Cliffs Natural Resources raised its friendly takeover offer for Freewest Resources Canada on Thursday, hoping of trumping a rival bid from Noront Resources and gain control of Freewest's Canadian chromite deposit.
Cliffs' revised all-stock offer values each Freewest share at 90 cents, and the company at about $211-million it said. This represents a 6 per cent premium on Freewest's closing price on Wednesday.
The fraction of Cliffs' shares offered would be determined before the transaction closes.
Freewest shares rose 3 Canadian cents to 88 Canadian cents. The stock has risen about 170 per cent since early October when Noront kicked off what has since become a bidding war.
Freewest said its board has agreed to support the deal.
On Monday, Noront raised its offer for Freewest to 86 cents a share in stock and warrants, calling it at the time its final offer.
Joanne Jobin, Noront's vice-president of corporate communications, said the company did not plan to raise its bid, but noted she had not yet consulted with the board of directors to finalize that position.
"We could keep raising our bid and Cliffs could outbid us until the cows come home, to be frank," she told Reuters.
"We cannot dilute our position any more for our shareholders, so that's where we're at."
Noront, which like Freewest is a junior Canadian miner, holds exploration assets near Freewest's chromite find in northern Ontario.
Chromite is an essential raw material for the production of chromium, which is used in the production of stainless steel.
U.S.-based Cliffs produces iron ore pellets and coal for steel manufacturers.
Noront initially bid 39.75 Canadian cents a share for Freewest, based on prices at the time of the Oct. 5 offer.
Cliffs, which already owns 12.4 per cent of Freewest, followed that up with an offer of 70 Canadian cents a share for Freewest, with 15 Canadian cents of that in the form of a planned spinoff of Freewest's non-chromite assets.
The latest Cliffs offer will not spin of those assets.
Cliffs' shares slid 87 cents to $45.08 (U.S.) on the New York Stock Exchange, while Noront rose 9 cents to $2.36 (Canadian) on the TSX Venture Exchange.
Noront struck high-grade nickel and copper in the "Ring of Fire" area west of James Bay in northern Ontario two years ago, sending its shares up sharply and triggering a staking rush.
Since then, Noront has hit two chromite deposits, while Freewest has been defining what it calls a "potentially world-class calibre chromite district" at its nearby Black Thor deposit.
Earlier on Thursday, Noront announced a preliminary development plan for its deposits, projecting that feasibility studies could be completed by 2011, and mining of the nickel and copper deposit could begin as early as 2016.
Mining of the chromite deposit would be expected to take longer due to higher infrastructure requirements, it said.