UPDATE 1-Allegiance says third party will not make offer

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SYDNEY, Feb 12 (Reuters) - Australia's Allegiance Mining Ltd AGM.AX said on Tuesday a third party had ended due diligence and would not be making a proposal because it could not comply with a deadline Allegiance had set.

No third party is currently conducting due diligence, Allegiance said.

Allegiance, a nickel miner, has rejected a takeover bid of $674 million from fellow Australian miner Zinifex Ltd ZFX.AX as inadequate.

Allegiance is one of a number of new mining companies in Australia catching the eye of established miners looking to acquire more assets to better ride the boom in raw materials.

It has previously said it had received other approaches, but had not given any names. Its major shareholder and sole customer is Jinchuan Group, China's largest nickel refiner.

Zinifex has offered A$1 a share for Allegiance, looking to reduce its reliance on zinc mining, following an industry-wide trend to diversify.

Allegiance shares fell 1.9 percent to $1.035 after the announcement, in a broader market up 0.45 percent . (Reporting by Jonathan Standing)