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The world’s third largest platinum producer has bought an Africa-focused gold and platinum mining company. Lonmin plc has bought AfriOre for more than £4 a share.

The deal, which values AfriOre at some £225.2 million (US$441 million), was paid in cash satisfied from the company’s existing debt. 

AfriOre’s main asset is a 74% stake in the Akanani Platinum Project on the Northern Limb of South Africa’s Bushveld Complex.

The transaction will combine Lonmin’s extensive operational experience in platinum mining, smelting and refining with AfriOre’s interest in the Akanani Platinum Project.

AfriOre’s president and chief executive, Warren Newfield, said: “We believe that this represents the optimum route to maximise value for AfriOre’s 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,” he added.

Lonmin’s financial adviser was BMO Capital Markets, led by managing director William Smith, while Ernst & Young handled the tax issues of the deal.

Smith said the firm was approached to work on this transaction due to the long-standing relationship it has with the company, during which it has worked on several of its previous acquisitions.

Lonmin, which is listed on the London and Johannesburg stock exchanges, is valued at £4.1 billion (US$8 billion). In the 12 months to September 30 last year, Lonmin’s South African operations produced almost a million ounces of platinum and more than 1.8 million ounces of total platinum group metals.

AfriOre has exploration projects in South Africa and is listed on AIM and the Toronto Stock Exchange.

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