SouthGobi Resources Limited
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SouthGobi Resources Limited

March 20, 2009 08:30 ET

SouthGobi Energy Resources Reports Revision of Previous Independent Resource Estimate for the West Field Portion of Its Ovoot Tolgoi Coal Mine in Mongolia

New Appointments to Management and Resource Development Team

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 20, 2009) - Gene Wusaty, Chief Operating Officer of SouthGobi Energy Resources Ltd. (TSX VENTURE:SGQ), announced today that errors have been discovered in a resource estimate prepared by an independent, third-party consultant for the West Field portion of the Ovoot Tolgoi coal mine in Mongolia.

These errors resulted in an overstatement of the resources in the West Field that were calculated effective June 20, 2008, and reported by SouthGobi on July 31, 2008, primarily in the indicated and inferred categories. However, the current resource estimates for the separate South-East Field and the Ovoot Tolgoi underground project are not affected.

Mr. Wusaty emphasized that the current mining plan and operations at Ovoot Tolgoi will not be impacted as it is based on an earlier estimate of the West Field coal resources as of December 31, 2006.

SouthGobi will appoint a major international engineering firm to complete a new Technical Report for Ovoot Tolgoi which is expected to be completed later in 2009. SouthGobi expects that this new report will incorporate outstanding data obtained from drilling to the end of 2008 and redesign the surface mine to a depth of 300 metres from the present 250 metres. In addition, the new Technical Report will update the resource models and delineate reserves based on at least a pre-feasibility level of engineering.

Management believes this new report will demonstrate the potential of the Ovoot Tolgoi coal deposit. SouthGobi made considerable progress in identifying additional resources at Ovoot Tolgoi in 2008, drilling over 23,200 metres down to a depth of 800 metres in the West Field. In addition, there are 3,800 metres of drill data from 2007 in the South-East Field that still require modelling. Based on 2008 drill data the coal potential is continuous along strike and at depth. "We are very encouraged with the results from drilling completed in 2008 and are confident we will be able to establish additional resources," Mr. Wusaty said. "We are planning further drilling this summer, which also is intended to expand the resource at Ovoot Tolgoi."

The incorrect West Field resource estimate included in the news release issued by SouthGobi on July 31, 2008, was prepared by The Americas Group, Inc. (TAG) of Lakewood, Colorado. In September 2008 TAG delivered to SouthGobi a Form 43-101F1 Technical Report based on drilling in 2007. The September Technical Report contained the following, incorrect resource estimate for the West Field:



Table 1: TAG Surface Coal Resources Summary for the
West Field of the Ovoot Tolgoi
Project as of June 20, 2008
(incorrect -as originally reported July 31, 2008)

--------------------------------------------------------------
Resources at Ovoot Tolgoi
-----------------------------------
ASTM
Resource Coal Measured Indicated Inferred
Area Rank (tonnes) (tonnes) (tonnes)
-------------------------------------------------------------
West Field hvB to hvA 79,567,545 113,623,016 138,821,278
-------------------------------------------------------------
Total 193,190,561 138,821,278
-------------------------------------------------------------


TAG now has advised SouthGobi that the West Field resource estimate supported by the September Technical Report, was incorrect. According to TAG, an arithmetic error in calculating the resources and an error in the resource model resulted in the resource estimate being overstated. TAG now has re-calculated the resource estimate as shown in Table 2 below:



Table 2: TAG Surface Coal Resources Summary for the
West Field of the Ovoot Tolgoi as of
June 20, 2008
(corrected)

-------------------------------------------------------------
Resources at Ovoot Tolgoi
----------------------------------
ASTM
Resource Coal Measured Indicated Inferred
Area Rank (tonnes) (tonnes) (tonnes)
-------------------------------------------------------------
West Field hvB to hvA 74,972,951 27,687,201 18,761,047
-------------------------------------------------------------
Total 102,660,152 18,761,047
-------------------------------------------------------------


Including the restated West Field resource estimate, the estimated combined resources for the South-East Field and the West Field of the Ovoot Tolgoi Project are shown in Table 3 below. The restated West Field resource estimate is based on data to June 20, 2008. The resource estimate for the South-East Field is based on data to December 31, 2006.



Table 3: Restated Ovoot Tolgoi West Field and South-East
Field In-Place Surface Coal Resources Summary

-------------------------------------------------------------------
Resources at Ovoot Tolgoi
-----------------------------------
ASTM
Resource Coal Measured Indicated Inferred
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 74,972,951 27,687,201 18,761,047
-------------------------------------------------------------------
Total 168,399,152 25,263,047
-------------------------------------------------------------------


TAG will deliver to SouthGobi for public filing an amended and restated technical report to support the revised West Field resource estimate as of June 20, 2008. Once delivered and filed, the amended and restated technical report will replace the September Technical Report, which no longer should be relied upon.

New Appointments to Management and Resource Development Team

SouthGobi is pleased to announce two new appointments to its Management and Resource Development team: Jess Harding and Stephen Torr.

Jess Harding has been appointed the company's new Vice-President, Evaluations and Project Development. Mr. Harding has more than 15 years' experience in the mining industry and assumes the same role that he presently holds at Ivanhoe Mines Ltd. Mr. Harding has a Bachelor of Chemical Engineering from the University of Leeds, UK.

Stephen Torr, (P.Geo.), has been appointed the company's new Resource Manager. Mr. Torr has 19 years of experience in the mining industry and currently is the Resource Manager for Ivanhoe Mines Ltd. Mr. Torr has a B.Sc. (Hons) Degree in Geology from the University of Southampton and a M.Sc. in Applied Geoscience from the University of Leicester. Mr. Torr has previous experience in estimation of open pit and underground coal resources and will be assuming the role of Qualified Person to oversee future independent resource estimates for SouthGobi.

Mr. 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 and thermal coal deposits in East Kalimantan, Indonesia. 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.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, planning additional drilling at Ovoot Tolgoi, the ability to establish additional resources at Ovoot Tolgoi, 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 nine months ended September 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