South Gobi sells Metals Division to Ivanhoe Mines

Monday, 05 January 2009 05:10

SouthGobi Energy Resources Ltd. (TSX VENTURE:SGQ) has sold its Metals Division to Ivanhoe Mines Ltd. for US$3 million. The Metals Division consists of base and precious metals properties in Mongolia.

The transaction will enable SouthGobi Energy Resources to focus solely on its principal business of coal production, development and exploration, according to company officials.

As part of the sale agreement, Ivanhoe Mines will allow SouthGobi to obtain advances from Ivanhoe to a maximum of US$30 million. This credit arrangement will be operated for one year with the possibility of being extended.

"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 Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd.

However, the sale is subject to approval from regulatory agencies, including the TSX Venture Exchange.

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