SouthGobi Resources Ltd.

NOTICE OF ANNUAL AND SPECIAL MEETING

OF SHAREHOLDERS

to be held on Thursday, January 21, 2021

and

MANAGEMENT PROXY CIRCULAR

DATED: December 9, 2020

TAKE ACTION AND VOTE TODAY

These materials are important and require your immediate attention. They require shareholders of SouthGobi Resources Ltd. to make important decisions. If you are in doubt as to how to make such decisions, please contact your financial, legal, tax or other professional advisors.

Your vote is important regardless of the number of shares you own. Whether or not you are able to attend, we urge you to vote using the enclosed proxy or voting instruction form. Please carefully follow the instructions provided to vote your shares.

SOUTHGOBI RESOURCES LTD.

Notice of the annual and special meeting of Shareholders to be held on Thursday, January 21, 2021

NOTICE IS HEREBY GIVEN that the annual and special meeting of the shareholders of SOUTHGOBI RESOURCES LTD. (the "Company") will be held at the offices of Dentons Canada LLP, 20th floor – 250 Howe Street, Vancouver, British Columbia, on Thursday, January 21, 2021 at 4:00 p.m. (PST) (the "Meeting") for the following purposes:

1. to receive the report of the Board of Directors (the "Board");
1. to receive the Company's audited financial statements for the financial year ended December 31, 2019 and the auditors' report thereon;
1. to appoint auditors for the Company for the ensuing year and to authorize the Board to fix the auditors' remuneration;
1. to consider, and if thought advisable, to pass an ordinary resolution fixing the number of directors to be elected at the Meeting at eight (8);
1. to elect directors for the ensuing year; and
1. to consider, and if thought advisable, to pass an ordinary resolution of disinterested shareholders of the Company authorizing and approving the deferral agreement dated November 19, 2020 (the "November 2020 Deferral Agreement") between Land Breeze II S.à.r.l. and Fullbloom Investment Corporation, each a wholly-owned subsidiary of China Investment Corporation, the Company and certain of its subsidiaries, as more fully described in the accompany management proxy circular (the "Management Proxy Circular").

The Company will transact such other business as may properly come before the Meeting or any adjournment thereof.

The Board has fixed Friday, December 11, 2020 as the record date for the determination of shareholders entitled to receive notice of, and to vote at, the Meeting and at any adjournment thereof.

Caution regarding COVID-19

As of the date of this Notice and the accompanying Management Proxy Circular, the Company intends to hold the Meeting at the location and time stated above in this Notice. However, in light of the rapidly evolving public health guidelines related to the ongoing coronavirus (COVID-19) pandemic ("COVID-19"), the Company is asking shareholders to consider voting their shares by proxy, rather than attending the Meeting in person. Shareholders who do wish to attend the Meeting in person should carefully consider and follow the instructions of the federal Public Health Agency of Canada: (https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html).

We ask that shareholders also review and follow the instructions of any regional health authorities of the Province of British Columbia, including the Vancouver Coastal Health Authority, the Fraser Health Authority and any other health authority which has authority to govern the areas that a shareholder must travel through in order to attend the Meeting in person. Please do not attend the Meeting in person if you are experiencing any cold or flu-like symptoms, or if you or someone with whom you have been in close contact has travelled to/from outside of Canada within the 14 days immediately prior to the Meeting. All shareholders are strongly encouraged to vote by submitting their completed form of proxy ("Form of Proxy") or voting instruction form prior to the Meeting by one of the means described in the Management Proxy Circular which accompanies this Notice.

The Company reserves the right to take any additional pre-cautionary measures deemed to be appropriate, necessary or advisable in relation to the Meeting in response to further developments in the COVID-19 outbreak or order established by applicable regional health authorities in the Province of British Columbia, which could include changing the location of the Meeting, hosting the Meeting by means of virtual communication only, placing further restrictions on in-person attendance (including limiting or prohibiting attendance) or postponing or adjourning the Meeting. Should any such changes to the Meeting format occur, the Company will announce any and all of these changes by way of news release, which will be filed under the Company's profile on SEDAR.

Voting

The Management Proxy Circular contains details of the matters to be considered at the Meeting. Information respecting the appointment of auditors, the election of directors and the approval of the November 2020 Deferral Agreement may be found in the Management Proxy Circular under the headings "Appointment of Auditors", "Election of Directors" and "Approval of November 2020 Deferral Agreement", respectively.

A Form of Proxy is enclosed herewith. Registered shareholders who are unable, or do not wish, to attend the Meeting in person are requested to complete, date, sign and return the enclosed Form of Proxy to AST Trust Company (Canada) in accordance with the instructions set out on the Form of Proxy and in the Management Proxy Circular. If you are voting your shares by proxy, AST Trust Company (Canada) must receive your completed Form of Proxy by 4:00 p.m. (PST) on Tuesday, January 19, 2021 (which is 8:00 a.m. (Hong Kong time) on Wednesday, January 20, 2021, or 48 hours (excluding Saturdays, Sundays and statutory holidays in the City of Vancouver, British Columbia, Canada) before any adjournment(s) or postponement(s) of the Meeting.

Non-registered shareholders receiving these materials through their broker or other intermediary should complete and return the voting instruction form provided to them by their broker or other intermediary in accordance with the instructions provided therein.

Approvals to Hold 2020 Annual General Meeting in 2021

As disclosed in the Company's press released dated December 4, 2020, the Company obtained (i) an order from the British Columbia Registrar of Companies on May 7, 2020 to delay the time to hold its annual general meeting for the calendar year ended December 31, 2020 (the "2020 AGM") until February 21, 2021; and (ii) approval from the Toronto Stock Exchange on November 20, 2020 to hold the 2020 AGM on or before January 21, 2021. Accordingly, notwithstanding the fact that the date of the Meeting will held in 2021, the Meeting shall constitute the Company's 2020 AGM for purposes of applicable corporate law and stock exchange rules.

SHAREHOLDERS ARE REMINDED TO REVIEW THE MANAGEMENT PROXY CIRCULAR CAREFULLY BEFORE EXERCISING THEIR RIGHT TO VOTE.

DATED at Vancouver, British Columbia, Canada this December 9, 2020.

BY ORDER OF THE BOARD OF DIRECTORS OF SOUTHGOBI RESOURCES LTD.

"Allison Snetsinger"

Allison Snetsinger Corporate Secretary

PLEASE VOTE PRIOR TO 4:00 P.M. (PST) ON TUESDAY, JANUARY 19, 2021

Telephone: 604-762-6783

MANAGEMENT PROXY CIRCULAR

This Management Proxy Circular is furnished to the holders ("shareholders") of common shares ("Common Shares") of SouthGobi Resources Ltd. (the "Company") (TSX:SGQ) (HKEx:1878) by the Company's management in connection with the solicitation of proxies to be voted at the annual and special meeting of shareholders (the "Meeting") to be held at 4:00 p.m. (PST) on Thursday, January 21, 2021, at the offices of Dentons Canada LLP, 20th floor – 250 Howe Street, Vancouver, British Columbia, for the purposes set forth in the Notice of Meeting that accompanies this Management Proxy Circular. Unless otherwise stated, this Management Proxy Circular contains information current as of December 8, 2020, the last business day preceding the date of this Management Proxy Circular.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited ("HKEx") take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

In this Management Proxy Circular, all dollar amounts are quoted in United States dollars unless otherwise indicated.

Caution regarding COVID-19

As of the date of this Management Proxy Circular, the Company intends to hold the Meeting at the location and time stated in the accompanying notice of meeting dated December 9, 2020 (the "Notice of Meeting"). However, in light of the rapidly evolving public health guidelines related to the ongoing coronavirus (COVID-19) pandemic ("COVID-19"), the Company is asking shareholders to consider voting their shares by proxy, rather than attending the Meeting in person. Shareholders who do wish to attend the Meeting in person should carefully consider and follow the instructions of the federal Public Health Agency of Canada: (https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease covid-19.html).

We ask that shareholders also review and follow the instructions of any regional health authorities of the Province of British Columbia, including the Vancouver Coastal Health Authority, the Fraser Health Authority and any other health authority which has authority to govern the areas that a shareholder must travel through in order to attend the Meeting in person. Please do not attend the Meeting in person if you are experiencing any cold or flu-like symptoms, or if you or someone with whom you have been in close contact has travelled to/from outside of Canada within the 14 days immediately prior to the Meeting. All shareholders are strongly encouraged to vote by submitting their completed form of proxy ("Form of Proxy") or voting instruction form ("VIF") prior to the Meeting by one of the means described in the Management Proxy Circular.

SOLICITATION OF PROXIES

The enclosed Form of Proxy is solicited by and on behalf of management of the Company.

This Management Proxy Circular, the accompanying Notice of Meeting and the enclosed Form of Proxy (collectively, the "Meeting Materials") are to be mailed to shareholders on or about December 18, 2020.

All expenses incurred in connection with the preparation, printing and mailing of this Management Proxy Circular and the solicitation of proxies for use at the Meeting will be borne by the Company.

No person is authorized to give any information or to make any representations other than those contained in this Management Proxy Circular and, if given or made, such information or representations must not be relied upon as having been authorized to be given or made.

In accordance with applicable securities law requirements, the Company will have distributed copies of the Meeting Materials to the clearing agencies and Intermediaries (as defined in the NI 54-101) for distribution to Non-Registered Shareholders (as defined below).

VOTING OF PROXIES

A Form of Proxy pertaining to the Meeting accompanies this Management Proxy Circular has been sent to registered shareholders. Common Shares represented by a properly executed Form of Proxy in favour of the persons designated therein will be voted or withheld from voting in accordance with the instructions made on the Form of Proxy in any ballot that may be called for. Where a shareholder specifies a choice as to any matter to be acted upon, the Common Shares will be voted accordingly. In the absence of such instructions, such Common Shares will be voted in favour of the matters specified in the Form of Proxy.

The Form of Proxy confers discretionary authority upon the nominees therein with respect to:

a) each matter or group of matters identified therein for which a choice is not specified;
b) any amendment to or variation of any matter identified therein; and
c) any other matter that properly comes before the Meeting.

As of the date of this Management Proxy Circular, management of the Company knows of no such amendments, variations or other matters that may come before the Meeting, but if any amendment, variation or other matter properly comes before the Meeting, each nominee named in the accompanying Form of Proxy intends to vote thereon in accordance with the nominee's best judgment.

Only registered shareholders of the Company or the persons they appoint as their proxies are permitted to vote at the Meeting. Most shareholders of the Company are "non-registered" shareholders ("Non-Registered Shareholders") because the Common Shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they own their Common Shares.

Intermediaries are required to forward the Meeting Materials to Non-Registered Shareholders unless a Non-Registered Shareholder has waived the right to receive them. Most Intermediaries delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge") in the United States and in Canada. Broadridge typically mails a scannable VIF instead of a Form of Proxy. Non-Registered Shareholders are asked to complete the VIF and return it to Broadridge by mail or facsimile. Alternatively, Non-Registered Shareholders may submit their votes by telephone or via the internet at www.proxyvote.com. The various voting methods will be set out by Broadridge on the VIF. In addition, the Company may utilize Broadridge's QuickVote™ service to assist Non-Registered Shareholders with voting their Common Shares.

The Form of Proxy or VIF from your Intermediary is to permit Non-Registered Shareholders to direct the voting of the Common Shares they beneficially own. Should a Non-Registered Shareholder who receives one of the above forms wish to vote in person at the Meeting, or any adjournment(s) or postponement(s) thereof (or have another person attend and vote on behalf of the Non-Registered Shareholder), the Non-Registered Shareholder should insert the Non-Registered Shareholder's or such other person's name in the blank space provided for this purpose. Non-Registered Shareholders should carefully follow the instructions of their Intermediary, including those regarding when and where the Form of Proxy or VIF is to be delivered.

If you are a Non-Registered Shareholder who has already provided voting or proxy holder instructions and wants to revoke it, contact your Intermediary about how to revoke your voting or proxy holder instructions.

The Meeting Materials are being sent to both registered shareholders and Non-Registered Shareholders. There are two (2) kinds of Non-Registered Shareholders: those who object to their names being made known to the Company, referred to as objecting beneficial owners ("OBOs"), and those who do not object to the Company knowing who they are, referred to as non-objecting beneficial owners ("NOBOs").

The Company does not intend to pay for Intermediaries to forward to OBOs the proxyrelated materials under NI 54-101 and Form 54-101F7 – Request for Voting Instructions Made by Intermediary and OBOs will not receive the Meeting Materials unless the OBO's Intermediary assumes the cost of delivery.

In order to vote via the Internet, have the Form of Proxy you received available and access the website at www.astvotemyproxy.com. You will be prompted to enter the 13-digit Control Number which is located in a box on the backside of the Form of Proxy. The cut-off time for voting over the Internet is 4:00 p.m. (PST) on Tuesday, January 19, 2021 (which is 8:00 a.m. (Hong Kong time) on Wednesday, January 20, 2021), or 48 hours (excluding Saturdays and Sundays) before any adjournment(s) or postponement(s) of the Meeting.

If your Common Shares are held in street name for your account, your broker or other nominee will advise you whether you may vote online through the Internet. A number of banks and brokerage firms participate in programs that permit shareholders to direct their votes online through the Internet.

APPOINTMENT AND REVOCATION OF PROXIES

The individuals named in the enclosed Form of Proxy are directors and/or officers of the Company. A shareholder wishing to appoint some other person or company (who need not be a shareholder) to represent such shareholder at the Meeting has the right to do so, either by inserting such person's name in the blank space provided on the Form of Proxy or by completing another Form of Proxy.

An appointment of a proxy holder or alternate proxy holders will not be valid unless a Form of Proxy making the appointment, signed by the shareholder or by an attorney of the shareholder authorized in writing, is deposited with AST Trust Company (Canada) (the "Transfer Agent"):

a) via the internet www.astvotemyproxy.com;
b) by facsimile to 1-416-368-2502 or 1-866-781-3111;
c) by mail to P.O. Box 721, Agincourt, Ontario, M1S 0A1 Attn: Proxy Department;
d) by hand to Suite 1200 1 Toronto Street, Toronto, Ontario, M5C 2V6; or
e) by email to: [email protected] (for proxy appointments in English) or [email protected] (for proxy appointments in French),

and in each case must be received by the Transfer Agent by no later than 4:00 p.m. (PST) on Tuesday, January 19, 2021 (which is 8:00 a.m. (Hong Kong time) on Wednesday, January 20, 2021), or 48 hours (excluding Saturdays, Sundays and statutory holidays in the City of Vancouver, British Columbia, Canada) before the Meeting or any postponement(s) or adjournment(s) thereof at which the instrument of proxy is to be used.

In addition to revocation in any other manner permitted by law, a shareholder who has given a proxy may revoke it by depositing an instrument in writing executed by the shareholder or by the shareholder's attorney authorized in writing: (i) at the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting or any postponement(s) or adjournment(s) thereof at which the proxy is to be used; or (ii) with the Chair of the Meeting on the day of the Meeting or any postponement(s) or adjournment(s) thereof.

With respect to Non-Registered Shareholders, a Form of Proxy or VIF given to an Intermediary may be revoked by contacting the Intermediary through which the Non-Registered Shareholder's Common Shares are held and following the instructions of the intermediary respecting the revocation of proxies. In order to ensure that an Intermediary acts upon a revocation of a Form of Proxy or voting instruction form, the written notice should be received by the Intermediary well in advance of the Meeting.

A revocation of a proxy does not affect any matter on which a vote has been taken before the revocation. Please note that if you vote and subsequently change your voting preferences you may vote again not less than 24 hours (excluding Saturdays, Sundays and statutory holidays in the City of Vancouver, British Columbia, Canada) before the Meeting or any postponement(s) or adjournment(s) thereof. When you vote again, your latest vote will be recognized as your only valid vote, and all previous votes which you have recorded will be disregarded and considered as revoked.

APPROVALS TO HOLD 2020 ANNUAL GENERAL MEETING IN 2021

VOTING SHARES AND RECORD DATE

Voting Shares

The Company has an authorized share capital consisting of an unlimited number of Common Shares without par value and an unlimited number of preferred shares without par value ("Preferred Shares"). As of the close of business on December 11, 2020 (the "Record Date"), 272,702,835 Common Shares were issued and outstanding as fully paid and non-assessable shares and no Preferred Shares were issued and outstanding. Each outstanding Common Share is entitled to one (1) vote on each item of business to be considered at the Meeting.

Record Date

A holder of record of Common Shares on the securities register of the Company at the close of business on the Record Date who either attends the Meeting personally or deposits a properly completed Form of Proxy in the manner and subject to the provisions described above will be entitled to vote or to have such Common Shares voted at the Meeting.

VOTES NECESSARY TO PASS RESOLUTIONS

Pursuant to the Articles of the Company (the "Articles"), a quorum for the transaction of business at any meeting of shareholders is at least two (2) persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued Common Shares entitled to be voted at such meeting.

Under the Business Corporations Act (British Columbia) (the "BCBCA") and its regulations, a simple majority of the votes cast at a meeting of holders of Common Shares is required to pass all ordinary resolutions. For a special resolution to be passed, a majority of not less than twothirds (2/3) of the votes cast by holders of Common Shares must be obtained.

Shareholders are entitled, and will be asked, to elect directors and appoint the Company's auditors for the ensuing year, while shareholders, other than the Interested Shareholders (as hereinafter defined), are entitled, and will be asked, to approve the deferral agreement dated November 19, 2020 (the "November 2020 Deferral Agreement") between Land Breeze II S.à.r.l. and Fullbloom Investment Corporation, each a wholly-owned subsidiary of China Investment Corporation, the Company and certain of its subsidiaries, as more particularly described in the

section entitled "Approval of November 2020 Deferral Agreement" in this Management Proxy Circular. With respect to the election of directors, if there are more nominees for election as directors or for appointment as the Company's auditors than there are vacancies to fill such positions, those nominees receiving the greatest number of votes will be elected or appointed, as the case may be, until all such vacancies have been filled. If the number of nominees for election or appointment is equal to the number of vacancies to be filled, all such nominees will be declared elected or appointed by acclamation, subject to the Company's Majority Voting Policy (see the heading entitled "Majority Voting Policy" below).

PRINCIPAL HOLDERS OF VOTING SHARES

The following table sets forth information as of December 8, 2020, with respect to:

a) all persons known by the Company's directors (the "Directors") and executive officers to beneficially own, or control or direct, directly or indirectly, 10% or more of the Common Shares issued and outstanding on a non-diluted basis; and
b) share ownership by the current Directors and executive officers of the Company as a group.

Name or Group and Municipality of Residence	Type of Ownership	Number of Issued Shares Owned (1)	% of Shares Outstanding
China Investment Corporation (2) Beijing, China	Indirect	64,766,591	23.75%
China Cinda Asset Management Co., Limited (3) Beijing, China	Indirect	46,358,978	17.00%
Directors & executive officers as a group	Direct	7,000 (4)	0.00%

Notes:

(1) The information as to Common Shares beneficially owned or controlled or directed that is not within the knowledge of the Company, its Directors or its officers has been furnished by the applicable shareholders or has been extracted from public filings.
(2) China Investment Corporation (together with its wholly-owned subsidiaries, "CIC") holds its Common Shares through Land Breeze II S.à-r.l. ("CIC Subco"). Pursuant to the terms of a convertible debenture issued by the Company to CIC on October 26, 2009 and subsequently assigned by CIC to CIC Subco (the "Convertible Debenture"), and, subject to certain exceptions, while the Convertible Debenture is outstanding or while CIC Subco beneficially owns directly or indirectly 15% of the outstanding Common Shares, CIC Subco has a preemptive right to subscribe for any new Common Shares offered by the Company (on a pro rata basis).
(3) China Cinda Asset Management Co., Limited holds its Common Shares through Novel Sunrise Investments Limited ("Novel Sunrise"). Subject to certain exceptions, for as long as Novel Sunrise and its affiliates own, directly or indirectly, 10% or more of the outstanding Common Shares, Novel Sunrise has a pre-emptive right to subscribe for any Common Shares, equity securities of the Company or securities convertible into Common Shares or equity securities of the Company, offered by the Company (on a pro rata basis).
(4) This figure does not include the 3,050,000 Common Shares issuable upon the exercise of incentive stock options held, in aggregate, by the Directors and executive officers.

