UPDATE: SouthGobi Falls 13% On Possible Mining Suspension, Auditor Quits
April 17 2012 - 1:34AM
Dow Jones News
Shares of SouthGobi Resources Ltd. (1878.HK) fell as much as 13%
Tuesday after the firm replaced its auditor Tuesday and the
Mongolian coal miner said late Monday the local government is
seeking a temporary halt to mining licenses for its flagship Ovoot
Tolgoi coal mine.
Takeover target SouthGobi Resources, which produces coking coal
and thermal coal and is listed in Hong Kong and Toronto, said in a
statement Tuesday that Deloitte & Touche LLP has resigned as
auditor of the Mongolian coal miner "on its own initiative" and
that PricewaterhouseCoopers LLP has replaced it. Both events were
effective April 2, it said.
Deloitte & Touche LLP resigned before its contract with
SouthGobi Resources was due to expire, SouthGobi Resources said.
But it noted the auditor "has not expressed any reservations" in
its reports for SouthGobi Resources' two most recently completed
fiscal years or for any period subsequent to the last completed
fiscal year.
Deloitte & Touche and PricewaterhouseCoopers could not
immediately be reached for comment.
Uncertainties over whether Aluminum Corp. of China Ltd.'s (ACH)
plan to buy a controlling stake in SouthGobi would receive
regulatory approval weighed on its share price. SouthGobi's stock
tumbled 13% to a more than one month intraday low of HK$48.10 early
Tuesday -- 27% lower than the HK$65.97 cash offer by Chalco for
each of SouthGobi's shares. Chalco's stock fell as much as 2.7% to
HK$3.67 in the morning session.
The share price weakness comes after SouthGobi said Monday the
Mineral Resources Authority of Mongolia stated the request of
suspension is connected to Chinese aluminum producer Chalco's
proposed deal in April 2 to buy a controlling stake in SouthGobi
from Canada's Ivanhoe Mines Ltd. (IVN) in a deal worth as much as
HK$7.20 billion (US$923 million) as the Chinese aluminum producer
diversifies into the resource-rich country.
The suspension would allow the Mongolian government time to
review the proposed change of ownership, it noted.
SouthGobi has requested Ivanhoe and Chalco discuss the proposed
deal with the Mongolian government. It has also informed Rio Tinto
Ltd. (RIO.LN), which has a 51% stake in Ivanhoe, and Chinese
sovereign wealth fund China Investment Corp., which owns a 14%
stake in SouthGobi.
"If the acquisition falls through, it would have a negative
impact on SouthGobi which relies very much on Chalco for financial
support to ramp up its production," said Robin Tsui, an analyst at
BOCI Research.
A spokesman at Chalco declined to comment on SouthGobi's
possible mining suspension.
-By Joanne Chiu, Dow Jones Newswires; 852-2802-7002;
joanne.chiu@dowjones.com
Ivanhoe Mines (NYSE:IVN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ivanhoe Mines (NYSE:IVN)
Historical Stock Chart
From Jul 2023 to Jul 2024