Court of Justice in Mongolia Returns the Tax Investigation Case Against SouthGobi Sands and Three of Its Former Employees to the Prosecutor General for Further Investigations

HONG KONG, CHINA--(Marketwired - Aug 26, 2014) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) (the "Company"). The Company announced on August 11, 2014, the trial date for the tax investigation case against the Company's Mongolian subsidiary SouthGobi Sands LLC ("SGS") and three of its former employees was set for August 25, 2014.

The trial commenced on August 25, 2014 and on August 26, 2014, the panel of three appointed judges to the case ordered the matter be returned to the Prosecutor General for further investigation due to insufficient evidence presented by the prosecutor. The Company is still awaiting a written decision by the judges and will update the market accordingly.

The Company, including its Mongolian subsidiary SGS, has prepared its financial statements in compliance with International Financial Reporting Standards, and lodged all its tax returns as required under Mongolian tax law. During the investigative period, which has been ongoing since May 2012, the Company has been fully cooperative with the relevant authorities of Mongolia and devoted considerable internal resources in reviewing and responding to the allegations raised through the investigations by those authorities. The Company disputes these accusations and the procedures and conclusions of the investigations that led to these accusations and will continue to vigorously defend itself and its former three (3) employees against these charges.

About SouthGobi

SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill, also publicly listed in Toronto and New York, has a 56% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.

SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.