Update on Delay in Publication of 2019 Audited Annual Results and Despatch of 2019 Annual Report

VANCOUVER, British Columbia, July 24, 2020 (GLOBE NEWSWIRE) -- SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi” or the “Company”) announces that reference is made to the announcement of the Company dated June 30, 2020 (the “June 30^th Announcement”) in relation to the delay in publication of the 2019 Audited Annual Results and the despatch of the 2019 Annual Report. Unless otherwise stated herein, capitalized terms used herein shall have the same meanings as that ascribed to them in the June 30^th Announcement.

As disclosed in the June 30^th Announcement, the Company has been in discussions with its key creditors in relation to settlement plans, which the Company intends to rely on as alternative audit evidence to address the going concern issues raised by the Auditors. The Company has obtained verbal commitments from certain key creditors, each of which has agreed to sign a settlement agreement with the Company on or before July 27, 2020. As of the date hereof, the Company remains in discussions with the other key creditors that the Company has not yet reached an agreement with. As a result of the delays in reaching settlement agreements with the key creditors, the Company is unable to publish the 2019 Audited Annual Results and the 2019 Annual Report on or prior to the previously disclosed filing date of July 24, 2020.

The Company continues to work closely with the Auditors and to provide them with audit evidence to support the going concern assumptions for the Company’s 2019 Financial Statements. However, as a result of the Government of Mongolia’s decision on July 10, 2020 to further extend travel restrictions on foreign travel into Mongolia until the end of July 2020, the Company’s ability to prepare and provide audit evidence to the Auditors in a timely manner has been, and continues to be, adversely impacted.

The Company is discussing with one of its major shareholders and looking for potential avenues of support for the Company which could serve as sufficient evidence to support the Company’s going concern assumptions in the event that the Company is unable to sign a settlement agreement with each of these key creditors.

Assuming that: (i) the Company will be able to reach written settlement agreements with each of the key creditors that has provided a verbal commitment to do so on or before July 30, 2020; and (ii) the Company and the aforementioned major shareholder are able to agree on an avenue of support that is acceptable to the Auditors, the Company expects that the Auditors will be able to finalize the remainder of the audit work, complete its internal sign-off procedure and render an unmodified opinion on the 2019 Financial Statements within two weeks, in which case the Company would be in a position to issue its 2019 Audited Annual Results and 2019 Annual Report by August 14, 2020. However, there can be no assurances that the aforementioned settlement agreements will be executed by the key creditors on a timely basis or at all, the Company and the major shareholder will be able to arrive at mutually acceptable support arrangement or any of the foregoing will be sufficient audit evidence to permit the Auditor to render an unmodified opinion on the 2019 Financial Statements.