Update on interest payment obligations to CIC

HONG KONG, CHINA--(Marketwired - May 25, 2017) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) ("SouthGobi" or the "Company") today announced an update on its interest payment obligations to China Investment Corporation ("CIC").

Pursuant to the convertible debenture between CIC and the Company executed in November 2009 (the "Convertible Debenture") and the deferral agreement between CIC and the Company executed on December 29, 2016 (the "December 2016 Deferral Agreement"), the total cash interest payments and associated fees which were due and payable to CIC on May 19, 2017 amounted to US$22.3 million (the "May 2017 Interest Payable").

As of the date of this announcement, the Company has not paid the May 2017 Interest Payable within the cure period provided for in the Convertible Debenture or agreed upon a repayment plan for such amount with CIC. Accordingly the principal amount outstanding and all accrued and unpaid interest and other amounts owing under the Convertible Debenture and the December 2016 Deferral Agreement would immediately become due and payable in the event that CIC provides notice to the Company.

The Company is in discussions with CIC for a repayment plan for the May 2017 Interest Payable. While the Company believes that an agreement will be reached, there is no assurance that an agreement will be concluded on terms acceptable to the Company, or at all. In such event, the value of the Company's common shares could be materially and negatively affected. As a result, shareholders of the Company and potential investors are advised to exercise caution when dealing in securities of the Company.

The Company will provide further updates of the status of the May 2017 Interest Payable as appropriate.

About SouthGobi

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.