Predator Zinifex Ltd, which on Friday extended its hostile bid for nickel producer Allegiance Mining NL by two weeks, says it has increased its stake in the takeover target to more than five per cent.
Zinifex chief executive Andrew Michelmore said that Allegiance's second largest shareholder, Lion Selection Group Ltd, had accepted Zinifex's offer.
"Lion Selection, the largest institution shareholder of Allegiance, actually accepted the bid on Friday," Mr Michelmore said.
"So, we now have over 40 million shares, the bulk of that is Lion Selection shares."
After the Jinchuan Group Ltd, which holds a key stake in Allegiance, Lion Selection is the next largest shareholder with more than five per cent of the company.
Prior to Lion Selection's acceptance of the offer, Zinifex had received acceptances of just 0.26 per cent.
On Friday, Zinifex extended its offer by two weeks to 1900 AEDT on February 22.
Mr Michelmore said Zinifex extended the offer "because we believe there was momentum of people selling".
Allegiance has maintained throughout the takeover process that Zinifex's bid, which consists of $1 for each of its shares, did not adequately value exploration upside at its flagship Avebury nickel project in Tasmania.
The company recently reported a 12.9 per cent increase in contained nickel reserves and a decrease in nickel grade of about one per cent at the project, where production is expected to commence this quarter.
But Mr Michelmore said the Zinifex offer was "very good" given the current market.
"We believe $1 cash, particularly in the current market, is a very good premium for the company."
He said that Lion Selection's acceptance of Zinifex's offer should send a clear message to shareholders.
"Shareholders can see that Lion Selection have accepted this, a long-term investor in the company, and that should send a clear message."
Allegiance shares closed above the $1 per share bid price at $1.05 on Friday, while Zinifex finished nine cents higher at $9.34.
AGM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
