Update on interest payment obligations to CIC

November 22, 2017

Update on interest payment obligations to CIC

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

“Company”) announces today that pursuant to the convertible debenture between China

Investment Corporation ( “CIC”) and the Company signed in November 2009 (the “ Convertible

Debenture”) and the deferral agreement between CIC and the Company executed on June 12,

2017 (the “June 2017 Deferral Agreement”), the total cash interest payments and associated

fees which were du e and payable to CIC on November 19, 2017 amounted to US$17.8 million

(“November 2017 Cash Interest Payable ”). Pursuant to the Convertible Debenture, t he

Company is also obliged to issue US$4.0 million worth of PIK interest shares to CIC on

November 19, 2017 (“November 2017 PIK Interest Payable ”).

As of the date of this announcement, the Company has neither paid the November 2017 Cash

Interest Payable nor issued the PIK interest shares to CIC within the cure period provided for in

the Convertible Debenture or agreed upon a repayment plan for such amount s with CIC.

Accordingly the principal amount outstanding and all accrued and unpaid interest and other

amounts owing under the Convertible Debenture and the June 2017 Deferral Agreement would

immediately become due and payable in the event that CIC provides notice to the Company.

The Company is in discussions with CIC for a repayment plan for the November 2017 Cash

Interest Payable and November 2017 PIK Interest Payable. While the Company believes that

an agreement will be reached , there is no assurance that an agreement will be concluded on

terms favourable to the Company or at all. In such event, the value of the Company’s common

shares could be materially and negatively affected. As a result, shareholders of the Company

and potential investors are advised to exercise caution when dealing in securities of the

Company.

The Company will provide further updates of the status of the interest payment obligations 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

Email: [email protected]

Website: www.southgobi.com