SouthGobi Resources Ltd. (01878) announced that its legal counsel in Mongolia has advised that legal entities holding mining licenses for deposits designated by the Mongolian government as strategically important must comply with specific ownership regulations under the Mongolian Mineral Resources Law. However, uncertainty remains regarding how these regulations will be interpreted and applied to a publicly listed company that is the beneficial owner of such a strategically important deposit. As of the date of this announcement, the mineral deposits covered by the Company's four Mongolian mining licenses have been designated as strategically important by Mongolian government authorities. These relevant mining licenses are associated with the Company's Ovoot Tolgoi coal mine and the Sumber deposit. Based on the opinion of its Mongolian legal counsel, the Company understands that, pursuant to Article 5.7 of the Mongolian Mineral Resources Law, any legal person holding a special license for a strategically important deposit must not hold, individually or collectively with other parties having a unified interest, more than 34% of the total issued and outstanding shares of that legal person. Should the aforementioned ownership restrictions not be complied with, the Mongolian government has the right, under Article 9.1.16 of the Mongolian Mineral Resources Law, to appoint a plenipotentiary representative to take over the management of the legal person to ensure its compliance with the law. The Company's Mongolian legal counsel has advised that, while it remains unclear how these ownership restrictions will be interpreted and applied in practice to a publicly listed company such as SouthGobi, they believe the restrictions under Article 5.7 will likely be determined by reference to the beneficial shareholders of the listed company. In other words, for the Company, if any single shareholder (or a concert party collectively) holds more than 34% of its issued and outstanding shares, the Company may be deemed in violation of Article 5.7 of the Mongolian Mineral Resources Law. The Company's Mongolian legal counsel further advised that the provisions concerning the aforementioned ownership restrictions under the Mongolian Mineral Resources Law contain ambiguity regarding their application to the Company or any other listed company. As of the date of this announcement, the Company is not aware of any judicial precedent in Mongolia that establishes a guideline or provides a clear interpretation or guidance on how the Article 5.7 ownership restrictions apply to listed companies. Consequently, as of the date of this announcement, the Company cannot provide any reasonable assurance or guidance on how the current ownership provisions under the Mongolian Mineral Resources Law might be applied to it in the future. As of the date of this announcement and to the best of the Company's knowledge, its single largest shareholder holds approximately 28.87% of its total issued and outstanding shares, and currently no shareholder holds more than 34% of the total issued and outstanding shares. As disclosed in the Company's announcement dated May 8, 2025, its wholly-owned Mongolian subsidiary, Southgobi Sands LLC (SGS), received a letter from a plenipotentiary representative of the Mongolian government inviting SGS to participate in consultations to determine the Mongolian government's ownership interest in SGS, which is the legal entity holding the Company's coal mining licenses in Mongolia. As of the date of this announcement, SGS continues its discussions with the Mongolian government's plenipotentiary representative. The Company expects that discussions between SGS and the government representative will continue, and both parties will endeavor to reach mutually understandable and constructive understandings and agreements in good faith. The Company will fully cooperate with the Mongolian government and provide all necessary information to the extent permitted by applicable law. The Company will monitor developments regarding the scope of strategically important deposits while seeking to protect its legitimate interests and rights concerning its mineral deposits.