SouthGobi Resources Ltd announced its financial results for the nine months ended September 30 2011
Highlights
The Company's highlights for the quarter ended September 30, 2011 and subsequent weeks are as follows:
1. Total sales of approximately 1.37 million tonnes and revenue of USD 60.5 million for the quarter ended September 30 2011 with both figures representing a record for any given third quarter and the revenue also being the highest quarterly revenue since the commencement of mining operations
2. Average realized selling price for the third quarter of 2011 was USD 54 per tonne, an increase of 45% compared to the third quarter of 2010
3. Income from mining operations of USD 20.6 million for the third quarter of 2011, which represents a quarterly record since the commencement of mining operations
4. Entered into an agreement with Ejinaqi Jinda Coal Industry Co Ltd to toll wash coal from the Ovoot Tolgoi Mine
5. Received a mining license pertaining to the Soumber Deposit
6. Awarded the tender to construct a paved highway from Ovoot Tolgoi to Mongolia-China border with consortium partner NTB LLC.
For the three months ended September 30, 2011
For the three months ended September 30 2011 the Company produced 1.25 million tonnes of raw coal with a strip ratio of 3.28 compared to production of 0.87 million tonnes of raw coal with a strip ratio of 4.74 for the three months ended June 30 2011 and production of 0.57 million tonnes of raw coal with a strip ratio of 5.09 for the three months ended September 30 2010. Mining capacity increased in the third quarter of 2011 compared to the third quarter of 2010 due to the commissioning of additional mining equipment. Mining activities also commenced in the Sunrise Pit during the third quarter of 2011.
For the three months ended September 30 2011, the Company sold 1.37 million tonnes of coal at an average realized selling price of approximately USD 54 per tonne. This compares to 1.05 million tonnes of coal sold for the three months ended June 30 2011 at an average realized selling price of approximately USD 54 per tonne and 0.19 million tonnes of coal sold for the three months ended September 30 2010 at an average realized selling price of approximately USD 37 per tonne.
Direct cash costs of product sold were USD 22.64 per tonne in the three months ended September 30 2011 compared to USD 18.59 per tonne in the three months ended September 30 2010. Direct cash costs have increased due to increased screening by the Company of its raw higher-ash coals and due to general economic factors including the strengthening of the Mongolian tugrik and the rate of inflation in Mongolia.
On September 27 2011, a fire occurred on one Liebherr 996 hydraulic shovel that was commissioned at the Ovoot Tolgoi Mine in December 2009 and previously included in the mining fleet. Safety protocols were followed and no injuries resulted. However, following subsequent inspection and third-party reports the Company has de-commissioned the machine and currently believes it is unlikely it will be repairable. Site inspections have been completed by the insurance underwriter and the Company has been advised that the damage will be covered by its insurance policy. As a result, the Company has de-recognized the full carrying amount of the machine and recognized a receivable in the third quarter of 2011 equal to the amount of the estimated net insurance proceeds.
For the nine months ended September 30 2011, the Company produced 3.22 million tonnes of raw coal with a strip ratio of 3.74 compared to production of 1.41 million tonnes of raw coal with a strip ratio of 4.35 for the nine months ended September 30 2010. The increase in raw coal production for the nine months ended September 30, 2011 primarily resulted from the expansion of the Company's mining fleet and commencement of mining operations at the Sunset Pit in the third quarter of 2011.
For the nine months ended September 30, 2011, the Company sold approximately 2.87 million tonnes of coal at an average realized selling price of approximately USD 53 per tonne. This compares to 1.07 million tonnes of coal at an average realized selling price of approximately USD 39 per tonne for the nine months ended September 30 2010. The average realized selling price has increased due to increased prices of individual customer contracts in 2011.
Direct cash costs of product sold were USD 23.55 per tonne for the nine months ended September 30, 2011 compared to USD 21.22 per tonne for the same period in 2010. The increase in direct cash costs is due primarily to increased screening activities by the Company of its raw higher-ash coals and higher diesel prices in the second quarter of 2011.
