(ShareCast News) - Lonmin was under the cosh on Monday after HSBC downgraded the stock to 'hold' from 'buy' and slashed its price target to 82p from 222p.The bank said its medium-term earnings and EBITDA estimates are substantially lowered by cuts in platinum group metals pricing and production expectations, and its fair value has declined by 45% from 222p to 122p."Given the current state of PGM pricing, the risks these present to Lonmin, and the need for clarity regarding the likely capital structure of the group in light of debt maturity in 2016, we have elected to place a subjective discount of 33% to our fair value calculation to help capture the inherent risks in our base case forecasts for the group," it said.The bank said Lonmin's quarterly results are likely to be overshadowed by the wide-raging implications of a decision to reduce high-cost production at the company.It said that at spot pricing, Lonmin is EBITDA negative and after substantial capex cuts, the group will now seek to curtail production by around 100,000 ounce by full-year 2017. "This will be achieved through shaft closures, and the resultant cut in labour numbers heightens near-term operational risk," said HSBC.It added that Lonmin's challenges are exacerbated by the nearing maturity of its existing debt facilities, with half of the three bilateral rand-denominated working capital facilities maturing in June 2016.Key upside risks to HSBC's valuation are a faster-than-expected recovery in PGM pricing and clarity regarding the likely long-term capital structure at the group during a period of lower than previously expected production.Key downside risks to the valuation are a decline in PGM pricing and a lower-than-expected production profile at the group and difficulty in refinancing debt facilities.At 10:47, Lonmin shares were down 5.1% at 59.19p.