LONMIN: Mining group withdraws Ashanti bid

By Gillian O'Connor Mining Correspondent

Lonmin, the mining group, has withdrawn its offer for rival Ashanti after it was rejected by the Ghana-based group.

The withdrawal was not a surprise: it was conditional on the approval of the Ghanaian government, which had signalled its opposition. Lonmin is Ashanti's biggest shareholder with a third of the equity; the Ghanaian government has 20 per cent and a golden share allowing it to block takeovers.

Lonmin said both its offers had been made at Ashanti's invitation. It also said it would resume negotiations at the request of Ashanti or the Ghanaian government.

Ashanti has begun laying the foundations for independence. On Monday it reached agreement with hedge book counterparties after hovering on the brink of default for four weeks. Yesterday it appointed Barclays Capital and Chase Manhattan to firm up and increase its bank borrowings, and advise on restructuring its balance sheet. The two are among Ashanti's hedge book creditors and are among lenders of its existing $270m (?163m) revolving credit facility.

Gerard Holden, of Barclays Capital, said he had every hope of renewing the credit and raising the additional $100m needed.

Both mining companies feel there is considerable logic in combining their gold (Ashanti) and platinum (Lonmin) interests. "We think there is a greater future for platinum, and the merger would have ensured more liquidity for the shares," said Sam Jonah, Ashanti's chief executive.

Both companies are reluctant for Ashanti to sell core assets to relieve its liquidity problems. Mr Jonah said Ashanti was prepared to consider all options for stabilising its finances: a merger, an asset sale, the issue of new equity or of a convertible. But he is reluctant to sell all or part of Geita, the company's prize asset, a mine in Tanzania.

"Geita is this company's future, the gem," he commented. Geita is the asset that most attracts other mining companies. But Mr Jonah said he had received just one expression of interest in Obuasi, the company's century-old mine in Ghana.

Some other expressions of interest drummed up by the Ghanaian government seem to be evaporating. "We met the advisers of Sheikh Al- Waleed of Saudi Arabia last week. He could be interested in an equity stake of $18m-$20m in Ashanti. That's a bit less than the rumoured $400m," Mr Jonah said.