Chinese aluminum giant Chalco delayed plans to acquire a controlling stake in Mongolia-focused coal miner SouthGobi Resources Ltd on Tuesday, as it continues to work on securing regulatory approvals in Mongolia and outside.
In April the Aluminum Corporation of China Ltd , better known as Chalco, announced a $926 million bid for a controlling interest in SouthGobi, which owns large coal projects close to the Chinese border.
The proposed deal has the backing of Ivanhoe Mines Ltd , which currently owns a controlling stake in SouthGobi.
But it ran into obstacles immediately, after the Mongolian said it would enact new investment rules allowing it to review deals involving foreign companies that have assets in Mongolia.
Ivanhoe and Chalco agreed to cooperate with Mongolia to ensure any requirements under the country's new strategic foreign investment legislation are satisfied.
Chalco and Ivanhoe said on Tuesday they would extend the time for Chalco to make a proportional takeover bid for up to 60 percent of the common shares of SouthGobi by 30 days.
Chalco will make its C$8.48 a share proportional offer to all SouthGobi shareholders on or before August 3, the companies said. They gave no reason for the delay.
Ivanhoe has entered into a lock-up agreement with Chalco and has agreed to tender all of its SouthGobi shares, on a pro-rata basis, to Chalco.
Vancouver, British Columbia-based Ivanhoe, itself now majority-owned by global miner Rio Tinto, plans to use the proceeds from the deal with Chalco to fund development of the massive Oyu Tolgoi copper-gold project in Mongolia.
SouthGobi shares were up 5 Canadian cents at C$3.90 soon after the market opened on Tuesday.
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