the same day that police shot dead 34 striking miners at its mine in Marikana near Johannesburg.

Forty-four people, including two police, have been killed since the illegal strike began on 10 August.

“We are dealing with tragic and challenging issues, and will be for a long time to come, but for the sake of the company, its many thousands of employees and the industry which supports them we need to find a sustainable peace accord which allows people to return to a working business. That we are committed to doing in the coming days,” Scott said in a statement.

In addition to calming a situation that appeared to be close to spiralling out of control, one of Scott’s first acts will be to renegotiate Lonmin’s banking facilities or initiate an emergency rights issue.

The company said the cost of lost production resulting from the strike means it will probably breach its banking covenants when they are next tested on 30 September.

“With little sign of an imminent return to work by striking rock drill operators, we have updated our Lonmin forecasts to build in a six week strike. That would make a September covenant breach almost unavoidable, and a rights issue increasingly likely. If Lonmin did go down that route we believe it could look to raise around $700m,” said Alison Turner, analyst at Panmure Gordon, the Guardian reports.

A South African registered chartered accountant, Scott joined Lonmin in September 2010 and became CFO in November 2010. He has held a number of financial management roles in South Africa, including a total of nine years with Anglo Platinum. Most recently he was CFO of JSE-listed Aveng, an engineering and construction group with significant involvement in the mining sector.