TORONTO – SouthGobi Resources Ltd. (TSX:SGQ) says it’s unlikely to meet its debt obligations this year with coal prices expected to remain under pressure in China.
SouthGobi said it’s looking for additional financing, but a delay could result in the default of its $250 million convertible debenture. The coal producer said it assumes it will continue operating until at least Dec. 31.
Shares of the company fell to 55 cents, a decline of 18 cents or 25 per cent, on the Toronto Stock Exchange on Monday near midday.
In its fourth quarter, SouthGobi reported a deeper net loss of $138.7 million, or 75 cents per share, for the fourth quarter of 2013.
That compared to a loss of $56.5 million, or 31 cents per share, in the same period a year earlier.
Revenues increased to $32.4 million from $1.2 million.
The company said it recorded an impairment loss of $30.2 million in the fourth quarter of 2013 related to the $33.6 million of prepaid toll washing fees to Ejinaqi Jinda Coal Industry Co. Ltd.
For the full year, SouthGobi increased its net loss to $237.4 million, or $1.30 per share, compared with a loss of $97.5 million, or 54 cents, year-over-year.
Revenues for 2013 were $58.6 million, down from $78 million year-over-year.
SouthGobi Resources is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia’s South Gobi Region.