TORONTO, Feb 24 (Reuters) - Turquoise Hill Resources Ltd on Tuesday agreed to sell the remainder of its stake in SouthGobi Resources, in an attempt to finally sever ties with the Mongolian coal miner that was once worth over C$3 billion ($2.4 billion).
Turquoise Hill, a unit of Rio Tinto, in July agreed to sell the majority of its stake in SouthGobi to Hong Kong-listed National United Resources Holdings for C$12.8 million. On Tuesday, it said Novel Sunrise Investments is buying the remainder for C$8.5 million. Both the deals are expected to close later this year.
The deals will leave Turquoise Hill walking away with C$21.3 million from the whole sale process, or less than 1 percent of the C$2.3 billion that the stake was once worth.
SouthGobi's fall from being a one-time investor darling is a stark reminder of the woes that have plagued miners, especially those that invested in riskier jurisdictions at the peak of the commodity boom.
Turquoise Hill, previously known as Ivanhoe Mines and run by well known mining financier Robert Friedland, spun out its coal assets into SouthGobi in 2006 and received a controlling stake in SouthGobi at that time.
SouthGobi's Ovoot Tolgoi mine, located 25 miles north of the Chinese border, was once billed as a cash cow. Back in 2008 Friedland dubbed the asset the "beluga caviar of coal."
Since then, Friedland and later Rio, which gained control of Turquoise Hill, have tried to monetize the stake in SouthGobi. A deal to sell a 60 percent stake in SouthGobi to Chinese aluminum giant Chalco for about C$889 million in 2012, fell apart because of obstacles put in place by the Mongolian government.
Over the last few years a slowing Chinese economy, weakening coal prices, coupled with the company's own accounting problems and funding woes have led to a dramatic collapse in SouthGobi's fortunes.
Adding to its woes, the company is now attempting to appeal a Mongolian court verdict that found three of its former employees guilty of tax evasion. The court also fined SouthGobi some C$22 million, as a civil defendant in the matter.
Shares of SouthGobi that peaked at C$21.99 a share back in June 2008, closed on Tuesday at 56 Canadian cents a share.
$1 = 1.2592 Canadian dollars Reporting by Euan Rocha; Editing by Grant McCool