Northern Iron says gets rival bid from Prominvest

MELBOURNE/SYDNEY Sun Jul 29, 2012 9:42pm EDT

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MELBOURNE/SYDNEY (Reuters) - Australian junior miner Northern Iron Ltd (NFE.AX) said on Monday it has received a A$525 million ($550 million) takeover offer from a Swiss trading company, Prominvest AG, just topping an earlier bid from Indian conglomerate Aditya Birla Group.

The two bidders are eying Northern Iron's high quality iron ore mine in Norway, at a time when benchmark iron ore prices are falling, hitting their lowest level in more than two-and-a-half years on Friday.

Northern Iron said the new offer from Prominvest, pegged at a cash price of A$1.42 a share, was both indicative and highly conditional.

The offer was just above a sweetened A$1.40 per share bid last week by Aditya Birla worth A$518 million. [ID:nL4E8IO077]. Northern Iron's shares closed at A$1.04 on Friday, rising 30 percent for the week.

Northern Iron (NFE) said it planned to allow Aditya Birla to examine its books, and would make the same offer to Prominvest if it withdrew a request for exclusive access.

"Subject to one or both of Aditya Birla Group and Prominvest participating in the due diligence process, NFE will engage with each relevant party to determine whether a binding proposal can be agreed," the Australian firm said in a statement.

Northern Iron owns the Sydvaranger iron ore mine in northern Norway. It produced 501,000 metric tons of iron ore in the first quarter of 2012 and in late May said second-quarter output would be similar. Sales of its ore are spread across a range of steel mill customers worldwide, according to the company.

Analysts said the mine's resource stands at 450 million metric tons and has an operating life of around 19 years. Northern Iron has offtake agreements with India's Tata Steel (TISC.NS) and China's Sinosteel.

RBC Capital markets in a report in May said based on the average resource multiple of past deals involving magnetite projects Northern Iron would fetch at least $1.30 a share though a deal could come in higher as the mine is under production.

Aditya Birla Group is a $40 billion conglomerate with a focus on metals, cement, textiles and fertilizers, according to its website. No other details about Prominvest were immediately available.

(Reporting by Victoria Thieberger and Narayanan Somasundaram; Editing by Richard Pullin)

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