Takeover target, Resource Pacific said there are significant synergies between Resource's Pacific Newpac mine and Xstrata's Hunter Valley coal mines in the December quarter production report.
Despite the board's recommendation to shareholders to reject the Xstrata bid, Resource Pacific said it is open to discussions.
"There is no denying that there are significant mining and infrastructure synergies between Resource Pacific's Newpac mine and Xstrata's Hunter Valley mines," Resource Pacific said in the report.
These include access to Xstrata coal through extending Newpac's longwall blocks, and Xstrata's use of Newpac's coal preparation plant.
Resource's argument that Xstrata's $2.85 offer is neither fair nor reasonable, still stands.
"The independent expert, InterFinancial Limited, has valued Resource Pacific's shares in the range of $3.56 to $4.09, with a preferred value of $3.82 per share and has concluded that Xstrata's offer is neither fair nor reasonable."
Semi-soft coking coal and thermal coal producer, Resource Pacific painted a strong picture in its quarterly report.
The company's balance sheet is strengthened through $165 million rights issue. There has been a significant increase in coal price expected and development activities are progressing according to plan.
"The company said unprecedented prices are being achieved for export thermal coal and demand is forecast to continue to grow. Higher semi-soft cooking and thermal coal prices are expected to be achieved in the coming year," Resource said.
Shares in RSP traded flat in late afternoon at $3.00.
