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Nunavut Iron ups bid for Baffinland

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Nunavut Iron Ore said Wednesday it was raising its bid for Baffinland Iron Mines (BIM-T) to $1.40 a share for 60 percent of the company's shares, challenging ArcelorMittal's (MT-N) friendly bid of $1.25 a share for all of the shares.   

Nunavut Iron had earlier offered $1.35 a share for 50.1 percent of the company's outstanding shares. The company already controls about 10 percent of Baffinland shares.   

At stake is Baffinland's huge iron-ore deposit in the Canadian Arctic, which is believed to be large enough to meet all of Europe's needs for years.   

ArcelorMittal, the world's largest steel maker, said recently it has lockup agreements with key shareholders and Baffinland directors holding about 25 percent of the stock.   

The company said Wednesday it had no comment on the new Nunavut Iron bid. A week ago it said it would not hold its bid for the Canadian junior miner past Wednesday.   

The $1.40 per share bid values Baffinland at about $550 million, compared to ArcelorMittal's offer, which values the company at around $490 million.   

Nunavut Iron said its new bid is for 195,312,171 common shares, worth about $273 million, plus the roughly 10 percent of Baffinland shares it already owns.   

Nunavut said it plans to further amend its offer to include a warrant component that it said could increase the value of the bid. But it cautions this may require approvals from regulators and take a long time to become effective.   

"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.   

"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."   

The company said its increased offer is extended until Jan. 10.   

Prior to Nunavut Iron's original offer of 80 cents a share in September, Baffinland shares were trading at 56 cents.   

Toronto-based Baffinland is looking for a partner to allow it to develop its Mary River project in the remote territory of Nunavut. The deposit is located on Baffin Island. But it would cost an estimated $4 billion to develop the operation, more than Baffinland could bear on its own.

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