VANCOUVER, BC / ACCESSWIRE / June 9, 2022 / SouthGobi Resources Ltd. (TSX:SGQ), (HK:1878) (“SouthGobi” or the “Company“) announces that reference is made to the announcements of the Company dated March 11, March 24, March 28, March 30, March 31, April 14, April 29, May 17, May 27 and May 30, 2022 in relation to, among others, the delay in publication of the 2021 Audited Annual Results and delay in 2021 Annual Filings (the “Announcements“). Unless otherwise defined herein, capitalized terms used in this announcement shall have the same respective meanings as defined in the Announcements.
DELAY IN DESPATCH OF 2021 ANNUAL REPORT AND CONVENING OF ANNUAL MEETING OF THE SHAREHOLDERS OF THE COMPANY (“AGM”)
Publication of the 2021 Audited Annual Results
As disclosed in the Announcements, the Auditors were unable to render an unmodified opinion for the purpose of the 2021 Audited Annual Results as they had not been able to obtain sufficient evidence to support management’s Going Concern Assumptions (as defined below) pursuant to the applicable accounting standards (“Going Concern Issue“). The Going Concern Issue arose from the several adverse conditions and material uncertainties that cast significant doubt upon the assumptions that the Company is able to operate until at least December 31, 2022 and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due (“Going Concern Assumptions“), especially given that as at December 31, 2021, the Company’s deficiency in assets and working capital deficiency (i.e., excess current liabilities over current assets) reached approximately US$90.5 million and US$42.5 million, respectively. This was aggravated by the fact that, in light of the precautionary measures imposed by the Chinese authorities at the Ceke Port of Entry (“Ceke Port“) at the border of Mongolia and China in response to the increase of COVID-19 pandemic cases in Mongolia, including the temporary closure of the Ceke Port (which was later re-opened on May 25, 2022 for coal export on a trial basis, with a limited number of trucks permitted to cross the border during this trial period), the implemented restriction of the number of trucks crossing the Mongolian border into China had limited the Company’s ability to generate sufficient revenue to support and evidence the Going Concern Assumptions.
By virtue of the concerted efforts made by the Company, the Company obtained an unmodified opinion from the Auditors on the 2021 Financial Statements on May 30, 2022. As such, the Company completed the filing of the 2021 Annual Filings and published the 2021 Audited Annual Results on May 30, 2022. As disclosed in the announcement of the Company dated May 30, 2022, the 2021 Audited Annual Results were made to replace the 2021 Unaudited Annual Results, and since there were no changes contained in such consolidated statement of profit or loss and other comprehensive income and the consolidated statement of financial position, the 2021 Audited Annual Results are consistent with the 2021 Unaudited Annual Results. Together with the completion of filing of the Company’s interim financial statements for the quarter ended March 31, 2022, the Management Cease Trade Order, which was imposed on April 1, 2022, was revoked on June 6, 2022 by the British Columbia Securities Commission.
Despatch of the 2021 Annual Report and Convening of the AGM
Due to the delay in publication of the 2021 Audited Annual Results and the additional time required to finalise the annual report for the year ended December 31, 2021 (the “2021 Annual Report“) and the relevant circular for the AGM (the “2021 AGM Circular“), the Company was unable to publish and despatch the 2021 Annual Report to its shareholders on or before May 15, 2022 in accordance with the “Frequently Asked Questions on the Joint Statement in relation to Results Announcement in light of Travel Restrictions related to the Severe Respiratory Disease associated with a Novel Infectious Agent (Joint Statement) and holding of General Meetings” (last updated on 8 April 2022) issued by the Securities and Futures Commission of Hong Kong and the Hong Kong Stock Exchange. The Company anticipates that the expected date of the despatch of the 2021 Annual Report (together with the 2021 AGM Circular and the relevant notice of the AGM) will be on or before June 21, 2022.
Taking into account the expected despatch date of the 2021 Annual Report and the required notice period, the Company expects that the AGM will be held on or before July 21, 2022.
The Company had previously filed a Form 9A – Request for Extension for Financial Reporting/Annual Meeting with the TSX to apply for an extension for the AGM to be held on or before August 30, 2022, which was approved by the TSX on June 3, 2022. The Company will be sending the formal notice of meeting and associated materials in respect of the AGM to the shareholders of the Company in accordance with the requirements set forth under the Business Corporations Act (British Columbia) and securities regulations.
A waiver application has been made to the Hong Kong Stock Exchange for (i) approval for the delay in despatch of the 2021 Annual Report and waiver of the Company’s strict compliance with Rule 13.46(2)(a) of the Listing Rules in relation to the despatch of the 2021 Annual Report; and (ii) waiver of the Company’s strict compliance with Rule 13.46(2)(b) of the Listing Rules in relation to an extension of the deadline for the AGM (collectively, the “WaiverApplication“).
On June 9, 2022, the Stock Exchange agreed to waive the requirements of:
Rule 13.46(2)(a) of the Listing Rules on the basis that the Company will despatch the 2021 Annual Report on or before June 21, 2022; and
Rule 13.46(2)(b) of the Listing Rules subject to the Company’s compliance with its Articles and the laws and regulations in British Columbia and the Company will hold the AGM on or before July 21, 2022.
Further announcement(s) will be made by the Company as and when necessary if there is any other material development in the despatch of the 2021 Annual Report and the convening of the AGM.
Shareholders of the Company and potential investors are advised to exercise caution when dealing in the securities of the Company.
If there is any inconsistency or discrepancy between the English version and the Chinese version, the English version shall prevail.
SouthGobi, listed on the Toronto and Hong Kong stock exchanges, owns and operates its flagship Ovoot Tolgoi coal mine in Mongolia. It also holds the mining licences of its other metallurgical and thermal coal deposits in South Gobi region of Mongolia. SouthGobi produces and sells coal to customers in China.
Certain information included in this press release that is not current or historical factual information constitutes forward-looking statements or information within the meaning of applicable securities laws (collectively, “forward-looking statements”), including the despatch of the 2021 Annual Report on or before June 21, 2022. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “could”, “should”, “seek”, “likely”, “estimate” and other similar words or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on certain factors and assumptions including factors that may cause actual results to differ materially from what the Company currently expects. Actual results may vary from the forward-looking statements. Readers are cautioned not to place undue importance on forward-looking statements, which speaks only as of the date of this disclosure, and not to rely upon this information as of any other date. While the Company may elect to, it is under no obligation and does not undertake to, update or revise any forward-looking statements, whether as a result of new information, further events or otherwise at any particular time, except as required by law. Additional information concerning factors that may cause actual results to materially differ from those in such forward-looking statements is contained in the Company’s filings with Canadian securities regulatory authorities and can be found under the Company’s profile on SEDAR at www.sedar.com.
SOURCE: SouthGobi Resources Ltd.
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