Tsagaan Tolgoi coal resource buoys SouthGobi Energy (February 25, 2008)

The Tsagaan Tolgoi coal project has measured plus indicated coal resources of 36.4 million tonnes and an additional inferred coal resource of about 9 million tonnes, SouthGobi Energy Resources (SGQ-V, SGQRF-O) said today.

The initial and independent National Instrument 43-101 compliant resource estimate for the project in southern Mongolia, about 570 km south of the capital of Ulan Bataar, indicates that there is coal in sufficient quantity and quantity to support power generation 115 km to the west at the massive Oyu Tolgoi copper-gold deposit owned by Ivanhoe Mines (IVN-T,IVN-N).

All of SouthGobi Energy’s coal projects and licenses were previously owned by Ivanhoe Mines. But the Vancouver-based Ivanhoe didn’t think its coal portfolio was getting fully valued. So it poured its coal assets into SouthGobi Energy, a publicly traded company that debuted on the TSX Venture Exchange on May 29 last year. Ivanhoe retains a majority stake in the new company, holding 81% of its stock.

Tsagaan Tolgoi has eight main coal seams with multiple sub-seams with apparent thicknesses varying from 1.2 metres to 24.7 metres. The coal rank is high volatile B and C bituminous.

SouthGobi Energy has drilled a total of 86 reverse circulation and rotary holes and 28 core holes. There is potential for additional resources along strike and at depth, the company noted in a statement.

Additional exploration is planned this year to determine the extent of the coal resource.

Tsagaan Tolgoi is the company’s second coal deposit in southern Mongolia to have a NI 43-101 resource estimate.

SouthGobi’s primary mine development project — Ovoot Tolgoi — is 415 km to the southwest of Tsagaan Tolgoi.

Coal at Tsagaan Tolgoi is found in a steeply dipping sedimentary basin about 4 km by 20 km on two adjacent licenses stretching over 88 sq. km.

The independent resource estimate was prepared by Norwest of Salt Lake city.

SouthGobi Energy Resources plans to supply a wide range of coal products and electricity to markets in Mongolia and China.

In late afternoon trading, SouthGobi was at $11.40 a share — closing in on its 52-week high of $11.98 — with 20,100 shares exchanging hands.

SouthGobi has a 52-week trading range of $2.20 to $11.98 with 129.2 million shares outstanding.