Anglo-Swissminer Xstrata Ltd (XTA.L) on Thursday bid $398 million for Australian-listedIndophil Resources NL (IRN.AX) in a move that would give it full control of agiant copper mine in the Philippines.

Indophilrejected the A$426 million, or $1 a share, offer as opportunistic,saying it did not reflect the value of the company. Indophil shares soared 44percent to a 10-month high of A$1.12, suggesting the market sees scope for ahigher offer.

Xstratahas been one of the most acquisitive international mining houses buying copper,zinc and coal mines in Australia and nickel deposits in Canada and Africa asit builds up a diversified commodities powerhouse.

Copperprices have risen by more than a fifth so far this year.

Thisis a continuation of the only way Xstrata and other larger companies canactually grow because they are of such a size now that organic growth throughexploration will only provide minor growth, said DJ Carmichael & Coanalyst Paul Adams, adding this deal would be a good fit for Xstrata.

Xstrataalready owns the majority of the rights to the Tampakan copper lode in thesouthern Philippines' Mindanoa island, regarded as one of the richestin Southeast Asia.

Thedeposit is estimated to contain 11.6 million tonnes of copper and 14.6 millionounces of gold, which geologists believe can be extracted at a fraction oftoday's copper and gold selling prices.

Xstratapaid Indophil $41 million for a majority stake in the Tampakan deposit a yearago. Xstrata now has a 62.5 percent in the mine and management control, whileIndophil has a 34.2 percent stake with a right to acquire a further 3.3percent.

Xstratasaid it entered a pre-bid acceptance arrangement with Lion Selection Ltd(LST.AX), Indophil's largest shareholder, for its 17.76 percent stake, whichwould increase its holding in Indophil to 19.99 percent.

Xstrata'soffer, which it said it could finance through existing credit facilities andcash on hand, is conditional on Indophil withdrawing its own bid for LionSelection, or that bid failing. Indophil in March launched an all-share bid forLion, valuing Lion at as much as A$340 million.

Mostprospectors have fled the Philippines, put off by the difficulty of developing prospectsin remote, often volcanic locations and by long-standing governmentrestrictions on foreign mining companies operating in the country.

Littlehas changed in the landscape of Philippines mining despite efforts by the government ofPresident Gloria Macapagal Arroyo to rope in foreign mining projects amidstrong global demand for minerals. ($1=A$1.07)

(Reportingby James Regan; Editing by James Thornhill and Lincoln Feast)

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