SouthGobi Resources : ANNOUNCES FIRST QUARTER 2021 FINANCIAL AND OPERATING RESULTS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

SOUTHGOBI RESOURCES LTD.

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)

SouthGobi announces first quarter 2021

financial and operating results

SouthGobi Resources Ltd. (the "Company" or "SouthGobi") today announces its financial and operating results for the quarter ended March 31, 2021.

Please refer to the attached announcement for more details. The information per the attached announcement is available on the SEDAR website at www.sedar.com and the website of the Hong Kong Stock Exchange at www.hkexnews.hk.

By order of the Board

SouthGobi Resources Ltd.

Mao Sun

Lead Director

Vancouver, May 14, 2021

Hong Kong, May 14, 2021

As at the date of this announcement, the executive director of the Company is Mr. Dalanguerban; the independent non-executive directors are Messrs. Yingbin Ian He, Mao Sun and Ms. Jin Lan Quan; and the non-executive directors are Messrs. Jianmin Bao, Zhiwei Chen, Ben Niu and Ms. Ka Lee Ku.

• For identification purpose only

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R E S O U R C E S

May 14, 2021

SOUTHGOBI RESOURCES ANNOUNCES FIRST QUARTER 2021

FINANCIAL AND OPERATING RESULTS

HONG KONG - SouthGobi Resources Ltd. (Toronto Stock Exchange ("TSX"): SGQ, Hong Kong

Stock Exchange ("HKEX"): 1878) (the "Company" or "SouthGobi") today announces its financial and operating results for the three months ended March 31, 2021. All figures are in U.S. dollars ("USD") unless otherwise stated.

SIGNIFICANT EVENTS AND HIGHLIGHTS

The Company's significant events and highlights for the three months ended March 31, 2021 and the subsequent period to May 14, 2021 are as follows:

• Operating Results - The Company's sales volume increased from 0.2 million tonnes in the first quarter of 2020 to 0.6 million tonnes in the first quarter of 2021. The increase in sales volume was mainly attributable to the Company suspending coal exports to China during the first quarter of 2020 as a result of the closure of the Mongolia-Chinese border during the period between February 11, 2020 and March 27, 2020 in order to prevent the spread of the Coronavirus Disease 2019 ("COVID-19"). The Company experienced an increase in the average selling price of coal from $31.2 per tonne in the first quarter of 2020 to $43.5 per tonne in the first quarter of 2021, as a result of improved market conditions, higher coal prices in China as well as a higher portion of sales made through the Company's Inner Mongolia subsidiary.
• Financial Results - The Company recorded a $7.5 million profit from operations in the first quarter of 2021 compared to a $1.3 million loss from operations in the first quarter of 2020. The improvement was principally attributable to (i) the higher selling price achieved by the Company during the quarter ($43.5 per tonne in the first quarter of 2021 versus $31.2 per tonne in the first quarter of 2020); and (ii) the increase in sales volume from 0.2 million tonnes in the first quarter of 2020 to 0.6 million tonnes in the first quarter of 2021.
• Impact of the COVID-19Pandemic - Since the onset of the COVID-19 pandemic which began in early 2020, the Mongolian local authorities have taken certain precautionary steps to minimize further transmission of COVID-19 in Mongolia and announced several lockdown measures in Ulaanbaatar. Although the export of coal from Mongolia to China continues as of the date hereof, there can be no guarantee that the Company will be able to continue exporting coal to China, or that the border crossings would not be the subject of additional closures as a result of COVID-19 or any variants thereof in the future. The Company will continue to closely monitor the development of the COVID-19 pandemic and the impact it has on coal exports to China and will react promptly to preserve the working capital of the Company and mitigate any negative impacts on the business and operations of the Company.

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In the event that the Company's ability to export coal into the Chinese market becomes restricted or limited again as a result of any future restrictions which may be implemented at the Mongolia-China border crossing, this is expected to have a material adverse effect on the business and operations of the Company and may negatively affect the price and volatility of the Common Shares and any investment in such shares could suffer a significant decline or total loss in value.

• China Investment Corporation ("CIC") convertible debenture ("CIC Convertible Debenture") - On November 19, 2020, the Company and CIC entered into an agreement (the "2020 November Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of: (i) deferred cash interest and deferral fees of approximately $75.2 million which were due and payable to CIC on or before September 14, 2020, under the deferral agreement signed on June 19, 2020 (the "2020 June Deferral Agreement"); (ii) semi-annualcash interest payments in the aggregate amount of $16.0 million payable to CIC on November 19, 2020 and May 19, 2021; (iii) $4.0 million worth of payment in kind interest ("PIK Interest ") shares ("2020 November PIK Interest") issuable to CIC on November 19, 2020 under the CIC Convertible Debenture; and (iv) the Management Fee that were due and payable to CIC on November 14, 2020 and February 14, 2021, and that will be due and payable to CIC on May 15, 2021, August 14, 2021 and November 14, 2021 under the Amended and Restated Cooperation Agreement (collectively, the "2020 November Deferral Amounts"). On October 29, 2020, the Company obtained an order from the British Columbia Securities Commission (the "BCSC"), the Company's principal securities regulator in Canada, which partially revoked the CTO (as defined below) to, amongst other things, permit the Company to execute the 2020 November Deferral Agreement.

The 2020 November Deferral Agreement became effective on January 21, 2021, being the date on which the 2020 November Deferral Agreement was approved by shareholders at the Company's annual and special meeting of shareholders.

