Vancouver-based coal miner SouthGobi Resources Ltd. (TSX:SGQ; HK:1878) has announced that its subsidiary, SGQ Coal Investment Ptd. Ltd., has filed a notice of investment dispute on the Mongolian government in connection with the company’s coal projects.
SGQ Coal Investment Ptd. Ltd. owns SouthGobi’s Mongolian operating subsidiary, SouthGobi Sands LLC.
The notice “consists of, but is not limited to” the failure by the Mineral Resources Authority of Mongolia to execute pre-mining agreements connected with areas including the Zag Suuj resource and the Soumber Deposit.
SouthGobi contends that it has filed valid applications for the pre-mining agreements.
The notice triggers a dispute-resolution process under the Bilateral Investment Treaty between Singapore and Mongolia. Under the process, the Mongolian government has six months following receipt of the notice to resolve the dispute through negotiations. If negotiations fail, the company will be entitled to start arbitration proceedings. If the Mongolian fails to negotiate, the arbitration proceedings may occur prior to the six-month timeline.
Over the past 12 months, SouthGobi’s stock has lost about two-thirds of its value.
