Mr. Mr. Ruibin Xu reports

SOUTHGOBI ANNOUNCES COMPLETION OF ISSUE OF PAYMENT-IN-KIND INTEREST SHARES UNDER CONVERTIBLE DEBENTURE

SouthGobi Resources Ltd. has issued to Od Sar Trading Co. Ltd. (the assignee) 73,497,622 common shares (the PIK (payment-in-kind) interest shares), representing approximately 19.83 per cent of the issued and outstanding common shares following completion of the PIK interest share issuance, in satisfaction of the PIK interest payment request. The number of PIK interest shares issuable was determined based on the 50-day VWAP (volume-weighted average price) of approximately 32.72 Canadian cents (equivalent to 23.13 U.S. cents) per common share as of the date of issuance.

The PIK interest shares were issued to the assignee pursuant to the assignment agreement. Pursuant to the assignment agreement, JD Zhixing Fund LP had assigned to the assignee the right to receive the assigned PIK interest. Of the assigned PIK interest, $2-million (U.S.) remains outstanding, and, pursuant to the terms of the convertible debenture and related deferral agreements, the assignee may, at its discretion, require the company to satisfy the remaining assigned PIK interest by issuing common shares in an amount equal to the remaining assigned PIK interest divided by the 50-day VWAP of the common shares as of the date on which the assignee makes such request.

Shareholders and potential investors of the company should 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 the South Gobi region of Mongolia. SouthGobi produces and sells coal to customers in China.

We seek Safe Harbor.