HONG KONG--Mongolian coal company SouthGobi Resources Ltd. (1878.HK) said Monday it was notified by the Mongolian antigraft regulator that its chief legal counsel, Sarah Armstrong, is no longer a suspect in the agency's investigations and will be able to leave the country.

SouthGobi, controlled by Anglo-Australian resources giant Rio Tinto PLC (RIO), said in October that Ms. Armstrong, an Australian national, was required to remain in Mongolia to help authorities probe corruption allegations.

Mongolian officials earlier said Ms. Armstrong's assistance was needed in the investigation of the former chief of Mongolia's mining authority, who is suspected of illegally handling mining licenses.

SouthGobi said in its statement issued today that the Mongolian Independent Authority Against Corruption "has concluded its questioning of the SouthGobi's Chief Legal Counsel Ms. Sarah Armstrong and that she is no longer a suspect in their investigations." The agency, however, is continuing its investigation, including the sale of "certain SouthGobi licenses to third parties, and the involvement and conduct of government officials in connection with this."

Mongolia, which has huge and still lightly exploited mineral reserves, has been a prime beneficiary of a mining boom in recent years. But resource nationalism has delayed some major foreign-backed projects and thrown others into uncertainty.

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