Revolving Credit Facility
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March 2, 2023
REVOLVING CREDIT FACILITY
VANCOUVER – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the
“Company”) announces that , on March 2, 2023, Inner Mongolia SouthGobi Energy Co., Ltd.**
(內蒙古南戈壁能源有限公司 ) (the “ Borrower”), an indirect wholly -owned subsidiary of the
Company, entered into a revolving loan agreement (the “Revolving Loan Agreement”) with
Inner Mongolia Tianyu Innovation Investment Group Limited** (內蒙古天宇創新投資集團有限
公司 ) (the “ Lender”), which owns 80% equity interest in Inner Mongolia Yuxinsheng
Technology Co., Ltd.** (內蒙古宇鑫盛科技有限公司) (“IMYTC”) that in turn owns 100% equity
interest in Inner Mongolia Tianyu Trading Limited (“IMTT”), being the sole limited partner of
JD Zhixing Fund L.P. (“JDZF”), pursuant to which the Lender agreed to make available to the
Borrower an unsecured revolving credit facility (the “ Credit Facility ”) up to a maximum
principal sum of RMB90,000,000 (the “Maximum Loan Amount”) with a maturity date, being
the date which falls on three months after the date of the Revolving Loan Agreement (the
“Maturity Date”). JDZF is the registered holder of the Company’s US$250 million Convertible
Debenture issued on November 19, 2009 and the Company’s largest shareholder.
The principal terms of the Credit Facility are as follows:
All obligations under the Revolving Loan Agreement are due and payable on the
Maturity Date.
The Credit Facility is a revolving facility, pursuant to which the Borrower will be entitled,
but not obligated, to request advances (“ Advances”) under the Credit Facility from
time to time, provided that the aggregate amount of the outstanding Advances under
the Credit Facility does not exceed the Maximum Loan Amount at any time. The
Borrower is entitled to repay all or any portion of the outstanding Advances under the
Credit Facility from time to time without bonus or penalty.
Advances under the Credit Facility will not accrue interest if the Borrower repays any
Advance in full within fifteen (15) days following the date of drawdown (the " Interest-
Free Period"). If the Borrower fails to repay in full the amount of the Advance prior to
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the end of the Interest -Free Period, then the Borrower will pay to the Lender interest
on the outstanding amount of such Advance, beginning on the day immediately
following the last day of the Interest -Free Period (the " Interest Trigger Date ") and
ending on but excluding the day on which such Advance is repaid or satisfied in full.
Interest on the outstanding amount of each Advance from the Interest Trigger Date is
calculated at a rate per annum equal to 5%, determined daily and calculated and
payable on the date on which the relevant Advance is repaid in full.
The Company intends to use the proceeds of the Credit Facility for general corporate
purposes.
The Company has obtained the requisite acceptance from the Toronto Stock Exchange in
accordance with the requirements of the TSX Company manual, subject to certain standar d
conditions.
Listing Rules implications
As JDZF is a substantial shareholder and the Lender, being the owner of 80% equity interest
in IMYTC which in turn holds 100% equity interest in IMTT, the sole limited partner of JDZF,
is deemed to be an associate of JDZF, and hence JDZF and the Lender are connected
persons of the Company, the Revolving Loan Agreement constitutes a connected transaction
as it is a form of financial assistance received by th e Group from a connected person. The
Directors are of the view that the Revolving Loan Agreement is conducted on normal
commercial terms or better, and is not secured by the assets of the Group. Therefore, the
Revolving Loan Agreement is fully exempt from shareholders’ approval, annual review and all
disclosure requirements pursuant to Rule 14A.90 of the Listing Rules.
Multilateral Instrument 61-101 Requirements
The Lender is a "related party" of the Company and the Credit Facility constitutes a "related
party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority
Security Holders in Special Transactions ("MI 61-101"). The Company is not required under
MI 61-101 to obtain a formal valuation in connection with the Credit Facility. The Company is
relying on the exemption from the minority approval requirements of MI 61-101 based on the
exemption set forth in Section 5.7(f) of MI 61 -101, as the Credit Facility is not convertible,
directly or indirectly, into e quity or voting securities of the Company, or repayable as to
principal or interest, directly or indirectly, in equity or voting securities of the Company, and
the Credit Facility is on reasonable commercial terms that are not less advantageous to the
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Company than if the Credit Facility was obtained from an arm’s length provider. To the
knowledge of the Company or any director or senior officer of the Company, after reasonable
inquiry, no "prior valuations" (as defined in MI 61-101) in respect of the Company that relate
or are relevant to the Credit Facility or the Revolving Loan Agreement has been prepared
within 24 months preceding the date hereof. The Company did not file a material change report
more than 21 days before entering into the Revolving Loan Agreement, as the details of the
transaction were not finalized until immediately prior to the execution of the Revolving Loan
Agreement and the Company wished to close the transaction as soon as practicable for sound
business reasons.
If there is a ny 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
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 intended use of proceeds of the Credit Facility. 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 busines s
plans and goals, and other similar factors that may cause actual results to differ materially
from what the Company currently expects. Actual results may vary from the forward -looking
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statements. Readers are cautioned not to place undue importance on for ward-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 f orward-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 diffe r 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.