Deferral of Payment Obligation Under Convertible Debenture
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May 13, 2022
DEFERRAL OF PAYMENT OBLIGATION
UNDER CONVERTIBLE DEBENTURE
VANCOUVER – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the
“Company”) announces that announces that, on May 13, 2022, the Company and Land
Breeze II S.à.r.l. (“ Land Breeze”), a wholly-owned subsidiary of a major shareholder of the
Company (the “ Major Shareholder ”), signed a new deferral agreement (the “ 2022 May
Deferral Agreement”) pursuant to which Land Breeze agreed to grant the Company a deferral
of the interest payments which are due and payable on May 19, 202 2 under the convertible
debenture dated November 19, 2009 (the “Convertible Debenture”).
The effectiveness of the 2022 May Deferral Agreement and the respective obligations,
covenants and agreements of each party under the 2022 May Deferral Agreement are subject
to the Company obtaining the requisite acceptance thereof from the Toronto Stock Exchange
(the “TSX”).
The principal terms of the 2022 May Deferral Agreement are as follows:
Land Breeze agreed to grant the Company a deferral (the “Deferral”) of the following
payments until August 31, 2023 (the “Deferral Date”):
(i) a Deferral of semi-annual cash interest payment of US$7,934,247 payable to Land
Breeze on May 19, 2022 (the “ Deferred Amounts ”) under the Convertible
Debenture and a deferral fee equal to 6.4% per annum on the Deferred Amounts
(the “Deferral Fee”) payable under the Convertible Debenture; and
(ii) a Deferral of management fees for Q4 2021 and accrued deferral fees related
thereto that is outstanding as of November 14, 2021 (US$10,740) and the
management fees to be accrued in Q2 2022 which will be due and payable on
August 14, 2022 under the Amended and Restated Cooperation Agreement dated
April 23, 2019 (the “ Deferred Management Fees ”), and a deferral fee equal to
2.5% per annum on the outstanding balance of the Deferred Management Fees
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(the “Cooperation Agreement Deferral Fee ”) payable under the Amended and
Restated Cooperation Agreement.
If at any time before the Deferred Amounts and Deferral Fee are fully repaid, the
Company proposes to appoint, replace or terminate one or more of its chief executive
officer, its chief financial officer or any other senior executive(s) in charge of its principal
business function or its principal subsidiary, the Company will first consult with, and
obtain written consent (such consent shall not be unreasonably withheld) from Land
Breeze prior to effecting such appointment, replacement or termination;
The Company agreed to comply with all of its obligations under the prior deferral
agreements entered into with Land Breeze; and
The Company and Land Breeze agreed that nothing in the 2022 May Deferral
Agreement prejudices Land Breeze’s rights to pursue any of its remedies at any time
pursuant to the prior deferral agreements.
The Company will make further announce ments regarding the potential of further future
deferrals of its payment obligations under the Convertible Debenture as and when appropriate.
There can be no assurance, however, that any agreement for future deferrals will be reached
with the Major Shareholder either at all or on favourable terms.
If there is any inconsistency or discrepancy between the English version and the Chinese
version, the English version shall prevail.
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
Office: +852 2156 1438 (Hong Kong)
+1 604 762 6783 (Canada)
Email: [email protected]
Website: www.southgobi.com
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Forward-Looking Statements
Certain information included in this press release that is not current or historical factual
information constitutes forward -looking statements or information within the meaning of
applicable securities laws (collectively, “forward -looking statements”), including information
about the potential of further future deferrals of its payment obligations under the Convertible
Debenture. Forward-looking statements are frequently characterized by words such as “plan”,
“expect”, “project”, “intend”, “believe”, “anticipate”, "could", "should", "seek", "likely", "estimate"
and other similar words or statements that certain events or conditions “may” or “will” occur.
Forward-looking statements are based on certain factors and assumptions including, among
other things, the Company’s ability to successfully negotiate a future deferrals of its payment
obligations under the Convertible Debenture and other similar f actors that may cause actual
results to differ materially from what the Company currently expects. Actual results may vary
from the forward-looking statements. Readers are cautioned not to place undue importance
on forward-looking statements, which speaks only as of the date of this disclosure, and not to
rely upon this information as of any other date. While the Company may elect to, it is under
no obligation and does not undertake to, update or revise any forward -looking statements,
whether as a result of new information, further events or otherwise at any particular time,
except as required by law. Additional information concerning factors that may cause actual
results to materially differ from those in such forward -looking statements is contained in the
Company’s filings with Canadian securities regulatory authorities and can be found under the
Company’s profile on SEDAR at www.sedar.com.