ELECTION OF DIRECTORS

Fixing the Number of Directors

The Articles provide that the number of Directors is the greater of three (3) and the number fixed by ordinary resolution. At the Meeting, the Company's board of Directors (the "Board") is requesting that shareholders pass an ordinary resolution fixing the number of Directors at eight (8).

Term of Office

The term of office of each of the current Directors will end at the conclusion of the Meeting. Unless a Director's office is earlier vacated in accordance with the provisions of the BCBCA, each Director elected at the Meeting will hold office until the conclusion of the next annual meeting of the Company or, if no Director is then elected, until a successor is elected or appointed.

Majority Voting Policy

On November 6, 2013, the Board adopted a majority voting policy (which was amended on May 10, 2017) pursuant to which, in an uncontested election of Directors, if a nominee for election as a Director receives a greater number of votes "withheld" or "abstained" than votes "for" with respect to the election of Directors by shareholders, he or she will be deemed to have submitted his or her resignation to the Board upon the conclusion of the meeting of shareholders. Upon receiving such resignation, the Board will promptly refer such resignation to the Company's Nominating and Corporate Governance Committee (the "Nominating and Governance Committee") for consideration and the Nominating and Governance Committee will make a recommendation to the Board whether or not to accept such resignation. In the absence of exceptional circumstances, the Board expects that the Nominating and Governance Committee will recommend that the Board accept such resignation. The Board will determine whether to accept the resignation in question (and, absent exceptional circumstances, the Board will accept such resignation) and announce such decision in a press release to be issued within 90 days following the meeting of shareholders. The Director who tendered his or her resignation pursuant to this policy will not participate in any committee or Board deliberations and decisions pertaining to the resignation offer.

Contractual Director Nomination Rights

Novel Sunrise

Pursuant to a subscription agreement between the Company and Novel Sunrise entered into in March 2015 (the "Novel Sunrise Agreement"), Novel Sunrise is entitled to nominate a person or persons for appointment or election to the Board from time to time in proportion to the percentage of the Company's issued and outstanding Common Shares it holds. Specifically, (i) for so long as Novel Sunrise and its affiliates own 20% or more of the outstanding Common Shares, it will be entitled to nominate three (3) individuals for appointment or election to the Board; (ii) for so long as Novel Sunrise and its affiliates own 10% or more, but less than 20%, of the outstanding Common Shares, it will be entitled to nominate two (2) individuals for appointment or election to the Board; and (iii) for so long as Novel Sunrise and its affiliates own 5% or more, but less than 10%, of the outstanding Common Shares, it will be entitled to nominate one (1) individual for appointment or election to the Board. As at the date of this Management Proxy Circular, Novel Sunrise is entitled to nominate two (2) nominees for appointment or election to the Board. Pursuant to the Novel Sunrise Agreement, Novel Sunrise has nominated Mr. Zhiwei Chen and

Ms. Ka Lee Ku as its nominees for election as Directors at this Meeting. See "Election of Directors – Director Nominees" below.

CIC

In connection with the issuance of the Convertible Debenture, the Company, Turquoise Hill Resources Ltd. ("Turquoise Hill") and CIC entered into a securityholders' agreement (the "Securityholders' Agreement") pursuant to which CIC is entitled, but not obligated, to nominate one (1) individual for appointment or election to the Board for as long as the Convertible Debenture remains outstanding or CIC beneficially owns directly or indirectly 15% of the outstanding Common Shares.

Pursuant to the terms of the 2019 Deferral Agreement (as hereinafter defined), the Company agreed to grant CIC the following board nomination rights (which are in addition to CIC's existing right to nominate one individual for appointment or election to the Board pursuant to the Securityholders' Agreement):

for as long as CIC and its affiliates beneficially own, directly or indirectly, 20% or more of the outstanding Common Shares, CIC will be entitled to nominate two individuals for appointment or election to the Board; and
for as long as CIC and its affiliates beneficially own, directly or indirectly, 10% or more, but less than 20%, of the outstanding Common Shares, CIC will be entitled to nominate one individual for appointment or election to the Board

Pursuant to the Securityholders' Agreement and the 2019 Deferral Agreement, CIC has nominated Mr. Jianmin Bao and Mr. Ben Niu as its nominees for election as a Director at this Meeting. See "Election of Directors – Director Nominees" below.

Director Nominees

The following tables set out the names of management's, Novel Sunrise's and CIC's nominees for election as Directors, their ages, all major offices and positions with the Company each nominee now holds, each nominee's principal occupation, business or employment, the period of time during which each has been a Director, the number of Common Shares beneficially owned by each, directly or indirectly, or over which each exercised control or direction, as at December 8, 2020, and the number of options to purchase Common Shares held by each as at December 8, 2020.

Management recommends that shareholders vote in favour of each of the nominees named below as a Director of the Company. In the absence of contrary instructions, the person named in the accompanying Form of Proxy intends to vote the Common Shares represented thereby FOR the election of each of the nominees named below as a Director of the Company.

Dalanguerban

Beijing, China Director Since: March 31, 2020

Mr. Dalanguerban, 63, was appointed as Chief Executive Officer and as the Executive Director on March 31, 2020.

Mr. Dalanguerban is a seasoned mining professional, having accumulated over 35 years of international mining and operational experience including a number of mining projects in Mongolia. Mr. Dalanguerban had spent the majority of his career working for China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd. ("NFC"), in a variety of roles in various countries. Between 1985 and 2017 as the Chief Representative of NFC in Mongolia. During this time in Mongolia, Mr. Dalanguerban accomplished numerous achievements including the development and commissioning of the Tumurtiin-Ovoo zinc mine, which is recognized as an "Exemplary Project of China-Mongolia Cooperation" and for which he was awarded the "Mining Contribution" prize by Mongolia's Ministry of Mines. Mr. Dalanguerban served as a director, executive deputy general manager, and general manager successively in Tsairt Minerals LLC (the holding company of the Tumurtiin-Ovoo zinc mine) from its establishment in 1997 until 2005, when the Tumurtiin-Ovoo zinc mine was put into production.

Mr. Dalanguerban cofounded the Mongolian Chinese Chamber of Commerce in Mongolia in 2002 and now serves as its Executive Vice President and Secretary-General. In 2016, Mr. Dalanguerban was awarded an honorary Doctorate Degree from the Mongolian University of Life Sciences and in 2018 he was recognized by the Mongolian Government as a leading cultural contributor. Mr. Dalanguerban studied Arabic at the Shanghai International Studies University and graduated in 1980. He is a member of the Hong Kong and Canadian Institutes of Corporate Directors.

Principal Occupation, Business or Employment (1)

Areas of Experience: CEO/Senior Officer International Business Mining Industry Governance/Board Financial Acumen Environmental/Safety/Corporate Responsibility Technical Mining Experience Mongolia Specific Experience Mining Industry Chief Executive Officer of the Company (March 31, 2020 to present); Retired (July 2017 – March 2020); Mongolia Chief Representative for China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd. (1991 to July 2017). Director Status: Executive (6) Board/Committee Membership: (7) 2019 Attendance: Other Public Company Board Membership: Company: Since: n/a n/a Common Shares Beneficially Owned, Controlled or Directed:(1) (2) Value of Equity at Risk: Year Common Shares Total Market Value of Common Shares (4) Common Shares(4) Unexercised Options(5) Total 2020 Nil Nil Nil Nil Nil 2019 n/a n/a n/a n/a n/a Options Held: Date Granted Expiry Date Number Granted Vested/Unvested Cdn\$ Exercise Price Total Unexercised Value of Unexercised Options(5) n/a n/a n/a n/a n/a n/a n/a

Jianmin Bao

Beijing, China Director Since: March 18, 2020

Mr. Bao, 52, joined the Board of Directors on March 18, 2020 as a Non-Executive Director.

Mr. Bao is a member of the Executive Committee of CIC Investment Corporation ("CIC"). He is responsible for overseeing investment projects in infrastructure, energy, oil and gas, minerals and related investment funds at CIC Capital Corporation ("CIC Capital"). Prior to this appointment in September 2020, Mr. Bao was a Managing Director of CIC Capital. Mr. Bao joined CIC in 2011 and managed its North American fund investments and private credit market investments in the Private Equity Department.

Prior to joining CIC, Mr. Bao held the position of Vice President at the Beijing branch of HSBC Bank (China) Company Limited ("HSBC China") and various senior positions in the Global Investment Banking Division of HSBC China between 2006 to 2010. Before joining HSBC China, Mr. Bao was the Head of the Export Credit Department of Export-Import Bank of China.

Mr. Bao joined the Board of PT Bumi Resources Tbk, a company listed on the Jakarta Stock Exchange (the "IDX"), on July 9, 2020. Previously, he was a Commissioner on the Board of Commissioners of PT Bumi Resources Tbk, and a non-executive Director of Noble Group Limited, a company listed on the Singapore Stock Exchange.

Mr. Bao received his Bachelor's degree in 1990 and a Master's degree of Industry and Foreign Trade in 1994 from the Shanghai Jiao Tong University. He is a member of the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Areas of Experience:			Managing Director of CIC Capital (July 2015 – present).
Managing/Leading Growth International Business Governance/Board CEO/Senior Officer n/a Financial Acumen Mining Industry		(8) Director Status: Non-Independent		2019		Other Public Company Board Membership:
			(9) Board/Committee Membership:		Attendance:				Since:
							PT Bumi Resources Tbk	July 9, 2020
Owned, Controlled or Directed:(1) (2) Common Shares Beneficially						Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares		(4)		Common Shares(4) Unexercised Options(5)		Total
2020	Nil		Nil			Nil		Nil	Nil
2019	n/a		n/a			n/a		n/a	n/a
Options Held:
Date Granted	Expiry Date		Number Granted		Vested/Unvested		Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
n/a	n/a		n/a		n/a		n/a	n/a	n/a

Zhiwei Chen

Hong Kong, China Director Since: April 2018

Mr. Zhiwei Chen, 36, joined the Board on April 13, 2018 as a Non-Executive Director.

Mr. Chen joined China Cinda (HK) Holdings Company Limited ("Cinda HK") in 2010. He is currently the Deputy General Manager responsible for managing Cinda HK's investment and financing businesses, leading a team that manages nearly \$3.5 billion in investments.

Mr. Chen is an Executive Director of Zhongchang International Holdings Group Limited, a company listed on the HKEX. He is also a Non-Executive Director of Modern Land (China) Co., Limited, China Fortune Financial Group and Silver Grant International Holdings Group Limited, each of which are listed on the HKEX. Mr. Chen has over 10 years of investment and research experience in the financial industry and, prior to joining Cinda HK, he was the Executive Assistant to the Chairman of TIG Group in Singapore from 2007 to 2010, responsible for TIG Group's private equity investment business in China. Mr. Chen was a research scholar at the National University of Singapore from 2005 to 2007.

Mr. Chen obtained his Bachelor's Degree in Economics from Tsinghua University in China in 2004 and a Master's Degree in Estate Management from National University of Singapore in 2009. He is a member of the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Assistant General Manager of Cinda HK and the Managing Director of its investment department (January 2010 – present).

			Director Status: Non-Independent	(10)				Other Public Company Board Membership:
			Board/Committee Membership:		2019	Attendance:		Company:		Since:
Areas of Experience: Managing/Leading Growth		Board of Directors			10 of 15	67%		Modern Land (China) Co., Limited (HKEx)		2016
International Business				TOTAL	10 of 15	67%		China Fortune Financial Group (HKEx)		2018
CEO/Senior Officer Compensation Governance/Board Financial Acumen Diversity Environmental/Safety/Corporate Responsibility								Silver Grant International Industries Limited (HKEx)		2018
Common Shares Beneficially Owned, Controlled or Directed:(1) (2)							Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares		(4)	Common Shares(4)		Unexercised Options(5)	Total
2020	Nil		Nil			Nil		Nil	Nil
2019	Nil	Nil				Nil		Nil	Nil
Options Held:
Date Granted	Expiry Date		Number Granted		Vested/Unvested		Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
n/a	n/a		n/a		n/a		n/a	n/a	n/a

Yingbin Ian He

North Vancouver, Canada Director Since: May 2017

Mr. Yingbin Ian He, 58, joined the Board on May 16, 2017 as an Independent Non-Executive Director.

Mr. He's career in the mining industry has spanned over 30 years, with extensive senior executive and board experience. Mr. He is the Lead Independent Director of China Gold International Resources Corp. Ltd., a company dually listed on the Toronto Stock Exchange ("TSX") and HKEx; a Director of Tri-River Ventures Inc., a company listed on the TSX Venture Exchange (the "TSX-V"); a Director of PT Bumi Resources Tbk (IDX), and a Director and non-Executive Chairman of Vatukoula Gold Mines Plc, formerly listed on the London Stock Exchange Alternative Investment Market. He formerly served as director of several public companies and was President and Director of Spur Ventures Inc. (TSX-V), and the General Manager of its operating subsidiary Yichang Mapleleaf Chemicals Inc. In his early career, Mr. He worked as a mineral process engineer and coal preparation engineer respectively with a Canadian mining company and an engineering consulting company.

Mr. He obtained his Doctoral and Master's Degrees in Mineral Process Engineering from the University of British Columbia in Canada and his Bachelor Degree in Coal Preparation from Heilongjiang Institute of Mining and Technology (currently the Heilongjiang University of Technology) in China. Mr. He is a member of the Canadian Institute of Mining, Metallurgy and Petroleum and the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

President of Tri-River Ventures Inc. (2007 - present).

		(3) Director Status: Independent						Other Public Company Board Membership:
			Board/Committee Membership:		2019 Attendance:			Company:
Areas of Experience:		Board of Directors			14 of 15	93%		China Gold International Resources Corp. (TSX and HKEx)
Managing/Leading Growth International Business		Audit			7 of 7	100%		Tri-River Ventures Inc. (TSX-V)
CEO/Senior Officer Compensation			Compensation & Benefits			100%	PT Bumi Resources Tbk (IDX)			2006 2019
Mining Industry		Nominating & Corporate Governance (Chair)			3 of 3	100%
Governance/Board Financial Acumen		Special Committee		5 of 5	100%
Environmental/Safety/Corporate Responsibility		Health, Environment, Safety & Social			2 of 2	100%
Technical Mining Experience Coal Industry Specific Experience		Responsibility Total:		34 of 35	97%
Common Shares Beneficially Owned, Controlled or Directed:(1)(2)							Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares(4)			Common Shares(4)		Unexercised Options(5)	Total
2020	7,000		Nil			\$630		Nil	\$630
2019	Nil		Nil				\$875	Nil	\$875
Options Held:
Date Granted	Expiry Date		Number Granted		Vested/Unvested		Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
June 5, 2017	June 5, 2022		100,000	100,000	/ Nil		0.39	100,000	Nil
June 30, 2017	June 30, 2022		150,000	150,000	/ Nil		0.33	150,000	Nil
July 3, 2018	July 3, 2023		150,000	150,000	/ Nil		0.13	150,000	Nil
September 11, 2019	September 11, 2024		150,000		150,000 / Nil		0.11	150,000	Nil

Ka Lee Ku

Hong Kong Director Since: December 9, 2020

Ms. Ka Lee Ku, 50, joined the Board on December 9, 2020 as a Non-Executive Director.

Ms. Ku is currently the Managing Director of the Investment Department in China Cinda (HK) Holdings Company Limited ("Cinda HK"), responsible for sourcing and execution of private and secondary market transactions valuing in excess of HK\$10 billion. Ms. Ku has over 24 years' experience in the management and finance sectors. She joined China Cinda Asset Management Co., Ltd. ("China Cinda") in 1996 and, throughout her career at China Cinda she has worked in a variety of roles and positions. Prior to her appointment in 2018 as the Managing Director of the Investment Department in Cinda HK, Ms. Ku was an Executive Director of the Investment Department in Cinda HK from March 2017 to March 2018 and a Senior Manager Assistant of the Investment Department in Cinda HK from March 2016 to March 2017. While at Cinda HK, Ms. Ku has provided corporations with financial support through loans, equity investments, mezzanine investments, bond investments, initial public offerings, and additional investment opportunities at every stage of corporate growth.

Ms. Ku studied international trade at the Hubei University in China. She obtained a diploma in Business Management from The Hong Kong Management Association and completed the Licensing Examination for Securities and Futures Intermediaries from the Hong Kong Securities and Investment Institute. Ms. Ku is a member of the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Managing Director of Cinda HK (March 2018 - present)

Areas of Experience:		(10) Director Status: Independent				Other Public Company Board Membership:
Managing/Leading Growth		(11) Board/Committee Membership:			2019	Attendance:		Company:		Since:
International Business CEO/Senior Officer Governance/Board Financial Acumen		n/a					n/a
Common Shares Beneficially Owned, Controlled or Directed:(1)(2)							Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares(4)			Common Shares(4)		Unexercised Options(5)	Total
2020	Nil		Nil			Nil		Nil	Nil
2019	n/a		n/a				n/a	n/a	n/a
Options Held:
Date Granted	Expiry Date		Number Granted	Vested/Unvested			Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
n/a	n/a		n/a	n/a			n/a	n/a	n/a

Ben Niu

Beijing, China

Director Since: May 2019

Mr. Niu, 34, joined the Board on May 30, 2019 as a Non-Executive Director.

Mr. Niu is currently a Vice President of CIC Capital, a wholly owned subsidiary of CIC, and is responsible for evaluating investment opportunities in the metals and mining industry and management of CIC Capital's existing portfolio assets in the same sector. Prior to joining CIC Capital in 2019, Mr. Niu was a Senior Manager at China Minmetals Corporation, responsible for its overseas mining strategy, commodity analysis and M&A in the mining sector. Through his experience at China Minmetals Corporation and its subsidiaries, Mr. Niu has developed an extensive understanding of global mining development trends, commodity attractiveness and investment opportunity selection.

Mr. Niu received his Bachelor's and Master's degrees from Tsinghua University in China in 2012, majoring in Electronic Engineering. Mr. Niu is a member of the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Vice President of CIC Capital (January 2019 – present).

			Director Status: Non-Independent	(12)	2019 Attendance:			Other Public Company Board Membership:
			(13) Board/Committee Membership:				Company:			Since:
		Board of Directors			5 of 5	100%
Areas of Experience:				TOTAL:	5 of 5	100%	n/a
Managing/Leading Growth International Business Financial Acumen Environmental/Safety/Corporate Responsibility Technical Mining Experience Coal Industry Specific Experience
Common Shares Beneficially Owned, Controlled or Directed: (1) (2)							Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares		(4)		Common Shares(4)	Unexercised Options(5)	Total
2020	Nil		Nil				Nil	Nil	Nil
2019	Nil	Nil				Nil		Nil	Nil
Options Held:
Date Granted	Expiry Date		Number Granted		Vested/Unvested		Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
n/a	n/a		n/a		n/a		n/a	n/a	n/a

Jin Lan Quan

Sydney, Australia Director Since: August 2015

Ms. Jin Lan Quan, 57, joined the Board on August 6, 2015 as an Independent Non-Executive Director.

Ms. Quan is an independent financial planner and business consultant based in Sydney, Australia. Prior to her current role, Ms. Quan developed extensive and diverse finance and audit experience during her time as an audit partner with one of the big four international accounting firms in Sydney, Australia. She has extensive experience in financial consulting services with specialist skills in external auditing, internal audit structuring, corporate financing and risk management and business acquisition. Ms. Quan was previously a director of Kresta Holdings Ltd., a company listed on the Australian Stock Exchange.

