Irish miner Kenmare rebuffs approach from Australia's Iluka

* Iluka pounces amid slump in key product markets

* Kenmare shares up 21 pct despite rejection

* Iluka shares climb 1 pct on Thursday (Updates with Kenmare board rejects offer)

DUBLIN/MELBOURNE, June 26 (Reuters) - Irish titanium miner Kenmare Resources (LSE: KMR.L - news) rejected a takeover bid from Australian rival Iluka Resources Ltd (Other OTC: ILKAF - news) on Thursday, saying the share-for-share offer did not place sufficient value on its largest mine.

Iluka, which like Kenmare has suffered from weak prices in its core markets in recent months, offered 0.036 new Iluka shares for each Kenmare share.

"The board of Kenmare has rejected Iluka's proposal, which it believes does not recognise the value inherent in Moma as a long-life, low-cost asset," Kenmare said in a statement, referring to its flagship mine in Mozambique.

Kenmare shares jumped some 9 percent to 12 pence on Wednesday on talk, reported in Britain's The Times, that Iluka had offered 20 pence a share. On Thursday, following confirmation of the offer, the shares shot up 23 percent to hit 1475 pence by 1027 GMT.

The approach comes at a time when both companies are suffering from weak prices for mineral sands products like zircon and titanium. Shares in Kenmare, which has a market value of 321 million pounds ($545 million), had lost more than half their value so far this year before the offer.

Iluka, a A$3.5 billion ($3.29 billion) company, is the world's top producer of zircon, which is used in ceramic tiles.

The move on Kenmare, whose main asset is the Moma titanium minerals mine in Mozambique, fits with Iluka Chief Executive David Robb's strategy to use the company's strong balance sheet to expand by hunting for bargains amid the market slump.

"It makes some sense for the industry to be consolidated further given the tough marketing conditions," said Lawrence Grech, senior resources analyst at PhillipCapital.

Iluka shares jumped 1.5 percent, in a broader market that was up 1.2 percent.

($1 = 1.0639 Australian dollars) ($1 = 0.5889 British Pounds) (Reporting by Sonali Paul and Conor Humphries; Editing by Sophie Walker)