The board of Portman today recommended shareholders accept the offer, which represents a 43.9% premium to the volume weighted average price for the six months prior to the Australian company calling a trading halt last week.

Since the trading halt was called last Friday Portman’s share price has shot up from $3.05 to $3.50, a 14.8% increase.

Due to a change in State stamp duty legislation Cleveland Cliffs will have to pay a duty of 5.4% should the deal go ahead, netting the Western Australian Government about $28 million.

Alex Passmore from Paterson Securities was among the analysts who believed the Cleveland Cliffs deal was well on its way, saying the offer price for Portman was an 18% premium to his last valuation of $2.86.

“I believe it will go through, with the price and the unanimous support of the board and the 100% cash offer, I think the shareholders will support it,” he said.

The deal is subject to Cleveland Cliffs acquiring 90% of Portman, with the offer to remain open until then end of February.

In a joint conference today, Cleveland Cliffs chairman and chief executive officer John Brinzo said a takeover of Portman would offer his company a chance to tap into new markets.

“We can’t say that there are any synergies being created here in either operations or market,” he said.

“What this really is a strategic extension for us, into new market share, and into a new market.”

Brinzo admitted the deal would give Cleveland Cliffs greater exposure to Asian markets through Portman’s current marketing team and its long standing sales agreements.

“Our intention is to keep the organisation completely intact, continue marketing the product right from Portman just the way it has been,” he said.

“We have no real intentions of using our Cleveland iron ore commercial sales force in China.

“In terms of Portman’s projects, we are quite satisfied at the moment to ramp up production at Koolyanobbing to the 8 million tonnes per annum level and if in fact the reserve description could allow a further expansion then we would certainly pursue that.”

Portman is looking to increase production at the Koolyanobbing mine to 8Mtpa within the final quarter of this year.

The company also announced a substantial reserve upgrade for the mine recently from 63.8Mt to 94.6Mt.

But as Brinzo pointed out, one of the real advantages of acquiring Koolyanobbing was its higher grade ore.

“The taconites that we are mining in Minnesota, the head iron grades are probably running between 25% and 30% iron and we have got to convert those and make that into a 60% plus product as a pellet,” he said.

“So there is a great deal of equipment required and energy and labour to get it to that point.

“The difference between Minnesota and what is going on in Australia with Portman is that the head iron grade is about 62%, so this is the type of ore one mines, crushes it, screens it and ships it without having to go through the costly process.”

Cleveland-Cliffs is the largest producer of iron ore pellets in North America, selling majority of its pellets to integrated steel companies in the United States and Canada.

The Company operates six iron ore mines located in Michigan, Minnesota and Eastern Canada that currently have the capacity to produce 36.9Mtpa of iron ore pellets.

Cleveland Cliffs has previously operated in Australia as the original manager of the Robe River joint venture in Western Australia’s Pilbara region as an owner of the Savage River pellet operation in Tasmania.

The bidder’s and target’s statements will be jointly mailed to shareholders in the next two weeks.