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SouthGobi Resources Says Expanded Border Crossing Infrastructure Boosts Capacity Of Coal Exportation From Mongolia To China

SouthGobi Resources (TSE:SGQ)(HK:1878) said Tuesday that the opening of eight new border gates at the Shivee Khuren-Ceke border on Monday, exclusively for coal transportation, will largely increase the capacity of coal exportation from Mongolia to China.

"Our daily transportation record for the old border infrastructure was actually achieved last week at 409 trucks - which crossed from Mongolia to China (ie, approximately 37,000 tonnes of coal)," said SouthGobi`s president and CEO, Alexander Molyneux.

"We believe the new infrastructure will eliminate the 'bottleneck' at the border for quite some time. The expanded border crossing should also reduce transportation costs because of more efficient truck utilization for the transport companies."

Prior to the release of the new border gates, all coal transported out of Mongolia at the Shivee Khuren-Ceke border went through a single crossing gate around eight meters wide.

Empty trucks would be admitted into Mongolia in the mornings and then loaded trucks would export to China in the afternoons.

The new gates will create a significant increase in capacity as a number of gates will be available for simultaneous export traffic, while two gates will be reserved for inbound arrival of empty trucks so as to ensure that a constant two-way flow of traffic can be achieved.

The eight gates will be operated from 8am to 8pm six days per week, SouthGobi said.

SouthGobi is focused on the exploration and development of its Permian-age metallurgical and thermal coal deposits in Mongolia's South Gobi Region.

The company's flagship coal mine, Ovoot Tolgoi, is producing and selling coal to customers in China, and the company plans to supply a wide range of coal products to markets in Asia.

SouthGobi is the closest major coking coal producer in the world to China, which is the largest consumer of coal in the world.

The Ovoot Tolgoi Mine is approximately 40 kilometres from China, and the company is approximately 50 kilometres from existing railway infrastructure, which is approximately one tenth the distance to rail of Tavan Tolgoi coal producers in Mongolia.

The company recently released first quarterly results, declaring record coal sales, and higher selling prices.
For the first three months of the year, the company posted a profit of $3.1 million, versus a net loss of $46.6 million in the year ago period.

First quarter revenue almost doubled to $40.2 million, on the record sale of 0.84 million tonnes of coal - up 84 percent from a year earlier as the company's customer base expanded.

Quarterly average selling price amounted to $56.79 per tonne, 13 percent higher than a year ago - and the highest quarterly average since the start of mining operations, the company said.

The company also released updated NI 43-101 compliant resource and reserve estimates, which increased overall measured plus indicated resources by 35 percent to 492.6 million tonnes and inferred resources by 42 percent to 244.0 million tonnes.

Proven and probable reserves for the Ovoot Tolgoi Mine were boosted by 65 percent to 175.7 million tonnes.