SouthGobi turns a profit

MONGOLIA-focused coal miner SouthGobi has swung a profit in the March quarter, citing record sales and revenue despite almost unchanged production totals.
SouthGobi turns a profit SouthGobi turns a profit SouthGobi turns a profit SouthGobi turns a profit SouthGobi turns a profit

Drilling in SouthGobi's West Field

Justin Niessner

Net profit for the period ending March 31 totalled $US3.1 million compared to the $46.6 million loss in the same quarter last year.

The Vancouver-based company sold 0.84 million tonnes of coal in the quarter (up 84% from Q1 last year) and had revenue of $40.2 million (up 99% from Q1 last year).

Production of raw coal eroded only slightly, notching 1.07Mt for the period versus 1.11Mt during the same quarter last year.

Upcoming output numbers, however, have been put into doubt.

Some of the miner’s customers have cut their orders after the Mongolian government requested the suspension of certain projects.

“The announcement regarding potential license suspension has created significant uncertainty among the company’s customers,” the company said in a statement.

“Concern over whether SouthGobi will be able to deliver contracted volumes in the second quarter has in some cases led customers to reduce their coal purchases.”

In April, Mongolia’s Mineral Resources Authority sought a request to susepend exploration and mining activities at various SouthGobi licences, including its flagship Ovoot Tolgoi coal mine.

The move was in connection to the proposed takeover bid by Aluminum Corporation of China (Chalco) to buy a controlling stake in SouthGobi from Ivanhoe Mines.

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