SGQ.V · 2018-01-11 12:00:00

Update on Hong Kong Arbitration Proceeding

Legal & Disputes

January 11, 2018

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

“Company”) announces the receipt on January 10, 2018 of a confidential partial award (final

except as to costs) (“Arbitration Award”) with respect to an arbitration proceeding in Hong Kong

related to a dispute concerning a coal supply agreement between SouthGobi Sands LLC (“SGS”),

a subsidiary of t he Company, and First Concept Industrial Group Limited (formerly known as

First Concept Logistics Limited) (“ First Concept ”). For details of the background of this

arbitration proceeding, please refer to the Company’s Management’s Discussion and Analysis

for the quarter ended September 30, 2017 and, in particular, the section under the heading

“Commercial Arbitration in Hong Kong”, which is available on the SEDAR website at

www.sedar.com and on the website of the Hong Kong Stock Exchange at www.hkexnews.hk.

Pursuant to the Arbitration Award, SGS has been ordered to repay the sum of US$11.5 million

(which SGS had received as a prepayment for the purchase of coal) to First Concept, together

with accrued interest at a simple interest rate of 6% per annum from the date which the

prepayment was made until the date of the Arbitration Award, and then at a simple interest rate

of 8% per annum until full payment. The Arbitration Award is final, except as to costs which

have been reserved for a future award.

The Company is currently considering and reviewing its options with respect to the Arbitration

Award, including exploring ways to work together with First Concept on payment arrangements

that are practical to and are in best interests of both parties. In any event, if SGS fails to satisfy

the Arbitration Award, First Concept may apply to enforce the Arbitration Award against SGS

through judicial measures in courts of Mongolia or in other applicable jurisdiction(s). The

Company will provide further updates on the status of this matter as appropriate.

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

Office: +852 2156 7030

Website: www.southgobi.com