1st Oct 2008 10:45
Withdrawal of Xstrata's pre-conditional proposal
The Board of Lonmin Plc ("Lonmin" or the "Company") notes the statement made by Xstrata plc ("Xstrata") this morning that it has withdrawn its pre-conditional proposed offer for the Company.
Lonmin believes that the current prices of platinum and other PGMs have been substantially impacted by forced selling of platinum investments, physical inventory selling by automotive companies and negative sentiment on the economic outlook and supply-demand dynamics. While these factors have significantly depressed prices, the Board remains confident in the longer-term demand fundamentals for platinum and other PGMs.
Lonmin has long-life and high quality assets and is the lowest-cost integrated producer of PGMs in the Bushveld. These significant and fundamental competitive advantages ensure that Lonmin is better positioned than other PGM producers in the Bushveld to withstand the challenges presented by any period of lower PGM prices. As previously announced, Ian Farmer, Lonmin's new CEO, is leading a review of the Group's operations focused on improving performance and maximising value for Lonmin shareholders from our unique and highly attractive long-term assets.
Lonmin Chairman, Sir John Craven, said: "Xstrata's attempt to acquire Lonmin highlights the fundamental long-term value of Lonmin's business and the scarcity of large scale opportunities to enter the PGM market.
"Although recent unprecedented developments in world financial and economic markets are having a substantial impact on PGM and other commodity prices, the long-term demand fundamentals for platinum and other PGMs remain positive. Lonmin has a high quality proven resource base of reserves and is the lowest-cost integrated producer of PGMs in the Bushveld. These attributes represent even more significant competitive advantages if platinum and other PGM prices remain at their current levels.
"We will continue to run Lonmin in the interests of all shareholders."
Further information for shareholders
For the nine months ended 30 June 2008, Lonmin reported sales of 469,233 ounces of platinum at an average realised price of US$1,738 per ounce. Lonmin is confident of achieving its guidance of platinum sales for the 2008 financial year of around 725,000 ounces. In recent weeks there have been material declines in the spot prices of platinum and the other PGMs, which Lonmin expects will now be reflected in updated market forecasts.
Lonmin will publish its Q4 Production Report on 30 October 2008 and will provide an update on 2009 production plans at that time.
Lonmin will publish its Final Results on 18 November 2008.
Enquiries
Lonmin: +44 (0) 207 201 6060
Alex Shorland-Ball
Cardew Group: +44 (0) 207 930 0777
Anthony Cardew +44 (0) 7770 720 389
Rupert Pittman +44 (0) 7976 249 289
Financial Dynamics (South Africa) +27 (0) 21 487 9000
Nic Bennett +27 (0) 766 877 429
Related Shares:
Lonmin