SouthGobi Resources (TSE:SGQ)(HKSE:1878) said Tuesday that the expected closing date of the sale of its Tsagaan Tolgoi thermal coal deposit to Modun Resources (ASX:MOU) has been extended to on or before December 31.
Earlier this month, the company announced the Mineral Resources
Authority of Mongolia requested the suspension of some of its mining and
exploration licenses for its Ovoot Tolgoi coal mine following a buyout
bid by Chinese aluminum giant Chalco.
In early April, Aluminium Corp of China - known as Chalco - said it would buy Ivanhoe Mines' (TSE:IVN)(NYSE:IVN) SouthGobi stake in a deal worth as much as $925 million.
SouthGobi, which sells metallurgical and thermal coal mainly to
customers in China, said last week the suspension would be initiated to
allow the government to review the proposed change of ownership.
SouthGobi said Tuesday the extension of the expected closing date with Modun allows additional time to resolve any issues.
All other material terms of the deal remain unchanged, the company added.
In March, Mongolia-focused SouthGobi said it will sell its Tsagaan
Tolgoi deposit, a thermal coal property, to Modun in a deal valued at
Under the terms of the agreement, SouthGobi will receive $7.5 million
in up-front cash, $12.5 million shares of Modun common stock, and
deferred consideration of $10.0 million in Modun stock.
Should SouthGobi acquire over 14.9 percent of Modun shares, it will
also have the right to nominate one director to Modun's board. The deal
was originally expected to close by June 2012.
In early 2008, the company announced an initial NI 43-101 compliant
resource report for the deposit, which estimated measured plus indicated
resources of 36.4 million tonnes of coal, plus another nine million
tonnes of coal in the inferred category.
Tsagaan Tolgoi is in the Omnigovi Aimag, approximately 570 kilometres
south of the nation's capital of Ulaanbaatar and 113 kilometres
southeast of the provincial capital of Dalanzagad.
The project is also located 415 metres to the northeast of
SouthGobi's flagship Ovoot Tolgoi project, which sells coal to customers