A British mining company is flooding the market with 27 billion penny shares to avoid going broke

Lonmin, the platinum miner, is trying to sell £270 million ($407 million) worth of shares for a penny each, as it bids to avoid collapse.

The rights issue has been launched to try and stop the company, which is being crushed by the slumping price of platinum, running out of cash.

Shares in the company have tanked by nearly 90% already this year. In 2010, shares peaked at more than £20 ($30), but are now worth less than 1% of that value.

Furthermore, Lonmin is haemorrhaging money. In September, the miner announced pre-tax losses of £1.46 billion ($2.2 billion) for the year so far, and net debt has risen from £19 million ($29 million) in the same period last year to £123 million ($185 million) in 2015.

All shareholders in the company will be able to buy 46 of the new 1p shares for every share they currently own at a discount equivalent to around 94%. In total, if the issue sells out, there will be around 27 billion new Lonmin shares in the market, according to the company.

In a statement on Monday morning, Lonmin's chairman Brian Beamish said the shares were being issued "in order to be able to deal effectively with the effects of a continuation of current low [platinum] prices."

The move is just another sign of how badly the mining and commodities industry is struggling right now. Prices for most commodities have crashed in the past five years. Bloomberg's Commodities Index is down by more than 50% since mid-2011, with platinum falling by roughly the same amount.

Several big name commodity companies are really struggling right now. Glencore's troubles have been well documented, while Anglo American is being forced to cut production of numerous commodities, and BHP Billiton's struggles have been compounded by the collapse of a dam in Brazil.

Lonmin is just one of a series of commodity producers to attempt fundraising in the past few months. Impala, one of Lonmin's major platinum mining rivals issued around £187 million ($282 million) of new shares in September, and stricken Glencore also undertook a major fundraising operation, raising £1.66 billion ($2.5 billion) of new capital.

Shares in Lonmin have popped this morning as a result of the news, growing by around 10% by 11am:

The rights issue is being carried out by a collection of three underwriters; HSBC, JPMorgan Cazenove, and Standard Bank.