SouthGobi Resources : Announcements and Notices - DEFERRAL OF PAYMENT OBLIGATION UNDER CONVERTIBLE DEBENTURE

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)

DEFERRAL OF PAYMENT OBLIGATION

UNDER CONVERTIBLE DEBENTURE

This announcement is made by SouthGobi Resources Ltd. (the "Company") pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange 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 August 31, 2022 (the "Announcement") in relation to a private sale transaction among JD Zhixing Fund L.P. ("JDZF"), Land Breeze and Fullbloom (the "Sale Transaction") on August 30, 2022. Unless otherwise specified, terms used in this announcement shall have the meaning as defined in the Announcement.

Upon the completion of the Sale Transaction, JDZF became the registered holder of the Company's US$250 million Convertible Debenture issued on November 19, 2009 (the "Convertible Debenture"). The rights and obligations under (i) the Convertible Debenture and related security documents; (ii) the Cooperation Agreement and related documents; (iii) the deferral agreements between Land Breeze, the Company and certain of its subsidiaries in connection with the deferral of interest payments and other outstanding fees under the Convertible Debenture and the Cooperation Agreement; and (iv) the security holders agreement between the Company, Land Breeze and a former shareholder of the Company, were assigned to JDZF effective as of August 30, 2022.

The Company announces that, on November 11, 2022, the Company entered into a new deferral agreement (the "2022 November Deferral Agreement") with JDZF, pursuant to which JDZF agreed to grant the Company (i) a deferral of the interest payments which will be due and payable on November 19, 2022 under the Convertible Debenture; and (ii) a deferral of the management fees under the Amended and Restated Cooperation Agreement.

* For identification purposes only

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

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

• JDZF agreed to grant the Company a deferral of the following payments until November 19, 2023:
• 1. a deferral of US$7,065,753 out of the semi-annual cash interest payment in the accrued sum of US$8,065,753 payable to JDZF on November 19, 2022 under the Convertible Debenture (the "2022 November Cash Interest");
  2. a deferral of US$1,100,000 out of the payment-in kind interest payment in the accrued sum of US$4,000,000 payable to JDZF on November 19, 2022 under the Convertible Debenture (the "2022 November PIK Interest", together with the 2022 November Cash Interest, the "Deferred Amounts"); and
  3. a deferral of management fees payable to JDZF on November 15, 2022, February 15, 2023, May 16, 2023 and August 15, 2023, respectively, under the Amended and Restated
     Cooperation Agreement (the "Deferred Management Fees");
• As consideration for the deferral of the Deferred Amounts, the Company agrees to pay JDZF a deferral fee equal to 6.4% per annum on the Deferred Amounts (the "Deferral Fee") payable under the Convertible Debenture, commencing on November 19, 2022;
• As consideration for the deferral of the Deferred Management Fees, the Company agrees to pay JDZF a deferral fee equal to 1.5% per annum on the outstanding balance of the Deferred
  Management Fees (the "Cooperation Agreement Deferral Fees") payable under the Amended and Restated Cooperation Agreement, commencing on the date on which each such Deferred Management Fee would otherwise have been due and payable under the Amended and Restated Cooperation Agreement;
• If at any time before the Deferred Amounts, Deferred Management Fees, the Deferral Fee and the Cooperation Agreement Deferral Fees are fully repaid, the Company proposes to appoint,

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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 JDZF prior to effecting such appointment, replacement or termination;

• The Company agreed to comply with all of its obligations under the prior deferral agreements assigned to JDZF; and
• The Company and JDZF agreed that nothing in the 2022 November Deferral Agreement prejudices JDZF's rights to pursue any of its remedies at any time pursuant to the prior deferral agreements.

The Company anticipates paying JDZF a cash payment of US$1,000,000 as partial payment for the 2022 November Cash Interest on or before November 19, 2022. The Company will pay JDZF the remaining US$2,900,000 of the 2022 November PIK Interest on November 19, 2022 by way of issuing and delivering a certain number of PIK interest shares to JDZF which will be determined based on the volume weighted average price of the Company's common shares during the 50 consecutive trading days preceding November 19, 2022, all in accordance with the terms of the Convertible Debenture.

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.

By order of the Board

SouthGobi Resources Ltd.

Mao Sun

Lead Director

Vancouver, Canada, November 11, 2022

Hong Kong, November 11, 2022

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As at the date of this announcement, the executive Directors are Mr. Dong Wang, Mr. Dalanguerban and Ms. Chonglin Zhu; the independent non-executive Directors are Mr. Yingbin Ian He, Mr. Mao Sun and Ms. Jin Lan Quan; and the non-executive Directors are Mr. Zhiwei Chen and Ms. Ka Lee Ku.

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.

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