SouthGobi Energy Resources Receives Mining Licence For Tsaagan Tolgoi Coal Deposit

Wednesday, August 12th 2009

Alexander Molyneux, President of SouthGobi Energy Resources Ltd. announced that Mongolian authorities have issued a mining licence for the Tsaagan Tolgoi coal property that is held by the company’s Mongolian subsidiary, Southgobi sands LLC.

The Tsaagan Tolgoi property is in the South Gobi Region, approximately 415 kilometres east of SouthGobi’s Ovoot Tolgoi coal mine.

An independent NI 43-101 resource estimate for Tsaagan Tolgoi was prepared in February, 2008 by Norwest Corporation of Salt Lake City, USA. Norwest estimated 23.4 million tonnes of measured resources, 13.0 million tonnes of indicated resources and 9.0 million tonnes of inferred resources. The coal is of volatile bituminous B to C in rank based on ASTM D 388 standards and is suitable for use as a thermal coal. The resources appear to be amenable to surface extraction down to a planned depth of 150 metres. Details of the assumptions and parameters used to calculate these coal resources and coal quality estimates are set out in the Technical Report entitled “Coal Geology and Resources – Tsagaan Tolgoi Property” dated March 25, 2008 and available at www.sedar.com.

The deposit has the potential to supply any future coal-fired power plant that may be developed to produce electricity for Ivanhoe Mines’ planned Oyu Tolgoi copper-gold mining complex, which is approximately 115 kilometres northeast of Tsaagan Tolgoi.

SouthGobi is required to submit a Technical and Economic Study to the government agency in charge of mining within 60 days of the receipt of the mining licence. The study is almost complete and SouthGobi intends to meet the submission deadline. The General Environmental Impact Assessment (EIA) for the Tsaagan Tolgoi Project was approved by Mongolia’s Ministry of Nature and Environment in June 2009. A more detailed EIA is underway and will be submitted following approval of the Technical and Economic Study.

Mr. Molyneux said a decision to mine coal at Tsaagan Tolgoi will depend on the receipt of additional required permits and would follow the results of more detailed studies.

“Tsaagan Tolgoi is an important asset in SouthGobi’s portfolio and the receipt of a mining licence is an important step,” Mr. Molyneux added. “It speaks to the hard work and diligence of our employees, and the commitment the company has to Mongolia.”