COMPANY COMMENT: Sibanye and Lonmin an interesting couple
Deal-maker supremo Neal Froneman and his team are not coy about their platinum ambitions
Lonmin is the world’s third-largest platinum producer and it is about to be overtaken by Sibanye when it concludes the $2.2bn Stillwater Mining deal. Lonmin’s share price is a fraction of the price tag on the Stillwater deal, closing at $584m last week. As one market commentator points out, there’s a reason for that. Stillwater has a very high grade and low costs and is advancing a growth project. Lonmin, on the other hand, has marginally profitable mines, with no spare cash to invest in its partly built K4 mine, which would be a low-cost mine and has pressing social issues to deal with, such as funding or building accommodation for 11,500 of its 25,000 employees in a low-price environment that has persisted for the past eight years. If the rand price for platinum group metals remained low, it could do "irreparable" damage to the industry in SA, the world’s largest source of primary metal, Lonmin CEO Ben Magara said last week. Could Sibanye be waiting for things to become more diffi...
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