MELBOURNE, Oct 11 (Reuters) - Australia's Discovery MetalsLtd unexpectedly rebuffed a takeover offer led by aChinese private equity firm valuing the copper miner at A$824million ($844.31 million), but said it remained open to a higherbid.
Cathay Fortune Corp (CFC), founded by Chinese billionaire YuYong, teamed up with the state-backed China-Africa DevelopmentFund (CAD) to make an offer of A$1.70 a share last week. CFCalready owns a 13.7 percent stake in the copper miner.
"The directors have advised the representatives of CFC andCAD Fund that if they wish to put a new proposal to the board,the board will consider and assess that new proposal on itsmerits," Discovery said in a statement to the stock exchange onThursday.
The rejection came as a surprise, as the company's shareslast traded at A$1.64, just below the offer price, reflectingthe view that investors had expected the deal to go ahead.
Broker price targets before the bid ranged from A$0.80 toA$1.85 a share.
Discovery's directors said the offer from CFC and CAD failedto reflect the value of the company's management, operations andexpansion plans, exploration potential and what it called the"scarcity value" of the company.
Discovery owns the Boseto project in a region in Botswanathat has been the focus of more than $10 billion in copper minertakeovers in the past two years.
Canaccord Genuity analyst Jean Francois Bertincourt, one ofthe more bullish analysts on the stock, said the company couldattract other bids.
Discovery has an asset with substantial production, solidexpansion potential and a very long mine life in a politicallystable country, he said.
"I've got a price target of A$1.85 on the stock. If youapply a 30 percent control premium, there's still a lot of roomto fit another bid," Bertincourt said.($1 = 0.9759 Australian dollars)
(Reporting by Sonali Paul; Editing by Ryan Woo)
Keywords: DISCOVERY CATHAYFORTUNE/