Southgobi Resources Fires CEO After Chalco Withdraws Takeover
SouthGobi Resources Ltd. (SGQ), which mines steelmaking coal in Mongolia, fired Chief Executive Officer Alexander Molyneux, effective immediately, eight days after Aluminum Corp. of China Ltd. dropped its C$925 million ($949 million) takeover bid.
Molyneux will be replaced by Ross Tromans, the Vancouver- based company said in a statement today. Tromans formerly managed coal marketing at Rio Tinto Group, the London-based mining company that controls SouthGobi through its ownership of Vancouver’s Turquoise Hill Resources Ltd.
Aluminum Corp. of China, known as Chalco, dropped its offer to buy a 60 percent stake in SouthGobi at C$8.48 a share, according to a statement Sept. 3. The deal stalled in May when Mongolia passed a law restricting foreign state-owned companies from controlling key assets. SouthGobi halted all mining in Mongolia as of June 30, according to a statement on Aug. 13.
SouthGobi’s second-quarter profit slumped more than 99 percent as customers cut orders. Net income fell to $237,000 from $67.3 million a year earlier as revenue fell 82 percent to $8.4 million. Sales and earnings plunged due to the “uncertainty” created by Chalco’s bid, the company said.
SouthGobi rose 4.3 percent to C$2.27 at 10:31 a.m. in Toronto. The shares have slumped 71 percent since April 2, when Chalco announced its takeover attempt.
Turquoise Hill, 51 percent owned by Rio Tinto, changed its name from Ivanhoe Mines Ltd. after Rio moved to a majority stake in January. Turquoise Hill is SouthGobi’s largest shareholder with a 58 percent stake, according to data compiled by Bloomberg.
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