Ms. Quan is a Certified Public Accountant of China and a member of the Chinese Institute of Certified Public Accountants. She is also a Fellow of the Association of Chartered Certified Accountants of United Kingdom, a member of the Chartered accountants Australia and New Zealand (CA ANZ) and a member of the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Financial Planner and Business Consultant, J&Q Investments Pty Ltd. (2004 – present).

		(3) Director Status: Independent					Other Public Company Board Membership:
			Board/Committee Membership:		2019	Attendance:		Company:		Since:
			Board of Directors			100%	n/a
		Audit			7 of 7	100%
Areas of Experience:			Nominating & Corporate Governance		3 of 3	100%
Managing/Leading Growth Compensation			Compensation & Benefits (Chair)		3 of 3	100%
Financial Acumen Governance/Board		Special Committee			5 of 5	100%
International Business Diversity				Total:	33 of 33	100%
Common Shares Beneficially Owned, Controlled or Directed:(1)(2)							Value of Equity at Risk:
Year	Common Shares		Total Market Value of Common Shares(4)				Common Shares(4)	Unexercised Options(5)	Total
2020	Nil		Nil			Nil		Nil	Nil
2019	Nil		Nil			Nil		Nil	Nil
Options Held:
Date Granted	Expiry Date		Number Granted		Vested/Unvested		Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
December 14, 2015	December 14, 2020		100,000	100,000	/ Nil		0.29	100,000	Nil
November 16, 2016	November 16, 2021		150,000	150,000	/ Nil		0.33	150,000	Nil
June 30, 2017	June 30, 2022		150,000	150,000	/ Nil		0.33	150,000	Nil
July 3, 2018	July 3, 2023		150,000	150,000	/ Nil		0.13	150,000	Nil
September 11, 2019	September 11, 2024		150,000		150,000 / Nil		0.11	150,000	Nil

Mao Sun

Richmond, B.C., Canada Director Since: November 2015

Mr. Mao Sun, 44, joined the Board on November 5, 2015 as an Independent Non-Executive Director; he was the Company's Interim Lead Director from August 16, 2016 to May 30, 2019 and appointed as the Lead Director on May 30, 2019.

Mr. Sun is the founding partner of Mao & Ying LLP, a private accounting firm offering tax, assurance and management consulting services. He has over 15 years' experience in the accounting sector and has wide-ranging knowledge of Canadian accounting standards, International Financial Reporting Standards and Canadian taxation laws. Mr. Sun has extensive experience with Canadian listed companies. He has been the Chief Financial Officer of HFX Holding Corp since 2014. Mr. Sun was a Director and Chairman of the audit committee for Yalian Steel Corporation (TSX-V) from 2012 to 2013, and a Director and member of the audit committee for Wildsky Resources Inc. (TSX-V) from 2017 to February 2020. Prior to founding Mao & Ying LLP, Mr. Sun was the audit manager in the Vancouver office of KPMG, an internationally recognized accounting firm.

Mr. Sun graduated from Columbia University in New York with a Master's Degree in International Affairs, International Finance and Business, and a Bachelor's Degree in Computer Science from Nanjing University, China. Mr. Sun is a member of the Institute of Chartered Accountants of British Columbia, the Canadian Tax Foundation and the Canadian Institute of Corporate Directors.

Principal Occupation, Business or Employment (1)

Founding partner, Mao & Ying LLP (October 2009 - present).

	(3) Director Status: Independent			Other Public Company Board Membership:
	Board/Committee Membership:	2019	Attendance:	Company:	Since:
Areas of Experience:	Board of Directors (Lead Director)	14 of 15	93%
International Business				n/a
Mining Industry Compensation	Audit (Chair)	7 of 7	100%
CEO/Senior Office	Nominating & Corporate Governance	2 of 3	67%
Financial Acumen Governance/Board	Compensation & Benefits	3 of 3	100%
Managing/Leading Growth	Special Committee	5 of 5	100%
Mongolia Specific Experience	Total:	31 of 33	94%
Owned, Controlled or Directed:(1)(2) Common Shares Beneficially			Value of Equity at Risk:

Year	Common Shares	Total Market Value of Common Shares(4)		Common Shares(4)	Unexercised Options(5)	Total
2020	Nil	Nil		Nil	Nil	Nil
2019	Nil	Nil		Nil	Nil	Nil
Options Held:
Date Granted	Expiry Date	Number Granted	Vested/Unvested	Cdn\$ Exercise Price	Total Unexercised	Value of Unexercised Options(5)
December 14, 2015	December 14, 2020	100,000	100,000 / Nil	0.29	100,000	Nil
November 16, 2016	November 16, 2021	200,000	200,000 / Nil	0.33	200,000	Nil
June 30, 2017	June 30, 2022	200,000	200,000 / Nil	0.33	200,000	Nil

July 3, 2018 July 3, 2023 200,000 200,000 / Nil 0.13 200,000 Nil September 11, 2019 September 11, 2024 200,000 200,000 / Nil 0.11 200,000 Nil Notes:

(1) The information as to principal occupation, business or employment and Common Shares beneficially owned, controlled or directed by a nominee is not within the knowledge of the management of the Company and has been furnished by the nominee.
(2) Does not include unissued Common Shares issuable upon the exercise of incentive stock options.
(3) "Independent" refers to the standards of independence established under Canadian Securities Administrators' National Instrument 58-101 Disclosure of Corporate Governance Practices ("NI 58-101").
(4) "Total Market Value" is calculated by multiplying the Canadian dollar closing price of the Common Shares on the TSX on each of December 6, 2019 (being Cdn\$0.125 per Common Share) and June 18, 2020 (being Cdn\$0.09 per Common Share), respectively, by the number of Common Shares held by the nominee as of those dates and converted to U.S. dollars at the respective spot rates as published by the Bank of Canada. June 18, 2020 is the last trading date prior to the date on which trading in the Common Shares on the TSX was halted.
(5) The "Value of Unexercised Options" is calculated on the basis of the difference between the closing price of the Common Shares on the TSX on June 18, 2020 (being Cdn\$0.09 per Common Share) and the exercise price of the options multiplied by the number of unexercised options, vested and unvested and converted to US\$ at the respective spot rates as published by the Bank of Canada.
(6) Mr. Dalanguerban was appointed as the Company's Chief Executive Officer on March 31, 2020.
(7) Mr. Dalanguerban joined the Board as an Executive Director on March 31, 2020.
(8) Mr. Bao has been nominated for election as a Director of the Company by CIC pursuant to a contractual nomination right granted to CIC in connection with the Convertible Debenture (see the section entitled "Contractual Director Nomination Rights" in this Management Proxy Circular).
(9) Mr. Bao joined the Board on March 18, 2020.
(10) Mr. Chen and Ms. Ku have been nominated for election as Directors of the Company by Novel Sunrise pursuant to a contractual nomination right granted to Novel Sunrise in connection with the Novel Sunrise Agreement (see the section entitled "Contractual Director Nomination Rights" in this Management Proxy Circular).
(11) Ms. Ku joined the Board on December 9, 2020.
(12) Mr. Niu has been nominated for election as a Director of the Company by CIC pursuant to a contractual nomination right granted to CIC in connection with the 2019 Deferral Agreement (see the section entitled "Contractual Director Nomination Rights" in this Management Proxy Circular).
(13) Mr. Niu joined the Board on May 30, 2019 and there were five meetings of the Board of Directors following his appointment.

Summary of Board and Committee Meetings Held

The following table summarizes the number of Board and committee meetings held during the year ended December 31, 2019:

Board	15
Audit Committee	7
Compensation and Benefits Committee	3
Nominating and Corporate Governance Committee	3
Health, Environment, Safety and Social Responsibility Committee	2
Special Committee	5

All of the meetings listed in the foregoing table were held via teleconference.

In 2019, there were thirteen (13) written resolutions passed by the Directors, three (3) written resolutions passed by the Compensation & Benefits Committee (the "Compensation Committee") and two (2) written resolutions passed by the Nominating and Governance Committee. In 2019, no written resolutions were passed by the Audit Committee or the Health, Environment, Safety and Social Responsibility Committee (the "HESS Committee") or the Special Committee. Resolutions in writing must be executed by all of the members of the Board or the committee, as applicable, entitled to vote on a matter in order to be effective.

Independent Non-Executive Directors

The current Independent Non-Executive Directors of the Company (the "INEDs") – namely, Mr. Mao Sun, Mr. Yingbin Ian He and Ms. Jin Lin Quan – have all been nominated for re-election as INEDs and, if elected at the Meeting, will hold office until the conclusion of the next annual meeting of the Company or, if no Director is then elected, until a successor is elected or appointed. Each of the nominee INEDs were considered and recommended by the Nominating and Governance Committee.

In considering and recommending for nomination each of the aforementioned individuals as INEDs, the Nominating and Governance Committee and the Board considered a number of different factors, including the past performance of each nominee, the independence confirmations provided by each nominee pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and their respective expertise, knowledge and experience. The Nominating and Governance Committee and the Board also considered the terms of the Board Diversity Policy, which recognizes that a diverse Board will enhance the decision making of the Board by utilizing the difference in skills, experience and background, geographical and industry experience, ethnicity, gender, knowledge and length of services, and other distinguishing qualities of the members of the Board.

Brief biographies for each of Mr. Mao Sun, Mr. Yingbin Ian He and Ms. Jin Lin Quan are set out in the section entitled "Election of Directors – Director Nominees" of this Management Proxy Circular. The Board is of the view that each of the nominee INEDs offers a unique set of experiences in different fields and professions, including business, finance, accounting, audit and mining, which are relevant and valuable to the Company's business. In addition, none of the nominee INEDs are considered to hold directorships on an excessive number of publicly listed companies, which allows each of them to devote sufficient time and attention to the Company's affairs. Finally, the Board is of the view that it has greatly benefited from each nominee INED's contributions in the past.

In view of the above, the Board believes that Mr. Mao Sun, Mr. Yingbin Ian He and Ms. Jin Lin Quan are qualified to serve as INEDs and should be elected to the Board.

BOARD OF DIRECTORS

Directors and Officers Insurance

Given the current market condition, directors' and officers' liability insurance cannot be obtained at economically reasonable premium. The Company has therefore elected to place its current directors' and officers' liability insurance with aggregate coverage in the amount of US\$5 million into 3 years run-off, at one time cost of US\$50,000. The coverage has a deductible of US\$250,000.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Other than as disclosed below, to the knowledge of the Company, no proposed Director:

a) is, as at the date of this Management Proxy Circular, or has been, within 10 years before the date of this Management Proxy Circular, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity,
i) was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days;
ii) was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant corporation access to any exemption under securities legislation, for a period of more than thirty consecutive days; or
iii) within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
b) has, within the 10 years before the date of this Management Proxy Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed Director; or
c) has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed Director.

On May 13, 2020, the Company applied for a management cease trade order (the "MCTO") with the applicable Canadian securities regulators in connection with the anticipated delayed filing of: (i) its audited financial statements for the financial year ended December 31, 2019 (the "2019 Financial Statements") and accompanying Management Discussion & Analysis ("MD&A") and CEO and CFO certificates prior to the filing deadline of May 14, 2020; and (ii) its interim consolidated financial statements for the three month period ended March 31, 2020 and accompanying MD&A and CEO and CFO certificates prior to the filing deadline of May 15, 2020 (collectively, the "Required Filings"). A management cease trade order was issued by the British Columbia Securities Commission ("BCSC"), the Company's principal securities regulator in Canada, on May 15, 2020. On June 19, 2020, the BCSC issued a general "failure to file" cease trade order (the "Cease Trade Order") prohibiting trading in the securities of the Company by any person in Canada, due to the Company's failure to file the Required Filings prior to the deadline of June 15, 2020 provided in the MCTO. The Cease Trade Order remains in effect as of the date

of this Management Proxy Circular. All of the individuals nominated for election as Directors at the Meeting were Directors while the Company was the subject of the Cease Trade Order.

Mr. Yingbin Ian He, a nominee for Director at the Meeting, was previously a director of Huaxing Machinery Corp. ("Huaxing") from January 2011 to January 2017. On February 26, 2015, the British Columbia Securities Commission issued a cease trade order requiring all persons to cease trading in the securities of Huaxing until Huaxing files amended and restated audited financial information for the financial years ended December 31, 2013 and 2012.

On June 9, 2015, the Alberta Securities Commission issued a cease trader order which required that all trading or purchasing cease in respect of the securities of Huaxing as a result of the failure by Huaxing to file: (i) annual audited financial statements, annual management's discussion and analysis, and certification of annual filings for the year ended December 31, 2014; and (ii) interim unaudited financial statements, interim management's discussion and analysis, and certification of interim filings for the interim period ended March 31, 2015.

APPOINTMENT OF AUDITORS

Shareholders will be requested to appoint BDO Limited, Certified Public Accountants (Practicing), Hong Kong ("BDO") as auditors of the Company to hold office until the next annual meeting of shareholders and to authorize the Directors to fix their remuneration and the terms of their engagement.

PricewaterhouseCoopers, Chartered Professional Accountants, Vancouver, B.C. (the "Former Auditors") were appointed as auditors of the Company on May 17, 2012. Further to the recommendation of the Audit Committee, the Board accepted the resignation of the Former Auditors as auditors of the Company effective November 13, 2019 and approved the appointment of BDO as the Company's auditors with effect upon receipt of the Former Auditor's resignation.

Pursuant to subsection 4.11(5)(c) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102"), a copy of the "reporting package"(as such term is defined in NI 51-102) is attached as Schedule "A" of this Management Proxy Circular. As indicated in the "Notice of Change of Auditor" contained in the reporting package, there have been no modified opinions expressed in the Former Auditor's reports for the period commencing at the beginning of the Company's two most recent financial years and ending on the date of the Former Auditor's resignation and there is no "reportable event" (as such term is defined in NI 51-102) in connection with the change of auditor.

Management and the Board recommend that BDO be appointed as auditor of the Company until the next annual meeting of shareholders. In the absence of contrary instructions, the person named in the accompanying Form of Proxy intends to vote the Common Shares represented thereby FOR the appointment of PwC as auditor of the Company until the next annual meeting of shareholders and the authorization to permit the Directors to set their remuneration.

Pre-Approval Policies and Procedures

All services to be performed by the Company's independent auditor must be approved in advance by the Audit Committee or a designated member of the Audit Committee (a "Designated Member"). The Designated Member is a member of the Audit Committee who has been given the authority to grant pre-approvals of permitted audit and non-audit services.

The Audit Committee has considered whether the provision of services other than audit services is compatible with maintaining the auditors' independence and has adopted a policy governing the provision of these services. This policy requires the pre-approval by the Audit Committee or the Designated Member of all audit and non-audit services provided by the external auditor, other than any de minimis non-audit services allowed by applicable law or regulation. The decisions of the Designated Member to pre-approve a permitted service are reported to the Audit Committee at its regularly scheduled meetings.

Pre-approval from the Audit Committee or Designated Member can be sought for planned engagements based on budgeted or committed fees. No further approval is required to pay preapproved fees. Additional pre-approval is required for any increase in scope or in final fees.

Pursuant to these procedures, 100% of each of the services provided by the Company's external auditors relating to the fees reported as audit, audit-related, tax and all other fees during 2019 were pre-approved by the Audit Committee or the Designated Member.

APPROVAL OF NOVEMBER 2020 DEFERRAL AGREEMENT

Background to the November 2020 Deferral Agreement

The November 2020 Deferral Agreement is the result of arm's length negotiations between representatives of the Company and CIC that were conducted principally between July 2020 and November 2020. The following is a summary of the events leading up to the execution of the November 2020 Deferral Agreement, including certain relevant events relating to the negotiations and actions that preceded the execution and public announcement of the November 2020 Deferral Agreement.

Convertible Debenture and Cooperation Agreement

On October 26, 2009, the Company entered into the Convertible Debenture with CIC, which was subsequently assigned by CIC to CIC Subco on November 19, 2009. The Convertible Debenture is a secured, convertible debenture with an original principal amount of \$500 million bearing interest at 8.0% (6.4% payable semi-annually in cash and 1.6% payable annually in Common Shares) with a maximum term of 30 years. The Convertible Debenture is secured by a first ranking charge over the assets of the Company and certain subsidiaries. For a summary of the material terms of the Convertible Debenture, please refer to the section entitled "Material Contracts – Convertible Debenture" in the Company's Annual Information Form dated March 31, 2019, (the "AIF") a copy of which is available under the Company's profile on SEDAR at www.sedar.com.

On November 19, 2009, the Company entered into a mutual co-operation agreement (the "Cooperation Agreement") with Fullbloom Investment Corporation ("Fullbloom"), a whollyowned subsidiary of CIC, pursuant to which Fullbloom agreed to provide advisory services to the Company in relation to the sale of coal into China, and other procurement and logistics related matters. In consideration, the Company agreed to pay Fullbloom a fee for such services based on a percentage of the total net revenues realized by the Company and its Mongolian subsidiaries from sales into China.

On March 29, 2010, the Company exercised its right to call for the conversion of up to \$250.0 million of the Convertible Debenture into approximately 21.5 million Common Shares at a conversion price of \$11.64 (CAD\$11.88) per Common Share.

As of the date of this Management Proxy Circular, CIC represents both the Company's largest shareholder, holding approximately 64.8 million Common Shares representing approximately 23.8% of the issued and outstanding Common Shares, and largest creditor, by virtue of the Convertible Debenture and the 2019 Deferral Agreement.

June 2017 Deferral Agreement

On June 12, 2017, the Company and CIC executed a deferral agreement (the "June 2017 Deferral Agreement") in relation to a revised payment schedule on the \$22.3 million of cash interest and associated costs originally due on May 19, 2017. The key repayment terms of the June 2017 Deferral Agreement were as follows: (i) the Company was required to repay on average \$2.2 million of the deferred cash interest and associated costs on a monthly basis during the period from May 2017 to October 2017; and (ii) the Company was required to repay \$9.7 million of deferred cash interest and associated costs on November 19, 2017. The Company agreed to pay a deferral fee at a rate of 6.4% per annum as consideration for the aforementioned deferral.

2019 Deferral Agreement and Amended and Restated Cooperation Agreement

On April 23, 2019, CIC, the Company and certain of its subsidiaries entered into a deferral agreement (the "2019 Deferral Agreement") pursuant to which CIC agreed to a deferral and revised repayment schedule in respect of: (i) \$41.8 million of outstanding cash interest and payment in kind interest ("PIK Interest") and associated costs which were due and payable to CIC on November 19, 2018 under the Convertible Debenture and the June 2017 Deferral Agreement; (ii) the semi-annual cash interest payments in the aggregate amount of \$23.9 million which were due and payable to CIC in May 19, 2019, November 19, 2019 and May 20, 2020 under the Convertible Debenture; and (iii) \$4.0 million worth of PIK Interest shares which were due to be issued to CIC on November 19, 2019 under the Convertible Debenture (collectively, the "2019 Deferral Amounts").

As consideration for the deferral provided under the 2019 Deferral Agreement, the Company agreed to pay a deferral fee equal to 6.4% per annum on the outstanding balance of the 2019 Deferred Amounts, commencing on the date on which each such 2019 Deferred Amount was otherwise due and payable under the Convertible Debenture or the June 2017 Deferral Agreement, as applicable.

Under the 2019 Deferral Agreement, the Company agreed to pay CIC the 2019 Deferred Amounts in accordance with the following repayment schedule:

\$14.3 million by way of eight (8) instalment payments during the period from November 19, 2019 to June 19, 2020; and
\$62.6 million on June 20, 2020.

