UPDATE 2-Monterrico Metals agrees $186 mln bid from Zijin

(Rewrites with companies' statement, adds LONDON to dateline)

LONDON/HONG KONG Feb 5 (Reuters) - Peru-focused copper miner Monterrico Metals Plc MNA.L has agreed to a takeover at 350 pence a share by a Chinese consortium valuing the company at around 94.6 million pounds ($186 million).

The consortium, led by Chinese No. 2 gold miner Zijin Mining Group Co. Ltd (2899.HK), has agreed the cash offer with UK-based Monterrico at a premium to its Friday closing price of 297-1/2p, the companies said in a statement on Monday.

Monterrico shares were up 14.5 percent at 340-1/2p by 0838 GMT.

Earlier, trading in Zijin Mining shares was suspended after Reuters reported the company would lead a consortium to buy out Monterrico. The shares ended at HK$5.12 on Friday.

A source familiar with the situation told Reuters on Sunday that Monterrico Metals had agreed to be taken over by a Zijin-led group at a price set to be above 340 pence a share.

Monterrico also said on Monday it had completed a detailed feasibility study on its Rio Blanco copper and molybdenum project in Peru, which is seen by analysts as the largest copper project in the world not owned by a major firm.

"I think the project is worth a lot more and this is a bit of a cheeky bid by Zijin ... which should flush out other interested parties," Numis Securities analyst John Meyer said.

Meyer said larger companies could get significantly higher production rates from Rio Blanco and he believed major copper miners including Xstrata (XTA.L), Rio Tinto (RIO.AX) (RIO.L), Poland's KGHM KGHM.WA KPMDq.L, BHP Billiton (BHP.AX) (BLT.L) and local Peruvian miners could table rival bids for Monterrico.

The Rio Blanco project would cost $1.44 billion, with a four-year payback, and with initial annual copper production of 224,000 tonnes a year and 1,800 tonnes of molybdenum in the first year, Monterrico said.

The total resource is estimated around 1.2 billion tonnes and the initial plan is to mine 500 million tonnes, it said.

Zijin Consortium is a group formed recently for the purpose of the offer comprising Zijin, investment company Xiamen and Tongling, China's second-largest copper producer.

The offer represented a premium of 34 percent to the closing mid-market price of Monterrico shares of 261 pence on Oct. 19, the last business day before the offer period, Zijin said.

It intends retaining Monterrico's listing on London's junior Alternative Investment Market (AIM) with a free float of no less than 30 percent, the company said.

Zijin said it had received irrevocable undertakings to accept the offer from five Monterrico board members including Chief Executive and Chairman Richard Ralph, whose holdings totalled 9.9 percent of the issued shares in the company. suspended on the Hong Kong stock exchange on Monday in anticipation of the announcement.