Lonmin's pgm production will be affected after it confirmed today (15th June) that it has shut down its Number One furnace.

The world's third-largest producer of platinum revealed that a matte run-out occurred on Sunday and that the full repairs are expected to take up to 30 days.

In response to the closure, the company has opened three Pyromet furnaces but they only have the capacity to produce half of Number One's 550 tonnes of matte per day.

"In order to mitigate the impact on production of this shutdown and repair, our three Pyromet furnaces have already been started up and are expected to tap matte in seven days," said a statement.

At this stage, it is unclear how badly pgm output will be impacted, although Lonmin confirmed that more details will be available when a full inspection is conducted.

"Guidance regarding the impact of this incident on production and sales for the 2009 financial year will also be given at that time," the company added.

Investors will view developments with great interest as Lonmin has a history of missing production targets and incurring difficulties with its smelting facilities.

"The news is a blow to the new management team who had made strides in regaining investor trust and in our view highlights that there are better ways to play the pgm cycle," said Liberum Capital Analyst Michael Rawlinson in a note quoted by Reuters.

Lonmin revealed last month that it was sticking to its target of selling 700,000 oz of refined platinum during the fiscal year to the end of September 2009.

Sources:

UPDATE 3-Lonmin shuts down furnace, shares slide (15/06/09)

DJ Lonmin: Number 1 Furnace Shut Dn Following A Matte Run-Out (15/06/09)

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