CHALCO will buy 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.

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

The mine is expected to start initial production in 2012 while commercial production will begin by 2013.

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."