WMC is a major producer of copper and uranium

There is now pressure on Swiss-based Xstrata to increase its takeover offer.

A report from investment firm Grant Samuel in WMC defence documents values WMC shares at A$7.17 to A$8.24, against Xstrata's bid of A$6.35 a share.

Analysts said the defence documents provided more details on WMC, and may trigger a possible rival bid.

"If a bid is going to emerge it is probably likely in the next one to two weeks," said Daiwa Securities analyst Mark Pervan.

He said the valuation would put increased pressure on Xstrata to look at "sweetening" its offer.

Marc Gonsalves, an executive at Xstrata, said: "We will review the information contained in the target's statement over the next week or so."

He added: "While we will review the assumptions made by Grant Samuel in detail, we are extremely sceptical of their conclusion, and suggest that WMC shareholders take extreme care in presuming that these optimistic assumptions are capable of being realised."

Minerals valuation

Last month Australia's competition watchdog said it would not oppose the purchase of WMC by Zurich and London-based Xstrata.

On Tuesday, WMC chairman Tommie Bergman said in a statement the directors believed it was in shareholders' best interest to reject the offer.

He said WMC would pursue "value-creating options" provided by a portfolio of "world class assets".

And WMC chief executive Andrew Michelmore claimed the Xstrata offer was aimed at creating value for Xstrata's shareholders, and was not being made for the benefit of WMC's shareholders.

Grant Samuel said its valuation of WMC was based on lower average prices for nickel, copper and uranium than current market levels.

"Any longer term commodity price improvements would only improve our outlook," Mr Michelmore said.

Global operations

In 2003 Xstrata acquired Australia's largest copper miner - MIM Holdings.

WMC Resources is the world's third-largest producer of concentrated nickel, and also a miner of copper and uranium.

It owns the Olympic Dam mine in South Australia, which contains about one-third of the world's known uranium resources and is also the world's fourth largest copper mine.

Xstrata is a global mining giant with operations in Australia, South Africa, Spain, Germany, Argentina and the UK.

Its core products are copper, coking coal, thermal coal, ferrochrome, vanadium and zinc. It also has growing businesses in gold, lead and silver.