Aluminum Corp. of China (Chalco) has agreed to a 30-day extension for its bid for Ivanhoe Mines’s controlling stake in SouthGobi Resources that has come under scrutiny by the Mongolian government.
The offer of $8.48 per share is subject to Canadian and Chinese regulatory approvals as well as Chalco shareholder approval.
Shares in SouthGobi fell sharply last week after the company said it would stop production at its Mongolian coal mine due to weak market conditions and regulatory issues.
Instead of July 5, Chalco has now agreed to make a takeover bid on or before Aug. 3, and thereafter the bid must be taken up after 36 days at the earliest, the companies said Tuesday in a news release.
Mongolian authorities have asked SouthGobi to suspend production while they review a plan by state-owned Chalco to acquire a majority stake in SouthGobi from Ivanhoe.
Ivanhoe and SouthGobi have most of their operations outside Canada but are listed on the Toronto Stock Exchange and have corporate head offices in Vancouver.
Ivanhoe is developing the Oyu Tolgoi mine in southern Mongolia. The mine is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold a year in the first decade of operation.
Rio Tinto owns a 51-per-cent stake in Ivanhoe, which in turn owns two-thirds of the Oyu Tolgoi project. The Mongolian government owns the remaining third.
Mongolia has profited from selling coal, copper and other minerals to China’s booming economy but some in the sparsely populated North Asian country are uneasy about possible economic domination by their giant neighbour.