As a condition to agreeing to the 2019 Deferral Agreement, CIC required that the Company agree to an amendment and restatement of the Cooperation Agreement (the "Amended and Restated Cooperation Agreement") for the purpose of clarifying the manner in which the service fee payable to Fullbloom under the Cooperation Agreement is calculated, with effect as of January 1, 2017, to provide that the service fee shall be calculated based on the net revenues realized by the Company and all of its subsidiaries derived from sales into China (rather than the net revenues realized by the Company and its Mongolian subsidiaries).

The aggregate amount of additional service fees payable to Fullbloom as a result of the Amended and Restated Cooperation Agreement was approximately \$4.0 million (the "Deferred Compensation"). As consideration for deferring payment of the Deferred Compensation payable under the Amended and Restated Cooperation Agreement, the Company agreed to pay to Fullbloom a deferral fee at a rate of 2.5% on the outstanding amount of the Deferred Compensation and the related accrued deferral fee, commencing on the date on which each such payment of Deferred Compensation would otherwise have been due and payable under the Amended and Restated Cooperation Agreement. Under the Amended and Restated Cooperation Agreement, the Company agreed to repay Fullbloom the Deferred Compensation and related accrued deferral fee in six instalments between June 30, 2019 to November 30, 2019.

The terms of the 2019 Deferral Agreement and the Amended and Restated Cooperation Agreement provided that the effectiveness thereof were subject to the Company obtaining acceptance of the 2019 Deferral Agreement from the TSX and the requisite approval of the 2019 Deferral Agreement from Shareholders.

The 2019 Deferral Agreement was accepted by the TSX and approved by a majority of disinterested shareholders at the Company's adjourned annual general and special meeting of Shareholders held on June 13, 2019 in accordance with the requirements of Section 501(c) of the TSX Company Manual. The 2019 Deferral Agreement and the Amended and Restated Cooperation Agreement and the respective parties' obligations and rights thereunder became effective on the same date.

Events in 2020

The Mongolian State Emergency Commission closed Mongolia's southern border with China in order to prevent the spread of COVID-19 effective as of February 11, 2020. As a result of the border closure, the Company suspended coal exports to China as of the same date. In order to address the financial impact of the border closures and preserve its working capital, the Company ceased major mining operations (including coal mining activities), reduced production to only coalblending activities and placed approximately half of its workforce on furlough in February 2020.

On February 19, 2020, the Company and CIC entered into an agreement (the "February 2020 Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of: (i) deferred cash interest and deferral fees of \$1.3 million and \$2.0 million which were due and payable to CIC on January 19, 2020 and February 19, 2020, respectively, under the 2019 Deferral Agreement; and (ii) approximately \$0.7 million of management fee which was due and payable on February 14, 2020 to Fullbloom under the Amended and Restated Cooperation Agreement.

The key terms of the February 2020 Deferral Agreement were as follows: (i) payment of the deferred cash interest and deferral fees was deferred until June 20, 2020, while the management fee was deferred until it is repaid by the Company; (ii) the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the deferred cash interest and deferral fees and a deferral fee equal to 2.5% per annum on the deferred management fees, in each case commencing on the date on which such payment would otherwise have been due and payable under the 2019 Deferral Agreement or Amended and Restated Cooperation Agreement, as applicable; and (iii) the parties agreed that nothing in the February 2020 Deferral Agreement prejudiced CIC's rights to pursue any of its remedies at any time pursuant to the 2019 Deferral Agreement and Amended and Restated Cooperation Agreement, respectively. The February 2020 Deferral Agreement was accepted by the TSX, and the respective parties' obligations and rights thereunder became effective, on March 10, 2020.

On March 10, 2020, the Company and CIC entered into an agreement (the "March 2020 Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of deferred cash interest and deferral fees of \$2.0 million which were due and payable to CIC on March 19, 2020 under the 2019 Deferral Agreement. The terms of the 2020 March Deferral Agreement are substantially the same as the terms of the 2020 February Deferral Agreement, including that the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the 2020 March Deferral Amount, commencing on March 19, 2020. The 2020 March Deferral Agreement became effective on March 25, 2020, being the date on which the Company obtained the requisite acceptance of the 2020 March Deferral Agreement from the TSX as required under applicable TSX rules.

On March 28, 2020, the Company learned that the Mongolian-Chinese border was re-opened for coal export on a trial basis, with a limit imposed on the total volume of coal that is permitted to be exported during the trial period.

On March 30, 2020, the Company announced that the audit of the 2019 Financial Statements was not completed prior to the filing deadline of March 30, 2020 due to travel restrictions in force in parts of China and Mongolia as a result of the COVID-19 pandemic and the Company would be relying upon the blanket relief order issued by the Canadian Securities Administrators on March 18, 2020 which provided reporting issuers with a 45-day extension for filing certain periodic filings normally required to be filed on or before June 1, 2020 under applicable Canadian securities laws. The Company also announced that the border closure had an adverse impact on the Company's sales and cash flows in the first quarter of 2020 and would have the same adverse impact in the second quarter of 2020.

On April 10, 2020, the Company and CIC entered into an agreement (the "April 2020 Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of deferred cash interest and deferral fees of \$2.0 million which were due and payable to CIC on April 19, 2020 under the 2019 Deferral Agreement. The terms of the 2020 April Deferral Agreement are substantially the same as the terms of the 2020 February Deferral Agreement, including that the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the 2020 April Deferral Amount, commencing on April 19, 2020. The April 2020 Deferral Agreement became effective on April 29, 2020, being the date on which the Company obtained the requisite acceptance of the April 2020 Deferral Agreement from the TSX as required under applicable TSX rules.

On May 8, 2020, the Company and CIC entered into an agreement (the "May 2020 Deferral Agreement") pursuant to which CIC agreed to grant the Company a deferral of deferred cash interest and deferral fees of \$2.0 million which were due and payable to CIC on May 19, 2020 under the 2019 Deferral Agreement. The terms of the 2020 May Deferral Agreement are substantially the same as the terms of the 2020 February Deferral Agreement, including that the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the deferred cash interest and deferral fees commencing on May 19, 2020. The May 2020 Deferral Agreement became effective on June 8, 2020, being the date on which the Company obtained the requisite acceptance of the May 2020 Deferral Agreement from the TSX as required under applicable TSX rules.

On May 12, 2020, the Company announced that it was advised by the Auditors that they would not be in a position to render an unmodified opinion on the 2019 Financial Statements prior to the extended filing deadline of May 14, 2020 because they were not able to obtain sufficient evidence to support management's going concern assumptions. Based on discussions with the Auditors during the course of the audit process, the Company learned that the Auditors were of the view that several adverse conditions and material uncertainties existed which cast doubt upon management's going concern assumptions in the 2019 Financial Statements, including the ability

of the Company to successfully negotiate a deferral with CIC in respect of its obligation to pay the deferred cash interest and deferral fees of approximately \$74.0 million on or before June 20, 2020 under the 2019 Deferral Agreement and the prior deferral agreements entered into during the period between February 2020 to May 2020 and its requirement to pay CIC \$8.1 million of cash interest on November 19, 2020 under the Convertible Debenture. As a result, the Company was unable to file the Required Filings prior to the filing deadline of May 15, 2020.

On May 13, 2020, the Company applied for a MCTO with the applicable Canadian securities regulators in connection with the anticipated delayed filing of the Required Filings. A MCTO was issued by the BCSC, the Company's principal securities regulator in Canada, on May 15, 2020.

On June 18, 2020, the Company and CIC entered into an agreement (the "June 2020 Deferral Agreement") pursuant to which CIC agreed with the Company that payment of the deferred cash interest and deferral fees in the aggregate amount of approximately \$74.0 million which were due and payable to CIC on June 19, 2020 (the "June 2020 Deferred Amounts") under the 2019 Deferral Agreement and the prior deferral agreements entered into during the period between February 2020 to May 2020 would be deferred until September 14, 2020. The terms of the June 2020 Deferral Agreement are substantially the same as the terms of the 2020 February Deferral Agreement, including that the Company agreed to pay CIC a deferral fee equal to 6.4% per annum on the June 2020 Deferral Amount commencing on June 19, 2020. The May 2020 Deferral Agreement became effective on July 17, 2020, being the date on which the Company obtained the requisite acceptance of the June 2020 Deferral Agreement from the TSX as required under applicable TSX rules.

On June 19, 2020, the BCSC issued the Cease Trade Order prohibiting trading in the securities of the Company by any person in Canada, due to the Company's failure to file the Required Filings prior to the deadline of June 15, 2020 provided in the MCTO. Trading in the Common Shares on the TSX was halted as a result of the Cease Trade Order.

On August 17, 2020, trading in the Common Shares on the HKEX was suspended at the request of the Company pending the publication of the audited annual financial results of the Company for the year ended December 31, 2019.

On September 2, 2020, the Company received a letter from the HKEX setting out the following resumption guidance for the resumption of trading in the Common Shares on the HKEX: (i) publish all outstanding financial results and address any audit modifications; (ii) inform the market of all material information for the Company's shareholders and investors to appraise its position; and (iii) announce quarterly updates on the Company's developments under Rules 13.24A of the HKEX's Listing Rules, including, amongst other relevant matters, its business operations, its resumption plan and the progress of implementation.

On September 13, 2020, the Company announced that the TSX is reviewing the eligibility for continued listing of the Common Shares on the TSX pursuant to the TSX's Remedial Review Process. The Company has been granted until January 11, 2021 to remedy the following delisting criteria, as well as any other delisting criteria that become applicable during the TSX's Remedial Review Process: (i) financial condition and/or operating results; (ii) adequate working capital and appropriate capital structure; and (iii) disclosure issues (collectively, the "Delisting Criteria").The TSX Continued Listing Committee scheduled a meeting to be held on January 7, 2021 to consider whether or not to suspend trading in and delist the shares of the Company on TSX. If the Company fails to demonstrate to the TSX that no Delisting Criteria remain applicable on or before January 11, 2021, unless such date is extended by the TSX, the Company's common shares will be delisted from the TSX 30 days from such date.

On September 30, 2020, the Company was notified by the HKEX of the following additional condition which must be satisfied in order for trading in the Common Shares on the HKEX to resume: resolve issues arising from the Cease Trade Order and/or the TSX Delisting Review, or take steps to the satisfaction of the HKEX that the Company will be eligible for a primary listing on the HKEX. If the Company fails to remedy the issues causing its trading suspension, fully comply with the Listing Rules to the HKEX's satisfaction and resume trading in its shares on the HKEX by February 16, 2022, the HKEX's Listing Division will recommend to the HKEX's Listing Committee that it proceed with the cancellation of the Company's HKEX listing. Under Rules 6.01 and 6.10 of the Listing Rules, the HKEX also has the right to impose a shorter specific remedial period, where appropriate.

On October 9, 2020, the Board (excluding the CIC nominees, Mr. Jianmin Bao and Mr. Ben Niu) convened a meeting and, after careful consideration, including reviewing the terms of the Deferral and the November 2020 Deferral Agreement, the Company's financial position and the possible funding alternatives reasonably available to the Company, the Company being in default under the Convertible Debenture and 2019 Deferral Agreement and the fact that the Company's ability to successfully negotiate a deferral with CIC in respect of its obligation to pay the deferred cash interest and deferral fees of approximately \$75.2 million under the June 2020 Deferral Agreement and the \$12.1 million of cash and PIK interest payments due and payable under Convertible Debenture on November 19, 2020 was considered by the Auditors as a material uncertainty which cast doubt upon management's going concern assumptions in the 2019 Financial Statements, the Board unanimously resolved (with the interested directors, being Mr. Jianmin Bao and Mr. Ben Niu, abstaining), among other things, to approve the terms of the Deferral and November 2020 Deferral Agreement and to authorize the execution and delivery of the November 2020 Deferral Agreement, subject to the BCSC granting a partial revocation of the Cease Trade Order to permit the Company to enter into the November 2020 Deferral Agreement.

On October 29, 2020, the Company obtained an order from the BCSC which partially revoked the Cease Trade Order to, amongst other things, permit the Company to execute the November 2020 Deferral Agreement, issue the November 2020 PIK Interest shares (as defined below) and convene the Meeting to obtain the requisite approval of the November 2020 Deferral Agreement from shareholders.

On November 18, 2020, the Company learned that CIC obtained the necessary internal approvals to approve and enter into the November 2020 Deferral Agreement. Shortly thereafter, the Board, including the Company's independent directors (being Mr. Mao Sun, Ms. Jin Lan Quan and Mr. Y.B. Ian He) (the "Independent Directors"), excluding the interested directors (being Mr. Jianmin Bao and Mr. Ben Niu) who abstained, determined, in good faith, that: (i) the Company is in serious financial difficulty; (ii) the November 2020 Deferral Agreement is designed to improve the financial position of the Company; and (iii) the terms of the November 2020 Deferral Agreement are reasonable in the circumstances of the Company, and resolved to ratify, approve and confirm the terms of the November 2020 Deferral Agreement and authorize the execution and delivery thereof.

On November 19, 2020, the Company and certain of its subsidiaries entered into the November 2020 Deferral Agreement with CIC Subco and Fullbloom.

On November 26, 2020, the Company filed the 2019 Financial Statements and accompanying MD&A and CEO and CFO certificates, with the Auditors issuing an unmodified opinion on the 2019 Financial Statements. The Company intends to apply for a revocation of the Cease Trade Order as soon as it fully remedies its filing defaults under applicable Canadian securities laws, including the filing of its 2019 AIF, its interim financial statements for the three-month period ended March 31, 2020, the three and six-month period ended June 30, 2020 and the three and ninemonth period ended September 30, 2020 and the accompanying Management Discussion & Analysis, and makes a successful application to the BCSC to have the Cease Trade Order revoked.

November 2020 Deferral Agreement

The following is a summary of the principal terms of the November 2020 Deferral Agreement. The summary contained in this Management Proxy Circular is not comprehensive, and is qualified in its entirety by reference to the full text of the November 2020 Deferral Agreement, a copy of which has been filed on the Company's profile on SEDAR at www.sedar.com. A copy of the November 2020 Deferral Agreement is also available for inspection by shareholders at the Company's registered and records office located at 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada, V6C 3R8 during regular business hours prior to the date of the Meeting.

Effectiveness of the November 2020 Deferral Agreement

The effectiveness of the November 2020 Deferral Agreement and the respective covenants, agreements and obligations of each party under the November 2020 Deferral Agreement are subject to the Company obtaining acceptance of the 2020 November Deferral Agreement from the TSX and the requisite approval of the November 2020 Deferral Agreement from shareholders in accordance with the requirements of Section 501(c) of the TSX Company Manual. See the section entitled "Shareholder Approval Pursuant to TSX Requirements" below.

Deferral

Under the November 2020 Deferral Agreement, CIC agreed to grant the Company a deferral (the "Deferral") of the following payments until August 31, 2023 (the "Deferral Date"):

(i) cash interest and deferral fees of approximately \$75.2 million which were due and payable to CIC on September 14, 2020 under the June 2020 Deferral Agreement;
(ii) semi-annual cash interest payments in the aggregate amount of \$16.0 million payable to CIC on November 19, 2020 and May 19, 2021 under the Convertible Debenture;
(iii) \$4.0 million worth of PIK Interest shares ("November 2020 PIK Interest", and together with the amounts referenced in subparagraphs (i) and (ii) above, the "November 2020 Deferred Amounts") issuable to CIC on November 19, 2020 under the Convertible Debenture; and
(iv) the management fees accrued in Q4 2019, Q1 2020 and Q2 2020 and the accrued deferral fees related thereto that is outstanding as of September 14, 2020 and management fees to be accrued in Q3 2020 to Q3 2021, in each case under the Amended and Restated Cooperation Agreement (the "Deferred Management Fees").

As consideration for the Deferral of the November 2020 Deferred Amounts, the Company agreed to pay CIC a deferral fee equal to 6.4% per annum (the "Deferral Fee") on the November 2020 Deferred Amounts payable under the Convertible Debenture and the June 2020 Deferral Agreement, commencing on the date on which each such November 2020 Deferred Amount would otherwise have been due and payable under the Convertible Debenture or the 2020 June Deferral Agreement, as applicable.

As a consideration for the Deferral of the Deferred Management Fees, the Company agreed to pay Fullbloom a deferral fee equal to 2.5% per annum (the "Cooperation Agreement Deferral Fee") on the outstanding balance of the Deferred Management Fees payable under the Amended and Restated Cooperation Agreement, commencing on the date on which each such Deferred Management Fee would otherwise have been due and payable under the Amended and Restated Cooperation Agreement.

The November 2020 Deferral Agreement does not contemplate a fixed repayment schedule for the November 2020 Deferred Amounts, the Deferred Management Fees, the Deferral Fee and the Cooperation Agreement Deferral Fee. Instead, the November 2020 Deferral Agreement requires the Company to use its best efforts to pay the November 2020 Deferred Amounts, the Deferred Management Fees, the Deferral Fee and the Cooperation Agreement Deferral Fee due and payable under the November 2020 Deferral Agreement to CIC. During the period beginning as of November 19, 2020 and ending as of the Deferral Date (the "Deferral Period"), the Company shall provide CIC with monthly updates of its financial status and business operations, and the Company and CIC shall on a monthly basis discuss and assess in good faith the amount (if any) of the November 202 Deferred Amounts, the Deferred Management Fees, the Deferral Fee and Cooperation Agreement Deferral Fee that the Company may be able to repay to CIC, having regard to the working capital requirements of the Company's operations and business at such time and with the view of ensuring that the Company's operations and business would not be materially prejudiced as a result of any repayment.

Commencing as of November 19, 2020 and until such time before the November 2020 PIK Interest is fully repaid, CIC reserves the right to require the Company to pay and satisfy the amount of the November 2020 PIK Interest, either in full or in part, by way of issuing and delivering PIK Interest shares in accordance with the Convertible Debenture provided that, on the date of issuance of the PIK Interest shares, the Common Shares are listed and trading on at least one stock exchange.

Covenants

In addition to the above, under the November 2020 Deferral Agreement, the Company also agreed to the following:

(i) if at any time before the November 2020 Deferred Amounts and Deferral Fees are fully repaid, the Company proposes to appoint, replace or terminate one or more of its chief executive officer, its chief financial officer or any other senior executive(s) in charge of its principal business function or its principal subsidiary, the Company will first consult with, and obtain written consent (such consent shall not be unreasonably withheld) from CIC prior to effecting such appointment, replacement or termination.
(ii) CIC agreed to waive its rights arising from any default or event of default under the Convertible Debenture as a result of trading in the Company's common shares being halted on the TSX beginning as of June 19, 2020 and trading in the Company's common shares being suspended on the Hong Kong Stock Exchange beginning as of August 17, 2020 and each such trading halt and suspension having been in effect for a period of more than five trading days.

Pursuant to the November 2020 Deferral Agreement, the Company and its subsidiaries, SouthGobi Sands LLC and SGQ Coal Investment PTE Ltd. (the "Guarantors"), each agreed to: (i) comply with all covenants under the Convertible Debenture; (ii) not sell, transfer, assign or

otherwise dispose of any of their respective property or assets (other than in the ordinary course of business) or enter into any agreement to do so; (iii) not create, incur, assume or permit to exist (I) additional debt (subject to limited exceptions); or (II) debt related to non-coal business related opportunities, and shall not grant a charge, pledge, mortgage or security interest in any of their respective assets or enter into any agreement to do so; (iv) grant reasonable access and provide any financial information as CIC may require; (v) not amend or modify the terms and conditions of, provide waivers with respect to, or terminate or otherwise abandon any material contract; (vi) continue to operate its business in the ordinary course; (vii) provide CIC with prior written notice of the commencement of any action, application or proceeding under any bankruptcy, insolvency, liquidation, winding-up or similar law for the relief from or otherwise affecting creditors of the Company or any of the Guarantors, or seek any debtor-in-possession financing in connection with the commencement of any such actions, application or proceeding; (viii) not object to the appointment of a receiver, receiver manager or other court-appointed officer over their respective property and assets in the event that CIC exercise any of its rights and remedies under the Convertible Debenture or related security documents; (ix) upon request, allow CIC and/or its advisors to: (I) inspect and audit the financial statements and books and records of the Company and its subsidiaries and affiliates; and (II) conduct due diligence of the business operation of the Company and its subsidiaries and affiliates.

