SouthGobi Energy Resources Sells Its Metals Division to Ivanhoe Minesadmin
Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd., announced today that the company has sold, subject to regulatory approval, its Metals Division to Ivanhoe Mines Ltd. for US$3 million. The Metals Division consists of certain base and precious metals properties in Mongolia and Indonesia. The transaction will enable SouthGobi Energy Resources to focus solely on its principal business of coal production, development and exploration.
In connection with the sale agreement, the company has established a credit facility with Ivanhoe Mines Ltd., which allows SouthGobi to obtain advances from Ivanhoe to an aggregate maximum of US$30 million. The credit facility is for a one year term with a one year discretionary extension. The credit facility is unsecured and carries an interest rate equal to LIBOR plus 7.5 basis points.
SouthGobi commissioned an independent valuation report from Stephen Semeniuk, CFA, and engaged Pierre Lebel, Lead Independent Director, to negotiate the sale of the Metals Division to Ivanhoe Mines.
“We believe the sale of the Metals Division represents excellent value to SouthGobi shareholders and positions SouthGobi to continue its evolution as a stand-alone coal mining company,” said Mr. Meredith.
The transaction is subject to all necessary regulatory approvals, including approval of the TSX Venture Exchange.