Source: South Asia Pacific Securities                      Date: 14 September, 2011

SouthGobi Resources may be open to a buy out if Ivanhoe Mines decides to sell its stake in the company. Ivanhoe has expressed an interest in selling its 57 percent stake in the company and concentrating its efforts on the Oyu Tolgoi copper and mine project.

SouthGobi's stock is currently valued at CAD 9.06. The stock's value hovers just above its price on 23 August, its lowest value since last year, at CAD 8.73. SouthGobi produces 5.3 million tons of coal annually and stands to increase production to a total between 12 million and 13 million tons. However, the company has not made profits consistently, reported the source. SouthGobi is a mining firm focused on the extraction of coal in Mongolia's southern Gobi region. Its main site of operations is at Ovoot Tolgoi.

In 2011 the mining sector has seen a flurry of acquisition activity, especially in coal. Acquisitions are attractive to mining firms because they can expand their operations without sinking large investments into exploration and development.