Events of Default

The occurrence of any of the following events shall constitute an event of default (each a "Deferral Event of Default") under the November 2020 Deferral Agreement: (i) the Company or any of the Guarantors fails to comply with or defaults in the performance of the terms, covenants and agreements of the November 2020 Deferral Agreement, or an Event of Default (as such term is defined in the Convertible Debenture) occurs; (ii) breach of any representation or warranty contained in the November 2020 Deferral Agreement, the Transaction Documents (as such term is defined in the Convertible Debenture), other security documents related to the Convertible Debenture; (iii) failure by the Company and the Guarantors: (I) to notify CIC of any action, application or proceeding under any bankruptcy, insolvency, liquidation, winding-up or similar law for the relief from or otherwise affecting creditors of the Company or any of the Guarantors within a prescribed period; or (II) to obtain the prior written consent of CIC to any debtor-in-possession financing in connection with the commencement of any such actions, application or proceeding; (iv) commencement of any action, application or proceeding under any bankruptcy, insolvency, liquidation, winding-up or similar law for the relief from or otherwise affecting creditors of the Company or any of the Guarantors; (v) any receiver, monitor, liquidator, trustee or similar official is appointed in respect of the Company or any of the Guarantors or all or any part of their respective property or assets; (vi) the Company or any of the Guarantors makes a general assignment for the benefit of its creditors, acknowledges its insolvency or declares bankruptcy, fails to meet its liabilities generally as they become due or commits an act of bankruptcy; (vii) any holder of any security interest, mortgage, lien, charge or encumbrance of any kind enforces against such security, or otherwise takes possession or control of all or any part of the property or assets of the Company or any of the Guarantors or all or any part of the interest of the Company or any of the Guarantors therein; (viii) a distress, execution, levy, writ or any similar process is enforced upon or against all or any part of the assets of the Company or any of the Guarantors with a total collateral value in excess of \$500,000 and which is not dismissed or resolved within a prescribed period, or any third party demand is issued by any governmental authority in respect of the Company or any of the Guarantors or all or any part of their respective assets, or any other seizure is made in respect of all or any part of any of the assets of the Company or any of the Guarantors with a total collateral value in excess of \$500,000 and which is not dismissed or resolved within a prescribed period, or the Company or any of the Guarantors ceases or threatens to cease to carry on their respective businesses; (ix) the Company or any of the Guarantors

contests or denies in any manner the legality, validity or enforceability of the November 2020 Deferral Agreement, the Convertible Debenture and related security documents; and (x) if CIC determines that a Material Adverse Effect (as such term is defined in the Convertible Debentures) in the financial or business condition of the Company or any of the Guarantors has occurred after the date of the November 2020 Deferral Agreement.

The occurrence of a Deferral Event of Default or an Event of Default (as such term is defined in the Convertible Debenture) will: (i) trigger the automatic termination of the Deferral without further notice from CIC; (ii) entitle CIC to pursue any and all remedies against the Company and the Guarantors in accordance with the Convertible Debenture; and (iii) result in the principal, interest and other amounts owing under the November 2020 Deferral Agreement, the Convertible Debenture and related security agreements becoming immediately due and payable without any requirement for CIC to deliver notice to the Company.

Reasons and Benefits for the November 2020 Deferral Agreement

In evaluating the terms of the November 2020 Deferral Agreement and reaching its conclusion and making its recommendation in support of the Deferral, the Board (excluding the CIC nominees, Mr. Jianmin Bao and Mr. Ben Niu), considered a number of factors, including the following:

immediately prior to entering into the November 2020 Deferral Agreement, the Company was in default under the Convertible Debenture and 2019 Deferral Agreement as a result of: (i) trading in the Company's common shares being halted on the TSX beginning as of June 19, 2020 and suspended on the Hong Kong Stock Exchange beginning as of August 17, 2020, in each case for a period of more than five trading days; and (ii) failing to repay the June 2020 Deferred Amounts which were due and payable on September 14, 2020 pursuant to the June 2020 Deferral Agreement;
one of the factors which the Auditors considered as a material uncertainty which cast doubt upon management's going concern assumptions in the 2019 Financial Statements was the Company's ability to successfully negotiate a deferral with CIC in respect of its obligation to pay the deferred cash interest and deferral fees of approximately \$75.2 million under the June 2020 Deferral Agreement and the \$12.1 million of cash and PIK interest payments due and payable under Convertible Debenture on November 19, 2020. If the Company were unable to provide sufficient audit evidence to the Auditors to support the issuance of an unmodified opinion on the 2019 Financial Statements, then the Company would be unable to file the 2019 Financial Statements in accordance with the requirements of applicable Canadian securities laws, which in turn would leave the Company being unable to apply for a revocation of the Cease Trade Order, and would result in the delisting of the Company's shares from the TSX and thus investment loss to shareholders;
the November 2020 Deferral Agreement is designed to improve the financial position of the Company;
based on the possible funding alternatives reasonably available to the Company, the Deferral is offered on reasonable commercial terms not less advantageous to the Company than if the Company obtained similar financing from a person dealing at arm's length with the Company;
the Deferral will enhance the Company's ability to continue as a going concern in the near term and provide the Company with financial flexibility to consider and explore different

measures to secure additional capital or to pursue a strategic debt restructuring or refinancing plan with CIC;

the terms of the Deferral are reasonable in the circumstances of the Company;
the terms of the November 2020 Deferral Agreement have been approved by the Independent Directors in accordance with MI 61-101 (as hereinafter defined);
the rights of shareholders will be protected because the effectiveness of the November 2020 Deferral Agreement is subject to the Company obtaining approval of a simple majority (50% plus one vote) of shareholders excluding the votes of CIC and its affiliates; and
the best interests of the Company and shareholders will be served by approving the Deferral and the November 2020 Deferral Agreement.

In reaching their conclusion, the Board relied on their knowledge of the Company, CIC and the mining industry, on the information provided by the Company's management and on the advice of its legal advisors.

The Board also considered potential risks relating to the November 2020 Deferral Agreement, including the following:

the risks and costs to the Company if the November 2020 Deferral Agreement was not executed by the Company, including the fact that the Company would remain in default under the Convertible Debenture and the 2019 Deferral Agreement and the risk that CIC would take steps to exercise its rights thereunder, the risk that the Company would not have been able to file its 2019 Financial Statements because the Auditors' willingness to render an unmodified opinion on the 2019 Financial Statements was conditioned on, amongst other things, the Company entering into the November 2020 Deferral Agreement, and the risk that the Company would be unable to successfully apply for a revocation of the Cease Trade Order; and
if the Company is unable to successfully apply for a revocation of the Cease Trade Order, this could result in the Company losing the listing of the Common Shares on the TSX and HKEX, which would have a significant adverse impact on the liquidity of the Common Shares and shareholders may suffer a significant decline or total loss in value of its investment in the Common Shares.

The foregoing summary of the information and factors considered by the Board in reaching their conclusions and recommendations is not, and is not intended to be, exhaustive. In view of the wide variety of factors and the amount of information considered in connection with its evaluation of the November 2020 Deferral Agreement, the Board did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weight to each specific factor considered in reaching its conclusions and recommendations. In addition, our individual directors may have assigned different weight to different factors.

Canadian Securities Law Matters

Requirements under Multilateral Instrument 61-101

As a reporting issuer in each of the provinces of Canada, the Company is subject to applicable securities laws of such provinces. The securities regulatory authority in the Provinces of Alberta, Manitoba, Ontario, Quebec and New Brunswick have adopted Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), which regulates transactions that raise the potential for conflicts of interest.

MI 61-101 regulates certain types of transactions to ensure fair treatment of securityholders when, in relation to a transaction, there are persons in a position that could cause them to have an actual or reasonably perceived conflict of interest or informational advantage over other securityholders. If MI 61-101 applies to a proposed transaction of a reporting issuer, then enhanced disclosure in documents sent to securityholders, the approval of security holders excluding, among others, "interested parties" (as defined in MI 61-101), and a formal valuation prepared by an independent and qualified valuator, are all mandated (subject to certain exemptions). The protections afforded by MI 61-101 apply to, among other transactions, "related party transactions" (as defined in MI 61-101) which involve the Issuer and a person that is a "related party" of the issuer (as defined in MI 61-101) at the time the transaction is agreed to.

CIC and its affiliates are "related parties" to the Company for purposes of MI 61-101 as a result of CIC's beneficial ownership of more than 10% of the outstanding Common Shares. The November 2020 Deferral Agreement is a "related party transaction" for purposes of MI 61-101 because it materially amends the terms of an outstanding debt or liability owed by the Company to CIC and its affiliates.

The Company is relying on the financial hardship exemption from the requirement to obtain a formal valuation in connection with the November 2020 Deferral Agreement, pursuant to section 5.5(g) of MI 61-101, based on the following: (i) the Company is in serious financial difficulty, (ii) the November 2020 Deferral Agreement is designed to improve the financial position of the Company, (iii) section 5.5(f) of MI61-101 is not applicable in connection with the November 2020 Deferral Agreement; (iv) the Company has one or more independent directors in respect of the November 2020 Deferral Agreement; and (v) the Board and the Independent Directors, acting in good faith, have determined that items (i) and (ii) above apply and that the terms of the November 2020 Deferral Agreement are reasonable in the circumstances of the Company.

To the knowledge of the Company and each of its directors or senior officers, after reasonable inquiry, no "prior valuations" (as defined in MI 61-101) in respect of the Company that relate or are relevant to the Deferral or the 2020 November Deferral Agreement have been prepared within 24 months preceding the date hereof.

MI 61-101 requires that, in addition to any other required security-holder approval, a related party transaction is subject to "minority approval" (as defined in MI 61-101) of every class of "affected securities" (as defined in MI 61-101) of the issuer. As a result, the November 2020 Deferral Agreement Resolution will require the affirmative vote of a simple majority of the votes cast by all shareholders, present in person or represented by proxy at the Meeting, other than with respect to Common Shares beneficially owned, or over which control or direction is exercised, by CIC and its related parties (collectively, the "Interested Shareholders").

To the best of the Company's knowledge, approximately 64,766,591 Common Shares, representing approximately 23.8% of the issued and outstanding Common Shares, are beneficially owned the Interested Shareholders. Accordingly, the 64,766,591 votes attached to the Common Shares beneficially owned, or over which control or direction is exercised, by the Interested Shareholders will be excluded from the vote.

Shareholder Approval Pursuant to TSX Requirements

Pursuant to Section 501(c) of the TSX Company Manual, the Company is required to seek approval of the November 2020 Deferral Agreement from shareholders, other than the Interested Shareholders, because (i) CIC is a related party to the Company (as a result of its beneficial ownership of more than 10% of the outstanding Common Shares); and (ii) the aggregate amount of Deferral Fees and Deferred Management Fees payable to CIC will be greater than 10% of the market capitalization of the Company. More specifically, the total amount of Deferral Fees and Deferred Management Fees that may be received by affiliates of CIC over the term of the November 2020 Deferral Agreement (assuming no repayment of any deferred amounts until August 31, 2023), when aggregated together with the deferral fees payable under the June 2020 Deferral Agreement, equals \$19.2 million representing approximately 107% of the market capitalization of the Company (calculated using the closing price of the Common Shares on June 18, 2020, being the last trading date prior to the date on which trading in the Common Shares on the TSX was halted).

Voting on the November 2020 Deferral Agreement Resolution

At the Meeting, shareholders will be asked to consider and, if thought fit, to pass an ordinary resolution (the "November 2020 Deferral Agreement Resolution") to authorize and approve the November 2020 Deferral Agreement. To be effective, the November 2020 Deferral Agreement Resolution requires the approval of at least a simple majority of the votes cast by shareholders (excluding the votes of the Interested Shareholders), represented in person or by proxy and entitled to vote at the Meeting.

The text of the November 2020 Deferral Agreement Resolution is as follows:

"BE IT RESOLVED THAT:

1. The deferral agreement (the "November 2020 Deferral Agreement") dated November 19, 2020 between Land Breeze II S.à.r.l., a wholly-owned subsidiary of China Investment Corporation, Fullbloom Investment Corporation, a wholly-owned subsidiary of China Investment Corporation, SouthGobi Resources Ltd. (the "Company"), SouthGobi Sands LLC and SGQ Coal Investment PTE Ltd., the actions of the directors of the Company in approving the Deferral (as more particularly described in the management proxy circular of the Company dated December 9, 2020) and the actions of the officers of the Company in executing and delivering the November 2020 Deferral Agreement, are hereby authorized, approved and ratified; and
1. any director or officer of the Company is hereby authorized, for and on behalf of the Company, to execute and, if appropriate, deliver all documents and instruments and to do all other things as in the opinion of such director or officer may be necessary or desirable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the

execution and delivery of any such document or instrument, and the taking of such action."

The Board recommends that shareholders vote in favour of the November 2020 Deferral Agreement Resolution. In the absence of contrary instructions, the person named in the accompanying Form of Proxy intends to vote the Common Shares represented thereby FOR the November 2020 Deferral Agreement Resolution.

OTHER BUSINESS

Management of the Company is not aware of any matter to come before the Meeting other than the matters referred to in the accompanying Notice of Meeting.

STATEMENT OF EXECUTIVE COMPENSATION

In accordance with the requirements of applicable securities legislation in Canada, the following executive compensation disclosure is provided in respect of (a) each person who served as the Company's Chief Executive Officer (the "CEO") or Chief Financial Officer (the "CFO") during the 2019 fiscal year, (b) each of the three most highly compensated executive officers of the Company and its subsidiaries whose annual aggregate compensation for the 2019 fiscal year exceeded Cdn\$150,000; and (c) each individual who would be included under (b) above but for the fact such individual was not an executive officer of the Company or its subsidiaries at the end of the financial year (collectively (a), (b) and (c), the "NEOs").

For the Company's 2019 fiscal year, the Company's NEOs were:

Mr. Shougao Wang, former CEO of the Company;
Mr. Weiguo Zhang, CFO of the Company;
Mr. Kino Fu, Deputy CFO of the Company;
Mr. Munkhbat Chuluun, President and Executive Director of SouthGobi Sands LLC ("SGS"), a subsidiary of the Company; and
Jonathan Kaetzel, Senior Maintenance Advisor of SGS.

COMPENSATION DISCUSSION AND ANALYSIS

Overview for 2019

The purpose of the Company's compensation program for senior executives is to provide incentives to attract, motivate and retain qualified and experienced executives, to ensure their interests are aligned with the interests of shareholders of the Company and to provide for transparent and defensible compensation.

The board of directors of the Company (the "Board"), through the Compensation Committee (comprised solely of independent directors), is committed to the transparent presentation of its compensation program.
The three principal elements that make up the compensation program are: base salary, performance bonus and long term incentives.
In the normal course, total executive compensation for NEOs (salary, cash bonus and stock options) is targeted at between the median and the top quartile of market.
In the normal course, annual incentive bonuses are based on achievement of short-term and medium-term goals and other strategic objectives, both personal and corporate.
Stock options have traditionally been awarded on an annual basis to incentivize the longterm growth of the Company while aligning the interests of shareholders and management. Stock option grants are based on a number of factors, including individual and corporate performance, retention considerations, and performance motivation.

Compensation and Benefits Committee

The Compensation Committee's objective is to discharge certain of the Board's responsibilities relating to compensation and benefits of the executive officers and Directors of the Company, including, among other things:

on an ongoing basis, reviewing and making recommendations to the Board relating to (i) the Company's policy and structure for all director and senior management remuneration, and (ii) the establishment of a formal and transparent procedure for developing such remuneration policy;
at least annually, reviewing and approving corporate goals and objectives relevant to the CEO's and CFO's compensation, evaluating their respective performance in light of those goals and objectives and setting their respective compensation level;
at least annually, reviewing and making recommendations to the Board with respect to the adequacy and form of compensation and benefits of all other executive officers and Directors of the Company;
administering and making recommendations to the Board with respect to the Company's Employees' and Directors' Equity Incentive Plan (the "Equity Incentive Plan") and any other incentive compensation plans and equity-based plans, including any share ownership guidelines, and review such plans annually;
recommending to the Board the CEO's and CFO's performance evaluation which takes into consideration the CEO's and CFO's respective annual objectives and performance; and
determining the recipients of, and the nature, vesting criteria (if applicable) and size of equity compensation awards and equity bonuses granted from time to time, in compliance with applicable securities laws, stock exchange rules and policies, and other regulatory requirements.

The charter of the Compensation Committee is available on the Company's website at www.SouthGobi.com.

All Compensation Committee members are independent Directors, based on the standards established under NI 58-101. The Compensation Committee met three (3) times during the fiscal 2019 year. As at the end of fiscal 2019 year, the Compensation Committee was made up of the following members, all of whom have experience in dealing with compensation matters:

Name	Experience
Jin Lan Quan (Chair)	Ms. Quan joined the Compensation Committee on June 30, 2016 and was appointed Chair of the Compensation Committee on June 28, 2018. As a former Managing Partner with an international accounting firm in Sydney Australia, Ms. Quan was involved in executive

Name	Experience
	compensation proposals and decisions. She is a certified public accountant and is an independent financial planner and business consultant based in Sydney, Australia.
Yingbin Ian He	Mr. He joined the Compensation Committee on May 16, 2017. Mr. He is a mining professional with over 30 years of board and senior executive experience. Over the course of his career, Mr. He has overseen the design and development of various forms of compensation policies, including salary, bonuses and stock options. Mr. He has also been involved in the recruitment of, and negotiation of compensation packages for, senior executives and expatriate senior executives. Mr. He was Chairman of the compensation committee for China Gold
	International Resources Corp. Ltd., a TSX and HKEx listed public company.
Mao Sun	Mr. Sun joined the Compensation Committee on December 14, 2015. Mr. Sun has extensive experience working with Canadian listed companies, as both a director and chief financial officer. He is a chartered accountant and graduated from Columbia University in New York with a Master Degree of International Affairs, International Finance and Business and a Bachelor Degree in Computer Science from Nanjing University, China.

Outside Consultants and Peer Comparator Group

In establishing policies covering base salaries, benefits, annual incentive bonuses and long term incentives, the Compensation Committee takes into consideration the recommendations of management. The Compensation Committee may seek compensation advice where appropriate from external consultants. When the Compensation Committee considers it necessary or advisable, it may retain, at the Company's expense, outside consultants or advisors to assist or advise the Committee on any matter within its mandate. The Committee has the sole authority to retain and terminate any such consultants or advisors.

In 2019, the Compensation Committee retained Spencer Ogden (Hong Kong) Ltd. as an external compensation consultant to update the Company's compensation program and a revised compensation policy for the Company's senior executives was approved by the Board in November 2019, which sets out guidelines for the parameters and controls for determining senior management's key performance indicators ("KPIs") and bonus compensation. The policy identifies six categories of KPIs (production, sales, liquidity, timely reporting, administrative costs and profitability) which are intended to correlate with the Company's performance. Based on the Company's annual operational and financial performance, an individual KPI coefficient is calculated for each member of senior management, which is then used as the determining factor of whether the size of the bonus payout which the Compensation Committee has benchmarked against other similar and comparable entities as the Company and will be in the range of 1 to 3 months base salary.

