Southgobi Resources Ltd.: Mineral Resources Authority of Mongolia Announces Suspension of Exploration and Mining Activities on Certain Licenses
HONG KONG, CHINA -- (Marketwire) -- 04/16/12 -- SouthGobi Resources Ltd. ("SouthGobi") (TSX: SGQ)(HK: 1878) announced today that the Mineral Resources Authority of Mongolia ("MRAM") held a press conference today in Ulaanbaatar announcing a request to suspend exploration and mining activity on certain licenses owned by SouthGobi Sands LLC, a wholly-owned division of SouthGobi Resources Ltd.
The request for suspension includes the license pertaining to SouthGobi's Ovoot Tolgoi Mine.
The Company has not received any official notification and has no reason to believe SouthGobi's licenses are not in good standing. However, the Company cautions at this time that any official notification received may require a suspension of operations until an injunction is granted.
Advice to the Company suggests the action has been taken under the broad national security powers of the Government of Mongolia. MRAM stated that the move is in connection to the proposed proportional takeover bid by Aluminum Corporation of China Limited ("CHALCO"), and the agreement by Ivanhoe Mines Ltd. ("Ivanhoe") to tender its controlling interest in SouthGobi to such a takeover. The suspension would be initiated to allow the Government of Mongolia to review the proposed change of ownership.
The Company has noted statements made by various Mongolian stakeholders that there has been little information disseminated to them and no prior government consultation regarding the proposed transaction.
SouthGobi has notified Ivanhoe and CHALCO, requesting them to discuss their agreement and the proposed transaction involving the Company with the Government of Mongolia.
SouthGobi has notified its other key investment stakeholders, including Rio Tinto (as Ivanhoe's 51% controlling shareholder) and the China Investment Corporation (the sovereign wealth fund of China owning 14% of the Company's common stock).
The Company will update investors when more information becomes available.
About SouthGobi Resources
SouthGobi Resources is focused on exploration and development of its Permian-age metallurgical and thermal coal deposits in Mongolia's South Gobi Region. SouthGobi's flagship coal mine, Ovoot Tolgoi, is producing and selling coal to customers in China. SouthGobi plans to supply a wide range of coal products to markets in Asia.
Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, plans to supply a wide range of coal products to markets in Asia; and other statements that are not historical facts. When used in this document, the words such as "plan", "estimate", "expect", "intend", "may", "likely" and similar expressions are forward-looking statements. Although SouthGobi believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are disclosed under the heading "Risk Factors" in SouthGobi's Management Discussion and Analysis of Financial Condition and Results of Operations for the year ended Dec. 31, 2011 which are available at www.sedar.com.
Contacts:
SouthGobi Resources Limited (Hong Kong)
Dave Bartel
Vice President Investor Relations and External Affairs
+852 2156 7023
SouthGobi Resources Limited (Vancouver)
Steven Feldman
Investor Relations Manager
+1 604 331 9813
www.southgobi.com