UPDATE 2-South Africa's Sibanye-Stillwater to buy troubled platinum producer Lonmin


* Sibanye-Stillwater to pay $382 mln for Lonmin

* Shares in Lonmin soar, after plunged in recent years

* Analyst calls it "bailout deal" for Lonmin (Updates with detail, background)

LONDON, Dec 14 (Reuters) - South African precious metals miner Sibanye-Stillwater has agreed to buy Lonmin in an all-share deal, valuing the troubled platinum producer at about 285 million pounds ($382 million).

Lonmin, the world's third biggest platinum producer, has been battling weak global platinum prices and soaring operating costs in South Africa, where laying off workers to improve profitability is a highly sensitive issue.

Lonmin's shares in London jumped 20 percent by 0916 GMT, after falling more than 90 percent in past five years as it struggled with a cash crunch. Sibanye-Stillwater's stock fell 2.6 percent in Johannesburg.

"This is a bailout deal for Lonmin," said Nedbank precious metals analyst Leon Esterhuizen. "It makes for a good match, but it doesn't resolve oversupply of the PGM (platinum group metals)industry."

Global platinum prices are trading around their lowest levels since early 2016. The market has been grappling with bloated overground supply and declining demand from the automotive industry.

Lonmin, listed in London since 1961, was undergoing an operational review to help resolve its cash crunch that led its banks to relax some debt covenants. The miner has tapped shareholders for cash three times since 2009.

"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," Sibanye Chief Executive Officer Neal Froneman said in a statement.

He said the acquisition would "deliver longer term benefits for all stakeholders."

Under the offer, Lonmin shareholders would receive 0.967 new Sibanye-Stillwater shares for each Lonmin share, the firms said.

Following the completion of the deal Lonmin shareholders would hold around 11.3 percent of the enlarged group.

"Doubtless welcome news to long suffering Lonmin shareholders averting the need to dig into their pockets once again to refinance the company in its regular three to four year refinancing cycle," said Marc Elliott, analyst at Investec bank.

He said Sibanye management could get the most value from Lonmin's smelting and refining assets and could also be betting on a rebound in the price of platinum group metals.

The government-owned Public Investment Corporation (PIC), which owns 30 percent of Lonmin, increased its stake in Sibanye in November to 10 percent.

In November, Reuters reported on its array of measures to save cash after it delayed its annual financial results pending conclusion of a business review.

UBS and HSBC advised Sibanye on the deal. (Reporting by Noor Zainab Hussain, Barbara Lewis, Clara Denina, Zandi Shabalala; Editing by Adrian Croft)