A leading banking group has predicted today (16th June) that Lonmin's furnace shutdown could lead to a drop of up to 60,000 oz in pgm production, the Guardian reports.

The world's third-largest platinum producer has confirmed that its Number One furnace will be closed for up to 30 days after a molten metal leak occurred over the weekend.

Although Lonmin's three Pyromet furnaces can offer 50 per cent of the capacity in the meantime, Investec has expressed its concerns about the eventual impact on output.

"Our worst-case scenario estimate is that a 30-day shutdown could reduce 2009 full year sales by around 60,000 oz platinum," the company said in a note quoted by the newspaper.

Lonmin has a history of difficulties with its smelting facilities, although it had managed to avoid any major incidents for about two-and-a-half years until its latest problem surfaced.

The company's response would be that recent rationalisation means it only has one main furnace, unlike its major rivals Anglo American and Impala Platinum, the Times reports.

However, some critics have noted that Lonmin was fortunate because the closure came just two weeks too late to play a part in the finalising of its £300 million rights issue.

"For Lonmin, the timing is fortuitous as it has just completed its rights issue to bring net debt down towards zero and remove any serious banking covenant concerns," said Charles Kernot of Evolution Securities in a sell note quoted by the Guardian.

Lonmin's shares fell by 141p to £13 on the back of the news and the Times suggests that shareholders may be losing faith in new Chief Executive Ian Farmer's ability to cure its technical woes.

The Number One furnace, which is located on the Marikana site of the Bushveld Complex in South Africa, underwent an extensive building programme in November 2008.

Sources:

Furnace failure adds to air of uncertainty around Lonmin (16/06/09)

Lonmin loses ground while FTSE falls by more than 2.6% (16/06/09)

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