Mongolian government tells SouthGobi Resources to stop mining
Three weeks after SouthGobi Resources' $925 million deal with Chalco, the Government of Mongolia told SouthGobi that it had to suspend exploration and mining activity on certain licenses.
The suspension includes SouthGobi's only operating mine, the Ovoot Tolgoi Mine.
SouthGobi Resources (HKG: 1878) fell 9.92% to $49.95 a share.
SouthGobi believes the action was taken under the security powers of the Government of Mongolia.
"MRSM stated that the move is in connection to the proposed proportional takeover bid by Aluminum Corporation of China Limited (CHALCO), and the agreement by Ivanhoe Mines Ltd. ("Ivanhoe") to tender its controlling interest in SouthGobi to such a takeover. The suspension would be initiated to allow the Government of Mongolia to review the proposed change of ownership," said SouthGobi in a statement.
Aluminum Corporation of China Limited was off 1.6% to $3.70.
Ivanhoe Mines stock was down 1.83% to $11.81 a share. Ivanhoe has fallen 34% since the beginning of the year.