Flinders Mines shares have surged after the Pilbara focused iron ore junior received a $38 million takeover offer from New Zealand firm Todd Corporation.
Todd Minerals, a subsidiary of Todd Corporation, said on Thursday it had made an unconditional cash off-market bid to acquire all Flinders shares at 1.3 cents per share.
Last year, Flinders shareholders rejected a proposal by Todd to buy its key Pilbara iron ore project, a proposed $800 million, 25 million tonne port, rail and mine project in north western Australia.
Todd Minerals director Michael Wolley on Thursday said the takeover offer provided shareholders with an opportunity to avoid the future risks and costs of the Pilbara Iron Ore Project (PIOP).
"PIOP does not currently have a transportation solution to get its ore to port and on to market," Mr Wolley said in a statement.
He said Flinders was likely to need to source additional funding in the near to medium term even if no progress is made on the development of PIOP.
"Significant funding will be needed to determine if there is an economical pathway to develop PIOP," he said.
He added that an independent experts report prepared for Flinders last year assumed that a 25 million tonnes per annum mine would cost $800 million to develop.
Mr Wolley said Todd's offer price was more than two and a half times the price set by the Flinders board for a recent private placement to OCJ Investment which has a 19.5 per cent stake in Flinders.
Privately-owned Todd Minerals has a 18.4 per cent stake in Flinders.
Todd Minerals has boosted its rail and port interests in the Pilbara after acquiring Australian-listed Rutila Resources last year, increasing its ownership in the Balla Balla Infrastructure Group (BBIG) to 90 per cent.
Flinders shares were 0.55 cents, or 68.75 per cent, higher at 1.35 cents at 1240 AEDT.
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