December 6, 2010 / 3:17 PM / 8 years ago

UPDATE 1-SouthGobi, Winsway sign coal sales agreement

* SouthGobi, Winsway also sign strategic alliance deal

TORONTO, Dec 6 (Reuters) - SouthGobi Resources (SGQ.TO) said on Monday it has signed a contract to sell 3.2 million tonnes of coal to Winsway Coking Coal (1733.HK) in 2011.

The two companies have also signed a strategic alliance agreement whereby SouthGobi has committed to sell at least two million tonnes of coal to Winsway annually. Under the five-year agreement, Winsway will also provide SouthGobi with priority access to its logistics assets.

SouthGobi said that it intends to deliver 800,000 tonnes of coal to Winsway in each quarter of 2011. Pricing for the coal to be sold under this contract has been agreed to for the first quarter of 2011, and will be determined by mutual agreement in advance of each subsequent quarter, the company said in a statement.

The company, which produces coal from its Ovoot Tolgoi mine in Southern Mongolia, did not disclose pricing terms related to the contract.

SouthGobi began mining coal in 2008, and sold 1.3 million tonnes of coal in 2009. The company is on track to sell about 2.5 million tonnes in 2010.

Shares of South Gobi were up 50 Canadian cents at C$12.60 on the Toronto Stock Exchange on Monday morning. (Reporting by Euan Rocha; editing by Peter Galloway)

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