SouthGobi Resources is in discussion with Turquoise Hill Resources regarding a new repayment plan for a shareholder loan which was due for repayment on April 22.

The two companies entered into a deferral agreement on October 27, 2015, in which Turquoise Hill agreed to defer the repayment of the shareholder loan to April 22.

As SouthGobi had not repaid the shareholder loan by that date, it hopes that the new discussions will result in a new repayment plan. The loan has an outstanding loan principal of US$3.4 million and interest accrued up to April 22 of US$700,000.

While SouthGobi believes it will be able to reach such a new repayment plan with Turquoise Hill, there is no assurance that the repayment plan will be favourable to SouthGobi.

SouthGobi, which is listed on the Toronto and Hong Kong stock exchanges, owns and operates its flagship Ovoot Tolgoi coal mine in Mongolia. It also holds the mining and exploration licences of its other metallurgical and thermal coal deposits in the South Gobi region of Mongolia.

SouthGobi produces and sells coal to customers in China.