SouthGobi Resources Limited
TSX : SGQ
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SouthGobi Resources Limited

July 31, 2008 08:31 ET

SouthGobi Energy Resources Announces Major Increases in Coal Resources at its Ovoot Tolgoi Coal Mine in Southern Mongolia

Measured plus Indicated coal Resources increase to 258.9 million tonnes, (up 73%); Inferred Coal Resources jump to 145.3 million tonnes (up 399%)

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 31, 2008) - Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd. (TSX VENTURE:SGQ), and Gene Wusaty, Chief Operating Officer, Coal Division, are pleased to announce today that an independent estimate compliant with National Instrument 43-101 has sharply increased resources at the company's Ovoot Tolgoi coal project in Mongolia.

The new report shows that Ovoot Tolgoi's West Field now contains Measured plus Indicated coal resources of 193.2 million tonnes, with an additional Inferred resource of approximately 138.8 million tonnes of coal. The resource report incorporates exploration data up to December 2007 for the West Field surface area down to a depth of 250 metres. A similar exploration and development program will be applied to the South-East Field surface and underground areas at Ovoot Tolgoi in the 2009 Exploration Program.

Ovoot Tolgoi commenced production in the West Field in April 2008. Three coal products have been established for export from the Ovoot Tolgoi mine - thermal coal, premium thermal coal and metallurgical coal.

The new resource estimate for the West Field resources, plus the previously identified resources in the South-East Field, bring total Ovoot Tolgoi surface resources to 258.9 million tonnes of Measured plus Indicated coal resources, with an additional Inferred coal resource of approximately 145.3 million tonnes.

"This new resource estimate is an encouraging step in the evolution of Ovoot Tolgoi as a very significant coal mine development," Mr. Wusaty said.



Table 1: New Ovoot Tolgoi In-Place Coal Resources Summary (to 250m Depth)
as of June 20, 2008
------------------------------------------------------------------------
Resources at Ovoot Tolgoi
---------------------------------------
ASTM Coal Measured Indicated Inferred
Resource Area Rank (tonnes) (tonnes) (tonnes)
------------------------------------------------------------------------
South-East Field hvB to hvA 49,752,000 15,987,000 6,502,000
------------------------------------------------------------------------
West Field hvB to hvA 79,567,545 113,623,016 138,821,278
------------------------------------------------------------------------
Total 258,929,561 145,323,278
------------------------------------------------------------------------


Table 2: Previous Ovoot Tolgoi In-Place Coal Resources Summary (to 250m
Depth) as of December 31, 2006
------------------------------------------------------------------------
Resources at Ovoot Tolgoi
---------------------------------------
ASTM Coal Measured Indicated Inferred
Resource Area Rank (tonnes) (tonnes) (tonnes)
------------------------------------------------------------------------
South-East Field hvB to hvA 49,752,000 15,987,000 6,502,000
------------------------------------------------------------------------
West Field hvB to hvA 55,144,000 28,698,000 22,601,000
------------------------------------------------------------------------
Total 149,580,000 29,103,000
------------------------------------------------------------------------

1. To facilitate estimation of resources at West Field, TAG completed a
digital geological model using GEMCOM Software International's Minex®
software. Key horizons or "surfaces" of each seam were modeled to
provide the necessary limits for volume estimation. The model converted
volumes to tonnages by application of density values derived from
available coal quality data.

2. The resources presented represent those areas suitable for surface
extraction down to a maximum vertical depth limit of 250 metres from
surface.


The updated Ovoot Tolgoi West Field resource estimates were prepared in conformance with Canadian Institute of Mining (CIM) Standards and the requirements set out in Canada's National Instrument 43-101, and were based on drilling activities to the end of December 2007. A NI 43-101 technical report is expected to be filed within 45 days. On March 27, 2008, Norwest Corporation (Norwest) of Salt Lake City, Utah, completed a Technical Report for West Field and South-East Field resource estimates (table 2) based on drilling activities at Ovoot Tolgoi through 2006.

Holes in the 2008 exploration program are being drilled up to a depth of 800 metres. New resource estimates are planned to be filed by year-end 2008 to reflect the current exploration program being carried out in the West Field underground (250 to 700 metres).

Data Verification

All data collection and verification was performed according to guidelines initially established by Norwest Corporation in 2005, and continued by The Americas Group, Inc. (TAG). Upon completion of a drill hole, the geologic and geophysical logs were reviewed by a Norwest geologist. All geologic, geophysical, and sampling data were entered and maintained in an electronic database. All mapping was entered and maintained in electronic format on a CAD-based system. Data entry of all geologic data was managed by Norwest at the project site. All electronic data were forwarded on a routine basis to Norwest's office in Salt Lake City. Results from coal-quality testing were added into the database in the Salt Lake office.

Between 2005 and 2006, Norwest, with Norwest Qualified Persons, managed and provided direct supervision of the 2005 and 2006 exploration programs, and reviewed data from previous programs. During that time, Norwest maintained complete control of the data collection, construction of the geologic model and resource calculation. In 2007, SouthGobi managed and provided direct supervision of the exploration program. No Qualified Person was on-site during the time of data collection. Geological exploration data were collected during 2005, 2006 and 2008 to provide a digital geologic model using all data between 2005 and 2007, and to provide a Technical Report under the strictures of NI 43-101. A.L. Livingston, the Qualified Person responsible for the updated resource estimate, did not directly verify the data collected in 2007, but has compared the data currently being collected by Sapphire in 2008 with data collected in 2007 and data verified by Norwest in 2005 and 2006. A.L. Livingston is of the opinion that all data is consistent and has therefore concluded that the data acquired in 2007 is reliable.

A.L. Livingston, Geologist with The Americas Group, Inc. (TAG) an independent consultant and Qualified Person as defined by NI 43-101, has reviewed the data underlying the resource estimate and approved the technical and scientific information pertaining to Ovoot Tolgoi contained in this release.

About SouthGobi Energy Resources

SouthGobi Energy Resources is focused on exploration and development of its Permian-Age metallurgical and thermal coal deposits in Mongolia's South Gobi Region and in East Kalimantan, Indonesia. The company intends to supply a wide range of coal products and electricity to markets in Asia. The company is investigating the implementation of clean-coal technologies in the development of coal power-generating capacity to benefit all of its stakeholders.

The company's metals division is focused on the exploration and development of its copper and gold projects in Mongolia and Indonesia.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, the timing to file a Technical Report on West Field Ovoot Tolgoi, the company's 2009 exploration program on the South-East field at Ovoot Tolgoi, the company's future ability to supply coal markets in Asia, and other statements that are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should", and similar expressions are forward-looking statements. Although SouthGobi Energy Resources believe 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 Energy's Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2008, and its Annual Information Form dated March 28, 2008 which is available at www.sedar.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • SouthGobi Energy Resources Ltd.
    Steven Feldman
    Investors
    (604) 681-6799
    or
    SouthGobi Energy Resources Ltd.
    Bob Williamson
    Media
    (604) 681-6799
    Website: www.southgobi.com