SouthGobi announces deferral of CIC payment obligations

VANCOUVER, British Columbia, June 19, 2020 (GLOBE NEWSWIRE) -- SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the “Company”) announces that it has agreed to a deferral of the payment obligations which are due and payable to CIC in June 2020.

Reference is made to the announcement of the Company dated February 19, 2020 (the “Announcement”). Capitalized terms used herein, unless otherwise defined, shall have the same meaning as those defined in the Announcement. On June 19, 2020, the Company and CIC have entered into an agreement (the “2020 June Deferral Agreement”) pursuant to which CIC agreed to grant the Company a deferral of cash interest and deferral fees of approximately USD $74 million (the “2020 June Deferral Amount”) which is due and payable to CIC in June 2020 under the deferral agreements between CIC and the Company signed in April 2019 and during the period between February to May 2020 (the “Prior Deferral Agreements”). The effectiveness of the 2020 June Deferral Agreement is subject to the Company obtaining the requisite acceptance thereof from the Toronto Stock Exchange.

The terms of the 2020 June Deferral Agreement are substantially similar to the terms of the 2020 February Deferral Agreement. The principal terms of the 2020 June Deferral Agreement are as follows:

• Payment of the 2020 June Deferral Amount will be deferred until September 14, 2020.
• As consideration for the deferral of the 2020 June Deferral Amount, the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the 2020 June Deferral Amounts.
• The Company agreed to provide CIC with monthly updates regarding its operational and financial affairs.
• The Company agreed to comply with all of its obligations under the Prior Deferral Agreements.
• The Company and CIC agreed that nothing in the 2020 June Deferral Agreement prejudices CIC’s rights to pursue any of its remedies at any time pursuant to the Prior Deferral Agreements.

The Company anticipates that it will not able to repay the 2020 June Deferral Amount in full on or prior to September 14, 2020, the Company and CIC have agreed to discuss a repayment schedule in relation to the unpaid portion of the 2020 June Deferral Amount as of September 14, 2020. There can be no assurance, however, that a favourable outcome will be reached either at all or on favourable terms. The Company will make further announcements with respect to these discussions as and when appropriate.