Update on interest payment obligations to CIC

November 20, 2018

Update on interest payment obligations to CIC

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

today announces 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”), total interest payments and associated fees which were due and payable to CIC on

November 19, 2018 amounted to US$41.8 million (“ Outstanding Interest Payable ”). The

Outstanding Interest Payable consists of:

(i) cash interest payments and associated fees in the aggregate amount of US$33.8 million

(“Outstanding Cash Interest Payable”); and

(ii) US$8.0 million worth of PIK interest shares (“ PIK Interest Shares ”) which the Company is

obliged to issue to CIC pursuant to the Convertible Debenture.

As of the date of this announcement, the Company has neither paid the Outstanding Cash Interest

Payable nor issued the PIK Interest Shares to CIC as provided for under the Convertible Debenture,

and has not agreed upon a repayment plan for such amounts with CIC. Consequently, the Company

is in default under the Convertible Debenture and the June 2017 Deferral Agreement.

Pursuant to the terms of the Convertible Debenture and the June 2017 Deferral Agreement, CIC may,

at its discretion, provide notice to the Company and declare all principal, interest and other amounts

owing under the Convertible Debenture and the June 2017 Deferral Agreement immediately due and

payable, and take steps to enforce payment thereof, which would have a material adverse effect on

the business and operations of the Company and may negatively affect the price and volatility of the

Common Shares and any investment in such shares could suffer a significant decline or total loss in

value.

As of the date of this press release, the Company has received no indication from CIC of any intention

to deliver a notice of default under the Convertible Debenture and the June 2017 Deferral Agreement

or to accelerate the amounts outstanding under the Convertible Debenture and the June 2017

Deferral Agreement.

The Company is in constructive discussions with CIC in relation to a repayment plan for the

Outstanding Interest Payable. While the Company believes that an agreement will be reached, there

is no assurance that an agreement will be concluded on terms fa vourable 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 extra caution

when dealing in securities of the Company.

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

discussions with CIC 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

Hong Kong: +852 2156 7030

Canada: +1 604 762 6783

Email: [email protected]

Website: www.southgobi.com