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NEW YORK (AP) â¿¿ Ivanhoe Mines Ltd. shares tumbled to the lowest levels in more than two years on Monday after the government in Mongolia asked for a suspension in activities at a coal mining company that Ivanhoe partially owns.
THE SPARK: Mongolian mining officials requested that SouthGobi Resources Ltd. to stop mining and exploration on certain licenses held by one of its subsidiaries.
SouthGobi said it believes that its licenses are in good standing, but it warned that if it does receive official notification from the government, it may have to shut down operations until an injunction is granted.
THE BIG PICTURE: SouthGobi said it was told by Mongolian officials that the move is related to Vancouver, British Columbia-based Ivanhoe's plan to sell its stake in the Mongolian company to Aluminum Corp. of China Ltd.
Aluminum Corp. wants to buy between 56 percent and 60 percent of SouthGobi's outstanding shares. Ivanhoe currently owns about 58 percent of the Mongolian company's stock and reached a deal with the Chinese company to tender all of its shares.
The suspension would allow the Mongolian government to review Aluminum Corp.'s bid, SouthGobi said.
Ivanhoe said its proceeds from the sale could total as much as $898 million, depending on how many of its shares are taken. It plans to use most of the money to fund the development of its Oyu Tolgoi copper, gold and silver mine in southern Mongolia, which is on track to begin production in the third quarter of this year.
THE SHARES: In heavy afternoon trading, Ivanhoe's U.S. shares fell 68 cents, or 5.3 percent, to $12.11, after dropping as low as $11.88 earlier in the day. That marked the company's lowest share price since late 2009.
Since the beginning of this year, the company's shares have lost about 28 percent of their value.