SouthGobi Energy Resources: New Star in Mongolia

SouthGobi Energy Resources (SGQ) announced on 21 January 2010 that it has priced its share offering on the Hong Kong Stock Exchange (HKEx) at C$17 or HK$ 126.04 per share, the top end of the indicative price range. The shares have been significantly oversubscribed on the back of strong investor demand.  As the only Mongolian coal producer listed outside Mongolia, SGQ attracted strong interest from Asian institutional investors. Chine Investment Corp and Temasek, two prominent sovereign wealth funds, have subscribed for US$50mn worth shares each as cornerstone investors, sending a powerful signal to institutional and retail investors alike. SouthGobi to amass up to US$1 billion in four months (US$500mn from CIC in October 2009 and up to US$500mn from this global offering) which will make SGQ the best capitalized resource company in Mongolia. SGQ is already an outstanding success story of bringing a coal mine from exploration into production in a record time.  The next target is to become the largest coal producer in Mongolia in coming years.  Thanks to superb management team, strong balance sheet and pole position in Mongolia in terms of expansion and M&A deals, SGQ has all ingredients in place to transform into one of the most dynamic resource companies in Asia. We maintain our target price of C$24 per share, representing 35% upside to current SGQ’s share price of C$17.8 (Jan 22, 2010). 

To download the report please login.