Turquoise Hill deal to exit Mongolia miner SouthGobi falls through

National United Resources Holdings

01/05/2015 16:56

By Susan Taylor 
    TORONTO, May 1 (Reuters) - A deal that would have allowed 
Canada's Turquoise Hill Resources Ltd  TRQ.TO  to unload its 
remaining stake in Mongolian coal miner SouthGobi Resources, a 
company that was once worth billions of dollars, has fallen 
through.  
    Turquoise Hill said on Friday that the agreement with 
National United Resources Holdings  0254.HK  expired on April 
30. 
    The deal's failure marks another setback in Turquoise Hill's 
effort to sever ties with SouthGobi  SGQ.TO , a company hit by a 
slowing Chinese economy, weaker coal prices, accounting problems 
and funding woes.  ID:nL1N0VY1KU   
    Turquoise Hill, a unit of global miner Rio Tinto  RIO.L , 
said it could not complete the transaction with Hong Kong-listed 
National United Resources  0254.HK  for 56.1 million SouthGobi 
 SGQ.TO  shares, a 23.3 percent stake, under the terms of the 
agreement.  
    The C$12.8 million ($10.5 million) deal was announced in 
July 2014.  ID:nASB08KRP  
    Vancouver-based Turquoise Hill also owns an about 66 percent 
stake in the massive Oyu Tolgoi copper-gold mine in Mongolia. 
    "Our focus is Oyu Tolgoi and we are looking at alternatives 
for divesting our remaining stake in SouthGobi," Turquoise Hill 
spokesman Tony Shaffer said in an email. 
    Last week, Turquoise Hill closed a deal with private Chinese 
company Novel Sunrise Investments Ltd to sell 48.7 million 
shares in SouthGobi for about C$17 million.  ID:nASB09HT6  
    Turquoise Hill, which was previously known as Ivanhoe Mines 
and was run by high-profile mining financier Robert Friedland, 
spun out its coal assets into SouthGobi in 2006, and took a 
controlling stake.  
    Friedland, and later Rio, have since tried to monetize that 
stake. A 2012 deal to sell 60 percent to Chinese aluminum giant 
Chalco for about C$889 million fell apart because of obstacles 
put in place by the Mongolian government. 
    SouthGobi was once worth over C$3 billion, and its shares  
peaked at C$21.99 in 2008. The stock fell as low as 41 Canadian 
cents in February, and was trading at 78 Canadian cents on 
Friday. 
    In January, a Mongolian court found SouthGobi and three 
former foreign employees guilty of tax evasion and fined the 
company nearly $18 million.  ID:nL4N0V96LA  
    SouthGobi has said it will continue to defend itself in the 
case, but a court refused its appeal this week.  ID:nWNAS00OZX  
    ($1=$1.22 Canadian)     
 
 (Reporting by Susan Taylor; Editing by Peter Galloway) 
 ((susan.taylor1@thomsonreuters.com; +1 416 941 8083; Reuters 
Messaging: susan.taylor1.thomsonreuters.com@reuters.net)) 
 
Keywords: TURQUOISE HILL SOUTHGOBI/