SouthGobi announces resumption guidance relating to trading suspension

January 8, 2019

SouthGobi announces resumption guidance

relating to trading suspension

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

announces that on January 3, 2019 , the Hong Kong Stock Exchange provided the following

resumption guidance for the Company, whereby the Company is to:

(i) conduct a forensic investigation (the “Forensic Investigation”) of past conduct engaged

in by former sen ior executive officers and employees of the Company (the “ Former

Management and Employees ”) which raises suspicions of serious fraud,

misappropriation of Company assets and other criminals acts by the Former Management

and Employees relating to transactions between 2016 and the first half of 2018 involving

the Company, Inner Mongolia SouthGobi Energy Co., Ltd. (a subsidiary of the Company)

and certain coal trading and transportation companies, some of which are allegedly related

to or controlled by the Former Management and Employees or their related persons (the

“Suspicious Transactions”);

(ii) disclose the findings of the Forensic Investigation and take appropriate remedial actions;

and

(iii) inform the market of all material information for its shareholders and investors to appraise

the Company’s position.

The Hong Kong Stock Exchange has advised that it may modify or supplement the trading resumption

guidance if the Company’s situation changes.

Pursuant to Rule 6.01A(1) of the Rules Governing the Listing of Securities on The Stock Exchange

of Hong Kong Limited (the “ Listing Rules”), the Hong Kong Stock Exchange may cancel the listing

of any securities that have been suspended from trading for a continuous period of 18 months. In the

case of the Company, this 18 month period expires on June 16, 2020. The Hong Kong Stock

Exchange has advised that if the Company fails to remedy the issues causing the trading suspension,

fully comply with the Listing Rules to the Hong Kong Stock Exchange’s satisfaction and resume

trading of its commons shares on the Hong Kong Stock Exchange by June 16, 2020, the Listing

Department of the Hong Kong Stock Exchange will recommend the Listing Committee to proceed with

the cancellation of the Company’s listing on the Hong Kong Stock Exchange. Pursuant to Listing

Rules 6.01 and 6.10, the Hong Kong Stock Exchange also has the right to impose a shorter specific

remedial period, where appropriate.

As announced in the Company’s December 15, 2018 press release, the Board of Directors of the

Company has expanded the mandate of the special committ ee of independent non -executive

directors of the Company (the “ Special Committee”) to also include a formal investigation of the

Suspicious Transactions, the implicated Former Management and Employees, and their impact, if

any, on the business and affairs of the Company. The Special Committee expects to engage forensic

accounting experts to assist with the investigation on or before January 11, 2019 and will endeavor

to complete the investigation by the middle of March 2019.

Pursuant to Rule 13.24A of the Listing Rules, the Company is required to announce quarterly updates

on developments relating to its trading resumption plan, including details of the actions taken or to be

taken in order to remedy the issues causing the trading suspension and fully comply with the Listing

Rules, the progress of implementing the trading resumption plan, details of any material change to

the trading resumption plan (including any delays thereof) and impact on the Compa ny’s business

operations. The Company is required to make its first quarterly update on or before March 16, 2019

and announce additional updates every 3 months thereafter until resumption of trading on the Hong

Kong Stock Exchange or cancellation of the Co mpany’s listing on the Hong Kong Stock Exchange

(whichever is earlier).

Trading in the common shares of the Company on the Hong Kong Stock Exchange and the Toronto

Stock Exchange will remain suspended until further notice. The Company will make additiona l

announcements if and when there are further material developments in relation to the investigation.

Forward-Looking Statements

Certain information included in this news release that is not current or historical factual information

constitutes forward-looking statements or information within the meaning of applicable securities laws

(collectively, “forward-looking statements)”, including information about the allegations of fraud,

misappropriation of Company assets and criminal activity involvin g Former Management and

Employees, timing on engagement of forensic experts to assist the Special Committee in the Forensic

investigation and timing on the completion of the Forensic Investigation. Forward-looking statements

are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”,

“anticipate”, "could", "should", "seek", "likely", "estimate" and other similar words or statements that

certain events or conditions “may” or “will” occur. Forward -looking statements are bas ed on certain

factors and assumptions including, among other things, the Special Committee's ability to conclude

the formal investigation in a timely manner, the final results of the formal investigation and other similar

factors that may cause actual resu lts to differ materially from what the Company currently expects.

Actual results may vary from the forward -looking statements. Readers are cautioned not to place

undue importance on forward-looking statements, which speaks only as of the date of this disclosure,

and should not rely upon this information as of any other date. While the Company may elect to, it is

under no obligation and does not undertake to, update or revise any forward -looking statements,

whether as a result of new information, further eve nts or otherwise at any particular time, except as

required by law. Additional information concerning factors that may cause actual results to materially

differ from those in such forward -looking statements is contained in the Company's filings with

Canadian securities regulatory authorities and can be found under the Company’s profile on SEDAR

at www.sedar.com.

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 licences of its other metallurgical and

thermal coal deposits in South Gobi Region of Mongolia. SouthGobi produces and sells coal to

customers in China.

Contact:

Investor Relations

Kino Fu

Hong Kong: +852 2156 7030

Canada: +1 604 762 6783

Email: [email protected]

Website: www.southgobi.com