SouthGobi Energy Resources Purchases Second Coal Mining Equipment Fleet From Monnis International, Mongolia
Gene Wusaty, Chief Operating Officer of SouthGobi Energy Resources Ltd. (TSX VENTURE: SGQ), is pleased to announce the company has purchased a second fleet of coal mining equipment for the Ovoot Tolgoi open-pit coal mine in southern Mongolia from Monnis International, the Liebherr equipment distributor in Mongolia. This second equipment purchase from Monnis is for a larger Liebherr 996 34-cubic-metre shovel, four 240-tonne Terex haul trucks and various auxiliary equipment. Delivery and commissioning of the equipment is scheduled for the second quarter 2009.
SouthGobi has issued Monnis International a Letter of Intent to purchase additional truck and shovel fleets for delivery in 2010 and 2011. The future deliveries of the mining fleets will be used to expand the annual production capacity of the Ovoot Tolgoi Mine. Monnis also provides air transportation to Ovoot Tolgoi, light vehicles and contract maintenance services on the mining equipment at Ovoot Tolgoi.
SouthGobi Energy Resources has entered into a subscription agreement with Monnis International for a private placement of 2,000,000 common shares at C$12.45 per share, representing an aggregate offering amount of C$24,900,000. SouthGobi intends to use the proceeds from this offering – along with the previous C$117,900,000 raised in January and February, 2008 – to further develop and expand the Ovoot Tolgoi open-pit coal mine and to finance additional drilling and engineering focused on developing an underground mine at Ovoot Tolgoi. The financing is subject to all necessary regulatory approvals, including approval of the TSX Venture Exchange. All securities issued by way of this placement will be subject to a four-month hold period.
“We are very pleased to continue our strategic alliance with Monnis, a Mongolian owned company, and welcome having Mongolian shareholders in SouthGobi,” Mr. Wusaty said. “The purchase of this larger capacity fleet allows for the accelerated development of the Ovoot Tolgoi Mine during a period of exceptionally strong coal demand.”
On March 31, 2008 SouthGobi was issued a Permit to Mine for Ovoot Tolgoi, allowing for open-pit mining to proceed. The Ovoot Tolgoi mine is located 45 kilometres north of the Mongolian border with China. A Chinese steel mill already has built a railway line to the Ceke border point, where a major, automated railcar loading facility opened last year.
The Mongolian Government is formally transforming the Ceke border point into a full-time border crossing that will allow daily distribution of Ovoot Tolgoi coal to customers in China.
In March 2008, SouthGobi began stripping and developing the first coal-mining production benches for the planned open-pit mine. Coal deliveries are expected to start in the third quarter 2008 to customers in China.
About SouthGobi Energy Resources
SouthGobi Energy Resources is focused on exploration and development of its Permian-age metallurgical and thermal coal deposits in Mongolia’s South Gobi Region to supply a wide range of coal products and electricity to markets in Mongolia and China. SouthGobi acquired the Coal Division of Ivanhoe Mines Ltd. In May 2007, Ivanhoe Mines presently owns an 80.5% interest in SouthGobi, which is investigating the implementation of clean-coal technologies in the development of coal power-generating capacity to benefit all of its stakeholders.
The company’s metals division is focused on the exploration and development of its copper and gold projects in Mongolia and Indonesia.
Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning the completion of the private placement, the timing to supply coal products to SouthGobi’s customers, the potential for expansion of production capacity at Ovoot Tolgoi, use of proceeds of the financing and other statements that are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should”, and similar expressions are forward-looking statements. Although SouthGobi Energy Resources believe 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 Energy’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the twelve months ended December 31, 2007, and its Annual Information Form dated March 28, 2008, which is available at www.sedar.com.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Contacts: SouthGobi Energy Resources – Investors Steven Feldman (604) 681-6799 SouthGobi Energy Resources – Media Bob Williamson (604) 681-6799 Website: www.southgobi.com
SOURCE: SouthGobi Energy Resources Ltd.