SouthGobi Updates on Mongolian Independent Anti-Corruption Agency Investigation and Receipt of a Pre-Mining Agreement

Thu Feb 7, 2013 6:15am EST

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SouthGobi Resources Limited

February 7, 2013 - 06:15:00 AM

SouthGobi Updates on Mongolian Independent Anti-Corruption Agency
Investigation and Receipt of a Pre-Mining Agreement

HONG KONG, CHINA--(Marketwire - Feb. 7, 2013) - SouthGobi Resources Ltd.
(TSX:SGQ)(HKSE:1878) ("SouthGobi" or the "Company") notes recent public
statements and Mongolian media reports referencing SouthGobi's wholly owned
subsidiary, SouthGobi Sands LLC ("SGS"), in connection with the recent trial
and conviction of the former Chairman and the former director of the Geology,
Mining and Cadastral Department of the Mineral Resources Authority of Mongolia
("MRAM"), and others. The Company also wishes to update recent developments in
relation to the current investigation being conducted by the Mongolian
Independent Authority Against Corruption (the "IAAC") and the Company's
receipt of a Pre-Mining Agreement ("PMA"). 

While neither the Company nor SGS has been provided with a copy of the
decision in the above-noted MRAM criminal case, various sources have reported
details of the verdict. A number of these reports suggest the court referred
to two matters specifically involving SGS; firstly, an alleged failure to meet
the minimum expenditure requirements required under Mongolian mining law in
relation to four exploration licenses (including License 9442X), and secondly,
an alleged impropriety in the transfer of a fifth license (License 5261X) to a
third party in March 2010 in violation of Mongolian anti-corruption laws.

Of the first four licenses, Licenses 5259X, 5277X and 12388X lapsed between
November 2009 and December 2011. Only License 9442X is a current license held
by SGS. This license does not contain any of SouthGobi's resources or
reserves. The license does not relate to the Company's Ovoot Tolgoi mine and
the Company does not consider it to be material to its business. 

The IAAC has informed SGS that orders placing administrative restrictions on
certain of its Mongolian assets, including local bank accounts, have been
imposed in connection with its continuing investigation. While the orders
restrict the use of in-country funds pending the outcome of the investigation,
they are not expected to have any material impact on the Company's activities.
SouthGobi is reviewing the legal process under which the orders were imposed
and intends to take all necessary steps to protect its ability to continue to
conduct its business activities in the ordinary course.

Neither SouthGobi nor any of its employees have been charged with any
wrongdoing. SouthGobi is investigating the issues that have been raised and
continues to cooperate with the Mongolian government agencies, including the
IAAC, in their ongoing investigations.

In other developments, the Company notes that a PMA for License 9443X was
approved and signed by SGS and MRAM on 18 January 2013. License 9443X is an
area which complements SouthGobi's existing mining license for the Soumber
Deposit. The Company now intends to proceed through the mining license
application process in respect of License 9443X.

In addition to the PMA, SGS holds four exploration licenses, including license
9442X, that are currently subject to valid PMA applications with MRAM.

Forward-Looking Statements: This document includes forward-looking statements.
Forward-looking statements include, but are not limited to, plans to supply a
wide range of coal products to markets in Asia; and other statements that are
not historical facts. When used in this document, the words such as "plan",
"estimate", "expect", "intend", "may", "likely" and similar expressions are
forward-looking statements. Although SouthGobi believes that the expectations
reflected in these forward-looking statements are reasonable, such statements
involve risks and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements. Important
factors that could cause actual results to differ from these forward-looking
statements are disclosed under the heading "Risk Factors" in SouthGobi's
Management Discussion and Analysis of Financial Condition and Results of
Operations for the year ended Dec. 31, 2011 which is available at 

SouthGobi Sands LLC (Mongolia)
Altanbagana Bayarsaikhan
+976 9910 7589

Brunswick Group (Hong Kong)
Joseph Lo
+852 9850 5033

Brunswick Group (Hong Kong)
Venus Mak
+852 9681 8994