Mining firm Xstrata Plc has increased its offer price for iron ore developer Perth-based Sphere Minerals Ltd (SPH.AU) to $3 a share and declared the offer best and estimated at $514 million.

In a statement to shareholders posted on its website, Xstrata's wholly owned subsidiary Sidero Pty Ltd increased the offer by $50 cents from $2.50 to close out the deal.

"We believe our cash offer ... is very attractive to Sphere shareholders and demonstrates our willingness to expedite the completion of our offer," Xstrata Coal chief executive Peter Freyberg said in a statement on Wednesday.

The Board of Directors of Sphere said in a separate statement posted on its website that it has "decided unanimously favoring Xstrata's offer in the absence of a superior proposal."

Sphere's Board corporate secretary Lexton Graefe also clarified previous media reports regarding Singapore-based Sin-Tang Development shareholdings in the company now pegged at 10.77 percent.

"The decision by Sin-Tang to acquire shares in Sphere does not impact the unanimous recommendation of Sphere's Board that shareholders accept (the) Xstrata offer," wrote Graefe in the notice to shareholders.

Shares in Sphere Minerals jumped 19 percent or 47 cents to $2.95--the highest since July 2008.

Although based in Perth, Sphere is a West African iron ore producer with three large-scale projects in Mauritania.

On November 2, Xstrata had an interest in Sphere valued at 8.11 percent, with the offer to close on November 12.