The all-share deal is likely to lead to more than 10,000 layoffs.
Lonmin Mining News
Lonmin also said on Thursday it expects Sibanye's deal to close early next year, but cautioned that some uncertainty still exists over its completion.
South Africa's Sibanye has proposed to buy Lonmin for about 285 million pounds ($365 million) to create the world's No. 2 platinum producer.
Deal would create the world’s No.2 platinum producer.
If approved, merger would create the world’s No.2 platinum producer as Lonmin is the world’s third-largest while Sibanye-Stillwater is the fourth.
Under the deal, Lonmin will repay most of the loan by delivering platinum and palladium over a three year period to a subsidiary of Jiangxi Copper, China’s largest copper producer.
Sibanye and Lonmin said in a joint statement they remained fully committed to the deal, which is expected to close by the end of the year.
The transaction would create the world’s No.2 platinum producer as Lonmin is the world’s third-largest while Sibanye-Stillwater is the fourth.
Sibanye said in a statement that it would fund the tender offer from existing cash resources.
Lonmin has been the biggest casualty in South Africa's platinum mining industry.
The deal requires more than 50 percent approval in a vote by Sibanye investors, in addition to Lonmin’s shareholders’ approval.
Price for scarce precious metal rhodium is up 270% in two years.
By mid-morning, Lonmin shares had lost 5.6% of their value in London, while Sibanye’s were down 4.9% in Johannesburg, even though the companies announced they had received the approval of the South African Reserve Bank (SARB).
The proposed deal with Sibanye is conditional upon Lonmin retaining a positive cash balance by the time it is to close in the second half of the year.
Sibanye said it would cut a third of Lonmin's employees and deliver savings of about $112 million a year by 2021.
The miner warned further reductions could be in store at those operations, which employ 31,000 people.
Consolidation in South African's platinum mining sector continued on Friday with Lonmin's decision to buy Amplats' stake in the Pandora platinum mine.
The move will allow the platinum miner to restructure its debt and, it hopes, weather an ongoing decline of platinum prices.
The company has priced its $407 million share sale at a discount of 94% as it fights for survival after a near-collapse in the commodity's price.
The radical decision would make of the platinum producer the biggest casualty of the ongoing commodity rout that is hurting miners worldwide.
The world’s third-largest platinum producer is also planning layoffs, cutting capex and lowering unit costs.
Given that ousted minister Ramatlhodi is considered the main person that helped end a five-month strike in the country’s platinum sector last year, Zuma's decision is being questioned.
Supply for the year, however, is expected to increase by 9% to 7.91 million ounces, owing to the recovery in the country’s output following strikes in 2014, as well as increased platinum recycling.
They claim the official report on the police killing of 34 striking miners in 2012 is a "gross defamation" of those who died.
The commission into the deaths at Lonmin's Marikana platinum mine in August 2012 concluded the plan to quell the massive protest was “defective,” and shouldn't have been executed as such.