SOUTHGOBI SAYS CUSTOMERS CUT ORDERS ON MONGOLIAN MINE CONCERNS

SouthGobi Resources Ltd., the coal producer which Aluminum Corp. of China Ltd. has agreed to buy, said some customers have cut orders after the Mongolian government requested the suspension of projects.

The Vancouver-based company said that it hasn’t received an official order to suspend operations, including at the Ovoot Tolgoi Mine, according to a Hong Kong stock exchange statement Monday. The company can’t provide guidance for the second quarter because of “uncertainty,” it said.

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

Mongolia’s Mineral Resources Authority last month requested the suspension of projects, including SouthGobi’s Ovoot Tolgoi mine, while it reviews Chalco’s proposed purchase. Chalco said it won’t proceed with the deal unless it gets the required approvals from Mongolia, which is scheduled to hold federal elections next month.

SouthGobi fell 1.9 percent to close at HK$46.60 in Hong Kong today, before the announcement, as the Hang Seng Index lost 1.2 percent. The stock has gained 2.3 percent this year against the benchmark’s 7.1 percent increase.

The company’s first-quarter sales rose to $40.2 million from $20.2 million a year earlier, according to the filing. Net income was $3.13 million, or 2 cents a share, compared with a net loss of $46.6 million, or 25 cents. Coal sales were 840,000 metric tons, an 84 percent gain on year, it said.