SouthGobi warns on Mongolia halt at Ovoot Tolgoi
SOUTHGOBI Resources stock tumbled overnight after it said a Mongolian mining authority is seeking a temporary halt to exploration and mining activity on certain licenses owned by the company, including the license related to its flagship coal mine Ovoot Tolgoi.
SouthGobi said the Mineral Resources Authority of Mongolia stated that its request is connected to Aluminum Corporation of China, known as Chalco's, proposed deal to buy a controlling stake in SouthGobi from Canada's Ivanhoe Mines. The suspension would allow the Mongolian government time to review the proposed change of ownership, it noted.
SouthGobi said "various" Mongolian stakeholders have said "there has been little information disseminated to them and no prior government consultation" over the proposed deal. It said it has requested that Ivanhoe and Chalco, discuss their agreement and the proposal involving SouthGobi with the Mongolian government.
SouthGobi shares tumbled 12 per cent to $C6.38 ($6.16) in Toronto on the news. Ivanhoe shares were down 5.2 per cent at $C12.09.
The coal miner said it hasn't received any official notification of suspension and "has no reason to believe" its licenses aren't in good standing. However, should it receive official notification, it said operations may need to be suspended until an injunction is granted.
Earlier this month, Chalco - China's biggest aluminum producer by output - agreed to buy up to a 60 per cent stake in SouthGobi for more than $US900 million ($868.93 million) to diversify into resource-rich Mongolia. Ivanhoe owns 57.6 per cent of SouthGobi.
SouthGobi said the Mineral Resources Authority of Mongolia stated that its request is connected to Aluminum Corporation of China, known as Chalco's, proposed deal to buy a controlling stake in SouthGobi from Canada's Ivanhoe Mines. The suspension would allow the Mongolian government time to review the proposed change of ownership, it noted.
SouthGobi said "various" Mongolian stakeholders have said "there has been little information disseminated to them and no prior government consultation" over the proposed deal. It said it has requested that Ivanhoe and Chalco, discuss their agreement and the proposal involving SouthGobi with the Mongolian government.
SouthGobi shares tumbled 12 per cent to $C6.38 ($6.16) in Toronto on the news. Ivanhoe shares were down 5.2 per cent at $C12.09.
The coal miner said it hasn't received any official notification of suspension and "has no reason to believe" its licenses aren't in good standing. However, should it receive official notification, it said operations may need to be suspended until an injunction is granted.
Earlier this month, Chalco - China's biggest aluminum producer by output - agreed to buy up to a 60 per cent stake in SouthGobi for more than $US900 million ($868.93 million) to diversify into resource-rich Mongolia. Ivanhoe owns 57.6 per cent of SouthGobi.
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