SouthGobi Resources Ltd. Announces New Deferral Agreement on Convertible Debenture Payments

On March 19, 2024, SouthGobi Resources Ltd., alongside its subsidiaries SouthGobi Sands LLC and SGQ Coal Investment Pte. Ltd., declared a new deferral agreement with its primary shareholder, JD Zhixing Fund L.P. This agreement pertains to its US$250 million Convertible Debenture originally issued on November 19, 2009. The deferral encompasses various financial obligations due in 2024, notably an approximate total of US$96.5 million in interest, management fees, and related fees initially due by August 31, as well as additional payments slated for May and November 2024, altogether termed as the “Deferred Amounts”.

The agreement stipulates that these Deferred Amounts will now be payable by August 31, 2025. In return, SouthGobi has agreed to render a deferral fee of 6.4% per annum on these amounts, reflecting changes in payment obligations under the Convertible Debenture and the Amended and Restated Cooperation Agreement dated April 23, 2019.

Key to enforcing this deferral will be SouthGobi's compliance with regulations requiring notice to, and possibly acceptance from, the TSX Venture Exchange (TSX-V), and gaining necessary approval from independent shareholders. The agreement emphasizes SouthGobi’s commitment to providing JDZF monthly updates on its financial status and business operations while discussing feasible repayment capabilities.

This development is subject to regulatory reporting, announcement obligations, and demands approval by the independent shareholders due to its classification as a connected transaction under the Hong Kong Listing Rules, following its relevance to a substantial shareholder. SouthGobi Resources Ltd., headquartered in Vancouver, BC, is a coal mining and trading company with significant operations in Mongolia.