Lonmin - damage limitation - FT.com Lonmin has fixed the strike. Can it fix itself? The London-listed platinum mining group agreed a deal earlier this week with striking miners at its Marikana mine in South Africa. The miners are expected to return to work on Thursday. It has been a tragic and violent dispute that damaged the platinum industry's image as well as that of South Africa itself. Its resolution heaps further financial pressure on Lonmin. Under the agreement with striking employees, Lonmin is offering a one-off bonus of R2,000 ($242) and an average rise in wages of between 11 per cent and 22 per cent. That will prove expensive. Labour makes up about 40 per cent of operating costs at Marikana. Lonmin's earnings are under pressure from a platinum price that is still down a tenth over the past year despite the supply concerns raised by the strikes. It is barely profitable at the current price of $1,635 an ounce. It also remains under pressure to meet bank covenant tests on September 30. Lonmin is trying to fix its balance sheet by cutting back on capital expenditure. But its net debt could now exceed the multiple of four times its earnings before interest, tax, depreciation and amortisation set in the covenants that govern its rand-denominated debt, according to Investec, which estimates net debt at $461m. The miner could do with raising at least $600m of equity, or three years" capex, to give it room to weather the platinum downturn. If it can buy time, Lonmin's longer-term prospects look better. The price of platinum byproducts such as palladium and iridium, which make up more than one-third of its production volumes, are at cyclical lows. It is also addressing the glut in platinum supply by stalling production ramp-ups. That should curb output by 5 per cent next year and 16 per cent by 2016. That could revive the platinum market, which needs all the help it can get in this damaging episode.