Reuters reported that SouthGobi Resources Limited, a Canadian coal miner with operations in Mongolia, could default on a debt repayment and was looking to raise money, sending its shares down as much as 29% in afternoon trading.
The company, controlled by Rio Tinto Plc through its unit Turquoise Hill Resources Limited also reported a bigger quarterly loss, mainly due to impairment charges. A delay in securing additional financing could result in a default of CAD 250 million debentures held by China Investment Corp, SouthGobi said in a statement on Monday.
SouthGobi shares plunged to 52 Canadian cents in afternoon trading, making it one of the biggest percentage losers on the Toronto Stock Exchange. The company had working capital - the difference between current assets and liabilities of CAD 41.7 million as of December 31, compared with CAD 120.4 million a year earlier. As of March 24, the company had CAD 10 million cash on hand.
SouthGobi said that it expects liquidity problems to continue and margins to remain weak as coal prices are likely to stay anemic in China this year, echoing US rivals such as Alpha Natural Resources and Arch Coal Inc.
Source - Reuters