SouthGobi Announces RMB 235 Million Secured Loan

Executive Summary

• SouthGobi’s Mongolian subsidiary, Southgobi Sands LLC (SGS), entered into a secured loan agreement with Khan Bank JSC for up to RMB 235 million (≈ CAD 46.1 million).
• The 18‑month loan carries interest at 10% per annum, interest‑only payments for the first 12 months and principal amortization over months 13‑18, and is secured by a broad package of immovable and movable assets of SGS.
• Proceeds will be used to fund working capital, operating expenses, taxes and accounts payable, enhancing SGS’s liquidity position.

Key Details

• Loan Amount: Up to RMB 235,000,000 (≈ CAD 46,095,250).
• Lender: Khan Bank JSC.
• Term: 18 months from initial disbursement.
• Interest Rate: 10% per annum on outstanding principal; default interest an additional 20% of the loan interest.
• Fees: 0.5% loan service fee (capped at RMB 7,500 ≈ CAD 1,471) and 0.5% amendment fee (same cap).
• Repayment Schedule: Interest‑only for months 1‑12; principal amortization during months 13‑18.
• Security Package: First‑ranking pledges over SGS immovable properties at Nariin Sukhait (office buildings, employee accommodation, maintenance shop, camp infrastructure, gas/fuel station, mining and infrastructure land parcels) plus movable/intangible assets (mining licence, exploration data, feasibility studies, accounts receivable, inventory).
• Collateral Registration: Subject to customary conditions precedent, including registration of the pledged collateral.
• Use of Proceeds: Working capital, operating expenses, tax obligations, and settlement of SGS accounts payable.
• Convertible Debenture Interaction: JD Zhixing Fund L.P. (JDZF) waived its rights over the pledged assets for the loan’s duration under the terms of a convertible debenture issued in 2009 and a March 2025 deferral agreement, ensuring no additional charges are placed on those assets.
• Documentation Availability: English version of the Loan Agreement filed on SEDAR+ (www.sedarplus.ca).

Notable Quotes

(No direct quotes were provided in the release.)