2nd UPDATE: Nunavut Iron Ore Again Boosts Bid For Canada's Baffinland

(Adds response from Baffinland in paragraph 3. Updates trading activity.)

Nunavut Iron Ore Acquisition Inc. has again sweetened its bid for a controlling stake in Baffinland Iron Mines Corp. (BIM.T), this time to C$1.40 a share for a 60% stake.

That offer compares with its most recent offer of C$1.35 a share for a 50.1% stake in the junior miner. Nunavut Iron Ore already controls 40.7 million Baffinland shares, or about a 10% stake.

Baffinland said its board is reviewing the amended offer and will respond "in due course."

Nunavut Iron Ore, which is owned by Iron Ore Holdings LP, a limited partnership controlled by Bruce Walter, Jowdat Waheed and funds managed by Energy Minerals Group, is locked in a takeover battle with steel giant ArcelorMittal (MT) for Baffinland, whose Mary River iron-ore property in Canada's Nunavut Territory is a number of years away from production.

Nunavut Iron Ore launched the bidding in September with an 80-Canadian-cent a share hostile bid for all of Baffinland, which the target company rejected. Baffinland instead agreed to a C$1.10-a-share offer from ArcelorMittal, later boosted to C$1.25 a share.

ArcelorMittal is seeking to expand its iron-ore output to become more self-sufficient.

In a research note Wednesday, Raymond James analyst Tom Meyer said he recommends that Baffinland shareholders tender to ArcelorMittal's bid, saying the nature of the steel giant's bid - 100% control - is superior to Nunavut Iron Ore's partial offer.

He believes continued ownership under Nunavut Iron Ore "will be subject to further share dilution, technical risk, project delays, capital cost inflation" and other factors.

Nunavut Iron Ore also said Wednesday that it has extended its offer to Jan. 10 from Dec. 30.

In Toronto, Baffinland is at C$1.33, down 1 Canadian cent, on volume of 7.7 million shares. The stock closed at 56 Canadian cents on Sept. 21, the day before Nunavut Iron Ore announced its initial offer.

-By Carolyn King, Dow Jones Newswires; 416-306-2100; [e-mail]