HONG KONG, CHINA–(Marketwired – Oct. 10, 2017) – SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) (“SouthGobi” or the “Company“) announces that it has entered into an investment agreement (“Investment Agreement“) with Beijing De Rong Tai Investment Co., Ltd. (“BDRT“) on October 10, 2017 in connection with the Company’s development of the Ceke Port Eco-friendly Bonded Logistics Park project (the “Ceke Logistics Park“). Pursuant to the Investment Agreement, BDRT has agreed, subject to fulfilment of certain conditions, to invest RMB 231 million in instalments by July 30, 2018 in return for a 30% interest in Inner Mongolia SouthGobi Energy Ltd. (“IMSGE“), while the Company will hold the remaining 70% interest in IMSGE. Proceeds from BDRT’s equity investment will be used by IMGSE for the construction of the Ceke Logistics Park. IMSGE is the project company which holds a 100% interest in the Ceke Logistics Park.
The Ceke Logistics Park will be strategically located in the Ceke Port on the Mongolia-China border, which is the only inland port where the coal products of the Company are imported from Mongolia to China. The development of the Ceke Logistics Park will facilitate compliance with the Chinese government’s policy to combat pollution in the Ceke Port and strengthen the supervision of coal storage and transport in the Ceke Port. Development of the Ceke Logistics Park will also represent a strategic transformation for the Company, evolving from a mining company into an integrated coal supplier and extending its downstream supply chain to reach end-customers of the Company.
The Ceke Logistics Park will be an integrated bonded warehouse with completely enclosed coal storage facilities and will be connected to the railway system and the highway system. Spanning 1.44 million square meters, the total coal handling capacity of the Ceke Logistics Park is projected to be 24 million tonnes per annum, encompassing an initial 12 million tonnes in Phase 1 of the Ceke Logistics Park and an additional 12 million tonnes in Phase 2. The construction of Phase 1 will commence in the fourth quarter of 2017 and is expected to be completed by the fourth quarter of 2018.
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 securities laws (collectively, “forward-looking statements”), including information about the Company’s development of the Ceke Logistics Park, estimated capital expenditures, the projected coal handling capacity of the Ceke Logistics Park, the estimated construction period, the anticipated benefits of the Ceke Logistics Park for the Company, anticipated financing sources for the Project and completion of BDRT’s equity investment in IMSGE. 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 current development plan for the Ceke Logistics Park, the timely receipt of required regulatory approvals, estimates related to bring the Ceke Logistics Park into operation, management’s business outlook, currency exchange rates, operating, labour and fuel costs, future coal market conditions in China, future coal prices, and the level of worldwide coal production. These assumptions may prove to be incorrect. Forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from what the Company currently expects.
These risks and uncertainties include, among other things, failure of plant, equipment or processes to operate as anticipated, actual capital and operating costs exceeding management’s estimates, risks associated with regulatory requirements and the ability to obtain all necessary regulatory approvals, risk of the Company defaulting under its existing debt obligations, the impact of amendments to, or the application of, the laws of Mongolia, China and other countries in which the Company carries on business, modifications to existing practices so as to comply with any future permit conditions that may be imposed by regulators; delays in obtaining approvals, the risk of fluctuations in coal prices and changes in China and world economic conditions, cash flow and liquidity risks, and risks relating to the Company’s ability to raise additional financing and to continue as a going concern. 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.
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.