SouthGobi Resources Limited
TSX : SGQ
PINK SHEETS : SGQRF
SEHK : 1878

SouthGobi Resources Limited

November 05, 2008 08:30 ET

SouthGobi Energy Resources Confirms High Quality Metallurgical Coking Coal at the Mamahak Coal Project in East Kalimantan, Indonesia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 5, 2008) - Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd. (TSX VENTURE:SGQ), and Gene Wusaty, Chief Operating Officer, Coal Division, announced today that the company has received independent laboratory analysis of a recent bulk sample that confirms high volatile, high-fluidity metallurgical coking coal at the Mamahak coal project in East Kalimantan, Indonesia. SouthGobi owns 85% of the Mamahak coal project with provisions to increase its ownership position to 100%.

The bulk sample was taken on the South-West Resource Block within the MCM concession and was comprised of proportioned blending of several coal seams from an area where the company plans to commence mining in the first quarter of 2009. The MCM concession area under development at Mamahak is located approximately 30 kilometres from the Mahakam River, a major coal transportation route. The company plans to use barges to transport coal to ocean-going vessels.

The proximate analysis and related testing of the bulk sample raw coal was prepared by PT Geoservices Ltd. of Jakarta, Indonesia. The following table summarizes the quality data gathered from the bulk sample.



MCM Concession: results from bulk sample on the South-West Resource Block

--------------------------------------------------------------------------
Fixed
TM IM Ash VM Carbon Sulphur CV CV
(ARB) (ADB) (ADB) (ADB) (ADB) (ADB) (ADB) (DAF) FSI
% % % % % % kCal/kg kCal/kg (CSN)
--------------------------------------------------------------------------
3.05% 1.87% 8.31% 40.91% 48.91% .85% 7,652 8,519 7 1/2
7 1/2(i)
--------------------------------------------------------------------------


--------------------------------------------------------------------------
Gieseler
Max. Mean Max Total Total
Fluidity Reflectance Reactives Vitrinite
Chlorine Phosphorus HGI ddpm R degrees % %
--------------------------------------------------------------------------
.01% .007% 49 13,560 .71 97.6 84.2
17,408(i)
--------------------------------------------------------------------------

(i) Denotes Check sample result

TM - Total Moisture; CV - Calorific Value; CSN - Crucible Swelling Index;
IM - Inherent Moisture; VM - Volatile Matter

ADB - Air Dry Basis; DAF - Dry Ash Free; FSI - Free Swelling Index;
ARB - As Received Basis, HGI - Hardgrove Grindability Index


"The Company believes these results further confirm that coal products from the Mamahak Coal Project will be well received and valued as an attractive component in metallurgical coke blends, particularly in Asia," Mr. Wusaty said.

PT Multi Mamahak Batubara (PT MMB), the Company's Indonesian subsidiary based in Jakarta, Indonesia, is distributing introductory coal samples from the bulk sample to Asian Steel Mills for further testing and market introduction.

Other project developments include:

- Local Indonesian Government approvals have been received which allows for the expedited development of surface coal mining in the APL block within the southern portion of the MCM Concession.

- A total of 121 holes have been drilled and geophysically logged in the south-west area within the MCM concession APL block. At least four separate coal seams ranging in thickness between 0.4 metres to 1.25 metres have been confirmed.

- A total of 172 holes have been drilled and geophysically logged in the E1, E2 and E3 resource blocks, which are located in the south-southeast area of the MCM KP.

- In addition to the ongoing quality assessment of the south-west block, a total of 136 drill core samples have been taken in the south-west and east block, for coal quality analysis.

- All the current exploration data has been transferred to the company's geological consultant, SMG Consultants in Jakarta for coal deposit modeling and National Instrument 43-101 compliant resource estimate and classification. Completion of this report is scheduled for the fourth quarter 2008.

- The Company has commenced site preparation at the wet season terminal on the Mahakam River and has rented a temporary construction camp at this location.

SouthGobi recently increased its ownership in the Mamahak Joint Venture to 85% from 56%. The Mamahak Project is ideally located to supply the Japanese, Korean, Indian and Chinese coastal markets and complements SouthGobi's established operating coal mine, Ovoot Tolgoi, in southern Mongolia.

Gene Wusaty, SouthGobi Energy's Chief Operating Officer, a qualified person as defined by National Instrument 43-101, supervised the preparation of the technical information 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 its Eocene-age metallurgical coking and thermal coal deposits in East Kalimantan, Indonesia. The company's flag-ship coal mine, Ovoot Tolgoi, is in production and selling coal to customers in China. The company plans to supply a wide range of coal products and electricity to markets in Asia. The company also 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 company plans to commence mining coal in the first quarter of 2009, the company's plans to use barges to transport coal to ocean-going vessels, the company's plans to complete coal deposit modeling and National Instrument 43-101 compliant resource estimate and classification in the fourth quarter of 2008, that coal products from the Mamahak Coal Project will be well received and valued as an attractive component in metallurgical coke blends, the company's future ability to supply coal products and electricity to 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 June 30, 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