LONDON (Reuters) - Lonmin Plc (L:LMI) on Monday said it would continue closing inefficient production in 2017 to cut costs as the platinum miner expects demand is likely to be subdued in the near term.
The platinum miner reported earnings before interest and tax (EBIT) of $7 million (5.60 million pounds) for the year ended Sept. 30 versus a loss of $134 million a year earlier.
Its sales of 735,747 platinum ounces topped its guidance of 700,000 platinum ounces.
Edward Sterck, a director of research at BMO Capital Markets, said the results beat expectations of a $7 million loss but that the margins were "very small".
"The PGM space is one that still needs to restructure," he said.
Lonmin said the closure of "inefficient areas and shafts will continue through 2017".
Platinum prices have failed to match a rally in other commodities. This year they have risen by around 5 percent to roughly $940 an ounce
A Reuters poll in October forecast a modest uptick in 2017.
Lonmin said it expected the outlook for the short term to remain subdued, but believed long-term fundamentals were strong.
"PGMs (platinum group metals) have a vital role to play as we move towards a greener global economy. Platinum and palladium's role in reducing harmful emissions remains key and is of growing relevance for developing markets," it said.
On Friday, Lonmin said it would buy Anglo American (LON:AAL) Platinum's (Amplats) (J:AMSJ) stake in their joint venture Pandora mine for between 400 million rand and 1 billion rand ($28 million-$69 million).
For Amplats, the transaction brings it closer to its goal of offloading its labour-intensive mines to focus on mechanised mines.
Lonmin's share price fell around 10 percent on news of the acquisition on Friday.
They had rallied by around 8 percent by 0911 GMT on Monday, outperforming the mining sector (FTNMX1770) which was up around 2 percent.
Some mining stocks have seen big swings this year, driven higher by a rally in some commodities markets, demand generated by Britain's vote to leave the European Union and by expectations of U.S. infrastructure spending under President-elect Donald Trump. Strong gains have also triggered profit-taking.
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