* To raise $800 million in underwritten rights issue
* Would equate to roughly half current market capitalisation
* No immediate comment from shareholder Xstrata
* Q4 production virtually halves
* Shares tick higher in early trade
LONDON/JOHANNESBURG, Oct 30 (Reuters) - Strike-hit South African miner Lonmin, the world's third-largest platinum producer, plans to raise $800 million from its investors to help slash debt and finance recovery after six weeks of strikes that left 46 people dead.
In August Lonmin's Marikana mine was the scene of South Africa's most violent episode since the end of apartheid, when police shot dead 34 people involved in the labour strife battering the country's already beleaguered platinum industry.
Most of Lonmin's miners have since returned to work, but the producer - which even before the walk-outs and illegal strikes had one of the most stretched balance sheets in the platinum sector - said it had lost 110,000 ounces of production, forcing it to scale back plans to boost output and sales.
Lonmin said efforts to ramp up after weeks of strikes were progressing better than expected, but the push and a rebuilding of stocks would swell its debt in the short term.
That meant it would have breached current loan covenants at the end of March 2012 - even if higher-than-expected sales of stockpiled platinum help it meet a test of covenants this November - prompting the miner to turn to investors for a cash boost.
``We believe $800 million is the right quantum to support the plan we have in place. It will put the company in a position where it can reduce its current debt levels and manage the business on a stable platform,'' acting chief executive Simon Scott told reporters.
Analysts had speculated that Lonmin could raise as much as $1.5 billion - virtually its current market value - after it warned in August that it could turn to investors for cash.
On Tuesday, Lonmin said it would raise less than half that in gross terms - meaning the number includes fees paid to underwriting banks that are expected to include its advisers JP Morgan and Citigroup. It did not provide full details on the timing or price, but said in a statement it planned to restructure its balance sheet at ``the earliest possible opportunity''.
It did not comment on any commitment from its largest single shareholder, miner Xstrata, which owns a 25 percent stake after a failed takeover attempt. Xstrata, which is currently in the throes of a takeover by its own largest shareholder, Glencore, has declined to comment on Lonmin to date.
``I want to see what Xstrata does. It would be very interesting to see if it follows its rights - they are more important in this whole process than anybody else,'' said Sasha Naryshkine, fund manager at Johannesburg-based Vestact.
``Lonmin has to be a meaner, leaner machine after (this).''
Shares in the group were trading up 2.1 percent at 490 pence at 0950 GMT in London on the back of the smaller than expected capital call, while its Johannesburg listed shares were up by the same amount.
Lonmin said new debt conditions agreed with its lenders depended on the company raising at least $700 million in new equity capital by the end of the year, and using that to reduce its debt to $400 million from $700 million.
The current conditions, linked to a profit-to-debt ratio, will be replaced by conditions tied to the value of its assets and limits on capital expenditure.
The changes will, though, slow Lonmin's previous vision of boosting production to more than 900,000 ounces by 2015 to raise margins and its bottom line, efforts which had been based on development of its growth shafts at Marikana - Hossy, Saffy and K4.
It now aims to sell 660,000 ounces in the financial year to the end of September 2013, Lonmin said, targeting sales of over 750,000 ounces in both 2014 and 2015. That would include output from a planned restart in 2014 of the currently mothballed K4 shaft.
The company, which had already warned the strike would cause it to miss targets, said production of platinum in concentrate almost halved in the three months to Sept. 30. Sales for the quarter, though, were down less than 4 percent, thanks to stocks. Over the year, Lonmin sold more than 700,000 ounces.
While Lonmin's rights issue will help it address the cost of months of unrest that have threatened growth in Africa's biggest economy, the sector remains beset by difficulties.
Amplats, the world's top platinum producer, is still struggling to get workers at its Rustenburg mines to return to work. Hundreds of miners barricaded a road to one of its mines on Tuesday with burning tyres, while police fired rubber bullets.