SouthGobi announces an update on enforcement of Arbitration Award with First Concept

1

June 2, 2020

SouthGobi announces an update on enforcement of

Arbitration Award with First Concept

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

“Company”) announces receipt of a letter dated June 1, 2020 (the “ Demand Letter”) from

legal counsel to First Concept Industrial Group Limited (“ First Concept ”) demanding

repayment of the outstanding sums and interests pursuant to an enforcement order issued in

January 2020 in relation to the arbitration award (the “ Arbitration Award”) related to a coal

supply agreement with First Concept. The Demand Letter stated that if the Company fails to

repay the outstanding payments on or before June 10, 2020, First C oncept will initiate a

bankruptcy case in the relevant court of Mongolia against SouthGobi Sands LLC, the

Company’s subsidiary in Mongolia. For more information regarding the Arbitration Award, the

status of the settlement deed in the relation to the Arbitration Award and the enforcement of

the Arbitration Award in Mongolia, please refer to the Company’s prior announcements dated

November 16, 2018, February 19, 2020 and March 30, 2020.

The Company has retained and is consulting with independent Mongolian legal counsel to

consider appropriate actions. The Company will provide further updates regarding the

enforcement of the Arbitration Award as and when appropriate.

About SouthGobi

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

flagship Ovoot Tolgoi coal mine in Mongolia. SouthGobi produces and sells coal to customers

in China.

2

Contact:

Investor Relations

Office: +852 2156 1438 (Hong Kong)

+1 604 762 6783 (Canada)

Email: [email protected]

Website: www.southgobi.com