TORONTO (miningweekly.com) – Mongolia-focused coal miner SouthGobi Resources on Monday said it had widened its quarter-on-quarter loss as operations at its flagship Ovoot Tolgoi mine during the fourth quarter remained suspended.
The miner during the quarter ended December 31, widened its net loss from $54.56-million to $51.81-million, as revenue was mainly wiped out as a result of the mine closure.
Revenue declined to $1.21-million, 63% lower quarter-on-quarter and was a far cry from the $51-million posted in the same quarter a year earlier.
On May 17, 2012, the Parliament of Mongolia approved a Foreign Investment Law (FIL) that regulates foreign direct investment into a number of key strategic sectors, which included mineral resources.
Shortly after promulgating the FIL, the Mineral Resources Authority of Mongolia (MRAM) suspended the exploration and mining licences at a number of SouthGobi’s properties, including its flagship Ovoot Tolgoi coal mine, in southern Mongolia, leaving the company in limbo, as Chalco entered into negotiations with the Mongolian government to clarify the conditions of its proposed $926-million, 60% share takeover.
Chalco had dropped its $926-million bid in September, as a result of rigid political resistance to Chinese- and foreign-owned operations from Mongolia.
Meanwhile, the company, which is majority-owned by mining major Rio Tinto, said it had restarted operations at Ovoot Tolgoi on Friday. SouthGobi said it planned to produce 3.2-million tons of semisoft coking coal over the remainder of the year.
The company’s TSX-listed stock had declined by 66.51% over the past year, and on Monday traded at C$2.15 apiece.