TORONTO, May 1 (Reuters) - A deal that would have allowed Canada's Turquoise Hill Resources Ltd to unload its remaining stake in Mongolian coal miner SouthGobi Resources, a company that was once worth billions of dollars, has fallen through.
Turquoise Hill said on Friday that the agreement with National United Resources Holdings expired on April 30.
The deal's failure marks another setback in Turquoise Hill's effort to sever ties with SouthGobi, a company hit by a slowing Chinese economy, weaker coal prices, accounting problems and funding woes.
Turquoise Hill, a unit of global miner Rio Tinto, said it could not complete the transaction with Hong Kong-listed National United Resources for 56.1 million SouthGobi shares, a 23.3 percent stake, under the terms of the agreement.
The C$12.8 million ($10.5 million) deal was announced in July 2014.
Vancouver-based Turquoise Hill also owns an about 66 percent stake in the massive Oyu Tolgoi copper-gold mine in Mongolia.
"Our focus is Oyu Tolgoi and we are looking at alternatives for divesting our remaining stake in SouthGobi," Turquoise Hill spokesman Tony Shaffer said in an email.
Last week, Turquoise Hill closed a deal with private Chinese company Novel Sunrise Investments Ltd to sell 48.7 million shares in SouthGobi for about C$17 million.
Turquoise Hill, which was previously known as Ivanhoe Mines and was run by high-profile mining financier Robert Friedland, spun out its coal assets into SouthGobi in 2006, and took a controlling stake.
Friedland, and later Rio, have since tried to monetize that stake. A 2012 deal to sell 60 percent to Chinese aluminum giant Chalco for about C$889 million fell apart because of obstacles put in place by the Mongolian government.
SouthGobi was once worth over C$3 billion, and its shares peaked at C$21.99 in 2008. The stock fell as low as 41 Canadian cents in February, and was trading at 78 Canadian cents on Friday.
In January, a Mongolian court found SouthGobi and three former foreign employees guilty of tax evasion and fined the company nearly $18 million.
SouthGobi has said it will continue to defend itself in the case, but a court refused its appeal this week.
$1=$1.22 Canadian Reporting by Susan Taylor; Editing by Peter Galloway