The miner said it would sell 27 billion shares at 1p per share. That compares with a share price of 16.25p on Friday.
Its shares have already tumbled 90% this year as it has also struggled to cope with strikes and rising costs.
Lonmin had already stated that its shares would be issued at a "significant discount".
Shares in the platinum miner rose nearly 10% to 17.75p in early trade on the London Stock Exchange.
Lonmin will use the cash raised to help secure $370m (£246m) in bank loans which will mature in 2020. Those loans will replace an existing $543m of loans, which are due to be repaid next year.
The company urged shareholders to approve the cash call, saying the injection was crucial to its survival.
It said if shareholders did not approve the rights issue, its lenders would not allow it to refinance its debt.
Platinum prices have fallen by about 22% in the last year.
"The rights issue has been fully underwritten and we hope shareholders vote positively. We firmly believe that the rights issue is in the best interest of our shareholders," Lonmin chief executive Ben Magara said in a statement.
The rights issue came as Lonmin reported an annual loss of $2.2bn, compared with a loss of $326m a year earlier.
The majority of its losses came from a $1.5bn impairment charge at its Marikana mine in South Africa, where 34 miners were killed by police during strikes and unrest in 2010.
Miners have been suffering heavily in recent months as a result of lower commodity prices. But Lonmin was also hit hard by another miners' strike in South Africa in 2014.
In July, it announced plans to close or mothball several mine shafts, putting 6,000 jobs at risk.
It said on Monday that about 3,100 people had since left the company.
Last month, Glencore announced the sale of two of its copper mines in Australia and Chile, in an effort to reduce a debt pile of £19.5bn created by its 2013 takeover of Xstrata.
The share sale is the second in three years at the embattled platinum minter.
Lonmin issued an $800m rights issue to shore up its balance sheet in November 2012.
Platinum producer Lonmin has priced its £270m share sale at a discount of 94% as it fights for survival after a near-collapse in the commodity's price.