South African precious metals mining firm Sibanye-Stillwater has made an offer to acquire UK-based platinum group metals (PGMs) producer Lonmin in a £285m deal.

Under the offer, Lonmin shareholders will receive 0.967 new Sibanye-Stillwater shares for each Lonmin unit.

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Once the acquisition is closed, Lonmin shareholders will hold 11.3% of the enlarged Sibanye-Stillwater Group, with Sibanye-Stillwater shareholders owning the remaining 88.7%.

The proposed acquisition is in line with Sibanye-Stillwater’s South African PGM strategy and follows the acquisitions of Aquarius Platinum and the Rustenburg Operations from Anglo American Platinum.

Lonmin CEO Ben Magara said: “The combination with Sibanye-Stillwater provides a stronger platform for Lonmin shareholders and other stakeholders to benefit from the long-term upside potential of an enlarged Sibanye-Stillwater Group with greater geographical and commodity diversification.”

“The flexibility inherent in the larger regional PGM footprint will create a more robust business, better able to withstand volatile PGM prices and exchange rates.”

Magara noted that the company continues to be affected by its capital structure and liquidity concerns.

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The combination is expected to enable Sibanye-Stillwater to unlock operational synergies and become a fully integrated PGM producer.

Sibanye-Stillwater CEO Neal Froneman said: “The proposed combination with Lonmin positions the enlarged Sibanye-Stillwater Group as a leading mine-to-market producer of PGMs in South Africa.

“The flexibility inherent in the larger regional PGM footprint will create a more robust business, better able to withstand volatile PGM prices and exchange rates.”

For the six months ending 31 March this year, Lonmin registered a net loss of $214m.

The Lonmin board has recommended the offer to its shareholders.