UPDATE 1-Australia's Discovery Metals says no new bid seen from China firm

Thu Apr 25, 2013 11:47pm EDT

* Cathay Fortune says would make a new takeover offer

* Discovery chief says will respond "in due course"

* Discovery working on equity raising

* Shares down 80 pct from rejected offer price (Adds executive's comments)

MELBOURNE, April 26 (Reuters) - Australian copper miner Discovery Metals Ltd's top executive said the company has received no new bid from former suitor Cathay Fortune, adding the Chinese firm's disparaging comments this week were part of an effort to snap up its Botswana copper project cheaply.

Private equity firm Cathay Fortune, Discovery's biggest shareholder, released a letter on Wednesday proposing to make a fresh offer to buy the Australian company as long as Discovery halts a planned equity raising.

"This is an interesting letter to the press, and at this point it's no more than that," Discovery Metals Managing Director Brad Sampson told Reuters by phone from Brisbane.

Cathay Fortune scrapped a joint A$824 million ($850 million) bid for Discovery Metals in February over concerns on the target's Botswana copper project, but it remains Discovery's top shareholder with a 13.7 percent stake, according to Thomson Reuters data.

The A$1.70 a share bid won little support, and since then Discovery's shares have slumped to 34 cents. The stock was suspended from trading on Friday pending an equity raising due to be announced by May 2.

Cathay Fortune said in its letter to Discovery shareholders that due to start-up problems at Discovery's Boseto mine in Botswana, tight capital markets and a poor outlook for commodities prices, the company was going to be strapped for cash and could face collapse.

"We are of the opinion that if Discovery progresses with the current financing arrangements, it is likely that it may be forced into receivership in the near future," the Chinese firm said.

Cathay Fortune said the company's plan to raise around A$75 million to shore it up would not work, and instead shareholders would be better off accepting an offer from Cathay Fortune.

"CFC is willing to put a binding cash proposal to the Board to acquire Discovery subject to the proposed equity raising not proceeding," Cathay Fortune said in the letter.

Australian rules, however, would bar the firm from making an offer below A$1.70 a share before mid-June, or four months since its last offer lapsed.

Following a public holiday on Thursday, Sampson said Discovery would come up with a response to Cathay Fortune's comments "in due course".

"We've seen Cathay Fortune repeatedly attack us, but they still have a very strong desire to take control of the company," he told Reuters.

"You'd presume it's because they see enormous upside in the project," he said. "They've endeavoured to acquire the project at the cheapest possible price."

UBS is advising Discovery. ($1 = 0.9697 Australian dollars) (Reporting by Sonali Paul; Editing by Jeremy Laurence and Muralikumar Anantharaman)

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