Lonmin’s centenary year has been nothing to celebrate.

Low platinum prices, an unhelpfully strong rand, a £300 million rights issue, the protracted shutdown of its biggest smelter after a leak of molten metal and, last week, the reminder that Lonmin may have to bail out its South African black empowerment partner, which is unable to repay its borrowings.

Oh, and there’s also the minor matter of the red ink on the company’s bottom line. Consensus forecasts suggest that next month Lonmin will report an £81 million pre-tax loss for the 12 months to September 30, against a £438 million profit the previous year. Based on their outlook for platinum prices, some analysts believe that Lonmin could be loss-making for a further two years.

Yet that has not stopped Lonmin’s shares gaining 73 per cent since the start of the year. Like the mining sector as a whole, Lonmin has benefited from the anticipation of cyclical recovery.

In particular, the outlook for the car industry, the biggest consumer of platinum through its production of emissions-reducing catalytic converters, is far brighter than in January. But the shares have also drawn momentum from Xstrata, which, since last year’s abortive bid approach, has been sitting on a 25 per cent stake.

Since the start of this month — coincidentally the first anniversary of the appointment of Ian Farmer, Lonmin’s chief executive — Xstrata has been free to bid again below its lowest purchase price.

The case for Xstrata is threefold. First, that Mr Farmer’s operational overhaul of his new charge will, over time, narrow the shares’s discount to Anglo Platinum and Impala Platinum, its bigger peers.

On that front, Mr Farmer appears to be doing all the right things: trimming capital expenditure, mothballing higher-cost mining projects and reining in overheads.

Second, that forces outside of Lonmin’s control — either a sustained rise in platinum prices from their present $1,300 an ounce, or a weakening of the rand, in which the company bears its costs — will speed its recovery.

Or third, that Xstrata finishes what it started in fairly short order.

Leaving aside the issue of whether Xstrata would be happy to burden its balance sheet with a further $4 billion (the cost of buying out the remaining 75 per cent that it does not own), it has been given until October 20 by the Takeover Panel to bid for Anglo American or walk away for six months.

That suggests that, within a fortnight or so, Lonmin’s shares could move sharply in either direction: down if Xstrata tackles Anglo, or up if it demurs.

In Marikana, Lonmin has a world-class shallow platinum project with a life of at least 40 years, and in Limpopo and Akanani, two decent options on growth. On the view that long-term demand for auto-catalysts has not gone away, the shares, at £15.33, are a speculative buy.

PZ Cussons

Forget Ben Bernanke, Mervyn King or Jean-Claude Trichet. Shareholders in PZ Cussons would do better to keep an eye on Lamido Sanusi, the new central bank governor of Nigeria.

The maker of Imperial Leather soap and Carex handwash draws about 40 per of its sales and profits from the West African nation, which has so far fared well in the credit crunch. But Mr Sanusi’s radical reforms of Nigeria’s banking system, enacted over the past two months, could yet cause a blip — not least in restricting the flow of credit to both consumers and companies.

That explains why the ever-conservative Cussons saw fit to make mention of Nigerian monetary policy in yesterday’s trading update, albeit that it has yet to see an effect. Indeed, tighter liquidity could even work in the company’s favour if it helps to force some of the illegitimate competition it faces in the country to the wall.

For now, Cussons is trading to plan. It is on course to produce a forecast 14 per cent rise in pre-tax profits for the 12 months to May 31, helped by strong demand, a new low-cost manufacturing facility in Manchester and more stable commodity prices (palm oil and tallow are two of its biggest costs). Swine flu has also provided a useful boost to Carex, the biggest brand in handwash.

Cussons has a strong balance sheet (last reported cash of £23 million), falling capital expenditure after heavy investment in the UK and Nigeria and plenty of scope to buy further brands in Europe and Asia.

At 251p, or 18 times earnings, the shares are a solid hold.

ISH

Immunodiagnostic Systems Holdings (ISH) will not win any awards for brevity of name. However, its achievements have not gone unrecognised. The Tyneside company, which makes tests for Vitamin D, is a nominee in the best technology category in next week’s AIM awards. Investors might think a prize for the performance of the shares, up threefold this year, more fitting.

That rally continued yesterday as ISH reported a better than expected 56 per cent rise in first-half revenues. Sales of its traditional Vitamin D tests — used to detect osteoporosis, but also increasingly used as a predictor of some cancers — have doubled.

Meanwhile, although sales of its newly launched testing machines are behind plan, ISH’s revenues per machine — which customers can either buy or rent for fees pegged to use — are running above forecast.

ISH benefits from having minimal competition and the potential to add more tests to its existing platform. It is also expected to gain US regulatory approval for its machines by the end of the year, which should put it firmly in the sights of the likes of Abbott Laboratories or Roche.

However, at 467½p, or 18 times earnings, the shares look up with events. Pass.

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