Shares in Kazakh miner ENRC jumped almost 5 percent in early trade after a Sunday newspaper report that commodities trader Glencore was considering a 12 billion pound ($19.5 billion) takeover bid, Reuters reported.
At 0715 GMT on Monday, shares in ENRC, hit last week by a bitter boardroom battle at the group, were up 4.7 percent at 777 pence, outperforming a broadly flat mining sector.
Glencore shares were down 0.1 percent.
Quoting a source with knowledge of the discussions, the Sunday Times newspaper said Glencore Chief Executive Ivan Glasenberg had held talks in recent weeks with ENRC's three founders and key shareholders Alexander Mashkevitch, Patokh Chodiev and Alijan Ibragimov. The trio control some 45 percent of ENRC's shares.
ENRC, with a free float of less than 20 percent, has long been named as a potential target for Glencore.
The commodities trader has always had an opportunistic approach to deals and could be tempted by both ENRC's undervalued asset portfolio and the heavy fall in its shares, battered by a boardroom dispute over governance that has pitted its independent directors against its founders.
Two independent directors have already been ousted by top shareholders and at least one other is considering tendering his resignation, according to a source familiar with tha matter last week.
ENRC, which trades at a hefty 15 percent discount to the sector on a P/E basis, is down almost 30 percent this year and hit 741 pence on Friday, its lowest level since August 2009.
But one industry source said it was simply too soon for Glencore to be seriously considering a move on a company as large as ENRC. It would have had to disclose plans in its listing prospectus and would also struggle to raise money to pay for the deal, as it cannot issue new shares for six months.
"We would see an all-out cash bid near-term from Glencore for ENRC as highly unlikely and the Swiss-based group issuing more equity is not an option for at least six months," said Miriam Hehir, credit research analyst, RBC Capital Markets.
"Glencore highly values its investment grade credit ratings, which help to underpin its profitable Marketing business, and we do not believe it would jeopardise these ratings with an ENRC bid," she added.
Glencore shares are still trading "under water", or below their issue price of 530 pence.
Industry analysts have suggested Glencore could take a stake in ENRC rather than buy the entire company, potentially taking shares currently owned by rival Kazakhmys which has said it is considering all options for its 26 percent stake.
Shares in Kazakhmys were up 4.2 percent. Separately, Kazakhmys announced earlier on Monday that it had agreed a $1.5 billion loan from China Development Bank to help develop a large copper deposit in eastern Kazakhstan, a move that will allow it to avoid selling a stake in the project.