(EnergyAsia, April 3 2012, Tuesday) — Vancouver, Canada-based Ivanhoe Mines said its 57.6%-owned Mongolian coal mining subsidiary SouthGobi Resources is the subject of a “proportional” takeover by Aluminum Corporation of China Ltd (Chalco) worth as much as C$889 million. (US$1=C$0.99).

Chalco plans to make a takeover bid for between 56% and 60% of the common shares of SouthGobi Resources Ltd at C$8.48 per share.

Ivanhoe said it has entered into a lock-up agreement with the Chinese firm and has agreed to tender all of its SouthGobi shares on a pro-rata basis to Chalco, a listed subsidiary of Chinalco Aluminum Corporation of China.

Depending upon the uptake of the offer by other SouthGobi shareholders, Ivanhoe said it could receive up to C$889 million from the sale of all of its shares while a sale of 60% of its current holding would yield proceeds of C$533 million.

The offer price represents a 28% premium over SouthGobi’s most recent closing price on the Toronto Stock Exchange of C$6.62, and a 32% premium over the volume-weighted average price of C$6.41 in the previous 10 trading days.

The offer is subject to both Canadian and Chinese statutory and regulatory clearance as well as Chalco shareholder approval. China Investment Corporation, SouthGobi’s second largest shareholder, has confirmed that it does not intend to exercise its right of first offer, clearing a key hurdle for Chalco’s move.

Ivanhoe Mines chairman David Huberman said: “Ivanhoe’s board, in conjunction with our financial and legal advisors, has determined that the value offered by this transaction is an excellent opportunity for our shareholders to realise significant value through our creation of what has become one of the fastest growing coal producers on China’s doorstep.”

Ivanhoe said it plans to use the proceeds from the sale to fund the continued development of its flagship Oyu Tolgoi copper, gold and silver mine in southern Mongolia, which is on track to meet begin production in the third quarter.

SouthGobi Resources is focused on exploring and developing metallurgical and thermal coal deposits in Mongolia’s South Gobi Region while Chalco is engaged in mining, producing and selling a range of minerals and metal products.