Cathay Fortune Corp., Yu's Shanghai-based private equity firm, and the state-owned China-Africa Development Fund said Tuesday they will take their offer of A$1.70 per share directly to Discovery's shareholders after the target refused to grant them access to its books.

"The decision of the [Discovery Metals] board to refuse access to due diligence and further engagement without any reasonable basis has prompted CFC's decision to bypass the Discovery Board and present the offer directly to the Discovery shareholders," Yu said in a statement. "Less than three months ago the Discovery Board issued new shares to institutional shareholders at A$1.20 per share after considering the fair value of the company."

Chinese bidders for Australian mining assets have rarely made hostile offers, not least because domestic regulators and politicians dislike them. The risks are fewer for Yu's offer for Discovery, however, as the bid is not being led by the Chinese state and because Discovery's assets are in Africa. Cathay Fortune already owns a 13.7% Discovery stake.

The Chinese bidders offered A$1.70 on Oct. 4 for Discovery, a 17% premium to the target's closing price the day before. The offer had remained at a premium to the target's price up until Tuesday, on fears that the bidders would walk away. On Tuesday, investors pushed Discovery shares almost 5% higher to A$1.73, betting that the partners would increase their offer to win over shareholders in Discovery and pre-empt a competing bid.

Discovery on Oct. 11 said that the Cathay Fortune-led bid was "inadequate ... in a change of control" situation. It reiterated that stance on Tuesday.

The Chinese bidders have set a minimum target of 51% of Discovery as the only condition of their bid, which values the stock at A$829.6 million, based on 488 million shares outstanding.

If successful, the offer will result in Cathay Fortune owning 75% of Discovery, with China-Africa Development Fund taking the remaining 25%.

Discovery operates the Boseto Copper Project in Western Botswana. The project began operating in July and is expected to deliver about 36,000 tons of copper a year and 1.1 million ounces of silver.

Discovery is taking financial advice from UBS and has tapped a team from GRT Lawyers for legal advice. The bidders are taking financial advice from Citigroup Global Markets Inc. and legal counsel from King & Wood Mallesons' lawyers Stephen Minns, Jin Xiong, David Lam and Alex Regan.