SouthGobi Resources : Announcements and Notices - SouthGobi announces fourth quarter and full year 2021 unaudited financial and operating results and postpones filing of 2021 audited consolidated financial statements and annual filings

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 fourth quarter and full year 2021 unaudited financial and operating results and postpones filing of 2021 audited consolidated financial statements and annual filings

SouthGobi Resources Ltd. ("SouthGobi") today announces its unaudited financial and operating results for the quarter and the year ended December 31, 2021.

Please see the attached announcement for more details. The information per the attached announcement is available on the SEDAR website atwww.sedar.comand the website of the Hong Kong Stock Exchange atwww.hkexnews.hk.

By order of the Board SouthGobi Resources Ltd.

Mao Sun

Lead Director

Vancouver, March 30, 2022

Hong Kong, March 30, 2022

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

RESOURCES

March 30, 2022

SouthGobi announces fourth quarter and full year 2021 unaudited financial and operating results and postpones filing of 2021 audited consolidated financial statements and annual filings

HONG KONG - SouthGobi Resources Ltd. (Toronto Stock Exchange ("TSX"): SGQ, Hong Kong Stock Exchange ("HKEX"): 1878) (the "Company" or "SouthGobi") today announces its unaudited financial and operating results for the quarter and the year ended December 31, 2021. All figures are in U.S. dollars ("USD") unless otherwise stated.

This announcement is made by the Company pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the "Hong Kong Listing Rules") and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to the announcement of the Company dated March 11 and 24, 2022 (the "Announcements"). As disclosed in the Announcements, the Company has been advised by the Company auditors (the "Auditors") that they will not be in a position to render an unmodified opinion on the Company's 2021 financial statements prior to the filing deadline of March 31, 2022 because they have not been able to obtain sufficient evidence to support management's going concern assumptions. Accordingly, the Company cautions that the financial results for its financial year ended December 31, 2021 disclosed herein are unaudited and have not been agreed upon with the Auditors. The unaudited financial results of the Company for the financial year ended December 31, 2021 disclosed herein were reviewed by the Audit Committee of the Company and approved and authorized for issue by the Board of Directors of the Company (the "Board") on March 30, 2022.

The Company is postponing the filing of its audited consolidated financial statements for its financial year ended December 31, 2021, the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operation and its Annual Information Form for the financial year ended December 31, 2021 (collectively, the "2021 Annual Filings"), as a result of the Auditors being unable to complete the audit process for the Company's annual results for the year ended 2021 prior to the filing deadline for the 2021 Annual Filings.

On March 17, 2022, the Company made an application to the British Columbia Securities Commission ("BCSC"), the Company's principal securities regulator in Canada, requesting that a management cease trade order (a "MCTO") be granted in respect of the late filing of the 2021 Annual Filings. As of the date hereof, the BCSC has not issued a decision in respect of the Company's MCTO application. There is no guarantee that a MCTO will be granted. For more information on the potential outcome of the BCSC's decision to either grant or refuse to grant the MCTO, see "Management Cease Trade Order" below.

Until such time as the Company files its 2021 Annual Filings, shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

SIGNIFICANT EVENTS AND HIGHLIGHTS

The Company's significant events and highlights for the year ended December 31, 2021 and the subsequent period to March 30, 2022 are as follows:

• • Operating Results - In response to the increase in the Coronavirus Disease 2019 ("COVID-19) case numbers in Mongolia, the Chinese authorities has been restricting the number of trucks permitted to cross the Ceke Port of Entry, and such restriction has severely impacted the sales volume of the Company in the third and fourth quarters of 2021. As a result, the Company's sales volume decreased from 2.6 million tonnes in 2020 to 0.9 million tonnes in 2021.

  In response to the restrictions on the number of trucks crossing the Mongolian border into China which began as of the second quarter of 2021, the Company temporarily suspended its major mining operations (including coal mining) in the second quarter of 2021 in order to control the inventory level and preserve the Company's working capital. Mining operations (including coal mining) resumed in the third quarter of 2021. However, mining operations were temporarily suspended again by the Company beginning in November 2021 in response to the temporary closure of the Ceke Port of Entry in the fourth quarter of 2021. See "Impact of the COVID-19 Pandemic" below.

  The Company experienced an increase in the average selling price of coal from $35.5 per tonne in the fourth quarter of 2020 to $55.4 per tonne in the fourth quarter of 2021, as a result of improved market conditions in China and an improvement of the overall product mix.

