RPT-UPDATE 1-Miner Lonmin beats forecasts amid "tough" wage talks
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LONDON, Nov 11 (Reuters) - South African platinum miner Lonmin posted a forecast-beating annual pretax profit of $140 million on Monday, recovering from a heavy loss last year, as both sales and an effort to contain cost increases exceeded its targets.
Lonmin, the world's third-largest primary platinum producer, was at the centre of the labour unrest and violence in South Africa last year that left dozens dead. Lonmin's finances were left so battered it had to tap shareholders for cash.
Union unrest continues to plague the sector, and last month leading platinum belt union AMCU declared a wage dispute with Lonmin, raising the possibility of fresh platinum strikes.
Lonmin's newly appointed chief executive, Ben Magara, who took the reins earlier this year, declined to comment on the detail of ongoing wage talks, but said discussions were "tough", and could take time as the miner balanced workers' demands with the economic reality of a weak platinum market.
"We are hoping to strike a balance, with the right economic realities factored in," Magara told reporters.
Lonmin said on Monday that pretax profit rose to $140 million for the year to the end of September, compared with a loss of $698 million a year ago and well above analysts' consensus forecast of $83.9 million, according to Thomson Reuters I/B/E/S Estimates.
The beat boosted Lonmin's shares in early trade, with its London stock up 5 percent around 0815 GMT, though analysts remained cautious given uncertainty over wage talks.
Lonmin said it produced 751,000 ounces of platinum in concentrate, its highest in six years, and sold 696,000 ounces, above its forecast of 660,000 ounces. The company targets sales above 750,000 ounces for the coming financial year.
"Despite the constraints faced at the start of the financial year our ramp-up was impressive and we met production expectations with costs well under control and with many areas of the business recording their best performance in years," Magara said.
Soaring cost inflation has been a major problem for platinum miners, already fighting lacklustre prices. Lonmin said its cost of production per PGM ounce over the past 12 months was contained to 3.8 percent - better than it had expected, and lower than South African inflation.
It aims to keep cost increases to less than wage inflation.
The company also reported net cash of $201 million, compared with net debt of $421 million at the end of last year.
Lonmin's single largest shareholder is Glencore Xstrata , with a 25 percent stake.
(Reporting by Clara Ferreira-Marques; Editing by Greg Mahlich and Mark Potter)