Deferral Of Payment Obligation Under Convertible Debenture

VANCOUVER, BC / ACCESSWIRE / May 13, 2022 / SouthGobi Resources Ltd. (TSX:SGQ) (HK:1878) ("SouthGobi" or the "Company") announces that announces that, on May 13, 2022, the Company and Land Breeze II S.à.r.l. ("Land Breeze"), a wholly-owned subsidiary of a major shareholder of the Company (the "Major Shareholder"), signed a new deferral agreement (the "2022 May Deferral Agreement") pursuant to which Land Breeze agreed to grant the Company a deferral of the interest payments which are due and payable on May 19, 2022 under the convertible debenture dated November 19, 2009 (the "Convertible Debenture").

The effectiveness of the 2022 May Deferral Agreement and the respective obligations, covenants and agreements of each party under the 2022 May Deferral Agreement are subject to the Company obtaining the requisite acceptance thereof from the Toronto Stock Exchange (the "TSX").

The principal terms of the 2022 May Deferral Agreement are as follows:

• Land Breeze agreed to grant the Company a deferral (the "Deferral") of the following payments until August 31, 2023 (the "Deferral Date"):

1. a Deferral of semi-annual cash interest payment of US$7,934,247 payable to Land Breeze on May 19, 2022 (the "Deferred Amounts") under the Convertible Debenture and a deferral fee equal to 6.4% per annum on the Deferred Amounts (the "Deferral Fee") payable under the Convertible Debenture; and
2. a Deferral of management fees for Q4 2021 and accrued deferral fees related thereto that is outstanding as of November 14, 2021 (US$10,740) and the management fees to be accrued in Q2 2022 which will be due and payable on August 14, 2022 under the Amended and Restated Cooperation Agreement dated April 23, 2019 (the "Deferred Management Fees"), and a deferral fee equal to 2.5% per annum on the outstanding balance of the Deferred Management Fees (the "Cooperation Agreement Deferral Fee") payable under the Amended and Restated Cooperation Agreement.

• If at any time before the Deferred Amounts and Deferral Fee 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, the Company will first consult with, and obtain written consent (such consent shall not be unreasonably withheld) from Land Breeze prior to effecting such appointment, replacement or termination;
• The Company agreed to comply with all of its obligations under the prior deferral agreements entered into with Land Breeze; and
• The Company and Land Breeze agreed that nothing in the 2022 May Deferral Agreement prejudices Land Breeze's rights to pursue any of its remedies at any time pursuant to the prior deferral agreements.

The Company will make further announcements regarding the potential of further future deferrals of its payment obligations under the Convertible Debenture as and when appropriate. There can be no assurance, however, that any agreement for future deferrals will be reached with the Major Shareholder either at all or on favourable terms.

If there is any inconsistency or discrepancy between the English version and the Chinese version, the English version shall prevail.

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.

Contact:

Investor Relations
Office: +852 2156 1438 (Hong Kong)
+1 604 762 6783 (Canada)
Email: info@southgobi.com
Website: www.southgobi.com

Forward-Looking Statements

Certain information included in this press release that is not current or historical factual information constitutes forward-looking statements or information within the meaning of applicable securities laws (collectively, "forward-looking statements"), including information about the potential of further future deferrals of its payment obligations under the Convertible Debenture. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "could", "should", "seek", "likely", "estimate" and other similar words or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on certain factors and assumptions including, among other things, the Company's ability to successfully negotiate a future deferrals of its payment obligations under the Convertible Debenture and other similar factors that may cause actual results to differ materially from what the Company currently expects. Actual results may vary from the forward-looking statements. Readers are cautioned not to place undue importance on forward-looking statements, which speaks only as of the date of this disclosure, and not to rely upon this information as of any other date. While the Company may elect to, it is under no obligation and does not undertake to, update or revise any forward-looking statements, whether as a result of new information, further events or otherwise at any particular time, except as required by law. Additional information concerning factors that may cause actual results to materially differ from those in such forward-looking statements is contained in the Company's filings with Canadian securities regulatory authorities and can be found under the Company's profile on SEDAR at www.sedar.com.

SOURCE: SouthGobi Resources Ltd.