HONG KONG, CHINA--(Marketwired - Jan. 15, 2015) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) (the "Company" or "SouthGobi") today announced select fourth quarter 2014 operating results. All figures are in U.S. Dollars unless otherwise stated.
Select Operating Results
The Company's select operating results for the three months and year ended December 31, 2014, including comparative periods, are summarized in the table below:
| | Three months ended | Year ended |
| | 31-Dec | 30-Sep | 31-Dec | 31-Dec | 31-Dec |
| | 2014 | 2014 | 2013 | 2014 | 2013 |
| Raw coal production (millions of tonnes) | 0.21 | 0.17 | 1.73 | 1.56 | 3.06 |
| | | | | | |
| Sales volumes (millions of tonnes) | | | | | |
| | Premium semi-soft coking coal | 0.02 | - | 0.21 | 0.02 | 0.54 |
| | Standard semi-soft coking coal | 0.14 | 0.31 | 1.40 | 0.86 | 2.27 |
| | Thermal coal | 0.21 | 0.34 | 0.11 | 1.15 | 0.45 |
| | Total | 0.37 | 0.65 | 1.72 | 2.04 | 3.26 |
The Company continues to operate under difficult market conditions although in the fourth quarter of 2014 prices have shown signs of stabilization albeit with some regional variation. In this challenging environment, the Company remained focused on selling its coal products on a prepaid basis and used its existing stockpile to meet contracted sales volumes. The furlough for approximately half of the Company's workforce remains in place subject to market conditions.
Other Information
Cash Position and Liquidity
The Company's cash position and liquidity as at December 31, 2014, including comparative periods, is summarized in the table below. Amounts are presented in millions of U.S. Dollars.
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As at |
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31-Dec |
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30-Sep |
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30-Jun |
|
31-Dec |
| |
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2014 |
|
2014 |
|
2014 |
|
2013 |
| Cash and cash equivalents |
$ |
3.8 |
$ |
4.8 |
$ |
8.8 |
$ |
21.8 |
There continues to be uncertainty in respect of the timing of the release of restricted cash held in Mongolia as a result of the ongoing tax investigation case. Therefore the cash and cash equivalents balance as at December 31, 2014 and September 30, 2014 does not include restricted cash held in Mongolia of $1.2 million and $1.5 million, respectively. Restricted cash is classified within current assets in the Company's financial statements.
On December 3, 2014 the Company successfully completed private placements with independent investors raising net proceeds of $8.9 million. The proceeds from the private placements were used to pay in full the November 2014 installment of the cash interest due on the China Investment Corporation ("CIC") convertible debenture with the balance providing additional working capital.
The changes in the Company's cash position in periods disclosed above are inclusive of cash interest paid on the CIC convertible debenture. Cash interest on the CIC convertible debenture totaling $8.1 million was paid in the fourth quarter of 2014, compared to $nil in the third quarter of 2014, $7.9 million in the second quarter of 2014, and $8.1 million in the fourth quarter of 2013. The next cash interest payment on the CIC convertible of approximately $8 million is due on May 19, 2015.
As announced on December 5, 2014 and filed on SEDAR (www.sedar.com) Turquoise Hill Resources Ltd. ("Turquoise Hill") has agreed to a limited deferral of repayment on the $3.8 million principal owing on the $10 million revolving credit facility ("the Facility") as follows:
| (i) |
$1.9 million in principal and all interest that has accrued on and under the Facility up to and including May 30, 2015 shall become due and payable on May 30, 2015; and |
| (ii) |
$1.9 million in principal and all interest that has accrued on and under the Facility from June 1, 2015 up to and including August 31, 2015 shall become due and payable on August 31, 2015. |
This limited deferral is subject to certain conditions and limitations, including the completion by April 30, 2015 of the transaction contemplated by the Sale and Purchase Agreement between Turquoise Hill and National United Resources Ltd., as amended by an agreement dated December 2, 2014. The Facility matured on August 30, 2014 and is no longer available for further drawdowns by the Company.
The Company continues to actively seek additional sources of financing to continue operating and meet its objectives, which includes increasing the level of prepaid coal sales, debt and equity financing.
As at January 15, 2015, the Company had a cash balance of $4.5 million which excluded the $1.2 million restricted cash.
Disposal of Aspire Mining Limited shares:
In the fourth quarter of 2014, the Company raised a total of $2.8 million through the sale of 123.5 million shares held in Aspire Mining Limited. This reduced the Company's shareholding in Aspire Mining Limited to nil at December 31, 2014.
About SouthGobi
SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill Resources Ltd. ("Turquoise Hill"), also publicly listed in Toronto and New York, has a 47.9% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.
SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.