Coal news and updates

 

SouthGobi Resources Ltd. (SGQ), a producer of metallurgical coal in Mongolia, is seeking additional financing to avoid defaulting on a $250 million convertible debenture after the price of the commodity fell.

 

Based on forecasts for 2014, SouthGobi won’t have enough cash flow from mining to meet obligations including interest payments on the debenture held by China Investment Corp., the Vancouver-based company said yesterday in a statement. SouthGobi fell the most since its 2003 initial public offering.

 

“Coal prices in China will remain under pressure in 2014, which will continue to impact the company’s margins and liquidity,” it said.

 

SouthGobi operates the Ovoot Tolgoi metallurgical-coal mine, which lies about 40 kilometers (25 miles) from Mongolia’s border with China. Prices for metallurgical coal have fallen to a three-year low amid slowing economic growth in China, the biggest market for the steelmaking ingredient, and an increase in supply from Australia.

 

SouthGobi fell 27 percent to 53 Canadian cents in Toronto yesterday. The company also reported its net loss widened to $138.7 million in the fourth quarter from $56.6 million a year earlier.

 

SouthGobi is 56 percent owned by Turquoise Hill Resources Ltd., which is majority owned by Rio Tinto Group, according to data compiled by Bloomberg.

 

 

Source: http://www.bloomberg.com/