UPDATE 2-China's Zijin bids $498 mln for Australia's Indophil
* Zijin bids A$1.28/shr,18% premium to Indophil pre-bid price
* Xstrata agrees to sell 19.99 pct Indophil stake to Zijin
* Xstrata aims to finish Tampakan feasibility study in 2010
* The deal will see Zijin become a global copper producer
* Zijin shares up 8 pct, Indophil rises to 15-mth high (Adds analyst comments, Zijin shares and details)
By Sonali Paul and Alison Leung
MELBOURNE/HONG KONG, Dec 1 (Reuters) - Zijin Mining Group (2899.HK) has offered $498 million for Australia's Indophil Resources NL (IRN.AX), a deal that would propel China's largest listed gold miner into the ranks of the world's top copper producers.
Zijin's move is the latest swoop on an Australian miner by resource-hungry Chinese firms. The prize Zijin is mainly seeking is Indophil's one-third stake in a large and potentially hugely profitable copper and gold project in the Philippines.
The Chinese group has already agreed to buy a 19.99 percent stake in Indophil owned by Swiss-based miner Xstrata XTA.L.
"This acquisition will enable Zijin to increase its gold and copper metal reserves by 31 percent and 57 percent, making it a major copper producer globally with the largest copper reserves of any Chinese company," wrote Deutsche Bank analyst Julian Zhu in a research report.
The deal is subject to regulatory approval.
Indophil has a 34 percent stake in the $5.2 billion Tampakan copper and gold project in southern Philippines, controlled by Xstrata. Its only other assets are exploration prospects in the Philippines.
The deposit holds 13.5 million tonnes of copper and 15.8 million ounces of gold, which geologists believe can be extracted at a cost that is a fraction of today's copper and gold prices.
Indophil shares jumped to a 15-month high of A$1.22 before steadying at A$1.20, a 10.6 percent rise. But the shares were still trading below the offer price, indicating investors are not holding out for a higher bid.
Zijin's shares rose as much 8 percent after the news before settling at HK$8.64, up 6 percent in late morning trade.
"We like this acquisition and we believe Zijin will continue to diversify itself from a gold play into a multi-metal producer in different geographic locations, achieving a more balanced exposure to metals going forward," Deutsche Bank's Zhu said.
Discovered in 1991, the mine has never left the drawing board, dogged by environmental and economic problems, political instability and laws restricting foreign ownership.
"Xstrata welcomes the introduction of a joint venture partner with the capacity to support the advancement of the Tampakan project," Xstrata Copper Chief Executive Charlie Sartain said in a statement.
Xstrata estimates it will be 2016 before the mine is running.
"There will be no change in the management or operation of the Tampakan project as a result of Zijin's proposed takeover offer," Xstrata Copper said.
Zijin's offer for Indophil is pitched at more than 10 times the price Xstrata paid for its 62.5 percent stake in Tampakan. ($1=1.094 Australian Dollar) (Additional reporting by James Regan in SYDNEY; Editing by Muralikumar Anantharaman) ((email@example.com; +61 3 9286 1419; Reuters Messaging: firstname.lastname@example.org)) ((If you have a query or comment on this story, send an email to email@example.com))
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