Termination of mining licenses for the Soumber Deposit
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August 28, 2019
Termination of mining licenses for the Soumber Deposit
VANCOUVER – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the
“Company”) announces that SouthGobi Sands LLC (“ SGS”), the wholly -owned Mongolian
operating subsidiary of the Company, received a letter (the “ Notice Letter”) on August 26,
2019 from the Mineral Resources and Petroleum Authority of Mongolia (“ MRAM”) notifying
that the Company’s thr ee mining licenses (MV -016869, MV-020436 and MV -020451) (the
“Soumber Licenses ”) for the Soumber Deposit have been terminated by the Head of
Cadastre Division of MRAM effective as of August 21, 2019.
According to the Notice Letter, the Soumber Licenses h ave been terminated pursuant to
Clause 56.1.5 of Article 56 of the Minerals Law, Clauses 4.2.1 and 4.2.5 of Article 4 and Clause
28.1.1 of Article 28 of the General Administrative Law and a decision order of a working group
established under an order of the Minister of Environment and Tourism (Mongolia). According
to this decision order, the working group determined that SGS had violated its environmental
reclamation obligations with respect to the Soumber Deposit.
The Soumber Deposit is an undeveloped coal deposit covering approximately 22,263 hectares
located approximately 20 kilometers east of the Company’s Ovoot Tolgoi coal m ine in
Mongolia. For more information regarding the Soumber Deposit, please refer to the
Company’s annual information form dated March 31, 2019, a copy of which is available under
the Company’s profile on SEDAR at www.sedar.com.
The Company believes the cancelation of the Soumber Licenses is without merit. The
Company is not aware of any failure on its part to fulfill its environme ntal reclamation duties
as they relate to the Soumber Deposit. The Company has issued a letter to MRAM appealing
its decision to terminate the Soumber Licenses and is in communication with MRAM and other
relevant Mongolian government agencies. The Company will take all such actions, including
legal actions, as it considers necessary to reinstate the Soumber Licenses. However, there
can be no assurance that a favorable outcome will be reached.
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The termination of the Soumber Licenses does not have any impact on its current mining
operations at the Ovoot Tolgoi mine site. The Company does not expect that the termination
of the Soumber Licenses will have any material impact on the Company’s financial position or
results.
The Company will make additional announcements when there are further material
developments in relation to the Soumber Licenses.
Forward-Looking Statements
Certain information included in this news release that is not current or historical factual
information constitutes forward -looking statements or information within the meaning of
applicable s ecurities laws (collectively, “ Forward-Looking Statements )”, including
information about the expected impact that termination of the Soumber Licenses has on the
Company’s financial position or results, the outcome of the Company’s discussions with
MRAM and other Mongolian government agencies and the actions that the Company intends
to take to reinstate the Soumber Licenses. Forward -looking statements are freq uently
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
appeal MRAM’s decision to terminate the Soumber Licenses 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 statements. Readers are cautioned not to place
undue importance on forward -looking statements, which speaks only as of the date of this
disclosure, and should not 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.
If there is any inconsistency or discrepancy between the English version and the Chinese
version, the English version shall prevail.
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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
Office: +852 2156 7030 (Hong Kong)
+1 604 762 6783 (Canada)
Email: [email protected]
Website: www.southgobi.com