SouthGobi Announces Termination of Mining Licenses for the Soumber Deposit

VANCOUVER, Aug. 28, 2019 - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the “Company”) announces that SouthGobi Sands LLC (“SGS”), the wholly-owned Mongolian operating subsidiary of the Company, received a letter (the “Notice Letter”) on August 26, 2019 from the Mineral Resources and Petroleum Authority of Mongolia (“MRAM”) notifying that the Company’s three mining licenses (MV-016869, MV-020436 and MV-020451) (the “Soumber Licenses”) for the Soumber Deposit have been terminated by the Head of Cadastre Division of MRAM effective as of August 21, 2019.

According to the Notice Letter, the Soumber Licenses have been terminated pursuant to Clause 56.1.5 of Article 56 of the Minerals Law, Clauses 4.2.1 and 4.2.5 of Article 4 and Clause 28.1.1 of Article 28 of the General Administrative Law and a decision order of a working group established under an order of the Minister of Environment and Tourism (Mongolia). According to this decision order, the working group determined that SGS had violated its environmental reclamation obligations with respect to the Soumber Deposit.

The Soumber Deposit is an undeveloped coal deposit covering approximately 22,263 hectares located approximately 20 kilometers east of the Company’s Ovoot Tolgoi coal mine in Mongolia. For more information regarding the Soumber Deposit, please refer to the Company’s annual information form dated March 31, 2019, a copy of which is available under the Company’s profile on SEDAR at www.sedar.com.

The Company believes the cancelation of the Soumber Licenses is without merit. The Company is not aware of any failure on its part to fulfill its environmental reclamation duties as they relate to the Soumber Deposit. The Company has issued a letter to MRAM appealing its decision to terminate the Soumber Licenses and is in communication with MRAM and other relevant Mongolian government agencies. The Company will take all such actions, including legal actions, as it considers necessary to reinstate the Soumber Licenses. However, there can be no assurance that a favorable outcome will be reached.

The termination of the Soumber Licenses does not have any impact on its current mining operations at the Ovoot Tolgoi mine site. The Company does not expect that the termination of the Soumber Licenses will have any material impact on the Company’s financial position or results.

The Company will make additional announcements when there are further material developments in relation to the Soumber Licenses.

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 expected impact that termination of the Soumber Licenses has on the Company’s financial position or results, the outcome of the Company’s discussions with MRAM and other Mongolian government agencies and the actions that the Company intends to take to reinstate the Soumber Licenses. 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 based on certain factors and assumptions including, among other things, the Company’s ability to successfully appeal MRAM’s decision to terminate the Soumber Licenses and other similar factors that may cause actual results 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 events 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.

If there is any inconsistency or discrepancy between the English version and the Chinese version, the English version shall prevail.

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 (Hong Kong) +1 604 762 6783 (Canada) Email: kino.fu@southgobi.com Website: www.southgobi.com