SouthGobi Announces Update on Mongolia Tax Audit

VANCOUVER, May 22, 2024 - SouthGobi Resources Ltd. (TSX-V:SGQ)(HK:1878) ("SouthGobi" or the "Company") This announcement is made by the Company and together with its subsidiaries (the "Group") pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). Reference is made to the announcements of the Company dated July 31, 2023, August 18, 2023 and February 26, 2024 (the "Announcements") in relation to the Mongolia tax audit. Unless otherwise specified, capitalised terms used herein shall have the same meanings as those defined in the Announcements.

On May 15, 2024, the Company's wholly owned subsidiary in Mongolia, Southgobi Sands LLC ("SGS") received a notice (the "Revised Notice") from the Mongolian Tax Authority ("MTA") regarding the re-assessment result on the periodic tax audit as disclosed in the Announcements (the "Tax Audit"). The re-assessed amount of the tax penalty is approximately US$80.0 million (the "Re-assessment Result"). In accordance with applicable Mongolian laws, SGS is entitled to file an appeal to the Tax Dispute Resolution Council regarding the Re-assessment Result within a 30-day period from the date of receiving the Revised Notice (the "Appeal Period").

The Company's management is currently reviewing the Revised Notice with its independent tax consultant in Mongolia and intends to file an appeal against the Re-assessment Result within the Appeal Period. Therefore, the actual time to resolve the Tax Audit may be extended.

Despite the above, the Company wishes to inform its shareholders and potential investors that the above Re-assessment Result does not impact the Group's financial statements unless and until the appeal result is final and conclusive.

The Company will make further announcement(s) to keep its shareholders and potential investors informed of any progress as and when appropriate.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

About SouthGobi

SouthGobi, listed on the Hong Kong Stock Exchange and the TSX Venture Exchange, 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: SouthGobi Resources Ltd.