Currently viewing Global edition

SouthGobi shares suspended from trade

The securities of SouthGobi Resources (TSX:SGQ) have been suspended from trade in Toronto and Hong Kong after new information emerged on the conduct of former senior executives and employees.
SouthGobi shares suspended from trade SouthGobi shares suspended from trade SouthGobi shares suspended from trade SouthGobi shares suspended from trade SouthGobi shares suspended from trade

SouthGobi's stock has been suspended from trade in Toronto and Hong Kong

Staff Reporter

Trading will remain suspended until securities regulators have been satisfied that the company's business and affairs are above board. In Hong Kong, regulators are waiting on the company to file an insider information report.

SouthGobi said last weekend it had filed a complaint with local Mongolia police after the company received new information regarding its former staffers' past conduct. The information raised suspicions of serious fraud, misappropriation of company assets and other criminal acts, the company said.

The SouthGobi board has expanded the mandate of a special committee of independent directors that was formed in November 2017 to conduct a formal internal investigation into the arrest of, and charges against the company's former CEO, to also include a formal investigation into the suspicious transactions and their potential impact on the company.

The alleged irregular activities took place between 2016 and the first half of 2018, involving the company, its subsidiary Inner Mongolia SouthGobi Energy and certain coal trading and transportation companies, some of which are supposedly related to or controlled by the former management and staff.

The Rio Tinto-owned business is no stranger to controversy, having had previous run-ins with Mongolian and Chinese authorities.

In October 2012, chief legal councel Sarah Armstrong was detained for several months in Mongolia due to allegations that company management had bribed Mongolian state officials. The allegations resulted in the shutdown and search of SouthGobi headquarters in Mongolia by a Mongolian anti-corruption agency.

More recently, the Mongolia-focused coal producer has signed a US$13.89 million settlement deed with First Concept Industrial Group over an outstanding debt, following heightened concerns expressed by management about SouthGobi's ongoing financial viability.

The equity last traded at C13.5c, down 25% over the past 12 months. It currently has a market value of $36.81 million, far off its once lofty worth of more than C$3 billion.