Vancouver-based miner SouthGobi Resources (TSX: SGQ) said March 24 it is seeking additional financing to avoid defaulting on a $250 million convertible debenture due to the ongoing coal prices slump.
Delivering its 2013 results, the Mongolia-focused coal producer said it expected continued pressure on its margins and liquidity, as coal prices were likely to stay weak in China this year.
Shares in the company tumbled down almost 11% to 0.560 at 10:40 am March 24 in the Toronto Stock Exchange.
The company, controlled by Rio Tinto (LON:RIO), logged a $197 million loss from operations in 2013 compared with a $124 million loss from operations in 2012. Excluding certain items, loss from operations was $25 million, compared with a loss of $15 million a year earlier.
SouthGobi operates the Ovoot Tolgoi metallurgical-coal mine, located about 40 km from Mongolia’s border with China. Prices for metallurgical coal have plummeted to a three-year low amid slowing economic growth in China, the top consumer of the steelmaking ingredient, and an increase in supply from Australia.
