Mr. Ruibin Xu reports

UPDATE ON MONGOLIA TAX AUDIT

Reference is made to the SouthGobi Resources Ltd. announcements dated July 31, 2023, and Aug. 18, 2023, in relation to the Mongolian tax audit.

As previously disclosed in the company's announcement, on July 18, 2023, the company's wholly owned subsidiary in Mongolia, SouthGobi Sands LLC (SGS), received a notice from the Mongolian Tax Authority (the MTA) relating to a periodic tax audit on certain of SGS's financial information between 2017 and 2020, including transfer pricing, royalty, air pollution fee and unpaid tax payables. The MTA notified SGS that it is imposing a tax penalty against SGS in the amount of approximately $75-million (U.S.) as a result of the audit. On Aug. 17, 2023, SGS filed an appeal letter in relation to the audit with the MTA in accordance with Mongolian laws.

On Feb. 8, 2024, SGS received notice from the Tax Dispute Resolution Council (TDRC) of the MTA which stated that, after the TDRC's review, the TDRC issued a decision in relation to SGS's appeal of the audit, and ordered that the audit assessments set forth in the notice of July 18, 2023, be suspended and sent back to the MTA for review and reassessment.

On Feb. 22, 2024, SGS received another notice from the MTA that the MTA anticipates commencing the reassessment process on or about March 7, 2024, and the duration of such process will be approximately 45 working days.

The company's management is assessing the implications of the notices received from the TDRC. Any decision of the MTA following the reassessment process may not be conclusive as the company retains the right to appeal such decision under Mongolian laws. Therefore, the actual time to resolve the audit may be extended. 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 Resources Ltd.

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.