Tuesday, February 24, 2015

[BREAKING: SGQ raising US$7.5m from new strategic partner, TRQ sells remaining non-NUR stake in SGQ]

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Tuesday, February 24, 2015

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Turquoise Hill Announces Sale of Remaining Stake in SouthGobi Resources

VANCOUVER, BC--(Marketwired - February 24, 2015) - Turquoise Hill Resources (NYSE:TRQ) (NASDAQ: TRQ) (TSX: TRQ) (Turquoise Hill or the Company) today announced that it has entered into a share purchase agreement with Novel Sunrise Investments Limited (the Purchaser), a private investment holding company with affiliated Chinese-based enterprises in real estate, logistics and supply-chain management, providing for the sale to the Purchaser of its remaining stake in SouthGobi Resources Ltd. (SouthGobi), an integrated coal mining, development and exploration company operating in Mongolia.

Under the terms of the agreement, which was effected in accordance with and in reliance upon the "private agreement" exemption under the Canadian takeover bid regime, Turquoise Hill has agreed to sell 48,705,155 common shares that it owns in the capital of SouthGobi to the Purchaser at a price of CDN$0.35 per common share payable in cash. Half of the aggregate purchase price, representing approximately CDN$8.5 million, will be received by the Company at closing and the balance of approximately CDN$8.5 million will be payable on the first anniversary of the closing of the transaction.

In addition, Turquoise Hill has the option (the Put Option) to require the Purchaser to acquire an additional number of SouthGobi common shares, up to a pre-agreed maximum number of additional shares and in any event provided the Purchaser will not be required to own more than 29.99% of the outstanding SouthGobi shares following exercise of the Put Option, also at a price of CDN$0.35 per share, in the event the transaction contemplated by the share purchase agreement entered into by Turquoise Hill with National United Resources Holdings Limited (NUR) announced and entered into in July 2014 is not completed by April 30, 2015 (or such later outside date as may be extended by Turquoise Hill and NUR but no later than September 30, 2015 for the purposes of Turquoise Hill's purchase agreement with the Purchaser) (the TRQ-NUR Long Stop Date).

Closing is subject to certain closing conditions, including certain Canadian and Hong Kong stock exchange and securities regulatory matters. Closing is expected to occur no later than March 31, 2015.

Turquoise Hill has also been informed that, concurrently with the entering into of its share purchase agreement with the Purchaser, SouthGobi has entered into a subscription agreement with the Purchaser in respect of a private placement of 21,750,000 mandatory convertible units convertible on a one-for-one basis into new common shares to be issued by SouthGobi, of which 10,131,113 are expected to be issued upon closing of a first tranche of the private placement on or about March 3, 2015 and of which the remainder of the private placement, representing up to an additional 11,618,887 common shares, is expected to close concurrently with the transaction under the share purchase agreement with the Purchaser. Turquoise Hill understands that, assuming and giving effect to the entirety of the private placement and the conversion of all mandatory convertible units into common shares, SouthGobi would have 240,503,970 issued and outstanding common shares.

Following closing of the sale transaction with the Purchaser and assuming and giving effect to the issuance of 10,131,113 common shares (following conversion of the mandatory convertible units) by SouthGobi to the Purchaser upon closing of the first tranche of the private placement, Turquoise Hill would continue to own 56,102,000 SouthGobi common shares that are subject to the share purchase agreement with NUR, representing approximately 24.51% of the then issued and outstanding SouthGobi shares.

Following the closing of this transaction and the previously announced transaction with NUR, Turquoise Hill will no longer own or control any common shares of SouthGobi.

In the event the previously announced transaction with NUR is not completed by the agreed upon TRQ-NUR Long Stop Date and Turquoise Hill exercises its Put Option, and assuming and giving effect to the entirety of the SouthGobi private placement, Turquoise Hill would continue to own 54,430,015 common shares of SouthGobi, representing approximately 22.63% of the then issued and outstanding SouthGobi common shares.

About Novel Sunrise

Novel Sunrise is an investment holding company registered in the British Virgin Islands. Novel Sunrise, together with its affiliated companies in China (collectively, the "Novel Group"), is a leading private enterprise in the real estate, logistics and supply chain management industries. The Novel Group began its real estate business in the 1990s through an entity named Beijing Wanhai Real Estate Development Co. Ltd., which developed several high quality residential and commercial properties in gateway cities of China. With the growth of its real estate business, the Novel Group significantly increased its involvement in the procurement of construction materials and established strong relationships, as a customer, with a number of the leading steel and cement manufacturers in China. In the 2000s, the Novel Group further expanded its business into the logistics and trading of construction materials including iron ore, coking coal, steel and cement products. The Novel Group has since grown these relationships and developed further relationships with well-established state owned trading corporations. As it has expanded its business, the Novel Group has also established strong relationships with key commercial banks in China and Hong Kong.

Link to release


SouthGobi Resources Announces Private Placement for Proceeds of Up to US$7.5 Million With Novel Sunrise Investments Limited as a Proposed New Significant Investor and Strategic Partner

HONG KONG, CHINA--(Marketwired - Feb. 24, 2015) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) ("SouthGobi" or the "Company") announces it has entered into a private placement agreement with Novel Sunrise Investments Limited ("Novel Sunrise") as a proposed new significant investor and strategic partner for proceeds of up to approximately US$7.5 million, with an initial tranche of approximately US$3.5 million.

Pursuant to the private placement agreement Novel Sunrise will subscribe for an initial tranche of 10,131,113 Mandatory Convertible Units for subscription proceeds of approximately US$3.5 million. The Mandatory Convertible Units are convertible on a one for one basis for common shares in the Company (each, a "Common Share"). Upon closing of the Novel SPA, as described below, the private placement agreement provides for a further subscription of up to 11,618,887 Common Shares for additional gross proceeds of approximately US$4.0 million.

The completion of the private placement and related transactions is subject to acceptance of notice of the placement by the Toronto Stock Exchange ("TSX") pursuant to the financial hardship provisions of the TSX Company Manual. As a result of relying on the financial hardship provisions, the Company will be placed on remedial delisting review. See the section entitled TSX Financial Hardship Exemption Application and Status of Listing on TSX below for more information.

The Company has been advised that Novel Sunrise has entered into a Sale and Purchase Agreement ("Novel SPA") with Turquoise Hill Resources Ltd. ("Turquoise Hill"), the Company's largest shareholder, to purchase 48,705,155 Common Shares currently held by Turquoise Hill, subject to applicable regulatory approvals and other customary conditions. The Company has been advised that the closing of the Novel SPA is expected to occur no later than March 31, 2015.

Private Placement

Proposed Funding Plan

Sale and Purchase Agreement

TSX Financial Hardship Exemption Application and Status of Listing on TSX

Current cash position

At February 23, 2015, the Company has cash of US$2.7 million. The funds raised from the initial tranche of the private placement are expected to enable the Company to continue to operate as a going concern through March 31, 2015, and upon closing of the balance of the private placement, through April 30, 2015. The Company intends to continue to seek additional financing to fund its operations and meet its objectives following the closing through the implementation of the financial plan described above.

Link to release



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