China is Buying Aluminum Corporation of China offers $8.48 per share and has support of majority shareholder Ivanhoe Mines
SouthGobi Resources (TSX: T.SGQ, Stock Forum) shares surged 16% to $7.69 on Monday after the company said it has entered into a Cooperation Agreement in which Aluminum Corporation of China Ltd. (CHALCO) intends to make a proportional take-over bid for up to 60% of the issued and outstanding common shares of SouthGobi at a price of $8.48 per share.
Ivanhoe Mines, which is a 57.6% majority shareholder of SouthGobi, reported that it has signed a lock-up agreement with CHALCO, committing to tender all of its shares to the offer.
SouthGobi Resources is developing Permian-age metallurgical and thermal coal deposits in Mongolia's South Gobi Region. The company said benefits of the deal include CHALCO being obliged to purchase all its coal produced at market prices for a period of 24 months. CHALCO will also assist SouthGobi with its electricity needs and will support its coal-haul highway project.
SouthGobi Resources has a market capitalization of $1.48 billion based on 192,607,133 fully-diluted shares outstanding.