The Sichuan Hanlong Group, a private conglomerate, offered A$1.2 billion ($1.3 billion) in cash for the rest of Australia-listed miner Sundance Resources Ltd to gain control of its iron ore project in West Africa, a move to further expand its global footprint in resources.
Hanlong already holds an 18.6 percent stake in the company, which it bought in March. It offered 50 cents a share for the Perth-based company, 25 percent higher than Sundance's close on July 15, Sundance said in a statement.
"The board considers that the terms of the offer do not provide adequate value or certainty to Sundance shareholders and that it intends to engage in discussions with Hanlong about the terms of its proposal," Sundance said in the statement.
The statement also said it will continue talks with potential partners to help fund the project.
Hanlong Managing Director Xiao Hui said in a statement that he looks forward to further discussing the deal with Sundance.
The Mbalam project has identified reserves of 2.8 billion tons of iron ore, with a potential development period over 50 years.
The project is expected to start production in 2014, with annual output of 50 million tons of iron ore, it said in the statement.
The move comes a week after Hanlong's A$144 million bid for Australia's Bannerman Resources Ltd, eyeing the group's uranium project in Namibia near key mines.
Hanlong is a privately owned group based in the southwestern province of Sichuan, with interests in infrastructure, energy, real estate, resources, pharmaceuticals, chemicals and technology. Its revenue was about 16 billion yuan in 2010.
The company took a majority stake in Australian molybdenum developer Moly Mines Ltd in 2010 and is developing molybdenum and copper projects in Western Australia.
It also said it aims to become a "fourth force" in Australian iron ore mining, to rival Rio Tinto Plc, BHP Billiton and Fortescue Metals Group Ltd.
While Australian mining projects faced blocks from rising cost pressures, policy barriers and the introduction of new mining and carbon taxes, West Africa is emerging as an upcoming global iron ore destination.
China, the world's largest steelmaker and iron ore consumer, has been active in seeking global iron ore resources to reduce dependence on the monopoly of the three global miners, Vale Ltd, BHP and Rio Tinto, which together control two-thirds of the world's iron ore supply.
Wuhan Iron and Steel (Group) Corp said earlier it aims to become self-sufficient in iron ore supply by 2015 by acquiring overseas iron ore resources.
"It will require huge investment to build railways and ports in Africa, which may add risks for investing in Africa. However, with ore prices surging, China needs to diversify its iron ore supplies to break the monopoly of the three global miners," said Zhang Lin, an analyst with Beijing-based Lange Steel Research Information Center.