By Eric Onstad LONDON (Reuters) - Lonmin Plc, the world's third-biggest platinum producer, said on Thursday its troublesome No. 1 furnace would need another rebuild, but total capacity was only slightly down. Lonmin, which posted a 1 percent fall in third-quarter refined platinum sales, said full-year sales may miss a target but the firm was on track to deliver lower costs. The problems with the furnace -- which had just undergone a rebuild in December -- are a jolt to Chief Executive Ian Farmer, who took the reins last October and had begun to win over the confidence of investors frustrated at repeated disappointments over production shortfalls. "In order to meet this revised sales guidance Lonmin will have to deliver its best quarterly operational performance of the year... which is not a given in our view," Liberum Capital said in a note. Lonmin shares in London rose 1.9 percent to 1,158 pence by 0759 GMT, in line with the UK mining index. Lonmin shares have gained 30 percent so far this year, but have shed nearly that much since touching a peak of 1,568 pence in early June. FURNACE CAPACITY CUT Lonmin, which has a history of problems with processing, said it restarted the furnace on July 15 after a 30-day shutdown, but slag leaks occurred. "It will be operated at reduced power until a re-design of the matte tap hole area can be completed and a rebuild initiated. This is currently planned for the first quarter of the 2010 financial year," a statement said. Lonmin's financial year runs to end September. A spokesman said the furnace was operating at around half capacity of 280 tonnes per day versus the normal level of 550 tonnes. Together with three replacement Pyromet furnaces that can smelt 240 tonnes a day, there was a modest shortfall of 30 tonnes per day. Lonmin, which has operations in South Africa, also reiterated its full-year target for platinum sales may dip by 20,000 ounces to 680,000 ounces. On June 24, Lonmin said up to 20,000 ounces may be left unprocessed at the end of its fiscal year due to the furnace incident that led to the temporary closure. On Thursday, Lonmin said: "We still expect to achieve sales for the 2009 financial year of between 680,000 and 700,000 ounces of platinum. This result is dependent on the selling of metal-in-process inventory and on how the Number 1 furnace performs during the fourth quarter of the year." The firm sold 178,494 ounces of refined platinum during the three months to end June, down from 180,270 ounces in the same period last year. Lonmin said it was on track to meet cost guidance after a restructuring programme that shut loss-making shafts and shed workers, but more mine closures under a government safety initiative were a risk. The firm has previously said gross costs in rand would be lower in 2009 than the previous financial year. During the third quarter, the firm lost 160,000 tonnes of ore production due to safety-related shutdowns, up from 107,000 tonnes in the same period last year. Mining group Xstrata is Lonmin's biggest shareholder with a 25 percent stake. | 
