In December, Sibanye-Stillwater agreed to buy Lonmin in an all-share deal that values the company at £285mln, creating the world’s second largest platinum producer.
The Competition and Markets Authority said it would review whether the deal would lessen competition.
Shares in Lonmin fell 5.6% to 49.2p in morning trading.
The proposed takeover has been considered a rescue deal for Lonmin, which has suffered at the hands of weak platinum prices, costs related to the strengthening rand, a large labour force, and expensive deep-level mines.
The company has warned 12,600 jobs could be under threat over the next three years, with 3,700 job losses earmarked for this year, even if the Sibanye deal goes ahead.
Last week Lonmin reported a decline in its financial position with net cash falling to US$17mln at the end of March from US$63mln at the end of December, driven by restructuring costs.
Sibanye-Stillwater chief executive Neal Froneman has suggested Lonmin needs to be cash positive to follow through on the takeover, though it is not strictly a condition of the deal.
Analysts at Liberum said at the “current rate of cash burn Lonmin will be pushed into net debt before the year (end), scuppering the proposed merger before it has a chance to complete”.
However, Lonmin expects its cash position to improve by $47mln in the second half after an outage at one of its smelters.