The following table sets out the aggregate amount of fees billed by the Company's external compensation consultants or advisors, or any of its affiliates, for services related to determining compensation for any of the Company's Directors and executive officer for each of the two most recently completed financial years:

	Fiscal 2019 (Cdn\$)	Fiscal 2018 (Cdn\$)
Executive Compensation Related Fees	\$25,171	Nil
All Other Fees	Nil	Nil
Total Fees	\$25,171	Nil

Compensation and Benefits Philosophy and Goals

The Company's executive compensation program is administered by the Compensation Committee. The Compensation Committee has the following objectives:

to provide a strong incentive for management to contribute to the achievement of the Company's short-term and long-term goals;
to ensure that the interests of the Company's executive officers and shareholders are aligned;
to enable the Company to attract, retain and motivate executive officers of the highest caliber in light of the strong competition in the Company's industry for qualified personnel; and
to provide fair, transparent and defensible compensation.

Although compensation is generally tied to performance goals, the Compensation Committee and the Board maintain a degree of flexibility in making recommendations and compensation decisions.

NEOs and Directors are not permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or Director in accordance with the Company's Corporate Disclosure, Confidentiality and Securities Trading Policy. The Company continually reviews its compensation policies to ensure the alignment of remuneration outcomes with the successful delivery of the Company's strategy.

How We Make Compensation Decisions

The Compensation Committee generally oversees and sets the general guidelines and principles for the Company's executive compensation policies. It assesses individual performance of the Company's executive officers and makes recommendations relating to compensation to the Board. Based on these recommendations, the Board makes decisions concerning the nature and scope of the compensation to be paid to the Company's executive officers. The Compensation Committee bases its recommendations to the Board on a combination of its compensation philosophy, market analysis for compensation paid by a peer comparator group, advice from thirdparty consultants and the Committee's assessment of individual performance based on an objective set of performance goals. In the normal course, the Company's total compensation package is made up of three elements: salary, bonus and equity incentives. In addition, certain executives receive other compensation such as housing allowance, income tax benefit and travel expenditures, as determined on a case by case basis.

The Compensation Committee generally meets quarterly to deal with any compensation issues or more frequently as needed to address specific issues in respect of executive compensation. The Chair of the Compensation Committee meets with the CEO and CFO at least annually to discuss management's corporate goals for the forthcoming year, and to complete the annual review of the CEO's performance. The Compensation Committee works with the CEO and CFO to evaluate the performance and set the compensation for the other NEOs, including proposed salary adjustments, bonus awards and stock options grants.

The Board has the responsibility for overseeing the Company's compensation program. The Board has delegated certain oversight responsibilities to the Compensation Committee, but retains final authority over the compensation program and process, including approval of material amendments to or adoption of new equity-based compensation plans and the review and approval of Compensation Committee recommendations regarding executive compensation.

In designing the various elements and determining amounts of compensation, the Compensation Committee draws upon the advice from the CEO and CFO and also takes advice from its compensation advisor(s) with regard to the recommendations of management as part of preparing its recommendations to the Board.

The CEO and CFO, in consultation with the Board and senior management, are responsible for developing the Company's overall strategic plan. On the basis of the strategic plan, the CEO and CFO develop an annual business plan and sets out corporate strategies and objectives, which are reviewed and approved by the Board. These objectives include both general corporate and financial objectives and form the basis of assessing the performance of the executive management for the purpose of determining their annual incentive awards, which are weighted on an individual basis to reflect specific targets based on an executive's position.

The Board actively monitors the Company's adherence to its strategic plan and the annual business plan and budget and is directly involved in investigating any significant variance from those plans that would encounter any major new risks that have not already been identified and mitigated to the extent possible through its normal business practices.

Management of Risk

In designing and implementing the Company's compensation policy, the Compensation Committee and the Board regularly assess, as part of their respective deliberations, the risks associated with the Company's policies and practices. The structure of incentive compensation for executives is generally designed not to focus on a single metric, which in the Compensation Committee's view could be distortive, but rather a number of objectives within the framework of the following values and responsibilities: Health and Safety; Fair Treatment of Employees; Contributing to Communities and Sustaining Development; Managing Environmental Impacts; Operational Excellence and Financial Discipline. The objectives contain both short term and long term objectives. Planned performance is measured against actual achievements on a continuous basis so that the Board is able to react to any significant unanticipated risks. The Compensation Committee and the Board also aim to manage cash resources to the extent practicable with salaries aimed at the median of market, and overall consideration (including stock options) targeted at between the median and the top quartile of market. Consideration of risk is also directly incorporated into the incentive compensation by including goals related to risk management as a factor within the objectives for bonus incentive compensation. Compensation decisions are not entirely based on fixed formulas and the Board and Compensation Committee retain a certain degree of discretion when assessing certain performance based criteria and granting certain incentive compensation.

For a detailed explanation of the material risks applicable to the Company, see the section entitled "Risk Factors" in the Company's AIF Form dated March 31, 2019 available under the Company's profile on SEDAR at www.sedar.com.

Compensation in 2019

Compensation for former CEO

Shougao Wang

Mr. Wang was the Company's CEO from June 1, 2018 to March 31, 2020. In connection with his duties as CEO. Mr. Wang was also eligible to receive an annual cash bonus and stock options, at the discretion of the Board, based on his annual performance as CEO.

Compensation for CFO and other NEOs

Weiguo Zhang

Mr. Zhang was appointed as the Company's CFO effective as of June 1, 2018. In connection with his duties as CFO. Mr. Zhang is also eligible to receive an annual cash bonus and stock options, at the discretion of the Board, based on his annual performance as CFO.

Kino Fu

Mr. Fu has been the Company's Deputy CFO since April 18, 2018. In connection with his duties as the Company's Deputy CFO, Mr. Fu receives a base salary of HK\$1,560,000 per year. Mr. Fu is also eligible to receive an annual cash bonus and stock options, at the discretion of the Board, based on his annual performance as Deputy CFO.

Munkhbat Chuluun

Mr. Chuluun was appointed President and Executive Director of SGS effective as of September 17, 2015. In connection with his duties as President and Executive Director of SGS, Mr. Chuluun receives a base salary of \$217,929 per year. Mr. Chuluun is eligible to receive a cash bonus of up to 20% of his base salary subject to achieving certain performance indicators. Mr. Chuluun is also eligible to receive long-term performance awards in the form of stock options, at the discretion of the Board, based on his annual performance as President and Executive Director of SGS.

Jonathan Kaetzel

Mr. Kaetzel was appointed as the Senior Maintenance Advisor at SGS effective as of February 1, 2012. In connection with his duties, Mr. Kaetzel receives a base salary of \$183,316 per year. Mr. Kaetzel is eligible to receive a cash bonus of up to 30% of his base salary subject to achieving certain personal and corporate goals. Mr. Kaetzel is also eligible to receive long-term performance awards in the form of stock options, at the discretion of the Board, based on his annual performance as the Senior Maintenance Advisor at SGS.

NEO Incentive Compensation for 2019

Compensation decisions for incentive awards to NEOs for 2019 performance were based on an assessment by the Compensation Committee and the Board of each NEO's contribution during 2019 and the extent to which certain agreed upon individual and corporate performance measures were achieved. In assessing whether or not a particular performance measure was achieved, the Board and the Compensation Committee retain a considerable degree of discretion. Among other matters, considerable weight is given to the small size of the Company's executive team, the significant change in the senior management structure of the Company and the multiple roles handled by the very small management team members. In recognition of their contributions during fiscal 2019, the Company awarded \$99,112 in cash bonuses to certain of the NEOs.

Other Compensation

The aggregate "other compensation" received by each NEO is disclosed in the Summary Compensation Table below. The Company does not provide its executive officers with a pension plan. Termination compensation in respect of NEOs whose employment ended during 2019 is disclosed under "Termination and Change of Control Benefits" below.

Performance Graph

The following graph and table compare the cumulative shareholder return on a Cdn\$100 investment in Common Shares to a similar investment in companies comprising the S&P/TSX Composite Index, including dividend reinvestment, for the period from December 31, 2015 to December 31, 2019. Trading of the Company's shares were halted from December 17, 2018 to May 30, 2019.

	Dec-15	Dec-16	Dec-17	Dec-18	Dec-19
SouthGobi Resources Ltd.	100	69	46	36	23
S&P/TSX Composite Index	100	118	125	110	131

The trend in overall compensation paid to the Company's executive officers over the past five years has not tracked the performance of the market price of the Common Shares, or the S&P/TSX Composite Index. Given the various challenges facing the Company, the current share price is not a significant factor in cash compensation consideration. The value of long term incentive compensation in the form of stock options will be influenced by the Company's share price performance.

Summary Compensation Table

The following executive compensation disclosure for each NEO is provided as of December 31, 2019, December 31, 2018 and December 31, 2017.

Summary Compensation Table (\$)

						Non-equity incentive plan compensation (\$)
Name and principal position	Year	Salary (1)	Share based awards	Option based awards (2)	Annual incentive plans	Long-term incentive plans	Pension value	All other compensation(3)	Total compensation
	2019	360,000	Nil	11,723	Nil	30,000	Nil	Nil	401,723
Shougao Wang	2018	210,000	Nil	14,670	Nil	80,000	Nil	Nil	304,670
Former CEO(4)	2017	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Weiguo	2019	200,000	Nil	8,792	Nil	16,667	Nil	Nil	225,463
Zhang CFO	2018	116,669	Nil	7,335	Nil	80,000	Nil	Nil	204,004
	2017	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Munkhbat	2019	217,939	Nil	4,396	49,934	Nil	Nil	Nil	272,269
Chuluun SGS: President and	2018	188,351	Nil	5,501	38,834	Nil	Nil	Nil	232,687
Executive Director	2017	108,776	Nil	Nil	8,352	Nil	Nil	Nil	117,128
Kino Fu	2019	199,041	Nil	2,931	38,277	Nil	Nil	Nil	240,249
Deputy CFO	2018	193,756	Nil	3,668	103,815	Nil	Nil	Nil	301,238
	2017	159,178	Nil	Nil	60,000	Nil	Nil	Nil	219,178
Jonathan	2019	183,316	Nil	Nil	10,900	Nil	Nil	38,732	232,948
Kaetzel SGS:	2018	164,087	Nil	Nil	Nil	Nil	Nil	38,337	202,424

					Non-equity incentive plan compensation (\$)
Name and principal position	Year	Salary (1)	Share based awards	Option based awards (2)	Annual incentive plans	Long-term incentive plans	Pension value	All other compensation(3)	Total compensation
Senior Maintenance Advisor	2017	163,536	Nil	Nil	Nil	Nil	Nil	40,405	203,941

Notes:

(1) The salaries for the NEOs are paid in U.S., Hong Kong dollars and Mongolian Tugrik. For the purpose of reporting, the salaries in the Summary Compensation Table above are reported in U.S. dollars (converted using the prevailing Bank of Canada exchange rate on the date an amount was paid).

(2) The value of the stock options awarded is the estimated fair value on the date of grant calculated using the Black-Scholes option pricing model with the following assumptions: an estimated volatility equal to the historical volatility of the Common Shares over a period equal to the expected life of the option, an estimated divided yield of \$nil, a risk free rate of return equal to the rate currently available on federal government zero-coupon bonds with a term equal to the expected life of the option and an expected life approximating the term of the option. The value of stock options with a Canadian dollar exercise price was converted to US dollars using the Bank of Canada closing exchange rate on date of grant.
(3) For the purpose of reporting, all other compensation in the Summary Compensation Table are reported in U.S. dollars. Foreign currency amounts are converted into U.S. dollars using the prevailing Bank of Canada exchange rate on the date an amount was paid.

		(4) Mr. Wang was the Company's CEO from June 1, 2018 to March 31, 2020.
--	--	-------------------------------------------------------------------------	--

Name and principal position	Year	Option Grant	Grant Date	Conversion Rate(1)	Grant Date Fair Value (\$)	Grant Date Fair Value (Cdn\$)
Shougao Wang	2019	400,000	15-Nov-19	1.3250	11,723	15,533
Former CEO	2018	400,000	16-Aug-18	1.3144	14,670	19,283
	2017	Nil	Nil	Nil	Nil	Nil
	2019	300,000	15-Nov-19	1.3250	8,792	11,650
Weiguo Zhang	2018	200,000	16-Aug-18	1.3144	7,335	9,641
CFO	2017	Nil	Nil	Nil	Nil	Nil
Kino Fu	2019	100,000	15-Nov-19	1.3250	2,931	3,883
Deputy CFO	2018	100,000	16-Aug-18	1.3144	3,668	4,821
	2017	Nil	Nil	Nil	Nil	Nil
	2016	Nil	Nil	Nil	Nil	Nil
	2015	42,746	1-Apr-15	1.2612	14,423	18,191
	2014	24,134	13-Aug-14	1.0929	5,385	5,885
	2019	150,000	15-Nov-19	1.3250	4,396	5,825
Munkhbat Chuluun	2018	150,000	16-Aug-18	1.3144	5,501	7,231
SGS: President and	2017	Nil	Nil	Nil	Nil	Nil
Executive Director	2016	Nil	Nil	Nil	Nil	Nil
	2015	32,331	1-Apr-15	1.2612	10,909	13,758
Jonathan Kaetzel	2019	Nil	Nil	Nil	Nil	Nil
SGS: Senior	2018	Nil	Nil	Nil	Nil	Nil
Maintenance Advisor	2017	Nil	Nil	Nil	Nil	Nil

Notes:

(1) The conversion rates used for the purpose of converting the grants to the NEOs in the Summary Compensation Chart above from Canadian dollars to U.S. dollars in 2019, 2018, 2017, 2016, 2015 and 2014 are 1.3250, 1.3144, 1.2963, 1.3416, 1.3732 and 1.02929, respectively.

Incentive Plan Awards Outstanding share-based awards and option-based awards as at December 31, 2019

			Option-based Awards		Share-based Awards
Name and principal position	Number of securities underlying unexercised options	Option exercise price (Cdn\$)	Option expiration date	Value of unexercised in-the-money options (\$)(1)	Number of shares or units of shares that have not vested	Market or payout value of share based awards that have not vested (\$)
Shougao Wang Former CEO	400,000 400,000	0.13 0.13	15-Nov-24 16-Aug-23	Nil Nil	n/a	n/a
Weiguo Zhang CFO	300,000 200,000	0.13 0.13	15-Nov-24 16-Aug-23	Nil Nil	n/a	n/a
Kino Fu Deputy CFO	100,000 100,000 42,746	0.13 0.13 0.92	15-Nov-24 16-Aug-23 1-Apr-20	Nil Nil Nil	n/a	n/a
Munkhbat Chuluun SGS: President and Executive Director	150,000 150,000 32,331	0.13 0.13 0.92	15-Nov-24 16-Aug-23 1-Apr-20	Nil Nil Nil	n/a	n/a
Jonathan Kaetzel SGS: Senior Maintenance Advisor	Nil	n/a	n/a	n/a	n/a	n/a

Notes:

⁽¹⁾ The value of the unexercised in-the-money options, is calculated on the basis of the difference between the closing price of the Common Shares on the TSX on December 31, 2019 (Cdn\$0.09 per Common share) and the exercise price of the options. The value of the unexercised in-the-money options as of December 31, 2019, has been converted from Canadian dollars to U.S. dollars at the rate of US\$1.00/Cdn\$1.2988, which was the Bank of Canada noon rate on December 31, 2019, the last trading day of calendar 2019.

Incentive Plan Awards – value vested or earned during 2019 (\$)

Name and principal position	Option-based awards - Value vested during the year	Share-based awards - Value vested during the year	Non-equity incentive plan compensation - Value earned during the year
Shougao Wang Former CEO	Nil	n/a	Nil
Weiguo Zhang CFO	Nil	n/a	Nil
Kino Fu Deputy CFO	Nil	n/a	Nil
Munkhbat Chuluun SGS: President and Executive Director	Nil	n/a	Nil
Jonathan Kaetzel SGS: Senior Maintenance Advisor	Nil	n/a	Nil

PENSION PLAN BENEFITS

The Company does not have any pension, retirement or deferred compensation plans, including defined contribution plans.

TERMINATION AND CHANGE OF CONTROL BENEFITS

Shougao Wang

Mr. Wang's employment contract with SouthGobi Resources (Hong Kong) Limited ("SouthGobi HK") and under the secondment arrangement with the Company provide that in the case of a termination without cause, Mr. Wang is entitled to either one (1) month notice or payment equal to one (1) month's base salary. Neither Mr. Wang's employment contract with SouthGobi HK nor his secondment arrangement with the Company provide for any additional compensation in case of an involuntary termination following a change of control of the Company. The estimated payment to Mr. Wang as at December 31, 2019 in the event of a termination without cause would have been one month's salary equal to \$30,000.

Weiguo Zhang

Mr. Zhang's employment contract with SouthGobi HK and under the secondment arrangement with the Company provide that in the case of a termination without cause, Mr. Zhang is entitled to either one (1) month notice or payment equal to one (1) month's base salary. Neither Mr. Zhang's employment contract with SouthGobi HK nor his secondment arrangement with the Company provide for any additional compensation in case of an involuntary termination following a change of control of the Company. The estimated payment to Mr. Zhang as at December 31, 2019 in the event of a termination without cause would have been one month's salary equal to \$18,162.

Kino Fu

Mr. Fu's employment contract with SouthGobi HK and with the Company provide that in the case of a termination without cause, Mr. Fu is entitled to payment equal to two (2) months' base salary. Mr. Fu's employment contract does not provide for any additional compensation in case of an involuntary termination following a change of control of the Company. The estimated incremental payments to Mr. Fu as at December 31, 2019 in the event of a termination without cause would have been two (2) months' salary equal to HK\$260,000.

Munkhbat Chuluun

Mr. Chuluun's employment agreement with SGS does not provide for any additional compensation in case of any termination (whether voluntary, involuntary or constructive), resignation, retirement, or change of control of the Company.

Jonathan Kaetzel

Mr. Kaetzel's employment agreement with SGS does not provide for any additional compensation in case of any termination (whether voluntary, involuntary or constructive), resignation, retirement, or change of control of the Company.

COMPENSATION OF DIRECTORS

The Compensation Committee periodically reviews and makes recommendations to the Board regarding the adequacy and form of the compensation for non-management directors to ensure that such compensation realistically reflects the responsibilities and risks involved in being an effective Director, without compromising a Director's independence. Directors who are executives of the Company receive no additional remuneration for their services as directors.

Based in part on the recommendations provided in the compensation report commissioned from Roger Gurr & Associates (the "Gurr Directors Report") in 2016, the annual retainer for each of the INEDs was approved as below:

	Cdn\$
Independent Directors:	45,000
Audit Committee Chair:	20,000
Nominating and Governance Committee Chair:	20,000
Compensation and Benefits Committee Chair:	10,000
HESS Committee Chair:	10,000

The HESS Committee is chaired by Mr. Dalanguerban, the executive director. Should the HESS Committee be chaired by a non-executive Director, he or she would be entitled to receive the Cdn\$10,000 annual retainer. There are no fees paid to the Chair or the members of the Operations Committee.

In April 2018, based on the recommendations provided in the Gurr Directors Report, the remuneration for the Lead Director was approved and set at Cdn\$25,000 per annum.

The meeting fees for each of the INEDs is Cdn\$1,500 for each Board and each Committee

meeting attended. Directors also receive a travel allowance of Cdn\$2,000 per round-trip in excess of four (4) hours' travel time.

As recommended in the Gurr Directors Report, Mr. He and Ms. Quan each received 150,000 incentive stock options, which expire after five (5) years with a strike price of Cdn\$0.11 per share. In his capacity as the Lead Director, Mr. Sun received 200,000 incentive stock options, which expire after five (5) years with a strike price of Cdn\$0.11 per share.

In April 2018, the remuneration for each member of the Special Committee was approved and set at Cdn\$2,000 per month and the remuneration for the Chair of the Special Committee was approved and set at Cdn\$3,000 per month. The remuneration for the Special Committee members and Chair was suspended on April 28, 2019.

