Australian iron ore miner Northern Iron has just received a revised and improved takeover bid from Indian conglomerate Aditya Birla Group, which has prompted investors of the miner to rejoice over the latest development.

Shares in Northern Iron soared 38 per cent after the Aditya Birla Group offered an A$518 million ($532 million) takeover bid, sweetened by 4 per cent two months after an earlier attempt was rejected. The new offer was at a 75 per cent premium to the Australian company's closing stock price on Monday. Its shares closed at A$0.8 on Monday. It has fallen nearly a fifth since end of May.

In a statement to the Australian Securities Exchange, Northern Iron said the non-binding proposal, which it received late on Monday, was worth $1.40 per share. It stood for an 8.5 per cent increase over Aditya Birla's previous offer between $1.23 and $1.29 per share. The board of Northern Iron flatly rejected the first offer in mid-May, saying it was way too low.

"The board of directors will consider the revised proposal and whether to facilitate detailed stage-two due diligence as requested by Aditya Birla and expects to announce its decision within a week," Northern Iron said in a statement to the Australian Securities Exchange.

Northern Iron owns four magnetite deposits and 20 prospects by virtue of the Sydvaranger iron project in northern Norway.