Afferro Mining confirmed Monday reports that the iron ore development company was approached by International Mining and Infrastructure Corporation (IMIC).
Last week it was rumoured that Afferro had received a takeover offer of £140m, almost 50% of the group's current market value.
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IMIC - which already has a 3.9% stake in Afferro - is willing to offer between 115p to 140p per share, subject to conditions.
Shares were up 14.88% to 105.88p at 08:10 Monday.
The consideration would be satisfied with an undisclosed mix of cash and new IMIC shares.
"The approach from IMIC is at a very early stage and there can be no certainty that a formal offer will be forthcoming," Afferro said in a statement.
"In addition, Afferro continues to have discussions with other interested parties regarding a possible offer for the issued and to be issued share capital of Afferro."
Afferro said it is currently under exclusive obligations with another party which precludes the company from engaging in discussions with IMIC until January 13th.
The firm advised shareholders to hold back on taking any action until it reaches an agreement.
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