corporate presentationmedia.southgobi.com/201912031515261747252282_en.pdf · current cfo of an...

CORPORATE PRESENTATIONNovember 2019

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DISCLAIMER

The information contained in this document is strictly confidential, is not for public dissemination and is for the exclusive use of the persons who are authorized to receive thisdocument. You are authorized to use the information contained herein solely for the purpose of considering whether or not you will be making an investment in SouthGobi ResourcesLtd., together with its subsidiaries and controlled entities, the “Company”). You and your directors, officers, employees, agents, affiliates and advisors must not use the informationcontained herein for any other purpose and must not communicate, reproduce, distribute or disclose it to any other person, or refer to it publicly, in whole or in part, at any time.

The information contained in this document includes historical information about, and relevant to, the Company that should not be regarded as an indication of the futureperformance or results of the Company, or an indication that there has been no change in the information about and relevant to the Company since the date hereof or since the datesas of which information is given in this document. This document contains certain statements that reflect the Company’s beliefs, plans, projections, targets and expectations about itsprospect and the prospect of the general economy, global or local market and the relevant industry of the Company as of the respective dates indicated. These forward-lookingstatements are based on management’s current expectations or beliefs as well as a number of assumptions about the Company’s operations and factors that are beyond theCompany’s control, and accordingly, are subject to certain known and unknown risks and uncertainties that could cause actual results, performance or achievements of the Companyor otherwise to differ materially from those contemplated by the relevant forward-looking statements, and the forward-looking statements discussed in this document might notoccur. No representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecastscontained in this document, which speak only as of the date of this document. This document does not purport to be comprehensive or to contain all the information that a recipientmay need in order to evaluate the Company.

Certain data contained in this document was obtained from various external data sources, and none of the Company or any of their directors, officers, employees or representativeshas verified such data with independent sources. Accordingly, none of the Company or any of their directors, officers, employees or representatives accepts responsibility for, or makerepresentation as to, the accuracy, reliability, correctness, fairness or completeness of that data, and such data involves risks and uncertainties and is subject to change based onvarious factors. The information in this document does not take into account the effects of a possible transaction or certain transactions involving an actual or potential change ofcontrol, which may have significant valuation and other effects. Nothing contained in this document is, or shall be, relied upon as a promise or representation as to the future or as arepresentation or warranty otherwise.

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SOUTHGOBI AT A GLANCE

SouthGobi Resources Ltd. (“SouthGobi”) is

A dual-listed company, primary listed on the Toronto Stock Exchange and secondary listed on the Hong Kong Stock Exchange

An integrated coal mining enterprise, owns andoperates a flagship coal mine in Mongolia andtrades coal in China

One of the largest and most recognizedenterprises in Mongolia and an award-winningenterprise in China

TSX: SGQ HKEX: 1878

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CORPORATE OVERVIEW

Shareholding Structure

China Investment Corporation23.75%

China Cinda Asset Management Co. Ltd17.00%

Others59.25%

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COMPETITIVE LOCATION

SouthGobi has the closest coal mine to theworld largest coal consumer, China; and islocated 45 km from the China-Mongoliaborder.

There are two railways for transportation ofcoal at Ceke Port, a 440 km designatedrailway from Ceke to Gansu Province withthe annual capacity of 6.4 million tonnesand a 770 km railway from Ceke directly toLinhe, with annual capacity of 3 milliontonnes.

SouthGobi invested a paved highway fromOvoot Tolgoi coal mine to Ceke Port.

45km to China

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INFRASTRUCTURE AND OPERATIONS

Coal Production Coal Washing

Workforce of 425 employees as of

Q3 2019

Paved highway to the border of

China

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OVOOT TOLGOI COAL MINE

The Ovoot Tolgoi Coal Minecomprises of the Sunset Coalfieldin the West and the SunriseCoalfield in the East.

Products from the Ovoot TolgoiMine include coals with coking (ormetallurgical) properties, primarilya raw semi-soft coking coaltogether with raw medium ashcoals, which can be washed andblended into semi-soft cokingcoal.

Mining license

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ABUNDANT RESERVES & RESOURCES

Resources Summary

Million tonnes

Mining License Summary

SouthGobi has a total 496 million tonnes of coal resources under the NI43-101 resource reporting standard. The OvootTolgoi Mine contains 391 million tonnes of resources, in which 114 million tonnes are reserves.