All Directors are entitled to be reimbursed for actual expenses reasonably incurred in the performance of their duties as Directors.

Name (1)(2)	Fees Earned (\$)	Share based awards (\$)	Option-based awards (\$)	All Other Compensation	Total (\$)
Zhiwei Chen	n/a	n/a	n/a	n/a	nil
Yingbin Ian He	83,277	n/a	3,281 (3)	n/a	86,558
Xiaoxiao Li	n/a	n/a	n/a	n/a	nil
Ben Niu	n/a	n/a	n/a	n/a	nil
Jin Lan Quan	76,871	n/a	3,281 (3)	n/a	80,152
Mao Sun	102,495	n/a	4,374 (3)	n/a	106,869
Wen Yao	n/a	n/a	n/a	n/a	nil
Lan Cheng (4)	n/a	n/a	n/a	n/a	nil

Director Compensation Table for Fiscal 2019 (\$)

Notes:

(1) Additional information with respect to the compensation for Mr. Shougao Wang has been included in the Summary Compensation Table for NEOs, and is not reported in the Director Compensation section of this Management Proxy Circular.

(2) Mr. Jianmin Bao and Ms. Ka Lee Ku were appointed to the Board of Directors in 2020.

(3) As recommended in the Gurr Directors Report, Mr. Yingbin Ian He and Ms. Jin Lan Quan each received 150,000 incentive stock options, exercisable for five (5) years with a strike price of Cdn\$0.11 per share, respectively. In his capacity as Lead Director, Mr. Mao Sun received 200,000 incentive stock options, exercisable for five (5) years with a strike price of Cdn\$0.11 per share.

(4) Ms. Lan Cheng did not stand for re-election at the annual general meeting held on May 30, 2019 (the "2019 AGM") and ceased to be a Director as of that date.

Outstanding Share-based awards, option-based awards and non-equity incentive plan compensation as at December 31, 2019

		Share-based Awards
Name (1)(2)	Number of securities underlying unexercised options	Option exercise price (Cdn\$)	Option expiration date	Value of unexercised in the-money options (\$) (3)(4)	Number of shares or units of shares that have not vested	Market or payout value of share based awards that have not vested (\$)
Zhiwei Chen	n/a	n/a	n/a	n/a	n/a	n/a
	100,000	0.39	5-Jun-22	Nil
Yingbin Ian He	150,000	0.33	30-Jun-22	Nil	Nil	Nil
	150,000	0.13	3-Jul-23	Nil
	150,000	0.13	11-Sept-24	Nil
Xiaoxiao Li	n/a	n/a	n/a	n/a	n/a	n/a
Ben Niu	n/a	n/a	n/a	n/a	n/a
	100,000	0.29	14-Dec-20	Nil
	150,000	0.33	16-Nov-21	Nil
Jin Lan Quan	150,000	0.33	30-Jun-22	Nil	Nil	Nil
	150,000	0.13	3-Jul-23	Nil
	150,000	0.13	11-Sept-24	Nil
	100,000	0.29	14-Dec-20	Nil
	200,000	0.33	16-Nov-21	Nil
Mao Sun	200,000	0.33	30-Jun-22	Nil	Nil	Nil
	200,000	0.13	3-Jul-23	Nil
	200,000	0.13	11-Sept-24	Nil
Wen Yao	n/a	n/a	n/a	n/a	n/a	n/a
Lan Cheng	n/a	n/a	n/a	n/a	n/a	n/a

Notes:

(2) Mr. Jianmin Bao and Ms. Ka Lee Ku were appointed to the Board of Directors in 2020.

(3) The "Value of unexercised in-the-money options" is calculated on the basis of the difference between the closing price of the Common Shares on the TSX on December 31, 2019 (being Cdn\$0.09 per Common Share) and the exercise price of the option multiplied by the number of unexercised options, vested and unvested and converted to US\$ at the respective spot rates as published by the Bank of Canada.

(4) The value of the unexercised in-the-money options as of December 31, 2019, has been converted from Canadian dollars to U.S. dollars at the rate of US\$1.00/Cdn\$1.2988, which was the Bank of Canada noon rate on December 31, 2019, the last trading day of calendar 2019.

Name (1)(2)	Option-based awards - Value vested during the year (\$) (3)	Share-based awards - Value vested during the year (\$)	Non-equity incentive plan compensation - Value earned during the year (\$)
Zhiwei Chen	n/a	n/a	n/a
Yingbin Ian He	Nil	n/a	Nil
Xiaoxiao Li	n/a	n/a	n/a
Ben Niu	n/a	n/a	n/a
Jin Lan Quan	Nil	n/a	Nil
Mao Sun	Nil	n/a	Nil
Wen Yao	n/a	n/a	n/a
Lan Cheng	n/a	n/a	n/a

Incentive Plan Awards – value vested or earned during 2019

Notes:

(1) Additional information with respect to the compensation for Mr. Shougao Wang has been included in the Incentive Plan table for NEOs, and is not reported in the Director Compensation section of this Management Proxy Circular.
(2) Mr. Jianmin Bao and Ms. Ka Lee Ku were appointed to the Board of Directors in 2020.
(3) Value vested during the year represents the aggregate dollar value that would have been realized if a Director had exercised each of their options that vested in 2019 on the date of such vesting. The value vested during the year is converted from Canadian dollars to U.S. dollars based on the Bank of Canada noon rate at the date of vesting of each option. Where the option exercise price is above the share price on the date of vesting the value assigned to the option is nil.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Summary of the Company's Equity Incentive Plan

The following is a summary and description of the Equity Incentive Plan. This summary is qualified in its entirety by the text of the Equity Incentive Plan which is attached as Schedule "A" to the Company's management proxy circular dated May 14, 2018, a copy of which is available under the Company's profile on SEDAR at www.sedar.com.

As at December 31, 2019, a maximum of 27,270,284 Common Shares were issuable under the Equity Incentive Plan, representing approximately 10.00% of the Common Shares issued and outstanding. As at December 31, 2019, there remained 20,416,456 Common Shares available, in the aggregate, for issuance under the Equity Incentive Plan, representing approximately 7.49% of the Common Shares issued and outstanding. As at December 31, 2019, there were 6,853,828 stock options issued and outstanding under the Equity Incentive Plan, representing approximately 2.51% of the Common Shares issued and outstanding.

For the fiscal years ending December 31, 2017, 2018 and 2019 the Company granted awards under the Equity Incentive Plan covering 783,886 Common Shares, 2,908,702 Common Shares and 2,925,000 Common Shares, respectively. In accordance with the policies of the TSX, the following table sets out the annual burn rate, calculated in accordance with Section 613(p) of the TSX Company Manual, of the Equity Incentive Plan for the Company's three most recently complete financial years:

Fiscal Year	2017	2018	2019
Options	0.28%	1.04%	1.07%
Bonus Shares	0.00%	0.00%	0.00%
Share Purchase Plan Shares	0.01%	0.03%	0.00%
Average Annual Burn Rate(1)	0.29%	1.07%	1.07%
Three-year Average Burn Rate	0.81%

Notes:

(1) Annual Burn Rate is expressed as a percentage which is calculated by dividing the number of securities granted under the Equity Incentive Plan during the applicable fiscal year by the weighted average number of securities outstanding for the applicable fiscal year.

Overview

The Equity Incentive Plan has three (3) components: (i) a share option plan (the "Option Plan"), which provides for the grant to eligible participants of incentive stock options exercisable to purchase Common Shares; (ii) a share bonus plan (the "Bonus Plan"), which provides for awards of fully paid Common Shares to eligible participants as and when determined by the Board to be warranted on the basis of past performance; and (iii) a share purchase plan (the "Purchase Plan"), under which eligible participants have the opportunity to purchase Common Shares through payroll deductions which are supplemented by additional contributions by the Company.

The eligible participants in the Equity Incentive Plan include a Director of the Company or a director of any affiliate of the Company, and any full time and part time employees (including officers) of the Company or any affiliate of the Company that the Board determines to be eligible for participation in the Equity Incentive Plan. Furthermore, persons or companies engaged by the Company or any affiliate of the Company to provide services for an initial, renewable or extended period of 12 months or more are eligible for participation in the Equity Incentive Plan as the Board determines. The operation of the Company's Purchase Plan was suspended by the Board from January 28, 2019 to June 30, 2019.

The Equity Incentive Plan is, by its terms, to be administered by the Board. However, the Board has delegated to its Compensation Committee, to the extent permitted by law, responsibility for administering the Equity Incentive Plan.

Share Issuance Limits

The aggregate number of Common Shares that may be subject to issuance under the Equity Incentive Plan, together with any other securities based compensation arrangements of the Company in effect from time to time, may not exceed ten per cent (10%) of the outstanding Common Shares from time to time. The Equity Incentive Plan is a "rolling plan" and, accordingly in accordance with the rules of the TSX, options that have expired, or that have been cancelled, terminated, exercised or surrendered, will be available to be re-granted under the Equity Incentive Plan and, accordingly will not reduce the aggregate number of Common Shares that may be subject to issuance under the Equity Incentive Plan.

In addition, the aggregate number of Common Shares under the Equity Incentive Plan which the Company may:

issue or reserve for issuance to any eligible participant may not exceed five per cent (5%) of the issued and outstanding Common Shares from time to time;
reserve for issuance to insiders of the Company (when combined with all of the Company's other security-based compensation arrangements in favour of insiders of the Company) may not exceed ten per cent (10%) of the issued and outstanding Common Shares from time to time;
issue to insiders of the Company (when combined with all of the Company's other securitybased compensation arrangements in favour of insiders of the Company) within any oneyear period may not exceed ten per cent (10%) of the issued and outstanding Common Shares from time to time; or
issue to any one insider of the Company and his or her associates (when combined with all of the Company's other security-based compensation arrangements in favour that insider and his or her associates) within any one-year period may not exceed five per cent (5%) of the issued and outstanding Common Shares from time to time.

Option Plan

Option Grants

The Option Plan authorizes the Board to grant options to purchase Common Shares to eligible employees and directors as designated by the Board. The number of Common Shares, the exercise price per Common Share, the vesting period and any other terms and conditions of options granted pursuant to the Option Plan, from time to time are determined by the Board at the time of the grant, subject to the defined parameters of the Option Plan.

Exercise Price

The exercise price of any option granted under the Option Plan cannot be less than the volume weighted average price of the Common Shares on the TSX for the five (5) days on which Common Shares were traded immediately preceding the date of grant.

Exercise Period and Vesting

Options are exercisable for five (5) years from the date the option is granted or such shorter or longer period of time (not exceeding ten years) determined by the Board. Options may be earlier terminated in the event of death or termination of employment or appointment. Vesting of options is determined by the Board. Failing a specific vesting determination by the Board, options

automatically become exercisable incrementally over a period of three (3) years from the date of grant, as to one-third of the total number of Common Shares under option in each such year. Vesting may be accelerated by the Board in circumstances they deem appropriate, including in the event of a takeover bid in respect of the Common Shares.

Cashless Exercise

Optionees have the right to exercise a vested option on a "cashless" basis by electing to relinquish the right to exercise the option and receive, in lieu thereof, a number of fully paid Common Shares. The number of Common Shares issuable pursuant to any such cashless exercise is equal to the quotient obtained by dividing the difference between the aggregate fair market value and the aggregate option price of all Common Shares subject to the option by the fair market value of one (1) Common Share.

Financial Assistance

The Board may, in its discretion but subject to applicable laws, authorize the Company to make loans to employees to assist them in exercising options. The terms of any such loans include security, in favour of the Company, in the Common Shares issued upon exercise of the options, which security may be granted on a non-recourse basis, interest at prevailing market rates and a term not in excess of one year. Directors and executive officers are not eligible to receive financial assistance. As of the date of this Management Proxy Circular, no such loans are currently outstanding.

Termination or Death

If an optionee dies while employed by, or while serving as a director of, the Company or an affiliate, any vested option held by him or her will be exercisable for a period of twelve months or until the expiration of the option (whichever is sooner) by the person to whom the rights of the optionee pass by will or applicable laws of descent and distribution. If an optionee is terminated for cause, no option will be exercisable unless the Board determines otherwise. If an optionee is terminated for any reason other than cause, then all unvested options immediately terminate and any vested options will remain exercisable for a period of twelve months or until the expiration of the option (whichever is sooner).

Blackout Period

If the expiry date of any option would occur either during a period in which trading of the Common Shares is restricted (a "blackout period") or within ten business days following the expiry of the blackout period, the expiry date of such option is automatically extended to a date that is ten business days following the expiry of the blackout period.

Bonus Plan

The Bonus Plan permits the Board to authorize the issuance, from time to time, of Common Shares to employees, directors, officers and service providers of the Company and its affiliates for no cash consideration. The Board retains the discretion to determine the criteria for making an award and the quantum of the award. The Bonus Plan currently provides for the issuance of a maximum of 2,000,000 Common Shares in respect of bonus awards. Common Shares allocated to the Bonus Plan may be reallocated for issuance under the Option Plan or Purchase Plan and are then no longer available for issuance under the Bonus Plan. The Common Shares currently

available for issuance under the Bonus Plan represent less than 1% of the issued and outstanding Common Shares as of the date of this Management Proxy Circular.

Purchase Plan

Participation Criteria

Participants in the Purchase Plan must be full-time employees of the Company or its affiliates who have completed at least one year (or less, at the discretion of the Board) of continuous service and who elect to participate.

Contribution Limits

Eligible employees, as determined by the Board, on the recommendation of the Compensation Committee, may elect to contribute to the Purchase Plan a percentage of their annual basic salary set by the Board, which not exceeding ten per cent (10%) thereof. The Company makes a contribution of up to one hundred per cent (100%) of the employee's contribution on a quarterly basis.

Number of Shares

Each participant receives, at the end of each calendar quarter during which he or she participates in the Purchase Plan, a number of Common Shares equal to the quotient obtained by dividing the aggregate amount of all contributions to the Purchase Plan by the participant, and by the Company on the participant's behalf, during the preceding quarter by the weighted average trading price of the Common Shares on the TSX during the quarter.

The maximum number of Common Shares that may be issued to participants under the Purchase Plan is 500,000 Common Shares, represent less than 0.18% of the issued and outstanding Common Shares as of the date of this Management Proxy Circular.

Termination of Employment or Death

If the participant's employment with the Company is terminated for any reason or upon the death of the participant, any portion of the participant's contribution then held in trust for a participant pending a quarterly purchase of Common Shares is returned to him or her or to his or her estate, as applicable.

Transferability

Benefits, rights and options under the Equity Incentive Plan are non-transferable and, during the lifetime of a participant, may only be exercised by such participant.

Amendment Procedure

The Equity Incentive Plan provides that the Board has the authority and discretion to amend, suspend or terminate the Equity Incentive Plan and awards granted thereunder in respect of any matter without shareholder approval, including changes of a clerical or grammatical nature, changes regarding the persons eligible to participate in the Equity Incentive Plan, changes to the exercise price, vesting, term and termination provisions of options, changes to the cashless exercise provisions, changes to the share bonus plan provisions (other than the maximum number of Common Shares issuable under the Bonus Plan), changes to the authority and role of the

Compensation Committee under the Equity Incentive Plan, changes to the acceleration and vesting of options, and any other matter relating to the Equity Incentive Plan and the options and awards granted thereunder, subject always to the following provisos:

a) Any such amendment, change or termination is in compliance with applicable laws and the rules of any stock exchange on which the Common Shares are listed;
b) no amendment to the Equity Incentive Plan or to an option granted thereunder will have the effect of impairing, derogating from, or otherwise adversely affecting, the terms of an option which is outstanding at the time of such amendment without the written consent of the holder of such option;
c) the expiry date of an option may not exceed ten years except when the option period would otherwise end during a blackout period or within ten business days following the expiry of a blackout period as expressly provided for in the Equity Incentive Plan;
d) the Company must obtain shareholder approval of:
i) any increase in the maximum number of Common Shares available for issuance under the Bonus Plan;
ii) any increase in the maximum percentage of the outstanding Common Shares available for issuance under the Equity Incentive Plan;
iii) any amendment to the limitation on the number of Common Shares that may be reserved for issuance, or issued, to insiders of the Company or any amendment that would reduce the exercise price of an outstanding option except in the limited circumstances expressly provided for in the Equity Incentive Plan;
iv) any amendment that would reduce the exercise price of an option;
v) any amendment that would extend the expiry date of an option; and
vi) any amendment to the amending provisions of the Equity Incentive Plan.

If the Equity Incentive Plan is terminated, the provisions of the Equity Incentive Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force on the date of termination will continue in effect as long as any option or other awards remain outstanding and, notwithstanding the termination of the Equity Incentive Plan, the Board will remain able to make such amendments to the Equity Incentive Plan or the options as they would have been entitled to make if the Equity Incentive Plan were still in effect.

Securities Issued and Unissued under the Equity Incentive Plan

There are 272,702,835 Common Shares issued and outstanding as at December 8, 2020. The following table summarizes the total number of Common Shares reserved or that may be reserved for issuance under the Equity Incentive Plan:

	Number of Common Shares	% of Issued and Outstanding Common Shares (2)
Common shares reserved for future issuance pursuant to outstanding but unexercised options under the Option Plan	6,575,000	2.41
Unissued Common Shares available for future awards under the Bonus Plan	1,800,000	0.66
Unissued Common Shares available for future issuance under the Purchase Plan	186,388	0.07
Unissued Common Shares available for future option grants under the Option Plan	18,708,896	6.86
Maximum number of Common Shares available for issuance under Equity Incentive Plan shares available for future option grants under the Option Plan (1)	27,270,284	10.00

Notes:

(1) Includes unissued Common Shares available for future awards under Bonus Plan and Purchase Plan.

(2) The weighted average price of all options outstanding as of December 8, 2020 is Cdn\$0.16.

Equity Compensation Plan Information

The following table shows the equity securities authorized for issuance from the Company's treasury under the Equity Incentive Plan as at December 31, 2019, as approved by shareholders. The Company has no equity compensation plans providing for issuance of Common Shares that have not been previously approved by shareholders.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a) (b)		(c)
Equity compensation plans approved by security holders	6,853,828	Cdn\$0.18	20,416,456
Equity compensation plans not approved by security holders	n/a	n/a	n/a
Total	6,853,828	Cdn\$0.18	20,416,456

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than "routine indebtedness" as that term is defined in applicable securities legislation, no Director or executive officer of the Company, or associate or affiliate of any such Director or executive officer, is or has been indebted to the Company or any of its subsidiaries since the beginning of the last completed financial year of the Company.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as disclosed below or elsewhere in this Management Proxy Circular, or in the Company's AIF under the heading entitled "Material Contracts", no "informed person", being an insider of the Company and the Company itself if it holds its own Common Shares, nor any associate or affiliate of an informed person of the Company, has any material interest, direct or indirect, in any material transaction since the commencement of the Company's last financial year or in any proposed transaction, which, in either case, has materially affected or would materially affect the Company. A copy of the AIF is available under the Company's profile on SEDAR at www.sedar.com and shareholders may also contact the Company's Corporate Secretary by mail addressed to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, or by telephone at 604-762-6783 to request a copy of the AIF, without charge.

CORPORATE GOVERNANCE

NI 58-101 requires the Company to disclose its corporate governance practices with reference to a series of corporate governance practices outlined in National Policy 58-201 - Corporate Governance Guidelines that the Canadian Securities Administrators ("CSA") believe reflect "best practices" standards to which they encourage Canadian public companies to adhere.

