Lonmin’s (LMI) issues are numerous: stretched bank covenants, fraught labour relations, a bleak outlook for platinum, an investment-starved asset base, and rising costs among them. But it also now has a ray of hope, in the shape of fellow South African precious metals miner Sibanye-Stillwater (SA:SGL).
In a surprise move, Sibanye has tabled an all-share takeover of the London-listed group, offering 0.967 Sibanye shares for each Lonmin share. That’s a 41 per cent premium to Lonmin’s 30-day average, and on those terms the company is being valued at £285m, or 100p a share. However, taken from the closing price of both companies' shares on 13 December, the offer comes in at closer to 86p. And factor in the fall in Sibanye stock that greeted this news, and the offer comes in closer to 81p.
Consequently, Lonmin stock failed to push past 78p on news of the announcement. Excitement may also have been tempered by the prospect of competition authority intervention, given Lonmin and Sibanye account for 11 and 14 per cent of concentrated platinum production, respectively, according to analysis from Liberum.
