VANCOUVER, British Columbia, Aug. 28, 2019 (GLOBE NEWSWIRE) -- 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 three 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 have 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 mine 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 environmental 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.
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.