Lonmin Loses Prospecting Appeal in South Africa

(REUTERS) -- South Africa's Department of Mineral Resources has rejected an appeal by platinum miner Lonmin over a prospecting right on part of its mining area granted to a third party, Keysha Investments.

The DMR awarded prospecting rights for base metals minerals on part of Lonmin's mining area to Keysha Investments, linked to a former Lonmin director, in May 2009, a decision which Lonmin then appealed.

Lonmin is confident of its legal position and, given its view that this decision is procedurally and substantively incorrect, will take all necessary future measures to protect its rights, including taking the matter to court for review, the company said in a statement.

The DMR declined to comment on the Lonmin case.

A similar case was overturned last month by a South African judge, who ruled in favour of Kumba Iron Ore, a unit of Anglo American in a dispute over prospecting rights.

Lonmin may now pursue compensation from the DMR and the former director, having said in November that it was considering lodging compensation claims on the basis of expropriation and for breach of duties respectively.

A source familiar with the situation described the area in question as one of Lonmin's minor assets.