South African miner Lonmin could face a renewed bid from Xstrata within the next month, according to reports emerging on Sunday (6th September).

The world's third-largest platinum producer was the subject of a £33-per-share hostile takeover attempt from Xstrata last year which was eventually scuppered by a lack of credit.

Xstrata subsequently withdrew the offer on 1st October but it had obtained a 25 per cent blocking stake in Lonmin and can make a new bid 12 months later under stock market rules.

According to the Observer, Mick Davis, Chief Executive of the Anglo-Swiss mining group, has told his financial advisers, JP Morgan and Deutsche, to conduct a feasibility study into the rumoured deal.

Although Lonmin is currently worth about £3 billion - compared to Xstrata's previous £5 billion bid - reports suggest that the company will be able to claim a healthy premium to this value.

Chief Executive Ian Farmer has overseen a number of cost-cutting measures, while platinum prices are expected to recover strongly once demand in the automotive sector picks up again.

As a result, most analysts believe that Lonmin is an attractive proposition because it will eventually be able to reverse its recent losses and restore its once-impressive profit margins.

If an offer is forthcoming, it would also appear that Xstrata is abandoning its interest in securing a 'merger of equals' with Anglo American, or at least placing it on the backburner.

Anglo shareholders rebuffed the initial advances in June and a number of market observers have suggested that the company is determined to remain independent.

Sources:

Xstrata weighs move for platinum producer Lonmin (06/07/09)

Xstrata looking to extract value from Lonmin (07/09/09)

Investors look for the next move by Xstrata (07/09/09)

After failed Anglo American bid, Xstrata eyes Lonmin once again news (07/09/09)

Ÿ Adfero Ltd