August 13, 2012 / 1:17 PM / 6 years ago

SouthGobi Resources profit plunges, licensing worries weigh

Aug 13 (Reuters) - Coal miner SouthGobi Resources Ltd’s second-quarter profit plunged on lower output after the Mongolian government suspended its mining license following a takeover bid by Chinese aluminum giant Chalco.

Mineral Resources Authority of Mongolia in April suspended the company’s license to mine at its flagship Ovoot Tolgoi mine in southern Mongolia after Aluminum Corporation of China Ltd bid for a 60 percent stake in SouthGobi.

The company said operations, which have been fully curtailed since June 30, will be remain so in the third quarter due to the uncertainty.

The company’s profit fell to $237,000, or a loss of 12 cents per share, from $67.3 million, or 37 cents per share, a year earlier.

Revenue fell steeply to $8.4 million from $47.3 million.

Shares of the company, which has a market value of C$691.2 million, closed at C$3.80 on Friday on the Toronto Stock Exchange. The stock has lost 39 percent of its value since April when the Mongolian government suspended its license.

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