Irish mining group Celtic Resources, which operates in Russia and Kazakhstan, has rejected a takeover bid by Severstal. The Russian steelmaker has made an offer to buy 73% of Celtic, in which it already owns a 26% stake.

The Celtic board unanimously rejected the offer as it considered the price undervalues the company and its prospects.

The offer price of $US 249m is below Monday's close.

Severstal has recently been buying up gold-rich sites in Russia.

Analysts say there may be potential for a big increase in production from Celtic's assets in Russia, using new technology.

“Celtic has a lot of potential. Essentially there have been many promises in terms of raising output due to their technology and real guess about Celtic has been if and when this technology finally works, the gold production of Celtic is going to increase dramatically. Severstal is looking at Celtic and saying: well, it is cheap now, maybe with our know-how we can actually improve the performance of the assets in Celtic and value that way. They are looking at the landscape and saying: Ok, how can we reinvest the cash we have and make money for our shareholders? Clearly, the gold space in Russia is very unconsolidated, it is still kind of free for all  in many ways,” said Tim McCutcheon, an anaylst at DBM Capital.