Celtic Resources has rejected an improved 270p-a-share bid from 29.7 per cent shareholder Severstal.

Serverstal, the steel group controlled by Russian tycoon Alex Mordashev, bought 22 per cent of Celtic in August, attracted by the AIM-quoted company's gold, molybdenum and copper prospects in Kazakhstan and Russia – and, no doubt, by its depressed share price. Earlier this month, Severstal made a 'conditional' bid approach worth 220p, which Celtic, steered by chief executive Kevin Foo, rejected as inadequate.

Amid hints of another unnamed potential suitor in the wings, Severstal has now upped its stake and raised its bid to 270p cash. Mordashev's lieutenants argue this represents a 43.6 per cent premium to Celtic's 'volume-weighted' average share price for the three months up to 17 September and say Severstal has received a letter of intent to support its offer from Barrick Gold Corporation, holder of 6.6 per cent of Celtic.

However, Celtic, whose shares peaked at 464p two years ago, has been quick to urge shareholders to reject this improved offer. Celtic insists it 'significantly undervalues the company'.

Celtic shares, highlighted in August at 197p by Growth Company Investor, have shot up 53p today to 284p, valuing the company at £158.5 million. Hold on.

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