Update on Turquoise Hill Resources Ltd. Shareholder Loan and Short-Term Bridge Loan

HONG KONG, CHINA -- (Marketwired) -- 05/16/16 -- SouthGobi Resources Ltd. (TSX:SGQ)(HK:1878) (the "Company" or "SouthGobi") announces update on Turquoise Hill Resources shareholder loan and short term bridge loan.

Turquoise Hill Resources Ltd. shareholder loan

On May 16, 2016, the Company and Turquoise Hill Resources Ltd. ("Turquoise Hill") entered into a deferral agreement ("May 2016 Deferral Agreement") for a shareholder loan granted by Turquoise Hill with an outstanding loan principal of US$3.4 million and interest accrued up to May 16, 2016 of US$0.7 million ("TRQ Loan"). The key terms and conditions of the May 2016 Deferral Agreement are set out as follows:

-- The Company agreed to effect monthly repayments on the last business day of each month in an amount of (i) US$0.15 million per month starting on May 31, 2016 and ending on April 28, 2017, (ii) US$0.2 million per month starting on May 31, 2017 and ending on December 29, 2017, and (iii) all remaining balance of obligations owing under the TRQ Loan on December 29, 2017 (collectively, the "Repayments," and each, a "Repayment"). Upon receipt of each Repayment by Turquoise Hill, the aggregate amount of obligations owing under the TRQ Loan shall thereby be reduced by such equal amount; -- Interest shall accrue on all outstanding obligations under TRQ Loan at 12-month US dollar LIBOR rate; and -- In the event that the Company fails to make any one of the Repayments in its entirety on or before the exact dates set out above, then the Company shall be in automatic and irremediable default of the obligations hereunder and under the TRQ Loan and shall immediately and irremediably lose all benefits of the May 2016 Deferral Agreement and all then outstanding obligations shall become immediately due and payable to Turquoise Hill. 

Short-term bridge loan

On October 27, 2015, the Company executed a US$10 million bridge loan agreement with an independent Asian based private equity fund (the "PE Fund"). On May 16, 2016, the Company and the PE Fund entered into a deferral agreement, in which the PE Fund agreed to a deferral of repayment of all remaining amounts and accrued interest owing under the bridge loan to July 30, 2016, with the interest rate unchanged at 8% per annum. As at May 16, 2016, the outstanding balance for the bridge loan was US$4.9 million and accrued interest is of US$0.2 million.

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 and exploration licences of its other metallurgical and thermal coal deposits in South Gobi Region of Mongolia. SouthGobi produces and sells coal to customers in China.

Contacts:
SouthGobi Resources Ltd.
Kino Fu
Investor Relations
+852 2156 7030
kino.fu@southgobi.com
www.southgobi.com