Credit Suisse has upgraded its rating for platinum miner Lonmin from 'underperform' to 'neutral' after the 800m-dollar fully underwritten rights issue.

Following Tuesday's rights issue news, the broker said: "we believe that the company will remain well capitalised for the next three years on both spot and base case forecasts."

Credit Suisse says that the stock is "no longer a sell" given Lonmin's "significant operational leverage to a potentially tightening platinum market".

With the shares trading at 2008 price-to-book ratio lows, the broker says that it screens as the cheapest platinum equity from a value perspective. "Versus replacement costs the enterprise value trades with a 70% discount - the largest among the top three producers."

"On our analysis, using conservative assumptions and using an 'exit model', there should be some 14% upside to equity investors post issuance. If the company can execute upon the growth plans beyond 2015 then they should move down the cost curve as peers move up."

Nevertheless, there are still some uncertainties, Credit Suisse said. The broker said it is concerned about: whether the right issue will receive core shareholder support; medium-term volume and cost targets; labour and political backdrop in South Africa; increasing ownership in Marikana; production growth to 950koz.

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