ANNUAL%20REPORT%202015%20eng

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Notes to Consolidated Financial Statements 2 SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Basis of preparation of the financial statements (Continued) – Future trading may not be in line with the assumption in the Group’s latest forecasts, the achievability of which is dependent upon the current economic environment and the price of coking coal market; – The Group is due to redeem the senior notes (the “Notes”) issued by the Company with a principal amount of USD600,000,000 on 29 March 2017 (see Note 26). As announced by the Company on 26 January 2016, 14 March 2016 and 23 March 2016, the Group has been actively seeking for the potential restructuring of the Notes (the “Notes Restructuring”) with the holders of the Notes (the “Holders”). Management maintains regular discussions with the appointed restructuring advisers, the legal advisers, the financial advisers and the Holders. These discussions remain constructive, and considering the commercial basis of this restructuring, the Directors have no reason to believe that the restructuring will not be achieved after formulating and agreeing a detailed plan protecting the interests of all stakeholders of the Group in this regard; – The Group is due to repay the secured interest-bearing borrowings from BNP Paribas, Singapore Branch and Industrial and Commercial Bank of China Limited (collectively, the “Lenders”) (the “Facility”) with a principal amount of USD93,000,000 within the year ending 31 December 2016 (see Note 23). Management has initiated discussions with the Lenders for revised terms of the debt facility. Given the material amount of the Facility and also existing Intercreditors Agreement between Lenders and Holders in relation to the shared securities and guarantees, the discussions to revise the Facility are undertaken in connection with the Notes Restructuring. The Directors continue to maintain regular discussion with the Lenders and to seek for constructive resolutions; – The Group is due to repay the secured interest-bearing borrowings from European Bank for Reconstruction and Development, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., and Deutsche Investitions-und Entwicklungsgesellschaft mbH (the “Parallel Lenders”) with a principal amount of USD51,818,000 within the year ending 31 December 2016 (see Note 23). On 11 March 2016, the Group had entered into Deed of Termination and Release (the “DTR”) with the Parallel Lenders. Pursuant to the DTR, the Group shall endorse to the Parallel Lenders certain promissory notes issued by GoM (see Note 36(a)) with an amount totalling approximately MNT105.6 billion, the obligations under the borrowings will be discharged in their entirety and the relevant security thereunder will be released after 121 calendar days plus 2 business days from the signing of the DTR. The Group had completed the endorsement of promissory notes as required by the DTR as of the date of these consolidated financial statements; – The Group is due to repay promissory notes of USD72,000,000 to QGX Holding Ltd. (“QGX”) on 31 March 2016 (see Note 24(iv)). Throughout year ended 31 December 2015, extension of the outstanding promissory note payables had been granted by QGX on a quarterly basis. The Directors are seeking to extend such support from QGX into upcoming future in a contractual form. With full awareness of the Notes Restructuring, the reaching of such contract is on the condition of the achievability of the restructuring of the Notes, and meanwhile, the Directors continue to maintain regular and constructive discussions with QGX. Annual Report 2015 117
Notes to Consolidated Financial Statements 2 SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Basis of preparation of the financial statements (Continued) The Directors consider that, among all the above-mentioned matters and conditions, the key determining factor lies with the Notes Restructuring and it is the material uncertainty in the going concern assumption. Based on the Group’s business plan and cash flow forecast, and assuming having the ongoing support from its bankers, lenders, creditors and shareholders, the Director expect to have sufficient financial resources to cover its operating costs and to meet its financing commitments. The Directors have identified a number of management initiatives that the business could pursue and which they are confident these can be achieved to mitigate the liquidity and solvency pressure including: – The Group had updated the service agreement with the mining contractor by taking decreased charge rates; such cost saving effect is expected to be revealed during year ending 31 December 2016 and thereafter; – The Group manages capital expenditure to minimum levels; – Even the progress is not as rapid as originally envisaged, The Group remains focused on pursuing the opportunity to engage in coal mining, processing, transportation and exploration activities at Tavan Tolgoi coal deposit in Mongolia. The ultimate benefit is expected from the significant improvement of the competitive position of Mongolian coal in international markets by consolidating commercial operations within the Tavan Tolgoi coalfield under public private partnership (“PPP”) model; – The Group is seeking prepayments at reaching new coal off-take agreements, and negotiating business terms with suppliers to ease cash flow demands. Given expectation of having ongoing financial support from its bankers, lenders, creditors and shareholders, the Directors are satisfied that the Group will be able to meet its financial obligations as and when they fall due for the twelve months from 31 December 2015. Accordingly, the Directors are of the opinion that it is appropriate to prepare the consolidated financial statements on a going concern basis. The consolidated financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate. The consolidated financial statements for the year ended 31 December 2015 comprise the Company and its subsidiaries (together referred to as “the Group”) and the Group’s interest in associates and a joint venture. 118 Annual Report 2015
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(Incorporated in the Cayman Islands
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Company Profile Mongolian Mining Co
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Corporate Information BOARD OF DIRE
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Directors and Senior Management BOA
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Directors and Senior Management Gan
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Directors and Senior Management SEN
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Group Structure 14 Annual Report 20
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Management Discussion and Analysis
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Sustainability Report OUR APPROACH
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Sustainability Report Fair operatin
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Sustainability Report Figure 3. HR
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Sustainability Report The Company
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Sustainability Report In September
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Sustainability Report Figure 5. LTI
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Sustainability Report Biodiversity
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Financial Summary SUMMARY DATA OF C
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Appendix I Technical details of the
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Appendix I Criteria Commentary •
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Appendix I Criteria Commentary Infr
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