Xstrata ups Lonmin shares

Johannesburg - Market talk of a possible fresh bid from Xstrata pushed Lonmin shares up by more than 8% late on Friday afternoon.

Lonmin, the world's third-largest platinum producer, closed R14.74 firmer at R197 on the JSE after gaining 8.09% during the day's trade.

The platinum producer was one of the star performers on the JSE on Friday after analysts suggested that Xstrata might soon launch a new takeover offer for the company.

Xstrata, which was earlier this year rejected by Anglo American after proposing a merger of equals, abandoned its initial bid for Lonmin last year after the global economy took a turn for the worse and access to financial markets soured.

But the UK's Telegraph quoted Royal Bank of Canada (RBC) analyst Leon Esterhuizen as saying "the Takeover Panel restrictions on a potential acquisition by Xstrata end in early October 2009".

"With an Xstrata-Anglo American merger looking ever less likely, we believe a Lonmin acquisition looks more so," said Esterhuizen.

Xstrata looked set to realise its dream of becoming a major platinum player by combining its business with that of Anglo, which is the majority owner in the world's largest platinum producer Anglo Platinum.

Unwilling to sweeten its offer, it may again have fixed its sight on Lonmin.

Despite abandoning its offer to takeover Lonmin, Xstrata continued to buy shares in the platinum miner on the open market and by October last year held 24.9% of Lonmin's issued share capital.

Xstrata got a taste for the platinum industry when it took control of Elandsfontein when it acquired Eland Platinum, an independent platinum producer on the Western Limb of the Bushveld Igneous Complex in Mpumalanga.

All of Lonmin's operations are in the Bushveld Igneous Complex and close to Xstrata's chrome assets.

A combination with Lonmin would give Xstrata access to additional chromium deposits and allow it to consolidate a large chunk of properties on the Western Bushveld.

- I-Net Bridge