VANCOUVER – Aluminum Corporation of China (CHALCO) is making a bid for up to 60% of SouthGobi Resources, the coal mining subsidiary of Vancouver’s Ivanhoe Mines. CHALCO has offered $8.48 per share, a premium of between 28% and 32% over recent trading value.
Ivanhoe currently owns 104.8 million share of SouthGobi, about 57.6% of the issued and outstanding shares. This is a proportional bid, meaning that if Ivanhoe sells all of its shares, it will gross $889 million, or if it sold 60% of its holdings it would gross $538 million.
SouthGobi is producing both thermal and metallurgical coal from its Ovoot Tolgoi complex in Mongolia, only 45 km from the Chinese border. (SouthGobi.com)
Ivanhoe plans to use the proceeds of the sale to fund the continued development of its flagship Oyu Tolgoi copper-gold-silver mine, also in southern Mongolia. (IvanhoeMines.com)