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Johannesburg - Platinum miner Lonmin on Tuesday reiterated that it continues to believe that the unsolicited proposed offer for
Lonmin announced by Xstrata plc on August 6 fundamentally undervalues the company's unique assets, resources and reserves.
"It is not in the interests of Lonmin's shareholders, and the board will continue to oppose it vigorously," it said in a statement.
"If and when Xstrata comes forward with a formal offer, the board will provide shareholders with further comprehensive information, including long-term production information, to enable them to properly assess the fundamental value of Lonmin," it added.
The board continues strongly to advise shareholders to take no action and to reject Xstrata's approach, it added.
"Xstrata has for its own reasons decided that a hostile approach is the best way of persuading Lonmin shareholders to part with their assets," said chairperson Sir John Craven.
"The document we are issuing today provides further information highlighting the value of the company. As set out in this document, based on reasonable assumptions for rating, production and Platinum pricing, it is not difficult to see a share price for Lonmin well above Xstrata's £33 a share proposal, even
before a control premium.
"Therefore, the board has no hesitation in rejecting Xstrata's entirely unsatisfactory approach which fails to reflect a proper value for the assets and prospects of Lonmin and the synergies from which Xstrata's rather than Lonmin's shareholders would benefit. We continue to explore all options to maximise value for our shareholders," Craven said.
The group said it has made a significant investment in future production growth and the board has every confidence in the production improvement plans being put in place by its new mining management team which will improve performance in FY2009.
Fails to recognise potential
Thereafter, the board is confident that Lonmin can achieve, and improve on, previous sales levels of over 900 000 Platinum ounces per annum.
The board is also preparing long-term production information for
shareholders, which underpins the fundamental value of Lonmin, and expects to publish this at the appropriate time.
Lonmin's long-life, high quality, low-cost assets are extremely valuable, it said. Investment opportunities in the consolidated PGM sector are rare.
"Xstrata's unsolicited, pre-conditional proposed offer fails to recognise Lonmin's potential given both Lonmin's attractive growth profile and the prospects for PGMs in the future," it said.
A share price for Lonmin significantly above Xstrata's approach price can be calculated by applying reasonable rating, production and Platinum pricing assumptions, even before the addition of a control premium.
Lonmin said it will demonstrate through its defence that Xstrata's unsolicited, pre-conditional proposed offer does not reflect the fundamental value of Lonmin's assets.
"The board of Lonmin continues strongly to advise shareholders to take no action and to reject Xstrata's approach," it said.
- I-Net Bridge