Following the double whammy of RNS’ today from Lonmin relating to the serious illness that has struck Ian Farmer the CEO and the ongoing violence issues at its South African mines (and with veiled hints at debt covenant issues) we have opened a new long position in this stock with high conviction.
The company is, in our opinion, undervalued and ripe for a takeover with the head honcho temporarily no longer at the helm. Throw into the mix the lowly valuation and expectations from numerous analysts that should the Glencore merger go ahead that Xstrata are likely to sell their stake. Ash Lazenby and Dominic O’Kane, analysts at Liberum Capital, wrote in a research note to clients – “Platinum has no strategic interest for Glencore as marketing opportunities don’t really exist therefore a disposal is highly likely.”
Xstrata has a 24% holding in Lonmin and this would provide an ideal bidding platform for another acquisitor such as Aquarius which is the fourth-largest producer or either Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. All companies operate in the same region of South Africa as Lonmin.
If any of these companies were to make a move, now is the most optimum time.