UPDATE 12.55pm: Northern Iron shares have plunged by more than 30 per cent after a would-be suitor withdrew its takeover offer for the company.
India's Essel Mining had been conducting the second stage of its due diligence, after launching a takeover offer for Northern Iron in July.
However, Northern Iron learned on Saturday that Essel had walked away from a deal.
"On 3 November 2012, Essel Mining advised Northern Iron that following its stage two detailed due diligence investigations it was not in a position to submit a stage two proposal at this time," Northern Iron said in a statement on Monday.
Northern Iron shares were 22.5 cents, or 36.29 per cent, lower at 39.5 cents shortly before the close of trade.
Essel Mining said its decision related to the continued variability in production at Northern Iron's Sydvaranger Project in Norway and the impact on costs.
Production performance for October at Sydvaranger had been hit by a delay in dewatering a pit and the failure of a clutch on a secondary mill, which restricted throughput rates.
Northern Iron said both issues had been rectified.
"Nevertheless, Essel Mining has advised the company that it will continue to monitor Northern Iron's progress with a view to assessing whether at an appropriate time, a level of interest may materialise," Northern Iron said.
On Friday, Swiss-based trading company Prominvest said it was continuing to work on a proposal but it did not submit a final bid in line with the timetable provided to the bidders by the company.
Still, Northern Iron said it is open to other offers, but it has concluded its strategic review.The board said Northern Iron had a sound future as an independent company and that it is appropriately capitalised to pursue its near term objectives.
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