Dismissal of the lawsuit against SGS based on arbitration clause in fuel supply agreement

January 25, 2017

Dismissal of the lawsuit against SGS

based on arbitration clause in fuel supply agreement

HONG KONG – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the

“Company”) announces that the Khan-Uul District Civil Court of First Instance in Mongolia (the

“Court”) has dismissed the litigation raised by Magnai Trade LLC (" MT") against SouthGobi

Sands LLC (" SGS"), a subsidiary of the Company , in relation to a claim of MNT 22.2 billion

(approximately US$ 8.9 million) on the basis that if the dispute cannot be amicably resolved, it

must be settled by arbitration in Mongolia, rather than litigation, in accordance with the express

provisions of the fuel supply agreement between SGS and MT.

The Company values its business relationship with MT and will continue to resolve the dispute

with MT through continuing business discussions, or through arbitration if a resolution cannot

be reached.

About SouthGobi

SouthGobi, listed on the Toronto and Hong Kong stock exchanges, owns and operates its

flagship Ovoot Tolgoi coal mine in Mongolia. It also holds the mining and exploration licences

of its other metallurgical and thermal coal deposits in South Gobi Region o f Mongolia.

SouthGobi produces and sells coal to customers in China.

Contact:

Investor Relations

Kino Fu

Office: +852 2156 7030

Email: [email protected]

Website: www.southgobi.com