Aluminum Corporation of China (Chalco) and Ivanhoe Mines (TSE:IVN)(NYSE:IVN) Wednesday acknowledged the news that the Mongolian government has suspended SouthGobi Resources' (TSE:SGQ) licenses for its Ovoot Tolgoi coal mine.
Earlier this month, Chalco agreed to pay C$925 million for a 57.6 percent controlling stake in Mongolian coal miner SouthGobi Resources in a deal with Ivanhoe.
Chalco also laid out a timetable for its proposed acquisition of the SouthGobi stake.
was mentioned that Mineral Resources Authority of Mongolia (MRAM) had
stated that the move is in relation to the proposed takeover bid
contemplated by the lock-up agreement between Ivanhoe and Chalco.
the proposed partial bid is compliant with all the relevant laws and
regulations of jurisdictions concerned, SouthGobi,
Chalco have been advised by the Government of Mongolia that it is
considering the introduction of new foreign investment legislation to
allow it to assess investments.
In this context, the parties
understand that amongst the key issues to be considered include the
establishment of fair transfer pricing and taxation regimes with foreign
The parties also understand that the Government of Mongolia will look to model the legislation from precedents in other major
and Chalco have also noted certain statements made by various Mongolian
stakeholders recently since the announcement of the proposed partial
offer and would like to express their commitment to cooperate with and
assist the MRAM and the Government of Mongolia in any future processes
that they may have.
The parties confirm that subject to the terms
and conditions set out in the April, Chalco has agreed to make a
take-over bid on or before 5 July and thereafter the bid must be taken
up 36 days after it is made.
Chalco confirms that its current
intention is to mail the circular on or about 5 July and all deposited
shares would be taken up by Chalco on 10 August. Chalco also confirms
that it will not mail the bid circular before 28 June.
lock-up agreement, Ivanhoe is required to deposit its shares to
Chalco's bid within 10 days after Chalco mails its circular. However, a
condition to Chalco's completion of the proposed partial offer is that
all required regulatory approvals have been obtained on terms
satisfactory to Chalco.
Unless and until such regulatory
approvals have been obtained to its satisfaction, Chalco may withdraw
its bid or extend its bid up to 180 days from the date of the offer to
allow time for regulatory processes to be completed.
confirms that it intends not to take up any shares under its bid unless
and until the regulatory approvals from the Government of Mongolia, if
any, as well as other regulatory approvals have been obtained and other
conditions of its the Lock-up Agreement have been satisfied or waived.
the event new foreign investment legislation is implemented by the
Government of Mongolia prior to the completion of the partial offer of
the shares in SouthGobi, Ivanhoe and Chalco will cooperate with
Mongolia's government to ensure any requirements are satisfied.
intends to leverage its position as an established metals and mining
industry incumbent to further enhance the coal operation of SouthGobi.
its cooperation Agreement with SouthGobi, Chalco has undertaken,
following completion of the bid, to provide support services to further
develop the SouthGobi operation for the benefit of SouthGobi and its
Chalco believes there will be a net benefit to
Mongolia and the Mongolian mining industry which will also help
strengthen the future economic interests and co-operation between
Mongolia and China.