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CORPORATE PRESENTATIONDecember 2019
www.southgobi.com 2
DISCLAIMER
The information contained in this document is strictly confidential, is not for public dissemination and is for the exclusive use of the persons who are authorized to receive thisdocument. You are authorized to use the information contained herein solely for the purpose of considering whether or not you will be making an investment in SouthGobi ResourcesLtd., together with its subsidiaries and controlled entities, the “Company”). You and your directors, officers, employees, agents, affiliates and advisors must not use the informationcontained herein for any other purpose and must not communicate, reproduce, distribute or disclose it to any other person, or refer to it publicly, in whole or in part, at any time.
The information contained in this document includes historical information about, and relevant to, the Company that should not be regarded as an indication of the futureperformance or results of the Company, or an indication that there has been no change in the information about and relevant to the Company since the date hereof or since the datesas of which information is given in this document. This document contains certain statements that reflect the Company’s beliefs, plans, projections, targets and expectations about itsprospect and the prospect of the general economy, global or local market and the relevant industry of the Company as of the respective dates indicated. These forward-lookingstatements are based on management’s current expectations or beliefs as well as a number of assumptions about the Company’s operations and factors that are beyond theCompany’s control, and accordingly, are subject to certain known and unknown risks and uncertainties that could cause actual results, performance or achievements of the Companyor otherwise to differ materially from those contemplated by the relevant forward-looking statements, and the forward-looking statements discussed in this document might notoccur. No representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecastscontained in this document, which speak only as of the date of this document. This document does not purport to be comprehensive or to contain all the information that a recipientmay need in order to evaluate the Company.
Certain data contained in this document was obtained from various external data sources, and none of the Company or any of their directors, officers, employees or representativeshas verified such data with independent sources. Accordingly, none of the Company or any of their directors, officers, employees or representatives accepts responsibility for, or makerepresentation as to, the accuracy, reliability, correctness, fairness or completeness of that data, and such data involves risks and uncertainties and is subject to change based onvarious factors. The information in this document does not take into account the effects of a possible transaction or certain transactions involving an actual or potential change ofcontrol, which may have significant valuation and other effects. Nothing contained in this document is, or shall be, relied upon as a promise or representation as to the future or as arepresentation or warranty otherwise.
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SOUTHGOBI AT A GLANCE
SouthGobi Resources Ltd. (“SouthGobi”) is
A dual-listed company, primary listed on the Toronto Stock Exchange and secondary listed on the Hong Kong Stock Exchange
An integrated coal mining enterprise, owns andoperates a flagship coal mine in Mongolia andtrades coal in China
One of the largest and most recognizedenterprises in Mongolia and an award-winningenterprise in China
TSX: SGQ HKEX: 1878
www.southgobi.com 4
CORPORATE OVERVIEW
Shareholding Structure
China Investment Corporation23.75%
China Cinda Asset Management Co. Ltd17.00%
Others59.25%
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COMPETITIVE LOCATION
SouthGobi has the closest coal mine to theworld largest coal consumer, China; and islocated 45 km from the China-Mongoliaborder.
There are two railways for transportation ofcoal at Ceke Port, a 440 km designatedrailway from Ceke to Gansu Province withthe annual capacity of 6.4 million tonnesand a 770 km railway from Ceke directly toLinhe, with annual capacity of 3 milliontonnes.
SouthGobi invested a paved highway fromOvoot Tolgoi coal mine to Ceke Port.
45km to China
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INFRASTRUCTURE AND OPERATIONS
Coal Production Coal Washing
Workforce of 472employees as of
Q3 2019
Paved highway to the border of
China
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OVOOT TOLGOI COAL MINE
The Ovoot Tolgoi Coal Minecomprises of the Sunset Coalfieldin the West and the SunriseCoalfield in the East.
Products from the Ovoot TolgoiMine include thermal coal and 1/3coking coal.
Mining license
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ABUNDANT RESERVES & RESOURCES
SouthGobi has a total 496 million tonnes of coal resources under the NI43-101 resource reporting standard. The OvootTolgoi Mine contains 391 million tonnes of resources, in which 114 million tonnes are reserves.
