Lonmin PLC Chairman Brian Beamish urged shareholders to back Sibanye Gold Ltd.'s £285 million all-share offer while flagging shaft closures and job losses due to insufficient liquidity.
Beamish said in a March 25 letter to shareholders that the company has been seeking to retain a positive cash balance, but this has been difficult due to poor production and high costs, which largely offset the benefits from improved platinum prices.
Despite a reduction of over 8,000 positions as part of its business improvement plan, the company continues to be financially constrained and unable to fund the significant investment required to sustain its business and associated employment in the future, Beamish said.
"We continue to believe that this transaction represents a comprehensive solution to the challenges facing Lonmin," the statement said. "We believe that a combination of Sibanye-Stillwater and Lonmin will create a larger, more diversified and resilient
company better able to withstand market volatility and business disruptions."
In December 2018, the Association of Mineworkers and Construction Union lodged an appeal against the South African Competition Tribunal's decision to approve the takeover on concerns over job cuts. The Competition Appeal Court of South Africa will conduct a hearing on the appeal April 2.