Lonmin is leading the market higher as the FTSE 100 heads for a 14 month high, lifted by surging metal prices, especially gold.
Gold has hit a new record of more than $1130 an ounce, helped by continuing weakness in the dollar and stronger than expected Japanese GDP figures for the third quarter. Among other metals, copper is at a three week high while platinum - of particular interest to Lonmin - is at its highest level for more than a year.
In fact the price of platinum is helping to spur Lonmin's shares despite the mining group reporting a $142m full year loss, compared to a $764m profit. It plans to boost output by a fifth within 2013, to take advantage of shortages it expects in the coming years. In a hold note on the company, Investec said:
Lonmin has reported an underlying net loss, worse than our forecast and consensus. Guidance is for medium-term output of 850,000 ounces of platinum, driven by $300m-$350m capital expenditure in 2011. We believe the key question for Lonmin over the next six months will be whether it needs to raise funds for this growth. We think this will largely depend on where the platinum group metal price goes. We retain our hold recommendation.
At the moment the company is up 118p to £17.10, while the FTSE 100 is up 66.80 points at 5363.18, its best intra-day level since mid-September 2008, the weekend Lehman Brothers went under.
Six of the top risers today are mining companies, with Xstrata adding 59p to £10.73, Rio Tinto rising 160p to £32.93 and gold specialist Randgold Resources up 237p to £49.44.
