Second District Criminal Court of Mongolia Refuses SouthGobi's Appeal to the Supreme Court in Tax Case
SouthGobi challenges the legal grounds for the Court's action and will continue to defend itself through all available legal means
HONG KONG, CHINA--(Marketwired - Apr 29, 2015) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) ("SouthGobi" or the "Company") announced on March 28, 2015, that the court hearing for the Company's appeal against the verdict issued by the Second District Criminal Court of Justice ("Tax Verdict") took place on March 25, 2015 at the 10th Appeal Court for Criminal Case of Mongolia and the panel of three appointed judges decided to uphold the Tax Verdict and dismissed the appeal by the Company.
The Company has firmly and consistently rejected the Tax Verdict and subsequently the Appeal Verdict which it believes were both reached on the basis of the same erroneous and false reports. The Company reiterates that there is a complete lack of evidence to support the two verdicts.
As a consequence, the Company filed on April 24, 2015 an appeal ("Appeal") against the Appeal Verdict with the Supreme Court of Mongolia ("Supreme Court"). In accordance with Mongolia's criminal procedure law, the Company filed the Appeal through the Second District Criminal Court of Justice. On April 29, 2015, the Company was informed that the Second District Criminal Court of Justice had refused the Appeal citing that the Company, as a civil defendant, does not have the right to file an appeal with the Supreme Court.
The Company firmly rejects and challenges the legal grounds for the action by the Second District Criminal Court of Justice. The Company believes the Court has exceeded its authority in refusing the appeal. The Company is of the view that only the Supreme Court itself has the authority to decide on the question of admissibility of the Appeal. On April 29, 2015, the Company sent a letter and has filed an official protest with the Second District Criminal Court of Justice against their decision. Pending a written response from the Court, the Company will continue to defend itself through all available legal means.
Should the Company be successful in its challenge of the action by the Second District Criminal Court of Justice, the Appeal will be reviewed by the Supreme Court of Mongolia itself. If the Supreme Court of Mongolia upon reviewing the Appeal upholds the decision of the lower courts, then the Company will have the right to file a complaint with the Chief Justice within 30 days from the date it receives the written judgment of the Supreme Court seeking a review of its case by the full bench of the Supreme Court. The Tax Penalty would only be payable after a final appeal.
The consequences for the Company of the Tax Verdict, the Appeal Verdict and the Company's challenge against the Second District Criminal Court of Justice are uncertain. If the Company's efforts to have the Appeal heard by the Supreme Court are unsuccessful, or the Tax Verdict is not reversed on final appeal, or if the amount of the Tax Penalty is not reduced upon exhaustion of the foregoing appeal process, the Company may not be able to pay the Tax Penalty or the final assessed amount, which could result in voluntary or involuntary insolvency proceedings involving the Company. For further information see the Risk Factor entitled "If the Company is unsuccessful in appealing the Tax Verdict it will likely not have sufficient cash resources to satisfy the penalty imposed thereunder" in the Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2014 as available on www.sedar.com.
The Company reiterates that it has not committed tax evasion, and is resolute in continuing to defend itself through all available legal means.
About SouthGobi
SouthGobi, listed on the Toronto and Hong Kong stock exchanges, is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, a Mongolian registered company that holds the mining and exploration licences in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.
Contact
SouthGobi Resources Ltd.
Investor Relations
Galina Rogova
Office: +86-21-6103-3550
galina.rogova@southgobi.com
SouthGobi Resources Ltd.
Media Relations
Altanbagana Bayarsaikhan
Office: +976-7007-0710
altanbagana.bayarsaikhan@southgobi.com
www.southgobi.com