Mining License Issue Date Expiry Date

Ovoot Tolgoi(12726А) 2007.09.20 2037.09.20

Zag Suuj(MV-020675) 2016.11.09 2046.11.09

Zag Suuj(MV-020676) 2016.11.09 2046.11.09

277

114

105

496

0

100

200

300

400

500

600

Ovoot Tolgoi Zag Suuj Total Resources

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WORLD-CLASS EQUIPMENT

Machines & Specification Quantity Total

Liebherr Excavator - R996（36m3） 1

8Liebherr Excavator - R996B（33m3） 1

Liebherr Excavator - R9250（15m3） 3

Liebherr Excavator - R974（5.2-8.25m3） 2

Other Excavator 1

Terex Dump Truck - TR100（91t） 928

Terex Dump Truck - MT4400（240t） 19

Atlas Drill - DM45LP(171mm) 1

7Atlas Drill --DM45HP(171mm) 2

Atlas Drill - PV275(250mm) 4

CAT Wheel Loaders – 992K（12.3m3） 23

CAT Wheel Loaders - 950（12.3m3） 1

CAT Dozer -（D10T） 26

CAT Dozer -（D11T） 4

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COAL WASHING PLANT

SouthGobi owns a captive coal washing plant at Ovoot Tolgoi mine site, with annual processing capacity of approximately 2 million tonnes.


SOUTHGOBI VALUE CREATION CATALYSTS

Boosting product quality by washing

Talented workforce in Mongolia and China

Increasing production volume

Expanding customer base in China

Improving cash flow and reducing debt

QUALITY AND COST CONTROL

CUSTOMER BASEEXPANSION

STRONG FINANCIAL MANAGEMENT

TALENTED WORKFORCE

VOLUME GROWTH

QUALITY PRODUCTS


OUR EXPERIENCED BOARD OF DIRECTORS

MR. SUN MAO

Lead Director & Independent Non-executive Director

MR. WANG SHOUGAO

Executive Director &Chief Executive Officer

MR. YAO WEN

Non-executive Director

MR. CHEN ZHIWEI


MR. HE YINGBIN IAN

Independent Non-executive Director

MS. QUAN JIN LAN

Independent Non-executive Director

MR. NIU BEN


MR. LI XIAOXIAO


Over 20+ years’ experience in the accounting sector and has extensive knowledge of Canadian accounting standards, IFRS and Canadian taxation laws.

Founding partner of a private accounting firm in Canada

Current CFO of an exploration mineral company listed on TSX-V

Former director of a metal resources company

Over 30+ years’ experience in the mining industry

Former CEO of a mining company in Mongolia Served as various senior management positions

of China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (“NFC”)

Extensive knowledge in legal & compliance relating to corporate investments, risk management and corporate governance in the metals and mining industry

Current Managing Director and the Head of Investment Department 1 at CIC Capital

Former private practice lawyer at leading international law firms in the USA and China

Over 10+ years of investment and research experience in the financial industry

Current Managing Director of the Investment Department and Assistant GM of China Cinda (HK)

Current Director of various listed companies in HKEx

Over 30+ years in senior executive positions and director of the board

Extensive knowledge in the mining industry Current Director of several listed companies in

Canada and Shenzhen

Extensive experience in financial consulting services, internal audit, corporate finance, risk management, and business acquisition

Current independent financial planner and business consultant in Australia

Former Director of a listed company in ASX

Extensive knowledge in global mining development trends, corporate investments, M&A in the mining sector

Current Vice President of Investment Department 1 at CIC Capital

Served as a Senior Manager at China MinmetalsCorporation

Extensive knowledge in accounting, corporate finance and investment management

Current Investment Director of the Investment Department of China Cinda (HK)

Served as various positions in global banking and accounting field in USA


OUR EXPERIENCED MANAGEMENT TEAM

MR. ZHANG WEIGUO

Chief Financial Officer

MR. GUO AIMING

Chief Operating Officer

MR. ZHANG TAO

Vice President

Over 30+ years’ experience in the mining industry

Former CEO of a mining company in Mongolia Served as various senior management positions

of China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (“NFC”)

Over 30+ years’ experience in financial accounting, auditing, and corporate finance

Worked as various senior finance roles in NFC and CNMC’s global offices

Former President of NFC’s Kyrgyzstan office

Over 20+ years’ experience in the mining sector and technical management

Former Deputy Chief Engineer at Shanxi Hongsha First Construction Co., Ltd.

