Lonmin, world's No.3 platinum miner, urged shareholders to approve a $400 million equity cash call at a meeting next week, saying in a document posted on its website the injection was crucial to its survival.
Lonmin's shares in London fell 6.8 percent to 23.93 pence by 1223 GMT. The Johannesburg-listed stock was down by 8 percent at 5.00 rand.
Battered by strikes, rising costs and weak platinum prices, Lonmin said last month it planned to raise the money and another $370 million in bank loans to refinance debt due in May 2016.
The firm, founded in 1909 as the London and Rhodesian Mining and Land Company, said that if shareholders do not approve the rights issue at a meeting on Nov. 19, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.
"As a result, the group may have to cease trading at some point between December 2015 and May 2016 and shareholders could lose the entire value of their investment," the company said on its website.
Lonmin was hit harder than other producers by the platinum mining strike in 2014, South Africa's longest and costliest, as unlike its peers, virtually all its operations are concentrated in the strike-affected Rustenburg area.
To try to turn around its fortunes, the miner announced a plan in July to close or mothball several mine shafts, putting thousands of jobs at risk. It employs around 38,000 staff, including contractors.
The cash call has the backing of Lonmin's third-largest shareholder, the Public Investment Corporation (PIC), which has said it was willing to take up more than it is entitled to. The South African government-owned PIC owns about 7 percent of Lonmin.
The company said the Bapo Community, which owns 2.24 percent of its shares, would also back the rights issue.
Other top four shareholders in the company include South Africa's Kagiso Asset Management, Capital World Investors and Old Mutual Investment Group.
Lonmin said the new shares would be issued at a "significant discount", underscoring a more than 80 percent tumble in its stock price over the past year.
"We see this as a particularly stark warning by Lonmin but it is a reminder of the extreme pressures faced in the South African platinum industry," Investec said in a note.
Spot platinum has fallen by about 20 percent over the last year to levels last seen in 2009 due to oversupply concerns and slowing demand in top consumer China.