SouthGobi Resources Mongolian subsidiary SouthGobi Sands has
launched an investment dispute against the Mongolian government, citing the
Mineral Resources Authority failed to execute its pre-mining agreements
covering the Zag Suuj and Soumber coal deposits.

SGS says it has exhausted all other possible means to resolve the dispute. The
official filing of the investment dispute is under the Bilateral Investment
Treaty between Singapore and Mongolia and will trigger a requirement for the
Mongolian Government to resolve the dispute through negotiations within six
months.

Mr Dave Bartel company vice president of investor relations said “If the
negotiations are not successful, SGS will be entitled to commence
conciliation/arbitration proceedings under the auspices of the International
Centre for Settlement of Investment Disputes pursuant to the BIT. In the event
that the Mongolian Government fails to negotiate, ICSID arbitration proceedings
may be accelerated before the six months have expired. SGS holds valid permit
mining applications across the areas under dispute.”

The Soumber coal deposit is about 45 kilometers north of the Mongolia China
border. An extensive drill program at the site last year focused on increasing
both the confidence in the resource and the extent of the deposit eastward. The
company intends to further define the deposit with continued exploration work
while also substantially advancing the feasibility and planning for a mine at
Soumber. It is estimated to contain 137 million tonnes of measured and
indicated bituminous coal. A further 83 million tonnes of inferred coal was
announced in January.

An inaugural 17 million tonne indicated coal reserve was announced at the new
Zag Suuj deposit earlier this year, coupled with a 66 million tonne inferred
resource. Zag Suuj is about 150 kilometers east of the company flagship Ovoot
Tolgoi complex within the Ovoot Khural basin. SouthGobi is focused on
exploration and development of its Permian-age metallurgical and thermal coal
deposits in Mongolia South Gobi region. Ovoot Tolgoi produces and sells coal to
customers in China which is the world’s largest coal consumer. The company also
plans to supply a wide range of coal products to markets in Asia.

Source – Southgobi