Rio's Turquoise Hill gets rid of remaining stake in SouthGobi

Rio's Turquoise Hill gets rid of remaining stake in SouthGobi

Heavy machinery moves coal at the SouthGobi Energy Resources Ltd. Ovoot Tolgoi coal mine in Mongolia. (Image from archives)

Rio Tinto's Turquoise Hill (TSX:TRQ) is getting rid of its remaining stake in SouthGobi Resources Ltd. (TSX:SGQ) a troubled Mongolia-focused coal miner.

The Vancouver, Canada-based firm said Tuesday a private Chinese company, Novel Sunrise Investments, has agreed to buy 48.7 million shares in SouthGobi —which was once worth over US$2.4 billion —for 35 cents per share in cash.

In July last year Turquoise agreed to sell the majority of its stake in the company to Hong Kong-listed National United Resources Holdings for Cdn$12.8 million.

Both deals, expected to close by year-end, will leave Turquoise Hill walking away with Cdn$21.3 million, or less than 1% of the C$2.3 billion that the stake was once worth.

Earlier this month three SouthGobi ex-employees were found guilty of tax evasion by a Mongolian court. Under the country’s law, tax and other disputes are pursued in courts under the criminal code.

US citizen Justin Kapla and two Philippine nationals, Hilarion Cajucom Jr and Cristobal David, each received jail sentences of between five and six years, while the company was fined 35 billion tugrik ($18 million) for tax evasion. Money laundering charges of some 200 billion tugrik were dropped. SouthGobi said if the tax verdict stands it might have to file for bankruptcy.

Turquoise Hill also has a 66% interest in the Oyu Tolgoi mine in southern Mongolia.