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WORLD-CLASS EQUIPMENT
Machines & Specification Quantity Total
Liebherr Excavator - R996(36m3) 1
8Liebherr Excavator - R996B(33m3) 1
Liebherr Excavator - R9250(15m3) 3
Liebherr Excavator - R974(5.2-8.25m3) 2
Other Excavator 1
Terex Dump Truck - TR100(91t) 928
Terex Dump Truck - MT4400(240t) 19
Atlas Drill - DM45LP(171mm) 1
7Atlas Drill --DM45HP(171mm) 2
Atlas Drill - PV275(250mm) 4
CAT Wheel Loaders – 992K(12.3m3) 23
CAT Wheel Loaders - 950(12.3m3) 1
CAT Dozer -(D10T) 26
CAT Dozer -(D11T) 4
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COAL WASHING PLANT
SouthGobi owns a captive coal washing plant at Ovoot Tolgoi mine site, with annual processing capacity of approximately 2 million tonnes.
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SOUTHGOBI VALUE CREATION CATALYSTS
Boosting product quality by washing
Talented workforce in Mongolia and China
Increasing production volume
Expanding customer base in China
Improving cash flow and reducing debt
QUALITY AND COST CONTROL
CUSTOMER BASEEXPANSION
STRONG FINANCIAL MANAGEMENT
TALENTED WORKFORCE
VOLUME GROWTH
QUALITY PRODUCTS
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OUR EXPERIENCED BOARD OF DIRECTORS
MR. SUN MAO
Lead Director & Independent Non-executive Director
MR. WANG SHOUGAO
Executive Director &Chief Executive Officer
MR. YAO WEN
Non-executive Director
MR. CHEN ZHIWEI
Non-executive Director
MR. HE YINGBIN IAN
Independent Non-executive Director
MS. QUAN JIN LAN
Independent Non-executive Director
MR. NIU BEN
Non-executive Director
MR. LI XIAOXIAO
Non-executive Director
Over 20+ years’ experience in the accounting sector and has extensive knowledge of Canadian accounting standards, IFRS and Canadian taxation laws.
Founding partner of a private accounting firm in Canada
Current CFO of an exploration mineral company listed on TSX-V
Former director of a metal resources company
Over 30+ years’ experience in the mining industry
Former CEO of a mining company in Mongolia Served as various senior management positions
of China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (“NFC”)
Extensive knowledge in legal & compliance relating to corporate investments, risk management and corporate governance in the metals and mining industry
Current Managing Director and the Head of Investment Department 1 at CIC Capital
Former private practice lawyer at leading international law firms in the USA and China
Over 10+ years of investment and research experience in the financial industry
Current Managing Director of the Investment Department and Assistant GM of China Cinda (HK)
Current Director of various listed companies in HKEx
Over 30+ years in senior executive positions and director of the board
Extensive knowledge in the mining industry Current Director of several listed companies in
Canada and Shenzhen
Extensive experience in financial consulting services, internal audit, corporate finance, risk management, and business acquisition
Current independent financial planner and business consultant in Australia
Former Director of a listed company in ASX
Extensive knowledge in global mining development trends, corporate investments, M&A in the mining sector
Current Vice President of Investment Department 1 at CIC Capital
Served as a Senior Manager at China MinmetalsCorporation
Extensive knowledge in accounting, corporate finance and investment management
Current Investment Director of the Investment Department of China Cinda (HK)
Served as various positions in global banking and accounting field in USA
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OUR EXPERIENCED MANAGEMENT TEAM
MR. ZHANG WEIGUO
Chief Financial Officer
MR. GUO AIMING
Chief Operating Officer
MR. ZHANG TAO
Vice President
Over 30+ years’ experience in the mining industry
Former CEO of a mining company in Mongolia Served as various senior management positions
of China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (“NFC”)
Over 30+ years’ experience in financial accounting, auditing, and corporate finance
Worked as various senior finance roles in NFC and CNMC’s global offices
Former President of NFC’s Kyrgyzstan office
Over 20+ years’ experience in the mining sector and technical management
Former Deputy Chief Engineer at Shanxi Hongsha First Construction Co., Ltd.