The principal terms of the 2020 November Deferral Agreement are as follows:

• Payment of the 2020 November Deferral Amounts will be deferred until August 31, 2023.
• CIC agreed to waive its rights arising from any default or event default under the CIC Convertible Debenture as a result of trading in the Common Shares being halted on the TSX beginning as of June 19, 2020 and suspended on the HKEX beginning as of August 17, 2020, in each case for a period of more than five trading days.
• As consideration for the deferral of the 2020 November Deferral Amounts, the Company agreed to pay CIC: (i) a deferral fee equal to 6.4% per annum on the 2020 November Deferral Amounts payable under the CIC Convertible Debenture and the 2020 June Deferral Agreement, commencing on the date on which each such 2020 November Deferral Amounts would otherwise have been due and payable under the CIC Convertible Debenture or the 2020 June Deferral Agreement, as applicable; and (ii) a deferral fee equal to 2.5% per annum on the 2020 November Deferral Amounts payable under the Amended and Restated Cooperation Agreement, commencing on the date on which the Management Fee would otherwise have been due and payable under the Amended and Restated Cooperation Agreement.

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• • The 2020 November Deferral Agreement does not contemplate a fixed repayment schedule for the 2020 November Deferral Amounts and related deferral fees. Instead, the Company and CIC would agree to assess in good faith the Company's financial condition and working capital position on a monthly basis and determine the amount, if any, of the 2020 November Deferral Amounts and related deferral fees that the Company is able to repay under the CIC Convertible Debenture, the 2020 June Deferral Agreement or the Amended and Restated Cooperation Agreement, having regard to the working capital requirements of the Company's operations and business at such time and with the view of ensuring that the Company's operations and business would not be materially prejudiced as a result of any repayment.
  • Commencing as of November 19, 2020 and until such time as the November 2020 PIK Interest is fully repaid, CIC reserves the right to require the Company to pay and satisfy the amount of the November 2020 PIK Interest, either in full or in part, by way of issuing and delivering PIK interest shares in accordance with the CIC Convertible Debenture provided that, on the date of issuance of such shares, the Common Shares are listed and trading on at least one stock exchange.
  • If at any time before the 2020 November Deferral Amounts and related deferral fees are fully repaid, the Company proposes to appoint, replace or terminate one or more of its Chief Executive Officer, its Chief Financial Officer or any other senior executive(s) in charge of its principal business function or its principal subsidiary, then the Company must first consult with, and obtain written consent from CIC prior to effecting such appointment, replacement or termination.
• Cease Trade Order and Halt Trading on TSX - On June 19, 2020, the BCSC issued a general "failure to file" cease trade order ("CTO"), to prohibit the trading by any person of any securities of the Company in Canada. Trading in the Common Shares on the TSX was halted as a result of the CTO. The CTO was issued as a result of the Company's failure to file: (i) its annual consolidated financial statements for the year ended December 31, 2019 and the accompanying Management Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"); (ii) its Annual Information Form for the year ended December 31, 2019; and (iii) its condensed consolidated interim financial statements for the three-month period ended March 31, 2020 and accompanying MD&A, in each case prior to the filing deadline of June 15, 2020.

On February 5, 2021, the BCSC and the Ontario Securities Commission granted a full revocation of the CTO. Trading in the Common Shares resumed on the TSX on February 8, 2021.

• Suspension of Trading on HKEX - At the request of the Company, trading in the shares of the Company on the HKEX was suspended with effect as of August 17, 2020 pending the publication of the audited annual results of the Company for the year ended December 31, 2019.

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On February 9, 2021, the Company confirmed that it has fulfilled all the conditions stated in the resumption guidance to the satisfaction of the HKEX. Trading in the Common Shares resumed on the HKEX on February 10, 2021.

• TSX Delisting Review - On September 11, 2020, the TSX notified the Company that it is reviewing the eligibility for continued listing of the Common Shares on the TSX pursuant to the TSX's Remedial Review Process ("TSX Delisting Review"). On December 16, 2020, the TSX accepted the Company's request for a 60 day extension of the TSX Delisting Review process and the Company has been granted until February 16, 2021 to remedy the following delisting criteria, as well as any other delisting criteria that become applicable during the Remedial Review Process: (i) financial condition and/or operating results; (ii) adequate working capital and appropriate capital structure; and (iii) disclosure issues.

On February 15, 2021, the Company announced that the TSX Continued Listing Committee determined that the Company satisfies the TSX's applicable requirements for continued listing.

• Restoration of Soumber Deposit Mining Licenses - On August 26, 2019, SGS received a letter (the "Notice Letter") from the Mineral Resource Authority of Mongolia ("MRAM") notifying that the Company's three mining licenses (MV-016869, MV-020436and MV-020451)(the "Soumber Mining Licenses") for the Soumber Deposit have been terminated by the Head of Cadastre Division of MRAM effective as of August 21, 2019.

On March 2, 2021, SGS received a notice from the Mongolian governmental authority that the Soumber Mining Licenses have been reinstated effective as of March 2, 2021.

• Changes in Management

Mr. Weiguo Zhang : Mr. Zhang resigned as Chief Financial Officer on February 10, 2021.

Mr. Alan Ho : Mr. Ho was appointed as acting Chief Financial Officer on February 10, 2021.

Mr. Aiming Guo : Mr. Guo resigned as Chief Operating Officer on February 10, 2021.

Mr. Tao Zhang : Mr. Zhang has been re-designated from Vice President to Vice President of Sales on February 10, 2021.

Mr. Munkhbat Chuluun : Mr. Chuluun was appointed as Vice President of Public Relations on February 10, 2021.

• Going Concern - Several adverse conditions and material uncertainties relating to the Company cast significant doubt upon the going concern assumption which includes the deficiencies in assets and working capital.

Refer to section "Liquidity and Capital Resources" of this press release for details.

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