SouthGobi Resources said that its proposed sale of the Tsagaan Tolgoi thermal coal deposit to Australian Modun Resources has been cancelled, with mutual agreement from both parties.

Tsagaan Tolgoi remains non core to SouthGobi, and the company said it is evaluating other options. No other details of the termination were disclosed.

Under the terms of the proposed agreement, SouthGobi would have transfered the mining license and exploration license that covers the deposit in exchange for $30 million in cash and stock.

Tsagaan Tolgoi is in the Omnigovi Aimag, approximately 570 kilometres south of Mongolia's capital of Ulaanbaatar and 113 kilometres southeast of the provincial capital of Dalanzagad.

The project, which has measured plus indicated resources of 36.4 million tonnes of coal, is also located 415 metres to the northeast of the company's flagship Ovoot Tolgoi project.

Earlier this month, the Mongolia-focused coal miner posted a sharply lower second quarter profit as sales volume and revenue declined due to the curtailment of mining operations amid a controversial takeover bid for the mining company.

Operations at its Ovoot Tolgoi Mine in Mongolia were "entirely curtailed" at the end of the most recent quarter citing weak market conditions and regulatory issues.

Source - Proactive Investor

(www.coalguru.com)