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SouthGobi Resources Announces US$10 Million Shareholder Loan Facility With Turquoise Hill Resources

HONG KONG, CHINA -- (Marketwired) -- 05/26/14 -- SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) (the "Company" or "SouthGobi") today announced that its majority shareholder, Turquoise Hill Resources Ltd. ("Turquoise Hill"), will support the Company by providing a $10 million revolving credit facility to the Company to meet short term working capital requirements. All figures are in U.S. Dollars unless otherwise stated.

The key commercial terms of the facility are as follows;

--  maturity date of August 30, 2014; 
--  interest rate of one month US dollar LIBOR Rate in effect plus 11%
    margin per annum; 
--  commitment fee of 35% of interest rate payable quarterly in arrears on
    undrawn principal amount of facility; 
--  front end fee of $100,000 
--  draws subject to customary closing conditions and the Company's cash
    requirements in the ordinary course of business; 
--  facility is subject to certain mandatory prepayment and termination
    provisions; and 
--  the Company to continue to seek other funding alternatives.

Advances made under the facility will be used by the Company to fund operations and meet its ongoing obligations and future contractual commitments.

As Turquoise Hill owns approximately 56% of the Company's outstanding common shares, its agreement to provide the facility is a related party transaction under applicable Canadian securities laws. The facility is exempt from the formal valuation and minority approval provisions of such laws.

As of May 23, 2014 the Company had cash of $2.8 million following the payment of approximately $7.9 million of interest to China Investment Corporation ("CIC") under CIC's $250 million convertible debenture. The shareholder loan facility has been structured as permitted debt in compliance with the provisions of the CIC convertible debenture requirements.

Notwithstanding the provision of the $10 million shareholder loan facility, the Company continues to experience negative impacts on its margins and liquidity and there can be no assurance that the Company will have sufficient funding for the balance of 2014 to be able to continue as a going concern, as more fully detailed in its Management's Discussion and Analysis for the quarter ended March 31, 2014, available on SEDAR at www.sedar.com, and, in particular, section 5 "Liquidity and Capital Resources" and section 11 "Risk Factors" thereof. Therefore the Company is actively seeking additional sources of financing to continue operating and meet its objectives, while continuing to be focused on minimizing uncommitted capital expenditures while preserving the Company's growth options.

About SouthGobi

SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill, also publicly listed in Toronto and New York, has a 56% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.

SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to: the Company's expectations of sufficient liquidity and capital resources to meet its ongoing obligations and future contractual commitments, including the Company's ability to secure additional and alternative funding and minimize its uncommitted capital expenditures; the ability of the Company to meet the conditions to be able to draw and receive additional advances under its shareholder loan facility with Turquoise Hill Resources Ltd.; and other statements that are not historical facts. When used in this document, the words such as "plan", "estimate", "expect", "intend", "may", and similar expressions are forward-looking statements. Although SouthGobi believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are disclosed under the heading "Risk Factors" in SouthGobi's Management's Discussion and Analysis for the year ended December 31, 2013 and for the quarter ended March 31, 2014, which are available at www.sedar.com.

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