• • Financial Results - The Company recorded a $4.4 million profit from operations in 2021 compared to a $15.3 million profit in 2020. The financial results were impacted by the decreased sales resulting from the export volume limitations as well as the closure of the Ceke Port of Entry experienced by the Company during the year.

• • Impact of the COVID-19 Pandemic - Since the second quarter of 2021, additional precautionary measures were imposed by the Chinese authorities at the Ceke Port of Entry in response to the increase of COVID-19 cases in Mongolia, which included restricting the number of trucks crossing the Mongolian border into China. The restrictions on trucking volume have had an adverse impact on the Company's ability to import its coal products into China in 2021.

  In response to the increase in the number of COVID-19 cases in Ejinaqi, a region in China's Inner Mongolia Autonomous Region where the custom and border crossing are located, reported in late October 2021, the local government authorities have imposed stringent preventive measures throughout the region, including the temporary closure of the Ceke Port of Entry located at the border of Mongolia and China. Accordingly, the Company's coal exports into China have been suspended and such suspension remains in effect as of the date hereof. The Company anticipates the temporary closure of the Ceke Port of Entry will have a material adverse impact on the Company's sales and cash flow until such time as coal exports into China are allowed to resume. In order to control the inventory level and preserve the Company's working capital, the Company temporarily suspended mining operations (including coal mining) beginning in early November 2021.

  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 continue to react promptly to preserve the working capital of the Company and mitigate any negative impacts on the business and operations of the Company.

  In the event that the Company's ability to export coal into the Chinese market continues to be restricted or limited, 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 July 30, 2021, the Company and CIC entered into an agreement (the "2021 July Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of: (i) semi-annual cash interest payments of $8.1 million payable to CIC on November 19, 2021; and (ii) $4.0 million worth of payment in kind interest ("PIK Interest") shares (collectively, the "2021 Deferral Amounts") issuable to CIC on November 19, 2021 under the CIC Convertible Debenture.

  The principal terms of the 2021 July Deferral Agreement are as follows:

  • • Payment of the 2021 Deferral Amounts will be deferred until August 31, 2023.

  • • As consideration for the deferral of the 2021 Deferral Amounts, the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the 2021 Deferral Amounts payable under the CIC Convertible Debenture, commencing on November 19, 2021.

• • Management Cease Trade Order - On March 17, 2022, the Company made an application to the BCSC under National Policy 12-203 of the Canadian Securities Administrators ("NP 12-203") requesting that a MCTO be granted in respect of the late filing of the 2021 Annual Filings. As of the date hereof, the BCSC has not issued a decision in respect of the Company's MCTO application. There is no guarantee that a MCTO will be granted.

If a MCTO is granted, the Company will attempt to obtain and provide to the Auditors sufficient evidence to support management's going concern assumptions, and will attempt to obtain an unmodified opinion from the Auditors on the 2021 Financial Statements prior to the expiry of the MCTO. While the MCTO is in effect, the Company's Chief Executive Officer and Chief Financial Officer will be and, subject to the BCSC's discretion, the Company's other senior officers, directors and insiders may be, restricted from trading in the Company's securities. The Company will be required to comply with the provisions of the alternative information guidelines as set out in NP 12-203 for so long as the MCTO remains in effect, including the issuance of bi-weekly de-fault status reports by way of press releases. If a MCTO is granted, the MCTO would not affect the ability of investors who are not directors, officers and insiders to trade in the securities of the Company on the TSX and the HKEX.

However, if a MCTO is not granted, it is anticipated that the BCSC will issue a general "failure to file" cease trade order ("CTO") shortly after the filing deadline of March 31, 2022 prohibiting the trading by any person of any securities of the Company in Canada, including trades in the Company's common shares made through the TSX. The CTO will remain in place until such time as the 2021 Annual Filings are filed by the Company.

As a result of CTO, the Company anticipates that the trading in the Company's common shares will be halted on the TSX, and the trading in the common shares of the Company on the HKEX will also be suspended until such time as the CTO is lifted and trading resumes on the TSX.

The issuance of a CTO would have a significant adverse impact on the liquidity of the Company's common shares and shareholders may suffer a significant decline or total loss in value of its investment in the Company's common shares as a result.

• • 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 include the deficiencies in assets and working capital.

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