South Gobi (01878): The deposits covered by four Mongolian mining licenses have been designated as strategically important by the Mongolian government authorities

Zhitong Finance App News, South Gobi (01878) issued an announcement. On April 2, 2025, Southgobi Sands LLC (SGS), a wholly owned subsidiary of the Mongolian Government, received a letter (notice) from the Plenipotentiary Representative of the Mongolian Government inviting SGS to participate in negotiations to determine the Mongolian government's ownership rights in SGS (that is, the legal entity holding the company's coal mining license in Mongolia).

The notice stated that in order to advance the “National Wealth Fund Law” passed by Mongolia in April 2024, the Mongolian government decided to appoint a plenipotentiary representative (the plenipotentiary representative of the Mongolian Government) on February 5, 2025 to consult with legal entities holding licenses for minerals designated as strategically important by the Mongolian government to determine the proportion of Mongolian interests in this legal entity, or whether to replace Mongolia's rights in this legal entity with royalties.

Our Mongolian legal adviser advised that the Mongolian Government has the right to participate in the exploration and/or mining of strategically important minerals with license holders in the form of equity in accordance with the terms of negotiations between the Mongolian Government and the licensee. According to the company's Mongolian legal adviser, the company is aware that license holders for a number of other strategically important deposits have conducted similar discussions with the Mongolian government's plenipotentiary representative. On the date of this announcement, the deposits covered by the Company's four Mongolian mining licenses were designated by the Mongolian government authorities as strategically important deposits. The relevant mining licenses relate to the company's Obaut Tauragai coal mine and Sumber mine.

On April 24, 2025, SGS held preliminary discussions with the Plenipotentiary Representative of the Mongolian Government. The Company anticipates that discussions between SGS and the Plenipotentiary Representative of the Mongolian Government will continue, and that the two parties will do their best to reach mutual understanding and constructive understandings and agreements in good faith. The Company will fully cooperate with the Government of Mongolia and provide all necessary information to the extent permitted by applicable law.

The Company will continue to monitor developments relating to changes in the scope of strategically important deposits and the subsequent impact (if any) on the Company and its business and operations, while seeking to protect the legitimate rights and interests of its deposits.