Source: Bloomberg                          Date: 17 August, 2010

SouthGobi Resources Ltd., backed by China’s sovereign wealth fund, aims to get a mining license for a second coal pit in Mongolia by the year-end. The company will apply for a permit for the Soumber deposit in the coming months, Chief Executive Officer Alexander Molyneux has said. About USD205 million is needed to develop the mine. The Toronto and Hong Kong-listed coal producer already operates a pit at Ovoot Tolgoi, also in the deserts of southern Mongolia.

SouthGobi hopes to start production at Soumber by 2012, Mr. Molyneux said. Additional survey work at the site this summer indicates the pit’s reserves of coking coal are “radically higher” than previously thought, he said, without giving a new estimate. The deposit was previously estimated to hold about 77 million metric tons of coal. Ovoot Tolgoi has about 283 million tons, Mr. Molyneux told reporters.

The company has USD744 million in cash to fund expansion plans and doesn’t need extra financing to develop Soumber. It posted a second-quarter operating loss, partly because of upgrading work at Ovoot Tolgoi. China Investment Corp. owns about 13 percent of SouthGobi’s shares. The company plans to produce about 14 million tons of unprocessed coal in 2013, compared with 1.3 million tons last year.