Mongolian government asks work be stopped at SouthGobi's Ovoot Tolgoi mine
HONG KONG - Shares in SouthGobi Resources Ltd. (TSX:SGQ) fell more than 10 per cent Monday after the Mongolian government asked that work be stopped at the company's Ovoot Tolgoi mine.
SouthGobi said the Mineral Resources Authority of Mongolia requested the suspension in connection with a plan by Ivanhoe Mines Ltd. (TSX:IVN) to sell its controlling interest in the company to Aluminum Corporation of China Ltd.
A suspension would be initiated to allow Mongolia to review the proposed change of ownership, the company said.
"The company has not received any official notification and has no reason to believe SouthGobi's licences are not in good standing," SouthGobi said in a statement.
"However, the company cautions at this time that any official notification received may require a suspension of operations until an injunction is granted."
SouthGobi said it has asked Ivanhoe and Chalco to discuss their agreement with the Mongolian government.
Ivanhoe struck a deal earlier this year to sell its 57.6 per cent stake in SouthGobi to the Chinese company for about $889 million.
Chalco is offering C$8.48 per SouthGobi share and Ivanhoe currently owns 104.8 million shares of SouthGobi.
The move will provide Ivanhoe with much-needed cash to help fund construction of its Tolgoi copper, gold and silver mine in southern Mongolia.
SouthGobi shares closed down 90 cents at $6.36 on the Toronto Stock Exchange on Monday, while Ivanhoe shares lost 72 cents to end the day at $12.03.
SouthGobi said the Mineral Resources Authority of Mongolia requested the suspension in connection with a plan by Ivanhoe Mines Ltd. (TSX:IVN) to sell its controlling interest in the company to Aluminum Corporation of China Ltd.
A suspension would be initiated to allow Mongolia to review the proposed change of ownership, the company said.
"The company has not received any official notification and has no reason to believe SouthGobi's licences are not in good standing," SouthGobi said in a statement.
"However, the company cautions at this time that any official notification received may require a suspension of operations until an injunction is granted."
SouthGobi said it has asked Ivanhoe and Chalco to discuss their agreement with the Mongolian government.
Ivanhoe struck a deal earlier this year to sell its 57.6 per cent stake in SouthGobi to the Chinese company for about $889 million.
Chalco is offering C$8.48 per SouthGobi share and Ivanhoe currently owns 104.8 million shares of SouthGobi.
The move will provide Ivanhoe with much-needed cash to help fund construction of its Tolgoi copper, gold and silver mine in southern Mongolia.
SouthGobi shares closed down 90 cents at $6.36 on the Toronto Stock Exchange on Monday, while Ivanhoe shares lost 72 cents to end the day at $12.03.
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