Lonmin is a British producer of platinum group metals operating in the Bushveld. Thy are listed in London and in South Africa. On Tuesday the CMA (British Competition and Markets Authority) said they would examine whether a takeover by Sibanye-Stillwater would lessen the competition. If this takeover deal of R4bn continues Sibanye-Stillwater would be the second largest platinum producer in the world. Lonmin needs R1bn per month to run their business. Yesterday the Reserve Bank gave their approval for the buyout. Their second quarter production report, reported a 12.4% rise in unit cost for the quarter, which is primarily driven by the 8% increase in wages.

  • The share is caught within a descending channel (possible positive).
  • The formation will be confirmed above line A (R8-83) which can take the share to R11-86 should the formation play out.
  • First sign of strength will be visible above line B (R8-74) and if the strength in the share price remain the share can try to close the windows between R9 and R9-03 and between R9-73 and R10-18 and between R10-18 and R10-33.
  • Below R8-04 the optimism will be off the table.
  • For traders – Nibble above line B, increase exposure above line B but use R8 as stop loss to protect capital. The possible targets are the windows as given above.
  • For medium to long term investors – Let’s wait patiently for more certainty on the graph.

Let us know if there are any questions.

Frans & Christelle de Klerk