Shares of Mongolian coking coal miner SouthGobi Resources, controlled by sovereign wealth fund China Investment Corp (CIC), tumbled by as much as 13.6 per cent after revealing its chairman and chief executive Aminbuhe was detained in Shandong province to assist in a fraudulent loan investigation. SouthGobi closed 5.2 per cent lower at HK$1.46 on Monday, after changing hands for as low as HK$1.33 in intraday trading. It had reached a high of HK$127.8 in March 2010 soon after it was listed. He was arrested on October 11 and was now at a detention centre in Rizhao city, “as a suspect in a fraudulent loan case”, SouthGobi said in a filing to Hong Kong’s bourse late on Friday. “The board … has formed a special committee of independent non-executive directors … to initiate a formal internal investigation into the charges against Mr Aminbuhe and the connection, if any, between those charges and the company and his conduct as chairman and chief executive,” the filing said. Mongolia's Midas touch loses some of its shine The board will engage external advisers to assist them in the internal investigation, it added. SouthGobi last week said in a separate filing that Aminbuhe had “commenced a leave from his role” as chief executive on November 13, and general manager of sales and marketing, Wang Bing, has been appointed interim chief executive. No explanation was then given as the reason for the leave. The board will engage external advisers to assist them in the internal investigation Debt-ridden SouthGobi, which mines coking coal, an ingredient used in steel smelting, has been struggling to come out of the commodities downturn for the past few years. It posted a net loss of US$9.74 million for the three months to September 30, compared to a loss of US$9.33 million in the same quarter last year, despite revenue growing 18.2 per cent to US$19.36 million on the back of higher coal prices. The loss was because of decreased sales volume caused by delays in the customs clearance process at the China-Mongolia border, it said in its results filing. For the year’s first nine months, net loss narrowed to US$26.27 million from a loss of US$43.36 million in the year earlier period. Citic Group pulls investment in SouthGobi Resources given coal industry downturn Net debt amounted to almost five times that of shareholders’ equity at the end of September, up from 2.75 times a year earlier. Aminbuhe was appointed chief executive of SouthGobi just over two years ago. He was a former executive director of Hong Kong-listed National United Resources, a commodities trading firm in China and Mongolia. CIC held a 39.1 per cent stake in SouthGobi, a stock exchange filing in January this year showed. SouthGobi last week said it was in talks with CIC to further defer payment of US$17.8 million of interests and related costs owed to CIC arising from a convertible debenture, that was due on November 19.