Platinum miner Lomnin’s board rejected £5bn takeover offer from Xstrata, calling it opportunistic and blamed Xstrata for making an unwelcome attempt to buy the company at a price much lower than the value of its assets.

Lonmin is demanding an offer of £33-a-share amounting to 42 per cent premium on closing price on Tuesday.

The deal could have boosted Xstrata’s attempts in diversification away from nickel, copper, ferrochrome and coal business. Xstrata started its own platinum business in South Africa last year and has an ambitious plan of producing 1m ounces of platinum in the next 10 years. A deal with Lonmin would have enabled the group to attain this target in the shortest span of one year.

Some analysts feel that Xstrata can clinch the deal by increasing its bid by 20 per cent to £40-a-share, but its chief executive Mick Davis insists that Xstrata’s offer price was right and some shareholders endorsed fairness of the bid. He claimed that Xstrata had the required expertise to fully exploit Lonmin’s assets and bring turn around in its poor performance.

Xstrata bought additional 2.65 per cent stake in the market yesterday, taking its total stake in Lonmin to 8 per cent.

Graham Birch, Black Rock fund manager who is also the shareholder of Lonmin, remarked that Xstrata took advantage of a weak market and made an opportunistic offer.