Lonmin eyes Messina minorities (September 26, 2005)

London-based platinum producer Lonmin (LMI-L) says it will offer 33 rand per share (US$5.15) for the 8.5% stake it does not already own in fellow platinum miner Messina.

Earlier this summer, Lonmin acquired Southern Platinum for $190 million (US$162 million), giving it a 91.5% interest in the Messina platinum group metal (PGM) mine on the Northern portion of the eastern limb of the Bushveld complex, located in South Africa’s Limpopo province. Lonmin has since renamed the mine Lonmin Platinum Limpopo.

The latest offer represents a premium of 84% over the closing price of Messina’s shares on the Johannesburg Stock Exchange on March 18, the last trading day before Lonmin launched its bid for Southern Platinum. It represents a 20% discount to the shares’ closing price on Sept. 14.

In all, the offer, which is subject to regulatory approval, tallies to 56.3 million rand (US$8.8 million).

Lonmin Platinum Limpopo (Messina) currently produces around 45,000 oz. of platinum per year from a strike length of just 4 km. Lonmin plans to boost production to 75,000 oz. annually by 2007.

The company intends to spend US$75 million over three years introducing conventional long-hole mining above the mine’s 350-metre level, while mechanized long-hole mining will be the order of the day below the 350-metre level. Most of the capital will go toward shaft deepening, underground development and mechanized mining equipment.

Looking further ahead, Lonmin will examine the viability of additional production from the remainder of the Greater Messina resource base.

Messina has appointed an independent sub-committee of the board to consider Lonmin’s offer.