The OZ Minerals board said BHP's initial offer of $25 per share, a 32 per cent premium to OZL shares' closing price on Friday, significantly undervalued the Adelaide-based company.
"We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations," OZ Minerals chief executive and managing director Andrew Cole said.
Mr Cole called BHP's offer "highly opportunistic", coming at a time when copper prices, and OZL shares, have fallen from their peaks of a few months ago.
BHP chief executive Mike Henry said his company's offer represented a "compelling value proposition and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZL operational and growth-related funding challenges".
At 10.27am AEST, OZ Minerals shares were up 34.4 per cent to $25.46, indicating traders were betting an improved bid from BHP would materialise.
Datt Capital investment manager Emanuel Ajay Datt tweeted BHP were "very disciplined buyers. Not expecting a knock out bid, but they'll chip away. All the pressure is going to be (on) $OZL side IMO".
OZ Minerals runs the Prominent Hill and Carrapateena copper mines in South Australia's Gawler Craton, with regulatory approvals progressing for its West Musgrave copper-nickel mine in Western Australia.
OZ Minerals' SA mines are on either sides of BHP's Olympic Dam operation, and there are also opportunities for synergies with West Musgrave and BHP's Nickel West, OZ Minerals said, arguing BHP's offer does not reflect those benefits.
10°C