SouthGobi sells metals division to concentrate on coal

Vancouver-based mining firm SouthGobi Energy Resources Ltd. announced on Wednesday that it has sold its Metals Division to Ivanhoe Mines Ltd. for US$3 million.

The Metals Division consists of certain base and precious metals properties in Mongolia and Indonesia.

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

In connection with the sale agreement, the company has established a credit facility with Ivanhoe Mines Ltd., which allows SouthGobi to obtain advances from Ivanhoe to an aggregate maximum of US$30 million. The credit facility is for a one year term with a one year discretionary extension. The credit facility is unsecured and carries an interest rate equal to LIBOR plus 7.5 basis points.

SouthGobi has cola deposits in Mongolia and Mamahak coal project in East Kalimantan.(alex)