TORONTO (miningweekly.com) – Canada's Taseko Mines has offered to buy Copper Mountain Mining in a share exchange, but the other company rejected the proposal, which it slammed as “highly conditional” and “untimely”.

Taseko, which is a shareholder in Copper Mountain, objects to a brokered financing planned by the company, and instead proposed a “share exchange merger”, which would include an immediate cash financing of C$10-million at C$2,20 a share.

Copper Mountain has priced its C$50-million financing at C$1,15 a share which Taseko argues is “highly dilutive”.

"We believe the C$1,15 brokered financing badly undervalues Copper Mountain and we were astonished that our offer was not properly responded to before the brokered deal was priced,” Taseko CEO Russell Hallbauer said in a statement.

Taseko plans to take legal steps to try to subject the brokered financing to a Copper Mountain shareholders' vote, the company said.

However, Copper Mountain pointed out in its statement that the proposal from Taseko had been nonbinding, which could have resulted in a situation where Taseko completed the C$10-million share purchase but did not proceed with the acquisition.

“If the private placement was completed and the proposal was not concluded, the company would be in the position of having a competitor as a significant shareholder,” Copper Mountain said.

“"Their approach of interfering with the company's financing could deprive our shareholders of substantial benefit that could result from the development programme which is under way,” CEO Jim Rourke said.

“We are taking all steps necessary to protect the company and our shareholders.”

Taseko's flagship asset is the Gibraltar copper/molybdenum mine in British Columbia, Canada, which it restarted in 2004 and is expanding.

Copper Mountain also has a copper project in the province, where it is exploring and restarting a historic mine.

Mitsubishi Materials agreed in July to buy 25% of the project, and to help arrange a project loan.

Production is expected to start at Copper Mountain in mid-2011, the company said last month.

Shares in Copper Mountain jumped 17% on Thursday, to C$1,65 apiece. More than three-million shares changed hands.

Taseko nudged up 0,4%, to C$2,93 a share by 15:59 in Toronto.

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