Aditya and its controlling shareholder Hindalco Industries on Monday rejected Metals X’s one-for-five offer on the basis it undervalued the company.

It instead will embark on a strategic review to realise value, but said Metals X was welcome to participate.

“It is in the best interests of all Aditya Birla shareholders to run a competitive strategic review process, which is what the company announced  prior to Metals X making its conditional and inadequate offer," an Aditya spokesman said.

"Through this process, parties will be able to access comprehensive information to fully understand the value in Aditya Birla. This will give the company the best platform from which to extract maximum value for all shareholders.”

But Metals X said yesterday that the struggling Nifty mine in the Pilbara would continue to underperform without capital investment and shareholders would suffer during the period of uncertainty.

“Metals X’s offer was made on the basis that Metals X is ready to commence the significant effort of turning around the underperforming Nifty mine,” Metals X CEO Peter Cook said.

“We believe that the Aditya Birla Minerals board’s recommendation against the Metals X offer and commencement of a much slower process is unfortunate and ultimately will continue the deterioration of value in Aditya Birla Minerals’ Nifty assets.”

When the offer was first announced, Cook told MNN that Nifty was capable of being a good mine, but if it went through the next 6-12 months without investment it would likely be “unrescuable”.

Metals X said its offer was designed to provide Aditya shareholders with near-term value.

The company also called on Aditya to clarify its net cash position and cash needs.

Aditya said it had $33.4 million cash at the end of September, as well as $50.8 million in security deposits relating to environmental and performance bonds, and an escrow deposit for the sale of the Mt Gordon mine.

After the Mt Gordon sale was completed yesterday, the company received a further $5 million cash, while $42.7 million in security deposit and escrow amounts has been released.

Metals X has requested that Aditya clarify how much cash it needs to fund the working capital requirements at Nifty, as well as investment funds to establish a safe working environment and maintain the current 4.5-year mine life.

It also called on Aditya to explain to its shareholders the link between the lack of investment and the continued deterioration of the asset.

Shares in Metals X dropped 0.2% to $1.347, while Aditya shares were unchanged at 24c.