SouthGobi Announces Third Quarter 2025 Unaudited Financial and Operating Results
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The most recent news release from November 14, 2025, announces SouthGobi Resources Ltd.'s unaudited financial and operating results for the third quarter ended September 30, 2025.
Key highlights include: * Financial Performance: The company reported revenue of $148.8 million (USD) and a net profit of $1.1 million (USD) for Q3 2025. This marks a return to profitability after reporting losses in prior quarters. * Operational Performance: Sales volume for the quarter was 3.0 million tonnes. The average realized selling price was $49.0 per tonne, which is a decrease compared to previous quarters. Critically, the unit cost of sales improved significantly to $47.2 per tonne, contributing to the return to profit. The company continues to implement various coal processing methods (screening, wet washing, dry coal processing) to optimize its product mix, which includes premium semi-soft coking coal, standard semi-soft coking coal, thermal coal, and processed coal. * Tax Assessment Resolution: The Mongolian Tax Authority's (MTA) tax penalty for the years 2017-2020 has been finalized at $26.5 million (USD). This confirms the positive outcome of the administrative court proceedings noted in earlier releases. * Debt Deferral: The deferral of $111.6 million in interest and fees owed to JD Zhixing Fund L.P. (JDZF) to August 31, 2026, which became effective on March 20, 2025, is re-confirmed. This provides substantial liquidity relief. * New Debt Financing: A secured bank loan of $33.1 million (USD) from Khan Bank JSC has been obtained. The proceeds are designated for working capital, operating expenses, taxes, and settlement of accounts payable. This loan was previously announced on October 13, 2025, as RMB 235 million.
This news release is largely positive, confirming several anticipated outcomes and showing a notable improvement in profitability, primarily driven by cost control.
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Return to Profitability: The most material positive aspect is the reported net profit of $1.1 million for Q3 2025. This compares favorably to the $14.3 million loss from operations in Q2 2025 and the H1 2025 net loss of over $44.1 million. This turnaround indicates that management's focus on operational efficiency and cost optimization, as outlined in previous outlooks, is starting to yield results, despite a continued decline in the average realized selling price of coal. The unit cost of sales decreasing to $47.2/tonne from $53.9/tonne in Q2 is a significant achievement and directly contributed to this profitability.
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Tax Dispute Finality: The finalization of the $26.5 million tax penalty definitively removes a long-standing and significant legal and financial uncertainty that has plagued the company for years. This outcome is in line with the company's favored position following the appellate court's dismissal of the MTA officials' appeal in June 2025.
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Strengthened Liquidity (Short-term): The re-confirmation of the $111.6 million debt deferral from JDZF to August 31, 2026, and the securing of the $33.1 million (USD) bank loan from Khan Bank are critical for the company's short-term liquidity. The new bank loan provides immediate capital for working capital, operating expenses, and settling payables, which directly addresses the persistent working capital deficiency. This financing, combined with the debt deferral, significantly mitigates the immediate going concern risks previously highlighted.
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Sales Volume and Pricing: Sales volume remains strong at 3.0 million tonnes, consistent with recent periods. However, the average realized selling price continues its downward trend, falling to $49.0/tonne. This reflects ongoing challenges in the international coal market and potential downward pressure from the Chinese property market. The company's ability to achieve profit despite this price erosion underscores the importance of the improved unit cost of sales.
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Going Concern: While the financial position remains challenging with a history of asset and working capital deficiencies, the actions taken (debt deferral, new loan, return to operational profit) support management's assessment of being able to continue as a going concern for at least the next 12 months. The working capital deficiency has shown improvement from Q1 and FY2024.
Overall, the Q3 2025 results indicate operational improvements and critical financial de-risking actions that have been successfully implemented. The transition to profitability, even if modest, is a positive development following a series of negative financial reports.
SouthGobi Resources Ltd. is a coal mining and exploration company primarily focused on projects in Mongolia. Its flagship operation is the Ovoot Tolgoi Mine in South Gobi Province, Mongolia, located approximately 45 km north of the Mongolia-China border (Ceke border crossing). The mine has been in production since 2008 and produces various coal products, including premium semi-soft coking coal, standard semi-soft coking coal, higher ash content semi-soft coking coal, and thermal coal. The company has been actively implementing screening, wet washing, and dry coal processing methods to enhance its product mix and meet Chinese import quality standards.
The company also holds the Soumber Deposit, located approximately 20 km east of Ovoot Tolgoi. Recent NI 43-101 technical reports (filed December 2, 2024) provided updated mineral resource estimates for Ovoot Tolgoi and established first-time mineral reserve estimates for Soumber, indicating a significant long-term resource base.
The company's operations are strategically positioned to serve the Chinese coal market, with infrastructure advantages like a paved highway connecting Ovoot Tolgoi to the border crossing.