Lonmin takes out Southern Platinum (June 29, 2005)

London-based platinum producer Lonmin (LMI-L) intends to compulsorily acquire all of the shares of Southern Platinum (SPC-T) not tendered to its recently expired $2.66-per-share takeover bid.

The bid expired on June 28 with nearly 85.1 million shares tendered; those shares represent 97.2% of Southern Platinum’s issued and outstanding share count, and 91% on a fully diluted basis. The offer needed a 90% acceptance rate to allow for compulsory acquisition of the remaining shares.

Southern Platinum’s key asset is its 91.5%-owned Messina Platinum subsidiary, which operates the Messina platinum group metal mine in South Africa. Lonmin also inherits an offtake agreement for Messina concentrates from Impala Platinum Holdings (IMPAF-P) for US$15 million and will deliver concentrates to Impala’s refinery until May 2006.

The world’s third-largest platinum miner also plans to look at the economics of an expansion at Messina, which would have a budget of US$75 million. The current capacity is 45,000 oz. platinum per year plus 41,000 oz. of other platinum group elements and gold. The expansion would bring annual platinum production to 75,000 oz.

The South African Competition Tribunal approved Lonmin’s bid in early June, with the main proviso that no more than 284 semi-skilled employees, and 116 management-, artisan-, supervisor- and administrator-level positions be eliminated following the acquisition.