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Mongolia cancels SouthGobi's Soumber coal mining licenses

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Mongolia cancels SouthGobi's Soumber coal mining licenses

The Mineral Resources and Petroleum Authority of Mongolia terminated three mining licenses for SouthGobi Resources Ltd.'s Soumber coal deposit in Mongolia, effective Aug. 21.

The regulator said the company's SouthGobi Sands LLC unit was violating its environmental reclamation obligations with respect to Soumber, according to an Aug. 28 news release.

The company believes the cancellation is without merit, since it is not aware of any failure on its part in fulfilling the reclamation duties, and is in talks with relevant authorities after having issued a letter to appeal the decision.

SouthGobi Resources also flagged the potential for taking legal steps against the move, if necessary. The company sells coal to customers in China.

Soumber lies about 20 kilometers east of the company's Ovoot Tolgoi coal operations where mining has not been affected, nor will the license termination significantly impact its financial results, according to the release.

SouthGobi's shares resumed trading on the Toronto Stock Exchange and Hong Kong market in May after a five-month suspension, during which it investigated former senior executives over several fraudulent transactions.