Lonmin PLC to acquire AfriOre Ltd. for CAD 498.75-million cash
A UK-based Lonmin PLC, which is the third largest producer of platinum group metals in the world, has announced on Tuesday that it has entered into a binding agreement with AfriOre Ltd, an exploration company domiciled in the British Virgin Islands and operating in Africa.
Lonmin PLC is offering C$498.75 million cash to buy AfriOre Ltd. That means cash offer to shareholders at C$8.75 (US$7.74) per share, for each of AfriOre’s 57 million shares, on a fully diluted basis. This price is 9.4% above AfriOre’s Tuesday closing price of $8 on the Toronto Stock Exchange and above the all-time high of $8.20 set on Oct. 30.
The deal is already supported by the board of directors and shareholders of AfriOre, representing 6.4% of AfriOre’s outstanding common shares, but will require the acceptance of shareholders owning at least 66.6% of the common stock. AfriOre has agreed to pay Lonmin a break fee of $15 million if the transaction does not proceed in certain circumstances.
Warren Newfield, the president and chief executive of AfriOre, has commented in his statement from Road Town, BVI:
“We are pleased to have received the offer from Lonmin, which the board of AfriOre will recommend to shareholders to accept… We believe that this represents the optimum route to maximize value for AfriOre shareholders and other stakeholders, and to ensure steady progress towards mine development at Akanani. Akanani is a large and attractive platinum project, which will benefit significantly from Lonmin’s extensive experience and skills base in the platinum industry.”
Lonmin produced 947,795 ounces of platinum and 1,807,044 ounces of total platinum group metals in South Africa in the 12 months ended Sept. 30. AfriOre’s main assets include the Akanani platinum exploration project in South Africa, where Lonmin also has operations.