BRITISH COLUMBIA

Turquoise Hill's sale of half its SouthGobi stake is delayed, deadline extended

12/02/2014 11:13 EST | Updated 02/01/2015 05:59 EST
VANCOUVER - Turquoise Hill Resources Ltd. (TSX:TRQ) says there's been a delay in closing the sale of about half its remaining stake in SouthGobi Resources Ltd. (TSX:SGQ), a coal mining subsidiary with operations in Mongolia.

The sale of 56.1 million SouthGobi shares to National United Resources Holdings Ltd., was announced in July and was to close by Nov. 30, but the deal still awaits necessary approvals. The deadline has been extended by five months to April 30.

The deal is subject to approval from NUR's shareholders, but their vote can't be held until an information circular is approved by the Hong Kong Stock Exchange, Turquoise Hill said Tuesday.

If the sale with NUR is completed, Turquoise Hill will receive about $25.6 million in two installments and retain about 48.7 million shares of SouthGobi, or about 22.2 per cent of the total after taking into effect a recent share offering.

SouthGobi said last month that it had delayed an interest payment to China Investment Corp., a major creditor and minority shareholder, due to insufficient cash. It announced Monday that will sell nearly 24.4 million common shares for about US$9 million and use the cash to make the interest payment by Thursday.

The new investors will pay 42 cents per share compared with the 45.5 cents per share that National United Resources agreed to pay in its July 29 deal with Turquoise Hill.

Rio Tinto owns about 50.8 per cent of Turquoise Hill, which is focused on the Oyu Tolgoi copper-gold-silver mine in southern Mongolia.