SouthGobi Resources has closed the initial tranche of a two tranche private placement with Novel Sunrise Investments Limited. The initial tranche closing consisted of the issuance of more than 10 million mandatory convertible units of the company to Novel Sunrise for US$3.5 million.
The private placement was approved by the Toronto Stock Exchange pursuant to the financial hardship provisions of the TSX Company Manual on March 2, 2015 and the TSX has informed the company that it has been placed on remedial delisting review.
The closing of the initial tranche was completed pursuant to the terms of a private placement agreement entered into between the company and Novel Sunrise on February 24, 2015. On that date Novel Sunrise also entered into a Sale and Purchase Agreement with Turquoise Hill Resources, the company’s largest shareholder, to purchase more than 48 million common shares of the company held by Turquoise Hill subject to applicable regulatory approvals and other customary conditions.
Each Mandatory Convertible Unit issued to Novel Sunrise in the initial tranche is convertible on a one for one basis into a common share of the company, resulting in a deemed issue price of Can$0.432 per common share. The Mandatory Convertible Units mandatorily convert into common shares upon the earlier of the closing of the Novel SPA or the termination thereof.
Upon closing of the Novel SPA, the private placement agreement provides for a further subscription by Novel Sunrise of up to 11,618,887 common shares for additional gross proceeds of approximately US$4.0 million on or before April 10, 2015.
In accordance with the private placement agreement, on March 3 Ted Chan was appointed to the company's management team and joined the company's Board of Directors as an executive director. Mr Chan has more than 25 years of enterprise management experience. He is currently president of Novel Sunrise which, together with its affiliated companies in China, is a leading private enterprise in the real estate, logistics and supply chain management industries.