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. Last Updated: 07/27/2016

Severstal Raises Bid for Celtic

Severstal on Friday made a new public offer for gold miner Celtic Resources worth ?161 million ($328 million), but Celtic's board immediately advised shareholders to reject it.

News of Severstal's higher bid emerged just hours after Celtic, which has gold mining assets in Kazakhstan and Russia, informed the London Stock Exchange that a rival bidder had made a preliminary approach.

Severstal Resurs offered ?2.70 per share via affiliate Centroferve Limited, 50 pence higher than its initial bid earlier this week of ?2.20 per share.

Celtic's board advised shareholders to reject the approach, saying that the offer "significantly undervalues" the company.

Severstal said it was offering a fair price. Severstal also said it now holds 29.7 percent of Celtic's shares, up from the 26.6 percent stake it had at the beginning of last week. Severstal said several shareholders had approached it in the past week seeking an exit strategy.

The steel firm added that it had a letter of intent from shareholder Barrick Gold to support its offer with its 6.6 percent stake, which would bring Severstal's stake up to 36.3 percent.

"In the mining industry, the price a company usually goes out at is 50 percent to 100 percent higher from when the bidding starts," said Jonathan Guy, an analyst at Natixis Bleichroeder in London. Fair value for Celtic, according to Natixis Bleichroeder, is about ?2.90 per share.