Xstrata's Davis still in the market for Lonmin

Mick Davis, the chief executive at mining giant Xstrata, has privately told investors that he still wants to buy FTSE-100 platinum group Lonmin.

Xstrata has a 25 per cent stake in Lonmin, the legacy of an aborted £5bn takeover tilt in 2008. There has been feverish speculation ever since over what Xstrata will do with the stake, with some suggestions that the Anglo-Swiss miner would sell the holding.

Mr Davis has publicly said that he has "a whole range of options", but he has never committed the company to a particular route.

However, at a lunch with seven investors arranged by adviser Deutsche earlier this month, sources interpreted Mr Davis's words as meaning that his preferred option remains a takeout of Lonmin. Mr Davis is understood to have told investors that Lonmin "still has attractive assets", and that ideally he would "want control" of the group.

Mr Davis again admitted that he "went too early" for Lonmin. Just over two years ago, Xstrata cited dreadful market conditions as the big factor behind ending the pursuit of its South Africa-based prey.

The lunch took place during the post-results roadshow, when Mr Davis met investors to discuss Xstrata's impressive annual figures. Pre-tax profit before exceptional items was up from $1.5bn in 2009 to $7.1bn in 2010, while revenue rose 34 per cent to $30.5bn.

A mining banker said: "Mick would love to own Lonmin, that's why Xstrata still holds the stake. But my sense is that it's pretty hard to get the numbers right to get a deal to work from an Xstrata point of view."

An Xstrata spokesman said that options "could include the sale of the Lonmin stake, or an offer for the remaining shares in Lonmin which Xstrata doesn't already own".

Any attempt to buy Lonmin would be complicated by Xstrata's own share register. Commodity trader Glencore, its biggest investor, is about to launch a London listing and might then seek a merger with Xstrata.