VANCOUVER, British Columbia, Nov. 20, 2018 (GLOBE NEWSWIRE) -- SouthGobi Resources Ltd. (TSX: SGQ; HK:
1878) (“SouthGobi” or the “Company”) today announces that pursuant to the convertible
debenture between China Investment Corporation (“CIC”) and the Company signed in November 2009 (the
“Convertible Debenture”) and the deferral agreement between CIC and the Company executed on June 12, 2017 (the
“June 2017 Deferral Agreement”), total interest payments and associated fees which were due and payable to
CIC on November 19, 2018 amounted to US$41.8 million (“Outstanding Interest Payable”). The Outstanding Interest
Payable consists of:
(i) cash interest payments and associated fees in the aggregate amount of US$33.8 million (“Outstanding
Cash Interest Payable”); and
(ii) US$8.0 million worth of PIK interest shares (“PIK Interest Shares”) which the Company is
obliged to issue to CIC pursuant to the Convertible Debenture.
As of the date of this announcement, the Company has neither paid the Outstanding Cash Interest Payable nor
issued the PIK Interest Shares to CIC as provided for under the Convertible Debenture, and has not agreed upon a repayment plan for
such amounts with CIC. Consequently, the Company is in default under the Convertible Debenture and the June 2017 Deferral
Agreement.
Pursuant to the terms of the Convertible Debenture and the June 2017 Deferral Agreement, CIC may, at its
discretion, provide notice to the Company and declare all principal, interest and other amounts owing under the Convertible
Debenture and the June 2017 Deferral Agreement immediately due and payable, and take steps to enforce payment thereof, which would
have a material adverse effect on the business and operations of the Company and may negatively affect the price and volatility of
the Common Shares and any investment in such shares could suffer a significant decline or total loss in value.
As of the date of this press release, the Company has received no indication from CIC of any intention to
deliver a notice of default under the Convertible Debenture and the June 2017 Deferral Agreement or to accelerate the amounts
outstanding under the Convertible Debenture and the June 2017 Deferral Agreement.
The Company is in constructive discussions with CIC in relation to a repayment plan for the Outstanding Interest
Payable. While the Company believes that an agreement will be reached, there is no assurance that an agreement will be concluded on
terms favourable to the Company or at all. In such event, the value of the Company’s common shares could be materially and
negatively affected. As a result, shareholders of the Company and potential investors are advised to exercise extra caution when
dealing in securities of the Company.
The Company will provide further updates of the status of the interest payment obligations and discussions with
CIC as appropriate.
About SouthGobi
SouthGobi, listed on the Toronto and Hong Kong stock exchanges, owns and operates its flagship Ovoot Tolgoi coal
mine in Mongolia. It also holds the mining licences of its other metallurgical and thermal coal deposits in South Gobi Region of
Mongolia. SouthGobi produces and sells coal to customers in China.
Contact:
Investor Relations
Kino Fu
Hong Kong: +852 2156 7030
Canada: +1 604 762 6783
Email: kino.fu@southgobi.com
Website: www.southgobi.com
