TORONTO, Oct 20 (Reuters) - Waratah Coal (WCI.V: Quote, Profile, Research, Stock Buzz) has rejected a C$1.41-a-share partial takeover bid by privately-held Australian company Mineralogy Pty Ltd, saying on Monday the offer undervalues Waratah's stalled Galilee Basin coal project in eastern Australia.

In a statement, TSX Venture Exchange-listed Waratah recommended shareholders not tender to the cash offer for about 36 percent of the company, or about 27 million shares, which values the deal at about C$38 million ($32 million).

Mineralogy, which is backed by Australian billionaire Clive Palmer, already owns about 14 percent of the company, and would control 50.1 percent on a fully diluted basis if the deal were to go through.

Mineralogy announced the bid two weeks ago, drawing a quick rebuke from Waratah, which called it "opportunistic" in light of the company's share weakness following the Australian government's rejection of a proposal to build a coal port and rail line for the A$5.3 billion ($3.7 billion) Galilee Basinproject.

The shares had been trading at C$1.84 just before the Australian decision in early September, and were worth more than C$4 in late June.

"The board of directors has carefully reviewed Mineralogy's partial offer and believes the offer is inadequate, fails to compensate shareholders for the size, quality and strategic value of Waratah's assets, and disadvantages shareholders," the company said.

Waratah said it is working on other rail and port options for the Galilee Basin project, which has an inferred thermal coal resource of more than 4.3 billion tonnes.

Waratah shares were down 9 Canadian cents at C$1.25 on the TSX Venture Exchange.