Ulaanbaatar /MONTSAME/ SouthGobi Resources Ltd which operates at Ovoot Tolgoi coal mine announced on November 10 its financial and operating results for the three and nine months ended September 30. It says that the coal exploitation decreased against the same period of 2013.

The company"s significant events and highlights for the three months ended September 30, 2014 and subsequent period to November 10, 2014 are as follows:

As at the date hereof, the company is actively seeking sources of financing in order to be able to pay the interest due under the China Investment Corporation ("CIC") convertible debenture on November 19 of 2014. The company is also actively seeking additional sources of financing to maintain liquidity to fund its operations and meet its obligations.

The company continues to operate under difficult market conditions resulting from strong seaborne and domestic supply coupled with soft demand in China. As a result, coal prices in China declined further in the third quarter compared to the second quarter of 2014. Softness in market conditions has been marked by a slower seasonal restocking by purchasers of coal in the third quarter of 2014 compared to the same period of 2013. Although there are signs of stabilization or modest improvements in prices at the beginning of the fourth quarter, the company"s sales volumes and revenues are expected to remain under pressure through the end of 2014.

Production of raw coal by the company decreased to 0.17 million tonnes in the third quarter of 2014 from 0.55 million tonnes in the second quarter of 2014. This decrease is due to the company"s decision in June, in response to current market conditions, to reduce its production and place approximately half of its workforce on furlough. This furlough is anticipated to remain in place until the end of November 2014, subject to market conditions.

On July 30, the company announced Turquoise Hill Resources Ltd. entered into an agreement with National United Resources Holdings Limited (NUR) to sell shares representing 29.95% of the company"s total common shares. The closing of this transaction is subject to certain conditions, including the approval of both the HKEX as well as NUR"s shareholders.

As of August 29, the company had drawn down USD 3.8 million under the USD 10 million revolving credit facility (the Turquoise Hill Loan Facility) from Turquoise Hill. The Turquoise Hill Loan Facility matured on August 30 and is no longer available for further drawdowns by the company. Subject to certain terms and conditions as announced on August 31 of 2014 and filed on SEDAR on September 2 of 2014, Turquoise Hill has accepted the deferral of repayments of amounts and obligations due by the company.

On September 28, the company announced the construction of the paved highway from the Ovoot Tolgoi complex to the Shivee Khuren border crossing had been completed. The completion of the highway was one of the company"s key objectives for 2014. The highway is anticipated to significantly increase the safety of coal transportation, reduce environmental impacts and improve the efficiency and capacity of coal transportation. Commissioning of the highway is expected by the end of this year.

The trial on the tax investigation commenced on August 25. Following two days of hearing, the panel of three appointed judges ordered the matter be returned to the Prosecutor General for further investigations due to insufficient evidence presented by the prosecutor. The Mongolian investigation authority issued a resolution on October 7 to order a re-investigation and new investigators to the case were appointed.

Mr. Vincent H. Kou, the company"s general counsel and corporate secretary, has resigned with an effective date of November 14. Mr. Kou has accepted a new role with another company.

On October 31, the company sold 51.4% of its stake in Aspire Mining Limited  for USD 1.4 million in net proceeds.