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

SouthGobi Resources Limited

September 11, 2007 10:19 ET

SouthGobi Energy Resources Receives Mining Licence For an Open-Pit Coal Mine at Ovoot Tolgoi, Mongolia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 11, 2007) - Peter Meredith, CEO of SouthGobi Energy Resources Ltd. (TSX VENTURE:SGQ), is pleased to announce that the company's wholly owned Mongolian subsidiary has received a Mining Licence for the development of an open-pit coal mine at Ovoot Tolgoi. Ovoot Tolgoi is the company's most advanced coal mine development project. It is located in southern Mongolia, next to the existing MAK/Qinhua coal mine, approximately 45 kilometres north of the Mongolia/China border.

The Minerals Law of Mongolia 2006 specifies that upon receiving a Mining Licence the applicant must pay the licence fee for the first year. Within three days upon making the payment, the Minerals Law calls for the government agency to issue a 30-year Mining Licence. A mining licence holder has the right to extend the term of the mining licence two times for a period of 20 years each.

Upon receiving a Mining Licence, SouthGobi Energy is required to submit a Technical and Economic Study and a first year mine plan to the Government agency in charge of mining within 60 days. Once these technical documents have been reviewed and accepted, a Permit to Mine should be approved by a Commission appointed by the Government Ministry in charge of geology and mining. Parallel to this process, in accordance with The Minerals Law of Mongolia 2006, SouthGobi Energy can voluntarily enter into negotiations on an investment agreement with the Government of Mongolia. In anticipation of this eventuality, all required documentation is being assembled. The decision to request Investment Agreement negotiations does not preclude the company from commencing mining operations upon receiving the Permit to Mine.

In May 2007, the project's Detailed Environmental Impact Assessment (DEIA) was approved by the Mongolian Government's Ministry of Environment. The Geological Resource Report for Ovoot Tolgoi was approved by the Mongolian Government's Resource Committee on August 6, 2007. The company also has received formal support for its Ovoot Tolgoi project from the Omnigovi aimag and local soum governments to proceed with mine development.

Norwest Corporation is currently completing a Prefeasibility Study for the Ovoot Tolgoi open-pit mine. When completed, the report will be used to fulfill the legal requirement to file a technical and economical study with applicable Mongolian authorities within 60 days of receiving a mining licence.

Mining equipment for Ovoot Tolgoi has been evaluated and formal discussions with the selected supplier have begun. The company is now reviewing various equipment ownership and leasing options. Assuming the company receives all necessary approvals, pre development operations at Ovoot Tolgoi are expected to commence in the first quarter of 2008.

A new Ovoot Tolgoi Technical Report, containing the latest resource estimate is now available on SEDAR (www.sedar.com) and on the company's website (www.southgobi.com).

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 to supply a wide range of coal products and electricity to markets in Mongolia and China. The company is investigating the implementation of clean coal technologies in the development of a coal generating power plant to benefit all of its stakeholders. As the company increases its resource base, SouthGobi Energy Resources plans to pursue the potential application of Coal-to-Liquids (CTL) technology to convert a portion of its resources into low-sulphur diesel, gasoline and naphtha.

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

Ivanhoe Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) is SouthGobi Energy Resources' largest shareholder, currently owning approximately 87% of the issued and outstanding shares.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning the company's exploration plans as well as plans to develop and supply various coal products and electrical energy to markets in Mongolia and China, 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 South Gobi Energy's Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2007, 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