Le Lézard
Classified in: Mining industry
Subject: MISCELLANEOUS

Land Breeze II S.à r.l. Announces Sale Agreement


LUXEMBOURG, May 26, 2022 (GLOBE NEWSWIRE) -- Land Breeze II S.à r.l. issues the following press release in accordance with Canadian Securities Administrators' National Investment 62-103:

Item 1. Security and Reporting Issuer

1.1 State the designation and securities to which this report relates and the name and address of the head office of the issuer of the securities.

Common shares of the capital of SouthGobi Resources Ltd. ("SouthGobi"), whose head office is located at 1100 ? 355 Burrard Street, Vancouver, British Columbia, Canada, V6C 2G8.

1.2 State the name of the market in which the transaction or other occurrence that triggered the requirement to file this report took place.

The agreement to sell all of the acquiror's interest in SouthGobi is a private transaction that was negotiated, and will be completed, outside of Canada.

Item 2. Identity of the Acquiror

2.1 State the name and address of the acquiror.

Land Breeze II S.à r.l. ("LB")
18, avenue Marie-Therese
L-2132, Luxembourg

2.2 State the date of the transaction or other occurrence that triggered the requirement to file this report and briefly describe the transaction or other occurrence.

LB, a wholly-owned subsidiary of China Investment Corporation ("CIC"), continues to own and controls 64,766,591 common shares of SouthGobi, representing approximately 23.62% of the issued and outstanding common shares of SouthGobi as of May 11, 2022. LB additionally owns convertible debenture in the principal amount of US$250 million issued by SouthGobi (the "Debenture"). All of the foregoing interests were previously disclosed in the early warning report filed and dated January 12, 2017.

On May 26, 2022, JD Zhixing Fund L.P. agreed to purchase all the interest of SouthGobi held by LB for a purchase price of US$7,000,000 in aggregate to be paid for the common shares, equivalent to approximately Cdn$8,981,268 in aggregate and Cdn$0.1387 per common share, and for an additional purchase price not exceeding the principal amount of the Debenture to be paid for the Debenture.  

Item 3. Interest in Securities of the Reporting Issuer

3.1 State the designation and number or principal amount of securities acquired or disposed of that triggered the requirement to file this report and the change in the acquiror's securityholding percentage in the class of securities.

See item 2.2 above.

3.2 State whether the acquiror acquired or disposed ownership of, or acquired or ceased to have control over the securities that triggered the requirement to file the report.

See item 2.2 above.

3.3 State the designation and number or principal amount of securities and the acquiror's securityholding percentage in the class of securities, immediately before and after the transaction or other occurrence that triggered the requirement to file this report.

LB has agreed to sell all its 64,766,591 common shares of SouthGobi, representing approximately 23.62% of the issued and outstanding common shares of SouthGobi as of May 11, 2022. LB has also agreed to sell the Debenture in the principal amount of US$250 million which, if converted at the current conversion price of Cdn$8.88 per share (and the currency exchange rate of 0.7794) would represent approximately 36.12 million additional common shares. If the Debenture in the principal amount of US$250 million that remains outstanding is fully converted into SouthGobi common shares at the current conversion price of Cdn$8.88 and the currency exchange rate of 0.7794 then, together with the actual common shares owned or controlled by LB as of the date hereof, LB (and CIC indirectly through LB) would own or control a total of approximately 100.89 million common shares or approximately 32.51% of the common shares of SouthGobi (calculated with a denominator inclusive of the number of common shares convertible under the Debenture). LB has no current intention to convert the Debenture. Upon completion of the sale LB (and CIC indirectly through LB) will hold no securities of SouthGobi. The completion and settlement of the sale is subject to certain condition precedents including the approval of SouthGobi.

Item 4. Consideration Paid

4.1 State the value, in Canadian dollars, of any consideration paid or received per security and in total.

See item 2.2 above with respect to consideration payable under the agreed sale agreement.

Item 5. Purpose of the Transaction

State the purpose or purposes of the acquiror and any joint actors for the acquisition or disposition of securities of the reporting issuer. Describe any plans or future intentions which the acquiror and any joint actors may have which relate to or would result in any of the following:

  1. the acquisition of additional securities of the reporting issuer, or the disposition of securities of the reporting issuer;
  2. a corporate transaction, such as a merger, reorganization or liquidation, involving the reporting issuer or any of its subsidiaries;
  3. a sale or transfer of a material amount of the assets of the reporting issuer or any of its subsidiaries;
  4. a change in the board of directors or management of the reporting issuer, including any plans or intentions to change the number or term of directors or to fill any existing vacancy on the board;
  5. a material change in the present capitalization or dividend policy of the reporting issuer;
  6. a material change in the reporting issuer's business or corporate structure;
  7. a change in the reporting issuer's charter, bylaws or similar instruments or another action which might impede the acquisition of control of the reporting issuer by any person or company;
  8. a class of securities of the reporting issuer being delisted from, or ceasing to be authorized to be quoted on, a marketplace;
  9. the issuer ceasing to be a reporting issuer in any jurisdiction of Canada;
  10. a solicitation of proxies from securityholders; and
  11. an action similar to any of those enumerated above.

LB has agreed to sell all its SouthGobi common shares and the Debenture. LB has rights under the Debenture to convert the US$250 million principal amount under the Debenture into common shares of SouthGobi although it has no current intention to convert the Debenture. Other than the foregoing, LB has no current intention to undertake any of the activities identified in (a) to (k) although it may discuss some or all of those activities with management or the board of directors of SouthGobi from time to time should SouthGobi not be able to comply with the terms of the Debenture or deferral of interest arrangements between LB and SouthGobi.

LB has certain rights to nominate directors to the SouthGobi board of directors. While the Debenture is outstanding, or while CIC has a minimum 15% direct or indirect stake in SouthGobi, LB has the right to nominate one director to SouthGobi's board of directors. LB also has the right to nominate two additional directors if it and its affiliates have a minimum 20% direct or indirect stake in SouthGobi or one additional director if it and  its affiliates have a minimum 10% direct or indirect stake in SouthGobi in connection with deferral of interest arrangements with SouthGobi relating to the Debenture. Upon completion of the sale it is expected that the LB nominated directors will resign.

Item 6. Exemption

If the acquiror relies on an exemption from requirements in securities legislation applicable to formal bids for the transaction, state the exemption being relied on and describe the facts supporting that reliance.

Not applicable.

A copy of the amended early warning report to which this press release relates will be filed shortly on www.sedar.com under SouthGobi's issuer profile.

Land Breeze II S.à r.l.
18, avenue Marie-Therese
L-2132, Luxembourg

For more information, please contact:

Land Breeze II S.à r.l.
NIU, Ben
+86 (10) 8409-6718
[email protected] (Email)



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