Mr. Ruibin Xu reports

SOUTHGOBI ANNOUNCES UPDATE ON MONGOLIA TAX AUDIT

On March 19, 2025, SouthGobi Resources Ltd.'s wholly owned subsidiary in Mongolia, Southgobi Sands LLC (SGS), received a notice from the administrative court in Ulaanbaatar, Mongolia, requesting SGS provide supplemental information and co-operate with a court proceeding brought by certain officers of the Mongolian Tax Authority (MTA), as plaintiff, against the Tax Dispute Resolution Council (TDRC), as defendant. Upon further enquiry, the company obtained a copy of an order dated March 7, 2025, issued by the administrative court regarding the commencement of court proceedings brought by the MTA officials. The court order suggests that the MTA officials are attempting to dispute or overturn the previous decision made by the TDRC regarding the reassessment result, in which the TDRC concluded that the tax penalty against SGS be reduced from approximately $80-million (U.S.) to $26.5-million (U.S.).

The company is not a party to the aforementioned court proceeding. According to the preliminary advice of the company's independent tax consultant and legal advisers in Mongolia, court proceedings initiated by individual members of the MTA against the TDRC rarely occur. Based on the information available to the company as of the date hereof, the company is unable to ascertain the time required to conclude, and the likely outcome of, such court proceeding and its impact to the company. As of the date of this announcement, the reassessment result remains legally valid. The company will monitor the progress of the court proceeding and will make further announcement(s) in order to keep its shareholders and potential investors informed, 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 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.