May 12:
SouthGobi Resources Ltd., a Mongolian coal miner, posted a first-quarter loss and warned that it may face insolvency if a 35 billion tugrik ($18 million) fine for tax evasion isn’t overturned.
The miner made a $16.6 million loss from operations in the three months ended March 31, compared with a $16.7 million loss in the same period a year ago.
SouthGobi is currently awaiting confirmation from the Supreme Court of Mongolia on whether it will hear an appeal by the company on the fine, which is related to a case that saw three former employees jailed for tax evasion. They were released earlier this year after a presidential pardon.
“The consequences for the company of the tax verdict and the appeal verdict are uncertain,” according to a statement from the Hong Kong-listed company. It may face voluntary or involuntary insolvency proceedings if the verdict is not overturned or the penalty is not reduced, it said in the statement.
The fall in commodity prices is also adding to the company’s woes. The average realized selling price for a ton of coal fell to $12.66 in the first quarter from $19.54 in the same period a year earlier.
SouthGobi “continues to operate under difficult market conditions,” due to weakening prices in China, it said in the statement. “The company anticipates that coal prices in China will remain under pressure in 2015, which will continue to impact the company’s margins and liquidity.”
Restrictions placed on some SouthGobi assets due to orders by Mongolia’s Independent Authority against Corruption could result in a default on a $250 million China Investment Corp. loan. A default on the CIC debentures could also occur if SouthGobi is unable to secure additional financing, according to the statement.
SouthGobi shares fell 5 percent to HK$5.51 as of the noon trading break in Hong Kong.
Source: http://www.bloomberg.com/news/articles/2015-05-12/southgobi-warns-of-insolvency-on-mongolia-tax-claim-posts-loss?
SouthGobi Resources Ltd., a Mongolian coal miner, posted a first-quarter loss and warned that it may face insolvency if a 35 billion tugrik ($18 million) fine for tax evasion isn’t overturned.
The miner made a $16.6 million loss from operations in the three months ended March 31, compared with a $16.7 million loss in the same period a year ago.
SouthGobi is currently awaiting confirmation from the Supreme Court of Mongolia on whether it will hear an appeal by the company on the fine, which is related to a case that saw three former employees jailed for tax evasion. They were released earlier this year after a presidential pardon.
“The consequences for the company of the tax verdict and the appeal verdict are uncertain,” according to a statement from the Hong Kong-listed company. It may face voluntary or involuntary insolvency proceedings if the verdict is not overturned or the penalty is not reduced, it said in the statement.
The fall in commodity prices is also adding to the company’s woes. The average realized selling price for a ton of coal fell to $12.66 in the first quarter from $19.54 in the same period a year earlier.
SouthGobi “continues to operate under difficult market conditions,” due to weakening prices in China, it said in the statement. “The company anticipates that coal prices in China will remain under pressure in 2015, which will continue to impact the company’s margins and liquidity.”
Restrictions placed on some SouthGobi assets due to orders by Mongolia’s Independent Authority against Corruption could result in a default on a $250 million China Investment Corp. loan. A default on the CIC debentures could also occur if SouthGobi is unable to secure additional financing, according to the statement.
SouthGobi shares fell 5 percent to HK$5.51 as of the noon trading break in Hong Kong.
Source: http://www.bloomberg.com/news/articles/2015-05-12/southgobi-warns-of-insolvency-on-mongolia-tax-claim-posts-loss?
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