SYS-CON MEDIA Authors: Elizabeth White, Yeshim Deniz, Pat Romanski, Nikita Ivanov, Sean Houghton

News Feed Item

SouthGobi Resources Announces Select Second Quarter 2014 Operating Results

HONG KONG, CHINA -- (Marketwired) -- 07/10/14 -- SouthGobi Resources Ltd. (TSX: SGQ)(HKSE: 1878) (the "Company" or "SouthGobi") today announced select second quarter 2014 operating results. All figures are in U.S. Dollars unless otherwise stated.

Select Operating Results

The Company's select operating results for the three months ended June 30, 2014, including comparative periods, are summarized in the table below:



                                  ------------------------------------------
                                              Three months ended
                                  ------------------------------------------
                                          30-Jun        31-Mar        30-Jun
                                            2014          2014          2013
----------------------------------------------------------------------------
Raw coal production (millions of
 tonnes)                                    0.55          0.64          0.17

Sales volumes (millions of tonnes)
  Premium semi-soft coking coal                -             -          0.21
  Standard semi-soft coking coal            0.40          0.29             -
  Thermal coal                              0.51          0.10          0.11
  Total                                     0.91          0.39          0.32
----------------------------------------------------------------------------

The Company continues to operate under difficult market conditions. Coal prices in China declined further in the second quarter compared to the first quarter of 2014 as a result of strong seaborne and domestic supply. The decline in coal prices has been partially offset by the increase in the Company's volumes in the second quarter compared to the seasonally slow first quarter.

In June 2014, following a review of operations in response to current market conditions, the Company reduced its production and placed approximately half of its workforce in furlough. This furlough is anticipated to remain in place until the end of July subject to market conditions. Contracted sales volumes are expected to be met from the combination of the existing coal stockpile and reduced production volumes.

On June 26, 2014, the Ovoot Tolgoi mine site region experienced torrential rain and flooding which temporarily interrupted mining operations. The impact on the Company's operations is not expected to be material.

Other Information

Cash Position and Liquidity

The Company's cash position and liquidity as at June 30, 2014, including comparative periods, is summarized in the table below. Amounts are presented in millions of U.S. Dollars.



                            ------------------------------------------------
                                                 As at
                            ------------------------------------------------
                                  30-Jun      31-Mar      31-Dec      30-Jun
                                    2014        2014        2013        2013
----------------------------------------------------------------------------
Cash                         $       8.8 $       9.9 $      21.8 $      19.2
----------------------------------------------------------------------------

The changes in the Company's cash position in periods noted above are inclusive of cash interest paid on the China Investment Corporation ("CIC") convertible debenture in the amount of $7.9 million in the second quarter of 2014, $8.1 million in the fourth quarter of 2013, and nil in the second quarter of 2013. The next cash interest payment on the CIC convertible debenture of approximately $8 million is due on November 19, 2014.

On May 25, 2014, the Company announced it obtained a $10 million revolving credit facility from Turquoise Hill Resources Ltd. ("Turquoise Hill") to meet its short term working capital requirements with a maturity date of August 30, 2014. The terms and conditions of this facility were filed on SEDAR (www.sedar.com) on June 2, 2014. As at June 30, 2014, the Company had drawn down $3.8 million under this facility.

The Company continues to actively seek additional sources of financing to continue operating and meet its objectives, which includes increasing the level of prepaid coal sales. As at 30 June, the balance of customer prepayments for future coal deliveries amounted to $10.9 million including the receipt of $6.5 million received on June 30, 2014.

As at July 10, 2014, the Company had cash of $7.3 million and the amount drawn down under the Turquoise Hill loan facility remained at $3.8 million.

Sale of Tsagaan Tolgoi Deposit

The Company has completed the sale of Tsagaan Tolgoi Deposit in the second quarter of 2014 for an amount of $2 million. The net proceed generated for the Company after taxes and costs was $1.3 million.

Tax Investigation Case

The trial date for the tax investigation case against SouthGobi Sands LLC and three of its former employees as detailed in the Company's June 24 announcement has been deferred until August 25, 2014.

Outlook

Coal production in the second half of 2014 will be paced to meet contracted sales volumes.

The Company continues to experience negative impacts on its margins and liquidity and there can be no assurance that the Company will have sufficient funding for the balance of 2014 to be able to continue as a going concern, as more fully detailed in its Management's Discussion and Analysis for the quarter ended March 31, 2014, available on SEDAR at www.sedar.com, and, in particular, section 5 "Liquidity and Capital Resources" and section 11 "Risk Factors" thereof. Therefore the Company is actively seeking additional sources of financing to continue operating and meet its objectives. The Company remains focused on minimizing uncommitted capital expenditures while preserving its growth options.

About SouthGobi

SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill Resources Ltd. ("Turquoise Hill"), also publicly listed in Toronto and New York, has a 56% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.

SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to: the Company's expectations of sufficient liquidity and capital resources to meets its ongoing obligations and future contractual commitments, including the Company's ability to secure additional funding; the possibility of the CIC convertible debenture and all accrued and unpaid interest becoming immediately due; the continued pressure on the coal prices in China, and the related impact on the Company's margins and liquidity; the Company's expectation that its royalty per tonne calculated under the new "flexible tariff" royalty regime will decrease compared to the prior reference price royalty regime; and other statements that are not historical facts. When used in this document, the words such as "plan", "estimate", "expect", "intend", "may", 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's Discussion and Analysis for the year ended December 31, 2013 which is available at www.sedar.com.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
What do a firewall and a fortress have in common? They are no longer strong enough to protect the valuables housed inside. Like the walls of an old fortress, the cracks in the firewall are allowing the bad guys to slip in - unannounced and unnoticed. By the time these thieves get in, the damage is already done and the network is already compromised. Intellectual property is easily slipped out the back door leaving no trace of forced entry. If we want to reign in on these cybercriminals, it's hig...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Fundamentally, SDN is still mostly about network plumbing. While plumbing may be useful to tinker with, what you can do with your plumbing is far more intriguing. A rigid interpretation of SDN confines it to Layers 2 and 3, and that's reasonable. But SDN opens opportunities for novel constructions in Layers 4 to 7 that solve real operational problems in data centers. "Data center," in fact, might become anachronistic - data is everywhere, constantly on the move, seemingly always overflowing. Net...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from ha...
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, a...
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.