Toronto-listed SouthGobi Resources’s Mongolian operating subsidiary SouthGobi Sands
(SGS) on Wednesday filed a ‘notice of investment dispute’ on the Mongolian government
in terms of the bilateral investment treaty (BIT) between Singapore and
Mongolia.

The company said it had filed the notice following a determination by
management that it had exhausted all other possible means to resolve an ongoing
investment dispute.

In terms of the notice, SGS is frustrated by the country’s Mineral Resources
Authority’s failure to execute the premining agreements (PMAs) associated with
certain exploration licences of the company, for which valid PMA applications
had been lodged in 2011.

The areas covered by the applications included the resource known as Zag
Suuj deposit and certain areas associated with the broader Soumber deposit.

The notice triggered the dispute resolution process under the BIT, whereby
Mongolia had a six-month cure period to satisfactorily resolve the dispute
through negotiations.

If the negotiations are not successful, the company would be entitled to
start conciliation/arbitration proceedings under the auspices of the
International Centre for Settlement of Investment Disputes (ICSID) as
stipulated by the BIT.

In the event that Mongolia fails to enter negotiations, ICSID arbitration
proceedings may be accelerated before the six months have expired.

SouthGobi Resources’s flagship coal mine Ovoot Tolgoi, is producing and
selling coal to customers in China, and it has plans to supply a broader range
of coal products to markets in Asia.

miningweekly.com