Leading international law firm Milbank, Tweed, Hadley and McCloy LLP has advised Mongolian Mining Corp. (MMC) on its acquisition of QGX Coal from Kerry Mining in a transaction that could see MMC paying as much as US$950 million if the mine hits certain targets, making it Mongolia’s largest mining acquisition.
QGX Coal owns the Baruun Naran project in the Tavan Tolgoi coal formation in South Gobi, near the existing operations of MMC, Mongolia’s biggest coking coal producer, which Milbank advised when it became the first Mongolian company to listed on the Hong Kong Stock Exchange (HKSE) in 2010. Since setting up its Hong Kong practice this year, Milbank has also been appointed MMC’s securities compliance law firm and continues to represent MMC on a number of corporate financing transactions. MMC is controlled by the MCS Group, one of Mongolia’s largest private conglomerates and also Mongolia’s biggest tax payer. Kerry Mining is a subsidiary of the Kuok Group, one of the largest diversified conglomerates in Asia. Kerry Mining acquired QGX Coal in 2008 via a tender offer and subsequently delisted it from the Toronto Stock Exchange.
“Milbank was able to draw upon our global natural resources experience, our familiarity with MMC’s operations, and our integrated expertise in international and Hong Kong law practices on this transaction,” said Anthony Root, head of Milbank’s Asia corporate practice.
“We have been advising MMC on a number of matters since the company listed and our Hong Kong law team was able to resolve a number of complex issues involving Hong Kong securities law and stock exchange listing rules matters,” said Dieter Yih, who heads Milbank’s Hong Kong law practice.
Milbank’s team also included senior associate Andrew Yang and associates Joanne Fung, Polly Liu and King Lai from DY and Co.*
MMC’s initial acquisition price was US$464 million, made up of a cash payment of US$100 million, a convertible bond of US$85 million, and a vendor loan of US$279 million that is due to be settled within a few months of the closing. The mine contains 185 million tonnes of confirmed reserves and 282 million tonnes of resources, adding to MMC’s existing 286 million tonnes of reserves and 500 million tonnes of resources. The valuation is subject to adjustment based on the confirmed reserves position of the company in 18 months time, when MMC will pay a royalty based on the mine’s production exceeding certain thresholds. The total deal value is capped at US$950 million.
*DY & Co., which operates the Firm’s Hong Kong law practice, will combine with Milbank upon completion of Hong Kong legal formalities.
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