Nunavut Iron raises Baffinland offer

Nunavut Iron Ore Acquisition Inc. has raised its offer for Baffinland Iron Mines Corp. to $1.40 per share, and also increased the number of shares it's willing to purchase.

The revised offer, which values Baffinland at $484.2 million, raises the stakes in the takeover battle between Nunavut Iron Ore and global steel giant ArcelorMittal.

ArcelorMittal has offered $1.25 per share for 100 per cent of Baffinland while Nunavut Iron Ore, a subsidiary of the Energy & Minerals Group, is only offering to buy a majority stake in the Canadian mining company.

Nunavut said Wednesday it's now aiming to own a 60 per cent stake in Baffinland, including the shares it already owns. It was previously only offering to buy enough shares to increase its stake to 50.1 per cent.

Nunavut Iron is also withdrawing its proposal to receive a gross revenue royalty interest in Baffinland's production.

Offer 'even more attractive'

"Nunavut Iron has spent considerable time meeting with and soliciting the views of Baffinland shareholders," Bruce Walter, chairman of Nunavut Iron, said in a statement Wednesday.

"This increased offer, and our new proposals for Baffinland, address shareholder suggestions and make our offer even more attractive while preserving appropriate flexibility. Our increased offer will provide Baffinland shareholders superior value to the ArcelorMittal offer of $1.25 per share."

ArcelorMittal said last week that its offer, which values Baffinland at about $492 million, would not be extended beyond the Dec. 29 deadline.

ArcelorMittal and Nunavut Iron are fighting to control Baffinland's Mary River project, which contains several million tonnes of iron ore reserves. ArcelorMittal, the world's largest steel producer, has been building up its iron ore reserves as it seeks to protect itself against price increases in the metal.

The world's three biggest iron ore suppliers earlier this year decided to price their contracts on a quarterly basis rather than an annual one, making steel producers more vulnerable to sudden prices changes.