Lonmin’s CEO shocked the world by stepping down three days before the Xstrata (XTA) deadline. But the exit of Brad Mill leaves investors wondering not whether Lonmin (LMI) will accept the offer but if Xstrata will back out before it can.

Three days before the Xstrata (London:XTA) bid deadline, and Lonmin (London:LMI) has rolled over into the corporate equivalent of the fetal position.

Lonmin CEO Brad Mills bowed out of his position today by “mutual consent” according to the company, which Mills led for the last four and a half years through safety stoppages, labor strikes and power outages in its South African platinum mines.

Whether culpable or not, Mills has been blamed for a 29% decrease in output at Lonmin’s mines, and the market is expecting even worse numbers coming from the miner soon. It’s fiscal year ends tomorrow, and things are looking grim.

The former CEO said Xstrata’s $9.1 billion bid for his company undervalued Lonmin, but the market would beg to differ. Currently, LMI shares are running around 21 pounds ($38.00) about a third less than the all-cash offer of 33 pounds ($59.51) per share.The market is certainly betting against the buyout, but it would be the best thing to happen to Lonmin. The company can’t seem to get production up without help. It’s watched the price of platinum fall 52% since March, and it’s liabilities are mounting against any possible profits.

Lonmin’s new CEO, Ian Farmer, is a chartered accountant who joined the company in 1986 and worked as a director and chief strategic officer before taking the CEO position. Doesn’t he already sound like a good subsidiary president for Xstrata?

But the real question now is not whether Lonmin will accept the offer, but whether Xstrata will make the offer at all. Will Xstrata walk away or rescue Lonmin from oblivion? We’ll have to wait and see.

Source: Will Xstrata (XTA) fill vacuum left by Lonmin (LMI) CEO?