Served as senior management position of Mongolia project department in Shanxi Hongsha

Over 10+ years’ experience in operational management

Former Senior Supervisor of Corporate Development Department of NFC

Served as various positions in the mining sector and the quality, health, safety and environment department of NFC

MR. WANG SHOUGAO

Executive Director &Chief Executive Officer


CORPORATE CULTURE

BE TRUSTWORTHY AND COMPLIANCE WITH THE REGULATIONS

TAKE RESPONSIBILITY AND UPHOLD HARMONIOUS

DEVELOPMENT

WORK WITH CONSCIENTIOUS AND BE DUTIFUL

FOSTER MUTUAL TRUST AND PROMOTE COOPERATION

FACILITATE MUTUAL RESPECT AND DEVELOP MUTUAL BENEFICIAL

COOPERATION


REWARDS & RECOGNITIONS IN MONGOLIA AND INNER MONGOLIA

2012

Best Social Insurance Payer

Top 100 Tax Payer

2013

Top 100 Tax Payer

2014

Top National Employer-Social Insurance Payer

Top Sustainable OperationCompany award

Top 100 Tax Payer

Top 100 Tax Payer

2016

Best Social Responsibility Enterprise of 2016 –Silk Road Award

Best Social Insurance Payer of the Capital City

Top 100 Tax Payer

2017

Mongolian Outstanding Employers Award of the Year


Outstanding Entrepreneur Award in Healthy and Safety

Top 100 Tax Payer

2018

Best Social Responsibility Enterprise of 2017 –Silk Road Award

Outstanding Operations Award in Ceke District, Inner Mongolia China

Top 100 Tax Payer

Economic Forum 2018

2015 2019

Best Employer of 2018

Best Company of 2018 in occupation, health and safety



LEADERSHIP ROLE IN ENVIRONMENTAL PROTECTION

The Biodiversity Offset Scheme includes:

Environmental monitoring program

Rehabilitation and restoration of the 50-hectare land

Over 2,000 trees plantation

Energy conservation

Recycling and reduction of wastes

Responsive measures in protecting local area

SouthGobi has adopted a Biodiversity Offset Scheme, focusing on mitigation of potential environmental impacts in the desert-steppe zone within the Company’s operational area.


OCCUPATIONAL, HEALTH AND SAFETY - HIGHLIGHTS

The health and safety of the Company’s employees is the top priority.

SouthGobi commits to create safe and healthy workplaces and will continue to promote an effective safety culture throughout the corporation.

Award-winning in occupational, health

and safety

Strict safety management system

and policy

Health and safety training activities

Regular safety inspections

Integrity and responsibility in

operations

As of Q3 2019, lost time injury

frequency rate of 0.08 per 200,000

man hours


COMMUNITY DEVELOPMENT - HIGHLIGHTS

Public welfare donations

National and local communities’ development

Collaboration with our stakeholders,

Career opportunities and skills trainings to the citizens from local communities in Mongolia

Construction of staff buildings

SouthGobi Annual Scholarships

School facilities reconstruction and donations

Communities donations

to develop a sustainable future for society.

SouthGobi remains committed to contributing in the development of communities including:


EMPLOYEE ENGAGEMENT AND GROWTH

Enhance employee engagement

Hold regular professional skills

training

Adopt diversity and equal opportunity

policy

Maximize all employees’ expertise

and abilities

Enhance employees’ productivity


OPERATIONAL STATUS

-11.78

24.52

Profit From Operations(in USD million)

2019 Q1-Q32018 Q1-Q3

0.1

0.48

2018 Q1-Q3 2019 Q1-Q3

Washed Coal(in million tonnes)

1.872.75

2018 Q1-Q3 2019 Q1-Q3

Coal Sales(in million tonnes)

2.473.57

2018 Q1-Q3 2019 Q1-Q3

Raw Coal Production(in million tonnes)


FINANCIAL STATUS

(in USD million） 2018 Q1-Q3 2019 Q1-Q3

Revenue 69.99 97.59 ↑39.4%

Gross Profit 18.18 36.64 ↑101.5%

Gross Profit % 25.9% 37.5% ↑11.6 percentage points

Profit From Operations (11.78) 24.52

Net Profit (30.87) 6.38

Earning Per Share (USD/ Share) (0.11) 0.02


EXPANDING OPPORTUNITIES

Future target

Sustainable production Expansion of its opportunities

in Mongolia and China Improvement in financial position

To be an outstanding international mining enterprise

The total coal imports in Ceke Port was recorded as 9.37 million tonnes.

SouthGobi’s coal sales in Ceke were equal to about 3.57 million tonnes.

SouthGobi accounted for around 38% of the total coal imports in Ceke Port.

In Q1-Q3 2019 In Q4 2019

SouthGobi remains as a top-tier coal mining enterprise in Ceke region of Inner Mongolia, China.


SouthGobi Resources Ltd.

Canada Office: 20th Floor, 250 Howe Street, Vancouver, B.C., V6C 3R8

Hong Kong Office: Unit 1208-10, Tower 1, Grand Century Place,193 Prince Edward Road West, Mongkok, Hong Kong

Tel: +852-2156-1438

Fax: +852-2156-1439

Email: [email protected]

corporate presentationmedia.southgobi.com/201912031515261747252282_en.pdf · current cfo of an...

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