Aluminum Corporation of China Limited (CHALCO) has announced its intention to acquire controlling stake in Mongolian coal miner SouthGobi Resources from Canada’s Ivanhoe Mines for C$533m ($538m).

CHALCO will purchase 60% of common shares of the coal miner at C$8.48 ($8.5) per share on a pro-rata basis, following a lock-up agreement with Ivanhoe, which currently owns 104,807,155 shares.

Ivanhoe may receive C$889m ($898m) from the sale of all of its shares in SouthGobi, based on the uptake of the offer by other SouthGobi shareholders.

Ivanhoe Mines chairman David Huberman said, "Ivanhoe’s board, in conjunction with our financial and legal advisors, has determined that the value offered by this transaction is an excellent opportunity for our shareholders to realize significant value through our creation of what has become one of the fastest growing coal producers on China’s doorstep".

The proportional offer from CHALCO will be made by way of a takeover-bid and is subject to all statutory and regulatory approvals.

Ivanhoe plans to use the proceeds from the sale to finance the development of its flagship Oyu Tolgoi copper, gold and silver mine in southern Mongolia.

The mine is expected to start initial production this year, while commercial production will begin next year.