SouthGobi Energy Resources Arranges C$80 Million Financing to Develop Coal Properties in Mongolia
January 07 2008 - 8:30AM
Marketwired
VANCOUVER, BRITISH COLUMBIA , and John Macken, President and CEO
of Ivanhoe Mines Ltd. (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN), announced
today that SouthGobi Energy Resources has entered into an agreement
with a German Institutional investor for a placement of 10,000,000
common shares at C$8.00 per share, representing an aggregate
offering amount of C$80,000,000.
The proceeds from the offering will be used to finance initial
development of an open-pit coal mine at SouthGobi's Ovoot Tolgoi
coal project in southern Mongolia, 45 kilometres north of the
border with China, and for exploration and development of the
company's other coal and mineral projects. Funding also will be
used for general corporate and administrative purpose. The
financing is subject to all necessary regulatory approvals,
including approval of the TSX Venture Exchange. It also is a
condition of closing that SouthGobi file a prospectus to qualify
the common shares issuable in connection with the financing.
Pre-development of the Ovoot Tolgoi open-pit coal mine is
scheduled to commence in the first quarter of 2008 and shipping of
coal to market from Ovoot Tolgoi is scheduled to start in the third
quarter of 2008. Capital costs to start production are estimated at
approximately C$45 million. SouthGobi recently announced that it
has purchased a fleet of coal-mining equipment and in December,
2007 auxiliary equipment and a temporary maintenance facility were
delivered to the Ovoot Tolgoi mine site. The remainder of the
equipment is scheduled to start arriving in the coming weeks.
Ivanhoe Mines to convert preferred shares and debt into
equity
Coinciding with the financing, Ivanhoe Mines will convert
25,576,383 preferred shares, the total sum of preferred shares held
by Ivanhoe Mines, into common shares of SouthGobi Energy Resources
on a one-for-one basis. At SouthGobi's request, Ivanhoe Mines also
will convert approximately C$29,874,455 of debt into 14,293,998
common shares of SouthGobi Energy Resources at a conversion rate of
C$2.09 per share.
The conversion ratio for preferred shares and debt held by
Ivanhoe Mines was authorized in the coal transaction, voted on and
approved by minority shareholders on August 8, 2006.
At the closing of this offering, Ivanhoe Mines will own
approximately 104,339,582 shares of SouthGobi Energy Resources
representing approximately 84% of the issued and outstanding common
shares. The institutional investor subscriptions will amount to
approximately 8% of the issued and outstanding common shares of
SouthGobi Energy Resources.
SouthGobi has agreed to pay a fee equal to 3.5% of the gross
proceeds to an arm's-length third party in connection with the
financing.
About SouthGobi Energy Resources
SouthGobi Energy Resources is focused on exploration and
development of its Permian-age metallurgical and thermal coal
deposits in Mongolia's South Gobi Region to supply a wide range of
coal products and electricity to markets in Mongolia and China. The
company is investigating the implementation of clean-coal
technologies in the development of coal power-generating capacity
to benefit all of its stakeholders.
The company's metals division is focused on the exploration and
development of its copper and gold projects in Mongolia and
Indonesia.
Forward-Looking Statements: This document includes
forward-looking statements. Forward-looking statements include, but
are not limited to, statements concerning the completion of the
private placement, the company's plans to develop the Ovoot Tolgoi
Project in Mongolia, including timing of completion of development
and commencement of coal shipments to market and the estimated
capital cost of development of an open pit coal mine at Ovoot
Tolgoi, and other statements that are not historical facts. When
used in this document, the words such as "could", "plan",
"scheduled", "estimate", "expect", "intend", "may", "potential",
"should", and similar expressions are forward-looking statements.
Although SouthGobi Energy Resources believes that the expectations
reflected in these forward-looking statements are reasonable, such
statements involve risks and uncertainties and no assurance can be
given that actual results will be consistent with these
forward-looking statements. Important factors that could cause
actual results to differ from these forward-looking statements are
disclosed under the heading "Risk Factors" in SouthGobi Energy's
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the three months ended September 30, 2007
and its Annual Information Form dated August 27, 2007, which are
available at www.sedar.com.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: SouthGobi Energy Resources Ltd. - Investors Steven
Feldman (604) 681-6799 SouthGobi Energy Resources Ltd. - Media Bob
Williamson (604) 681-6799 Website: www.southgobi.com Ivanhoe Mines
Ltd. - Investors Bill Trenaman (604) 688-5755 Website:
www.ivanhoemines.com
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