SouthGobi Resources : Execution of New Deferral Agreement with CIC

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南戈壁資源有限公司*

(A company continued under the laws of British Columbia, Canada with limited liability)

(Hong Kong Stock Code: 1878) (Toronto Stock Code: SGQ)

This announcement is made by SouthGobi Resources Ltd. (HK: 1878, TSX: SGQ) (the "Company") pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The Company today announces the execution of a new deferral agreement (the "June 2017 Deferral Agreement") with China Investment Corporation ("CIC") in relation to the repayment of US$22.3 million of cash interest and associated costs originally due on May 19, 2017 (the "May 2017 Interest Payable"). The key terms of the June 2017 Deferral Agreement include the below:

1. the Company will repay on average US$2.2 million of cash interest and associated costs monthly during the period from May 2017 to October 2017;

2. the Company will repay US$9.7 million of cash interest and associated costs on November 19, 2017;

3. the Company will pay a deferral fee at a rate of 6.4% per annum as a consideration for deferral; and

   * For identification purposes only

4. at any time before the May 2017 Interest Payable are fully repaid, the Company is required to consult with and obtain written consent from CIC prior to effecting a replacement or termination of either or both of its Chief Executive Officer and its Chief Financial Officer; otherwise this will constitute an event of default for the convertible debenture between CIC and the Company signed in November 2009. Such consent shall not be unreasonably withheld to affect the exercise of fiduciary duties of the board of directors (the "Board") of the Company.

By order of the Board

Chairman

Hong Kong, June 12, 2017

As at the date of this announcement, the executive directors of the Company are Messrs. Ningqiao Li, Aminbuhe and Yulan Guo; the independent non-executive directors are Messrs. Zhu Liu, Mao Sun, Joseph Belan, Yingbin Ian He and Ms. Jin Lan Quan; the non-executive directors are Messrs. Wen Yao and Huiyi Wang.

June 12, 2017

1. the Company will repay on average US$2.2 million of cash interest and associated costs monthly during the period from May 2017 to October 2017;

2. the Company will repay US$9.7 million of cash interest and associated costs on November 19, 2017;

3. the Company will pay a deferral fee at a rate of 6.4% per annum as a consideration for deferral; and

4. at any time before the May 2017 Interest Payable are fully repaid, the Company is required to consult with and obtain written consent from CIC prior to effecting a replacement or termination of either or both of its Chief Executive Officer and its Chief Financial Officer; otherwise this will constitute an event of default for the convertible debenture between CIC and the Company signed in November 2009. Such consent shall not be unreasonably withheld to affect the exercise of fiduciary duties of the board of directors of the Company.

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.

Kino Fu

Office: +852 2156 7030

Email: kino.fu@southgobi.com