SouthGobi Resources Ltd. (TSX-V:SGQ)(HK:1878) ("SouthGobi" or the "Company") Reference is made to the announcements of the Company dated July 31, 2023, August 18, 2023, February 26, 2024, May 22, 2024, June 12, 2024 and January 20, 2025 (the "Announcements") in relation to the Mongolia tax audit. Unless otherwise specified, capitalised terms used herein shall have the same meanings as those defined in the Announcements.

As disclosed in the announcement of the Company dated January 20, 2025, the Company's wholly owned subsidiary in Mongolia, Southgobi Sands LLC ("SGS"), received a resolution ("Resolution") from the Tax Dispute Resolution Council ("TDRC") on January 10, 2025 in relation to the Tax Audit. As set forth in this Resolution, the TDRC has determined to reduce the re-assessed amount of the tax penalty against SGS from approximately US$80.0 million to US$26.5 million (the "Revised Re-assessment Result"). According to the applicable Mongolian laws, SGS is entitled to file an appeal to the Administrative Court regarding the Revised Re-assessment Result within a 30-day period from the date of receiving the Resolution (the "Appeal Period").

After careful consideration and consultation with the Company's independent tax consultant in Mongolia, the Company has determined not to pursue a further appeal of the Revised Re-assessment Result with the Administrative Court within the Appeal Period. As a result, the Revised Re-assessment Result will impact the Company's financial statements for the year ended December 31, 2024.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

About SouthGobi

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 South Gobi region of Mongolia. SouthGobi produces and sells coal to customers in China.