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Griffin Mining’s £45 million agreed bid for Yukon Zinc of Canada faces a new challenge from a powerful Chinese alliance.

Jinduicheng Molybdenum Group, a leading Asian molybdenum producer that recently raised £600 million with a float on the Shanghai market, has joined forces with Northwest Nonferrous Investment Company, which represents the geological bureau of the Chinese state of Shaanxi, to offer C$0.22 (11p) a share for Yukon. They call their offer the Northwest Proposal and Yukon’s board, advised by Paradigm Capital, says it will recommend it to shareholders, since it is worth 11.7 per cent more than AIM-quoted Griffin’s all-share bid.

The Northwest parties have given Vancouver-based Yukon until noon on Wednesday next week, 7 May, to accept or reject. That gives Griffin, headed by Australian entrepreneur Mladen Ninkov, until next Tuesday to formulate its response, which could involve improving its own offer.

Griffin bid because it wanted to combine Yukon’s high-grade zinc, silver, copper, gold and lead project at Wolverine in Canada with its own expanding Caijiaying operation in China to create a group with £100 million cash, no debt and the prospect of producing 150 million lbs of zinc in concentrate every year, along with more than 4.5 million oz of silver. The agreement between Griffin and Yukon allows Yukon to consider any potentially superior offer from another source.

While Griffin ponders its next move, it maintains the agreement also provides for Yukon to pay it a ‘break fee’ of £1.25 million to reimburse its expenses if the deal falls through ‘under certain circumstances’. At 87p, Griffin shares, which soared from 28p to 122p between 2005 and a year ago, value the company at £227.5 million.

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Griffin Mining	AIM	£30.87m	17.00p	0.25p
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Other company articles:
Chinese counter-bid for Yukon			29/04/2008
Exploration Insights			28/04/2008
Griffin in £45m takeover			22/04/2008
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