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Monday, April 2, 2012

[CPSI NewsAlert: Chalco Launches C$8.48 Bid for 60% of SouthGobi, Ivanhoe Commits its 57.6% Stake, Offer 28% Higher than Last Close]

CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, WA based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.

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1878 closed +0.10% to HK$51.25, SGQ closed +2.8% at C$6.62. HKEx opens 9:30am

SouthGobi Signs Cooperation Agreement With Aluminum Corporation of China Limited (CHALCO) and Receives Notification of CHALCO's Intention to Make a Proportional Take-Over Bid at C$8.48 Per Share

HONG KONG, CHINA--(Marketwire - April 1, 2012) - SouthGobi Resources Ltd. ("SouthGobi") (TSX:SGQ)(HKSE:1878) announced today that it has entered into a Cooperation Agreement with Aluminum Corporation of China Ltd. ("CHALCO"), and further announces that it has received notice that CHALCO intends to make a proportional take-over bid for up to 60% of the issued and outstanding common shares of SouthGobi.

SouthGobi has been informed that CHALCO intends to make a take-over bid for up to 60% of the issued and outstanding common shares of SouthGobi at C$8.48 per share ("Proportional Offer"). SouthGobi has also been informed by its 57.6% major shareholder, Ivanhoe Mines Ltd. ("Ivanhoe"), that Ivanhoe has signed a lock-up agreement with CHALCO, committing to tender all of its shares held or thereafter acquired by it during the Offer Period of CHALCO into the Proportional Offer. The Proportional Offer will be made by way of a takeover bid circular under British Columbia law and will be made to all SouthGobi shareholders. If shareholders tender more than 60% of the outstanding common shares of SouthGobi to the take-over bid, a proportional amount of shares will be taken up from each shareholder. SouthGobi has not received any formal documentation relating to the Proportional Offer.

SouthGobi's board of directors has established a special committee comprising independent directors including Pierre Lebel (Chair), Gordon Lancaster, Andre Deepwell and Robert Hanson to consider the Proportional Offer, when received. The special committee has engaged Blake, Cassels & Graydon LLP as its independent legal counsel and will engage an independent financial advisor to assist with its review of the Proportional Offer. SouthGobi is advising that Shareholders take no action in connection with the Proportional Offer until they receive further information and advice from the special committee.

In conjunction with the Proportional Offer, CHALCO and SouthGobi have entered into a Cooperation Agreement. CHALCO's obligations under the Cooperation Agreement will become effective upon CHALCO acquiring a shareholding in SouthGobi.

Key benefits under the Cooperation Agreement between SouthGobi and CHALCO include:

·         Coal off-take by CHALCO - SouthGobi will have the right to offer up to 100% of its salable coal to CHALCO and CHALCO will have the obligation to purchase the coal at market prices for a period of 24 months.

·         Infrastructure support - CHALCO will assist SouthGobi to procure electricity for its Mongolian business operations either through a direct connection to grid power, or through development of a conveniently located power plant. CHALCO will also provide support to SouthGobi's coal-haul highway project.

SouthGobi has been notified that CHALCO has entered into Consultancy Agreements with nine key senior executives, officers and staff to assist CHALCO with the integration and transition following CHALCO's acquisition of a shareholding in SouthGobi. Services would be retained for 12 months from the termination of their employment or for a period of 12-months less the notice period actually served by them on their resignation, after CHALCO becomes a shareholder of SouthGobi. Following arm's length negotiation between CHALCO and the relevant individuals, it has been agreed that fees totaling $9 million would be paid by CHALCO for the consulting services. Consultancy agreements have been entered into with the President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and key Vice Presidents, officers and staff.

CHALCO has advised SouthGobi that it expects to mail the takeover bid circular in connection with the Proportional Offer on or July 5, 2012.

Link to release

 

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"Mogi" Munkhdul Badral

Senior Client Manager / Executive Director

CPS International LLC

Telephone/Fax: +976-11-321326

Mobile: +976-99996779

Email: mogi@cpsinternational.mn

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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.

 

Disclosure/Disclaimer

CPS Securities, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions mentioned in correspondence from CPS International.

CPS International advise this email contains general information only and does not include advice. In preparing this communication, CPS International did not take into account the investment objectives, financial situation and particular needs of any person. As with any speculative mining company there are significant risks.

 

 

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