(Reuters) - Platinum producer Lonmin (LONDON:LMI) Plc said it expected full-year underlying cash costs to stay below its guidance, indicating that its deep cost-cutting measures were beginning to bear fruit.
Shares in the company, hit by a rout in metals prices and a long-running strike last year, rose to trade up almost 6 percent before falling back down. They were up 3 percent at 35.58 pence at 0736 GMT on the London Stock Exchange.
Lonmin said unaudited cash costs were at 10,499 rand ($806) per PGM ounce at the end of July on a year-to-date basis and are expected to remain below its guidance of full-year costs of 10,800 rand per ounce.
The company said 1,400 employees had so far left as part of a programme of up to 6,000 job cuts announced in July.
Platinum producers are being squeezed between soaring costs and a fall in platinum prices to lows not seen since the 2008 financial crash.
Adding to Lonmin's troubles, power and labour costs in South Africa have risen sharply.
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 of its operations are concentrated in the strike-affected Rustenburg area.
The company, also hit by technical snags that halted its smelters, has been struggling to recover since then.
Lonmin on Thursday said it expected to eliminate more than 100,000 ounces of high-cost production over the next two years. It added that production would be reduced by 100,000 ounces per annum by the end of 2017.