Served as senior management position of Mongolia project department in Shanxi Hongsha
Over 10+ years’ experience in operational management
Former Senior Supervisor of Corporate Development Department of NFC
Served as various positions in the mining sector and the quality, health, safety and environment department of NFC
MR. WANG SHOUGAO
Executive Director &Chief Executive Officer
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CORPORATE CULTURE
BE TRUSTWORTHY AND COMPLIANCE WITH THE REGULATIONS
TAKE RESPONSIBILITY AND UPHOLD HARMONIOUS
DEVELOPMENT
WORK WITH CONSCIENTIOUS AND BE DUTIFUL
FOSTER MUTUAL TRUST AND PROMOTE COOPERATION
FACILITATE MUTUAL RESPECT AND DEVELOP MUTUAL BENEFICIAL
COOPERATION
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REWARDS & RECOGNITIONS IN MONGOLIA AND INNER MONGOLIA
2012
Best Social Insurance Payer
Top 100 Tax Payer
2013
Top 100 Tax Payer
2014
Top National Employer-Social Insurance Payer
Top Sustainable OperationCompany award
Top 100 Tax Payer
Top 100 Tax Payer
2016
Best Social Responsibility Enterprise of 2016 –Silk Road Award
Best Social Insurance Payer of the Capital City
Top 100 Tax Payer
2017
Mongolian Outstanding Employers Award of the Year
Best Social Insurance Payer of the Capital City
Outstanding Entrepreneur Award in Healthy and Safety
Top 100 Tax Payer
2018
Best Social Responsibility Enterprise of 2017 –Silk Road Award
Outstanding Operations Award in Ceke District, Inner Mongolia China
Top 100 Tax Payer
Economic Forum 2018
2015 2019
Best Employer of 2018
Best Company of 2018 in occupation, health and safety
Best Social Insurance Payer of the Capital City
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LEADERSHIP ROLE IN ENVIRONMENTAL PROTECTION
The Biodiversity Offset Scheme includes:
Environmental monitoring program
Rehabilitation and restoration of the 50-hectare land
Over 2,000 trees plantation
Energy conservation
Recycling and reduction of wastes
Responsive measures in protecting local area
SouthGobi has adopted a Biodiversity Offset Scheme, focusing on mitigation of potential environmental impacts in the desert-steppe zone within the Company’s operational area.
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OCCUPATIONAL, HEALTH AND SAFETY - HIGHLIGHTS
The health and safety of the Company’s employees is the top priority.
SouthGobi commits to create safe and healthy workplaces and will continue to promote an effective safety culture throughout the corporation.
Award-winning in occupational, health
and safety
Strict safety management system
and policy
Health and safety training activities
Regular safety inspections
Integrity and responsibility in
operations
As of Q3 2019, lost time injury
frequency rate of 0.08 per 200,000
man hours
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COMMUNITY DEVELOPMENT - HIGHLIGHTS
Public welfare donations
National and local communities’ development
Collaboration with our stakeholders,
Career opportunities and skills trainings to the citizens from local communities in Mongolia
Construction of staff buildings
SouthGobi Annual Scholarships
School facilities reconstruction and donations
Communities donations
to develop a sustainable future for society.
SouthGobi remains committed to contributing in the development of communities including:
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EMPLOYEE ENGAGEMENT AND GROWTH
Enhance employee engagement
Hold regular professional skills
training
Adopt diversity and equal opportunity
policy
Maximize all employees’ expertise
and abilities
Enhance employees’ productivity
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OPERATIONAL STATUS
-11.78
24.52
Profit From Operations(in USD million)
2019 Q1-Q32018 Q1-Q3
0.1
0.48
2018 Q1-Q3 2019 Q1-Q3
Washed Coal(in million tonnes)
1.872.75
2018 Q1-Q3 2019 Q1-Q3
Coal Sales(in million tonnes)
2.473.57
2018 Q1-Q3 2019 Q1-Q3
Raw Coal Production(in million tonnes)
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FINANCIAL STATUS
(in USD million) 2018 Q1-Q3 2019 Q1-Q3
Revenue 69.99 97.59 ↑39.4%
Gross Profit 18.18 36.64 ↑101.5%
Gross Profit % 25.9% 37.5% ↑11.6 percentage points
Profit From Operations (11.78) 24.52
Net Profit (30.87) 6.38
Earning Per Share (USD/ Share) (0.11) 0.02
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EXPANDING OPPORTUNITIES
Future target
Sustainable production Expansion of its opportunities
in Mongolia and China Improvement in financial position
To be an outstanding international mining enterprise
The total coal imports in Ceke Port was recorded as 9.37 million tonnes.
SouthGobi’s coal sales in Ceke were equal to about 3.57 million tonnes.
SouthGobi accounted for around 38% of the total coal imports in Ceke Port.
In Q1-Q3 2019 In Q4 2019
SouthGobi remains as a top-tier coal mining enterprise in Ceke region of Inner Mongolia, China.
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SouthGobi Resources Ltd.
Canada Office: 20th Floor, 250 Howe Street, Vancouver, B.C., V6C 3R8
Hong Kong Office: Unit 1208-10, Tower 1, Grand Century Place,193 Prince Edward Road West, Mongkok, Hong Kong
Tel: +852-2156-1438
Fax: +852-2156-1439
Email: [email protected]