Gujarat, an Australia-listed subsidiary of Indian coking coal producer Gujarat NRE Coke, launched an offer back in June of either A9c cash per share or one share for every five Rey shares. Shares in Gujarat were last trading at 64c.

Rey snubbed Gujarat’s offer, claiming it undervalued the company’s key asset, a 511 million tonne coal resource in Western Australia’s Canning Basin.

Sydney-based Rey has identified the resources at the Duchess and Paradise projects, which lie around 150 kilometres inland from the port of Derby in northern WA.

While WA is not known for its coal deposits, Rey managing director Kevin Wilson said the project area was the main attraction for Gujarat in an attempt to gain exposure to the thermal coal market.

The Canning Basin resource is the subject of a prefeasibility study to investigate its potential to support an initial 2Mt per annum thermal coal export operation using existing port infrastructure.

Wilson suggested the 511Mt resource may just be the tip of an iceberg with potentially as much as 9-11 billion tonnes of near-surface coal.

Rey also holds several prospective copper and gold exploration projects in Chile and Peru.

Gujarat holds a 16.8% stake in Rey.

The Gujarat offer was due to close today, but under an extension it will now close on October 2.

Today, merchant bank Crosby Capital served up a new offer to acquire all Rey’s shares, at 19.5c cash per share, a premium of 116.7% to Gujarat’s current cash offer.

The Crosby offer values Rey at about $43.4 million.

Crosby said the offer would provide Rey shareholders with certainty of value as recent volatility in commodity prices had demonstrated there was a risk future coal prices might fall significantly below the current forecast levels.

“The Rey share price underperformed in the period prior to the Gujarat offer and considerable uncertainty remains regarding the future share price of Rey,” Crosby said in a statement.

“There is no certainty that Rey’s share price would trade above the offer if Crosby and Gujarat’s offers lapse and no other competing bidders emerge, and there is a risk that in this circumstance, Rey’s share price would fall.”

Crosby’s bidders statement is expected to be lodged within the next few weeks.

Previously, Crosby made an off-market takeover offer for Perth-based Philippines gold producer Medusa Mining for $1.15 per share, but this was eventually withdrawn partly due to changing market conditions.

In addition, Crosby-led consortium Alsons Corporation made an offer last year to purchase Indophil Resources’ 34.23% interest in the Tampakan copper-gold deposit in the Philippines.

Rey has called on shareholders to reject the Gujarat offer and take no action on the Crosby offer pending further advice.

Shares in Rey have added 3.5c or 18% to 23c, after reaching a high of 23.5c last week.