Source: SouthGobi Resources Ltd.                    Date: 01 July, 2010

SouthGobi Resources Ltd. has begun construction of a coal-handling facility (CHF) at its Ovoot Tolgoi coal mine in southern Mongolia. The CHF will allow SouthGobi to add value to its coal by removing ash, or waste rock, and enable the blending of coal from different seams to create higher-value products. Mr. Alexander Molyneux, President and CEO of the company, said, "SouthGobi will be one of the first coal producers in Mongolia to conduct value-adding processing in country. Operation of the new facility will create approximately 25 new jobs."

The new CHF, to cost approximately USD25 million, will include a 300-ton-capacity dump hopper, which will receive run-of-mine coal from pits and feed a coal rotary breaker that will size coal to a maximum of 50 millimeters and reject oversize ash. A radial stacker will facilitate loading of the sized coal into customers' trucks for delivery across the Mongolia-China border. Key long-lead-time equipment has been ordered and SouthGobi has begun excavation and site preparation work. The facility is planned to be operational in early 2011.