London-based gold miner Randgold Resources on Friday opened a battle for Ghana's Ashanti Goldfields by unveiling a rival $1.46 billion all-share bid to compete with AngloGold's $1.1 billion offer.

Randgold has proposed to buy Ashanti, which operates six mines in four African countries, by issuing one of its shares for every two Ashanti shares.

The news sent Randgold's Nasdaq listed shares down nearly 12 percent to $20.20 while Ashanti shares gained more than 11 percent to $9.10 on the New York Stock Exchange.

Randgold said its offer, which Ashanti confirmed receiving, was conditional on further due diligence. Both companies said the talks were at an early stage and may or may not lead to a formal offer.

"We have been forced to make this announcement because of press speculation," Randgold Chief Executive Mark Bristow said, referring to British regulatory rules.

South Africa's AngloGold, the world's second biggest gold producer, has offered to pay 26 of its shares for every 100 Ashanti shares, or about $1.1 billion.

Commenting on the competing bid, AngloGold Chief Financial Officer Jonathan Best said, "Our immediate reaction is that (Randgold) will have to increase their share capital very substantially and wonder what their existing shareholders will have to say about this."

He also questioned how Randgold, which has about half the market capitalization of AngloGold, would have the necessary money left to invest in improving Ashanti's mining operations.

"Because of this ... we doubt that the market will in the end regard it as a superior offer," Best said.

Based on Randgold's closing share price on Thursday, Randgold values Ashanti at $11.47 a share -- more than a 30 percent premium over AngloGold's offer, which was worth about $8.71 at close of South African business on Friday.

However, when using all three companies' share prices before either takeover offer was disclosed, the premiums on both bids are about the same.

AngloGold's offer would, if successful, propel the combined company to a position that would challenge the supremacy of the world's number one gold miner Newmont Mining Corp..

For Randgold, the deal would catapult it to a medium-sized miner with operations in more countries, diversifying from its current narrow base, analysts have said.

"At the end of the day, our stated strategy is to develop ourselves as a leading African gold business -- and so is Ashanti's if you look at our two annual statements," Bristow said.

GHANA ENCOURAGING Earlier on Friday, before the competing bid was disclosed, analysts had questioned Randgold's ability to compete with AngloGold's bid.

"Randgold is probably going to give it a go, but I don't think they have the balance sheet to pull it off," said gold analyst Leon Esterhuizen at Invetec Securities.

Sources told Reuters on Thursday that Randgold had been encouraged by the Ghanaian government to make a bid. The government has been keen to see other offers for Ashanti, sources close to the situation said.

The government, which owns a 17 percent stake in Randgold, can veto any acquisition of the miner and is also understood to be uncertain the AngloGold deal is the best it can get.

Best said AngloGold's bid for Ashanti was a "full and fair offer" and declined to say whether the company would raise it.

London-listed platinum miner Lonmin Plc owns a 32 percent stake in Ashanti and already has agreed to AngloGold's offer. A source familiar with Lonmin's thinking said on Thursday that if a rival offer arrived, it would expect to ask for cash as Lonmin is a stronger company than Randgold.

AngloGold also would have to be paid a termination fee of $15 million if its bid does not go through.

If Randgold launches a formal bid for Ashanti, it would be the second time in a year that the shrinking gold mining industry faced a bid battle. Last year Newmont and AngloGold fought each other tooth and nail before Newmont gained control of Australia's Normandy Mining.