The takeover story between Xstrata Coal and Pacific Resources continued to heat up on Tuesday as Xstrata Coal (XSS) questioned Pacific's response to its takeover offer of 5 December 2007.
Xstrata said Pacific's Target Statement released on 4 January 2008 had a "number of shortcomings".
One of the shortcomings identified is Resource Pacific's plan to double output from its Newpac underground coal mine in the Hunter Valley, near Newcastle.
"It does not stand up to scrutiny and accordingly fails to provide a realistic appraisal of the company's value," the Swiss-based giant said.
Xstrata is critical of Resource Pacific's production plan which it labelled as "overly optimistic and lacking technical credibility".
On 5 December 2007, Xstrata announced an unconditional cash offer of $2.85 per share for shares in Resource Pacific, a bid which Pacific's directors say undervalues the company.
"It's offer is at a price 85% higher than the average price of Resource Pacific shares before the commencement of takeover activity," Xstrata said.
"By any measure, this is a highly attractive premium," Xstrata said.
In its Target's Statement, Resource Pacific said it believes it is worth more, with an independent expert's valuation of the share price to be between $3.56 and $4.09, with a preferred value to be $3.82 per share.
In a shareholder letter sent to the stock exchange, Xstrata encouraged shareholders to accept the unconditional cash offer.
"Xstrata currently intends to provide you with a fuller response to Resource Pacific's Target Statement later this month," the company said.
Sydney-based Resource Pacific is a producer of semi-soft cooking coal and thermal coal.
Shares in RSP added 0.33% to $3.02 at noon Sydney time.
