Lonmin shares were up as much as 25 per cent in a week on fresh talk that diversified miner Xstrata, which , will table another offer. Retaining this stake indefinitely is certainly not Xstrata's intention - it ideally wants either the whole company, or a profit on its existing stake. The timing is certainly not right for a full bid.
Although his nil-premium merger approach to peer Anglo American , Xstrata chief executive Mick Davis remains committed to the transaction. And while waiting for Anglo shareholders to come round to his way of thinking, he cannot queer his pitch by also mounting a Lonmin bid. Splurging cash on Lonmin would not only mean sacrificing balance sheet stability, hard-won only earlier this year with another chunky rights issue, but also buying a company that remains loss-making at current platinum prices.
Plus, as Anglo American also controls Anglo Platinum, South Africa's leading platinum producer, Xstrata owning Lonmin would also introduce an anti-trust headache into the Anglo merger equation.
There is also the question of why Xstrata would want to see the Lonmin price rocketing up even before the expiry of the Takeover Panel's deadline on a fresh approach following the 2008 debacle - Xstrata is not technically free to table a new offer until early October, unless someone else does. All told, the market has jumped the gun on this one.
