London-listed gold miner Celtic Resources on Tuesday rejected a £123m takeover bid from Severstal, the Russian steelmaker and Celtic’s largest shareholder, saying it “very significantly undervalued the company and its prospects”.

Last week Celtic Resources said it had received a preliminary approach from a potential suitor. Although the company did not say who had made the approach, market speculation centred on Severstal, which acquired a 22 per cent stake in Celtic in August and said it had ambitious plans to expand into gold mining.