WMC believes the offer undervalues its operations

WMC turned down an approach in October, saying it undervalued the Perth-based nickel, uranium and copper producer.

Xstrata's offer to investors of Aus $6.35 a share, does not represent an increase in the price of its bid.

The firm, which is listed on the London stock market, is a market leader in copper, coal, zinc, and chrome mining.

Its offer will be sent directly to WMC shareholders in early December.

Xstrata said its bid, which is to be funded through debt, represented a premium of 29.1% to the market price of WMC before its offer sent the shares higher.

Further discussions

"Despite this substantial premium, the board declined to put our offer to shareholders after our initial approach," Xstrata chief executive Mick Davis said.

Shareholders were being offered a "significantly higher price than could otherwise be justified by WMC's operations", he added.

The offer fails to recognise the current and prospective value WMC Latest Xstrata share price

Melbourne-based WMC has indicated it was willing to have further discussions with Xstrata.

But it reiterated that "the offer fails to recognise the current and prospective value of WMC's assets and the strategic benefits to Xstrata or other potential acquirers".

Xstrata bought another Australian company, MIM Holdings, for $3bn in 2003.