Turquoise Hill sells down stake in SouthGobi coking coal asset
Turquoise Hill Resources has agreed to offload part of its 56% stake in Mongolia-based coal miner SouthGobi Resources to Hong Kong-listed National United Resources Holdings.
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The Canadian company will sell a 29.95% stake in SouthGobi for C$25.6 million ($24 million) and retain the other 26%, Turquoise Hill said on Wednesday July 30.
“About C$12.8 million [$11.8 million] in cash will be received by Turquoise Hill at closing, and deferred consideration of about C$12.8 million [$11.8 million] will be payable to Turquoise Hill one year after the closing of the transaction,” a statement said.
Turquoise Hill expected the deal to close no later than November 30.
“SouthGobi will continue to focus on its business and drive to deliver on its 2014 objectives, with the usual high priority on safety,” SouthGobi said.
The company produced 550,000 tonnes of raw coal during the second quarter of this year, down from 640,000 tonnes recorded in the first quarter. It sold 400,000 tonnes of semi-soft coking coal and 510,000 tonnes of thermal coal in the June quarter.
SouthGobi reduced its production and placed about half its workforce on leave in June, following a review of operations in response to market conditions.
“Coal production in the second half of 2014 will be paced to meet contracted sales volumes,” the company said in its operating results statement in early July.
National United Resources is principally engaged in outdoor media advertising and media-related services. It entered the coking coal trading business in 2013 and has sourced materials from Mongolia.