Director Independence

The Board has reviewed the independence of each Director on the basis of the definitions in section 1.4 of National Instrument 52-110 – Audit Committees ("NI 52-110"). A director is "independent" if he or she has no direct or indirect material relationship with the Company, including as a partner, shareholder or officer of an organization that has a relationship with the Company. A "material relationship" is one that would, or in the view of the Board, could be, reasonably expected to interfere with the exercise of a Director's independent judgment. The Board has determined, after reviewing the roles and relationships of each of the nominees proposed by management for election to the Board, that 38% (3 of 8) of such nominees are independent from the Company. The INED nominees are Ms. Jin Lan Quan and Messrs. Mao Sun and Yingbin Ian He. The non-independent director nominees are Messrs. Dalanguerban, Jianmin Bao, Ben Niu, Zhiwei Chen and Ms. Ka Lee Ku.

Mr. Dalanguerban is considered to be non-independent because he is an Executive Officer of the Company.

Messrs. Bao and Niu are considered to be non-independent because they are employees of CIC Capital, a wholly owned subsidiary of CIC, the Company's largest shareholder, which currently owns 23.75% of the issued and outstanding Common Shares as of the date of this Management Proxy Circular. Mr. Bao and Mr. Niu have been nominated for election as a Director of the Company at the Meeting by CIC pursuant to a contractual nomination right granted to CIC in connection with the Convertible Debenture and the 2019 Deferral Agreement. See "Election of Directors – Contractual Director Nomination Rights" in this Management Proxy Circular.

Mr. Chen and Ms. Ku are considered to be non-independent because they are employees of China Cinda (HK) Asset Management Company, a wholly owned subsidiary of Novel Sunrise, which currently owns 17.00% of the issued and outstanding Common Shares as of the date of this Management Proxy Circular. Mr. Chen and Ms. Ku have been nominated for election as Directors of the Company at the Meeting by Novel Sunrise pursuant to a contractual nomination

right granted to Novel Sunrise under the Novel Sunrise Agreement. See "Election of Directors – Contractual Director Nomination Rights" in this Management Proxy Circular.

The following	table		sets out each	Director	nominee's	independence	and	Committee
memberships:

	Year	Committees
Board Members (1)	Appointed	AC	C&B	N&CG	HESS	Operations	Special
Executive
Dalanguerban	2020				Chair	
Independent
Yingbin Ian He	2017			Chair		Chair	
Jin Lan Quan	2015		Chair				
Mao Sun	2015	Chair					
Non-Independent
Jianmin Bao	2020
Zhiwei Chen	2018
Ben Niu	2019					
Ka Lee Ku	2020

As of the date hereof, 38% of the current Board members are independent, and, if each of the nominees put forward in this Management Proxy Circular are elected as Directors of the Company, Messrs. Sun and He, and Ms. Quan, being 38% of the Board, will be considered INED. Although the majority of the Director nominees are not independent, all of the Director nominees (except Mr. Dalanguerban) will be non-executive Directors and the Board has in place an independent Lead Director.

In addition, the Audit Committee, Compensation Committee, and Nominating and Governance Committee are currently fully comprised of INED. If all of the nominees proposed by management for election to the Board are elected at the Meeting, it is expected that the Audit Committee, Compensation Committee and Nominating and Governance Committee will continue to be comprised exclusively of INED.

All Directors have or will receive a comprehensive briefing on the duties, responsibilities and liabilities of Directors. In particular, the briefings focused on the Directors' obligations to provide objective oversight of the Company on behalf of all shareholders notwithstanding other prior or current relationships. In the event the Board must consider a matter which involves a potential or actual conflict, such matter will be referred to the independent Directors for consideration to ensure that a proper process is followed and the matter is subject to independent scrutiny. To facilitate the exercise of their respective independent judgment, the INED may hold meetings

without the presence of management and the non-independent Directors. The independent Directors did not meet in 2019 (excluding any meetings of the Audit Committee, Compensation Committee, Nominating and Governance Committee and Special Committee). Additionally, a number of informal, ad hoc meetings were held, as not all meetings of the INED are scheduled but communication among this group occurs on an ongoing basis as needs arise. The CEO and CFO are periodically invited to attend such meetings in order to brief the INEDs on recent developments.

The following table discloses the attendance of the members of the Board at meetings of the Board and its committees in 2019:

Director	Board of Directors Meetings	Audit Committee Meetings	Nominating & Corporate Governance Committee Meetings	Compensation & Benefits Committee Meeting	Health, Environment, Safety & Social Responsibility Committee Meetings	Special Committee Meetings
Zhiwei Chen	10/15	n/a	n/a	n/a	n/a	n/a
Yingbin Ian He	14/15	7/7	3/3	3/3	2/2	5/5
Xiaoxiao Li	15/15	n/a	n/a	n/a	n/a	n/a
Ben Niu (1)	5/5	n/a	n/a	n/a	n/a	n/a
Jin Lan Quan	15/15	7/7	3/3	3/3	n/a	5/5
Mao Sun	14/15	7/7	2/3	3/3	n/a	5/5
Shougao Wang	15/15	n/a	n/a	n/a	2/2	n/a
Wen Yao (2)	14/14	n/a	n/a	n/a	n/a	n/a
Lan Cheng (3)	4/9	n/a	n/a	n/a	1/1	n/a
Overall Attendance Rate	90%	100%	89%	100%	100%	100%

Notes:

(1) Mr. Ben Niu was appointed to the Board of Directors at the 2019 AGM and there were five (5) meetings of the Board subsequent to his appointment.

(2) One (1) Board meeting was held without the participation of CIC directors.

(3) Ms. Lan Chang did not stand for re-election at the 2019 AGM and ceased to be a member of any committees following the date of the 2019 AGM.

All Committees composed of INED, with the exception of the Audit Committee, meet without management being present unless the Committee specifically requests the presence of one or more such persons.

During 2019, there were fifteen (15) Board meetings, seven (7) meetings of the Audit Committee, three (3) meetings of the Nominating and Governance Committee, three (3) meetings of the Compensation Committee, two (2) meetings of the HESS Committee and five (5) meetings of the Special Committee.

The results of discussions of all Board committees, and any meetings of the INED, are communicated to the rest of the Board at its next scheduled meeting, or more promptly, if required, by the committee Chairs to the other directors and members of management.

Chair of the Board

The Company does not currently have a Chairman. Mr. Sun, the Company's Lead Director and an INED, is currently fulfilling the duties of the Chairman of the Company, and is responsible for, amongst other things, maintaining the independence of the Board, ensuring that the Board carries out its responsibilities and chairing meetings of the Board. Mr. Sun was the Company's Interim Lead Director from August 2016 to May 2019 and was appointed as Lead Director on May 30, 2019. Mr. Sun does not serve in a similar capacity with any other company.

Directorship

Information respecting those entities that are reporting issuers (or the equivalent) in Canada or elsewhere in which any of the nominees for election as Directors also act as directors, is disclosed in the table containing information about each nominee in the section of this Management Proxy Circular entitled "Election of Directors". Other than as disclosed therein, none of the current or proposed Directors act as directors of any entities that are reporting issuers (or the equivalent) in Canada or elsewhere.

Interlocking Directorships

Messrs. Yingbin Ian He and Jianmin Bao are both directors on board of the PT Bumi Resources Tbk, a company listed on the Jakarta Stock Exchange.

None of the other Directors serve on the same boards and committees of another reporting issuer.

Position Descriptions

The Board has developed written position descriptions for the Chairman, Lead Director, the Chair of each of the Audit, Compensation, Nominating and Governance, and HESS Committees, CEO, CFO, COO, Vice President, Deputy CFO, Corporate Secretary and Controller clearly defining their respective roles and responsibilities. Such position descriptions were reviewed by the Nominating and Governance Committee and approved by the Board and are subject to annual review by the Nominating and Governance Committee. Copies of the position descriptions for the Chairman, Lead Director, CEO, CFO and COO can be found on the Company's website at www.SouthGobi.com.

Orientation and Continuing Education

The Company takes steps to ensure that prospective Directors fully understand the role of the Board and its Committees and the contribution individual Directors are expected to make, including, in particular, the commitment of time and energy that the Company expects. New Directors are provided with a director orientation as well as a comprehensive information package, including pertinent corporate documents and a Director's manual containing information on the duties, responsibilities and liabilities of Directors. New Directors are also briefed by management as to the status of the Company's business and are encouraged to visit the Company's properties.

All Directors have received or will receive a briefing on the duties, responsibilities and liabilities of Directors, including the statutory duty of Directors to act honestly and in good faith with a view to the best interests of the Company when exercising the powers and performing the functions of Directors. In particular, the briefing focuses on the Directors' obligations to provide objective oversight of the Company on behalf of all shareholders notwithstanding other prior or current relationships. In the event the Board must consider a matter which involves a potential or actual conflict, such matter will be referred to the independent Directors for consideration to ensure that a proper process is followed and the matter is subject to independent scrutiny.

Management and outside advisors provide information and education sessions to the Board and its Committees on a continuing basis as necessary to keep the Directors up-to-date with the Company, its business and the environment in which it operates as well as with developments in the responsibilities of Directors. Presentations are made to the Directors from time to time to educate and keep them informed of changes within the Company and of regulatory and industry requirements and standards.

As a means of facilitating continuing education opportunities for Directors, all Directors are members of, or in the process of becoming a member of, the Canadian Institute of Corporate Directors and have the opportunity to attend courses relevant to the Company and its business, particularly with respect to corporate governance and the mining industry, at the Company's expense.

Ethical Business Conduct

The Company's current practices are reviewed and updated regularly to ensure that the latest developments in corporate governance are followed and observed.

In 2012, the Company adopted and implemented a revised Code of Business Conduct and Ethics (the "Ethics Policy") called "The Way We Work". The Ethics Policy is applicable to all employees, consultants, officers and Directors regardless of their position in the organization, at all times and everywhere the Company does business.

In addition to "The Way We Work ", the Company has also adopted additional guidance notes and standards which form part of the Company's overall Code of Conduct Standards. Included in the Code of Conduct Standards are the following policies and standards: the Anti-Corruption Standard and the Conflicts of Interest Standard, "The Way We Work" and Guidelines for the investigation into allegations of serious wrongdoing and the EthicsPoint program.

EthicsPoint is the Company's whistleblowing service which is administered by an independent third party provider. EthicsPoint provides an avenue for the Company's personnel to raise concerns confidentially and anonymously and it is available for use should someone suspect or is aware of any illegal, unsafe or inappropriate activity at work. Information regarding EthicsPoint is available on the Company's website (www.southgobi.com).

The Ethics Policy and the Code of Conduct Standards provide that the Company's employees, consultants, officers and Directors will uphold its commitment to a culture of honesty, integrity and accountability and that the Company requires the highest standards of professional and ethical conduct from its employees, consultants, officers and Directors. A copy of the Ethics Policy entitled "The Way We Work" and the various policies forming the Code of Conduct Standards are available on the Company's website (www.southgobi.com) and may be obtained, without charge, by request to SouthGobi Resources Ltd. at its registered and records office in Canada, 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783.

The Nominating and Governance Committee monitors compliance with the Code of Conduct Standards and is responsible for establishing systems to verify compliance with legal, regulatory, corporate governance and disclosure requirements.

On April 30, 2019, the Special Committee, with the assistance of the Forensic Accountant (as hereinafter defined), completed its assessment of potential remedial actions and preventative measures to improve and strengthen the Company's commitment to a culture of honesty, integrity and accountability and compliance with the highest standards of professional and ethical conduct and delivered its report setting out a set of recommended Remedial Actions and Preventative Measures (as hereinafter defined) to the Board, which was approved at a meeting held on April 28, 2019. The Remedial Actions and Preventative Measures were intended to remediate the incidents identified in the Formal Investigation (as hereinafter defined) and address deficiencies in the implementation of the Company's practices and procedures. Issues identified of note for the purposes of such remediation include a lack of preventative measures to avoid conflicts of interests, the need for additional employee oversight and the need to enhance compliance with accounting protocols and documentation retention. For a summary of the Remedial Actions and Preventative Measures which were adopted and approved by the Board and the actions that the Company has taken to implement the Remedial Actions and Preventative Measures, please see the section entitled "Corporate Governance - Other Board Committees - Ad Hoc/ Special Committees – Formal Investigation" of this Management Proxy Circular.

Board Diversity Policy

The Company believes that a diverse board will enhance the decision making of the Board by utilizing the difference in skills, experience and background, geographical and industry experience, ethnicity, gender, knowledge and length of services, and other distinguishing qualities of the members of the Board. In support of this belief, the Board adopted a Board Diversity Policy in March 2014 and approved the adoption of certain amendments to the Board Diversity Policy in November 2017.

All Board appointments will continue to be based on merit, having due regard to the overall effectiveness of the Board and diversity will be one of the criteria considered in determining the optimum composition of the Board. A copy of the Board Diversity Policy is available on the Company's website at www.SouthGobi.com and may be obtained, without charge, by request to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783.

Representation of Women on the Board and in Executive Officer Positions

The Company supports the principle of diversity in its leadership, of which gender is an important aspect, but has not formally adopted a policy or targets regarding the representation of women on the Board of Directors or in its senior management, as it does not believe that quotas or strict rules necessarily result in the identification or selection of the best candidates. Instead, the identification and selection process takes into consideration a variety of factors, including differences of viewpoint, professional experience, education, skill, and other individual qualities and attributes, including race, gender and national origin, as well as the requirements of the Board of Directors and senior executive management at the time.

The Board currently consists of six (6) men and two (2) women, Mses. Ku and Quan, representing 25% of the total number of Directors.

Ms. Jin Lan Quan joined the Board as of August 6, 2015, the Audit Committee on September 1, 2015, the Nominating and Corporate Governance Committee on December 14, 2015, the Compensation Committee on June 30, 2016 and the Special Committee on November 16, 2017. Ms. Quan has extensive experience in financial consulting services with specialist skills in external auditing, internal audit structuring, corporate financing, risk management and business acquisition.

Ms. Ka Lee Ku joined the Board as of December 9, 2020. Ms. Ku has extensive experience in the management and finance sectors. She is responsible for sourcing and execution of private and secondary market transactions in excess of \$10 billion in assets at the Hong Kong office of Cinda HK.

In addition, Ms. Allison Snetsinger is the Company's Corporate Secretary and has over 15 years of experience providing regulatory and corporate services to public and private companies, primarily in mining and resource development.

The senior executive management of the Company currently consists of four (4) men and one (1) woman, Ms. Snetsinger, representing 20% of the total number of senior executives.

Shareholder Communication Policy

During the financial year, the Board of Directors reviewed and approved the adoption of the Shareholder Communication Policy. The Shareholder Communication Policy sets out the general policy and measures adopted by the Company in respect of its communication with Shareholders, both individual and institutional, and, when appropriate, potential investors and analysts who report on and analyze the Company's performance (collectively, the "investment community"), with the objective that all of them will be provided with complete, equal, and timely information about the Company (including its financial performance, strategic goals and plans, material business developments, corporate governance, risk profile and other material information) in order to enable shareholders to make an informed decision with respect to their shares and other securities of the Company and to allow the investment community to engage in constructive dialogue with the Company.

A copy of the Shareholder Communication Policy is available on the Company's website at www.SouthGobi.com and may be obtained, without charge, by request to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783.

Nomination of Directors

The Board maintains a Nominating and Governance Committee that currently consists of Messrs. He, Sun and Ms. Quan, all of whom are INED. Mr. He is Chair of the Nominating and Governance Committee. If management's nominees set forth herein are elected or re-elected, as applicable at the Meeting, it is expected that the Nominating and Governance Committee will continue to be composed solely of INED.

One of the primary responsibilities of the Nominating and Governance Committee is the identification of new candidates for Board nomination. Typically, the Board determines, based on the Company's objectives and strategies and the perceived risks it faces, the competencies, skills, experience and personal qualities it considers necessary or desirable in potential Director candidates. The Nominating and Governance Committee then takes responsibility for identifying potential candidates who possess some or all of these attributes for presentation to, and assessment by, the Board. The Nominating and Governance Committee is also responsible for assessing, on a periodic basis, the performance of individual Directors and the Board as a whole.

The Nominating and Governance Committee's responsibilities are outlined in the Committee's Charter. Those responsibilities include, but are not limited to:

examining the structure, size and diversity (including but not limited to the skills, knowledge, experience, gender, age, cultural and educational background, ethnicity, professional experience and length of service) of the Board and recommending adjustments from time to time, and at least annually, to ensure that the Board is of a size and composition that facilitates effective decision making and complements the Company's strategy;
identifying and assessing the necessary and desirable competencies and characteristics for Board membership and regularly assessing the extent to which those competencies and characteristics are represented on the Board;
identifying individuals qualified to become Directors based on merit and against objective criteria, with due regard to the Board's diversity policy;
recommending Director nominees to the Board for appointment, re-appointment or election;
making recommendations to the Board with respect to membership on committees of the Board (other than the Nominating and Governance Committee);
making recommendations with respect to potential successors to the CEO;
ensuring that the Board has appropriate structures and procedures so that the Board can function with the proper degree of independence from management;
assessing the independence of INEDs;
establishing induction programs for new Directors;
developing and maintaining continuing education programs for Directors; and
reviewing the practices and procedures of the Board in light of ongoing developments in regulatory requirements and industry best practices in matters of corporate governance and recommending to the Board any changes considered necessary or desirable.

The Board determines, in light of the opportunities and risks facing the Company, what competencies, skills and personal qualities it should seek in new Board members in order to add value to the Company. The Nominating and Governance Committee believes that the Board should be comprised of directors with a broad range of experience and expertise and utilizes a skills matrix to identify those areas which are necessary for the Board to carry out its mandate effectively. The following table reflects the diverse skill set requirements of the Board and identifies the specific experience and expertise brought by each individual Director nominee.

Director	Governance Corporate	Mining Industry	General Business Management	Compensation/ Resources man Hu	Finance	Audit	Mongolia	Public Company	China	Mining Expertise
Jianmin Bao									
Zhiwei Chen									
Dalanguerban										
Yingbin Ian He										
Ben Niu										
Jin Lan Quan									
Mao Sun									
Ka Lee Ku									

The Nominating and Governance Committee annually assesses the current competencies and characteristics represented on the Board and utilizes the matrix to determine the Board's strengths and identifies any gaps that need to be filled. This analysis assists the Nominating and Governance Committee in discharging its responsibility for approaching and proposing to the full Board new nominees to the Board, and for assessing Directors on an ongoing basis.

If required, the Nominating and Governance Committee has the authority to hire outside consultants to help to identify additional qualified Board candidates.

A copy of the Nominating and Governance Committee's Charter may be obtained upon request to: SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783, or on the Company's website at www.SouthGobi.com.

Director Term Limits and Other Mechanisms of Board Renewal

Each Director holds office until the next annual meeting of the Shareholders or until his or her successor is elected or appointed. The Board does not believe it should establish term limits. While the Board acknowledges the benefit of fresh ideas and viewpoints, it encourages alternative means of ensuring Board renewal as opposed to the imposition of arbitrary thresholds given the value of the contribution of Directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole.

Assessments

The Nominating and Governance Committee has the responsibility for developing and recommending to the Board, and overseeing the execution of, a process for assessing the effectiveness of the Board as a whole, the committees of the Board and the contribution of individual Directors on a regular basis. The Nominating and Governance Committee has developed an assessment process for the Board, each of its committees, and peer assessments of each of the Directors.

The Nominating and Governance Committee has, on an annual basis, reviewed and approved a performance evaluation questionnaire forwarded to all of the members of the Board. This questionnaire covers a wide range of issues providing for quantitative ratings and subjective comments and recommendations in each area. In 2019, all Directors assessed the performance of the Board as a whole and its Committees. These evaluations showed that the Board, its Committees, the Committee Chairs, the Lead Director and individual Directors were fulfilling their responsibilities.

Mandate of the Board

Under the BCBCA, Directors are required to manage the Company's business and affairs, and in doing so to act honestly and in good faith with a view to the best interests of the Company. In addition, each Director must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The Board is responsible for supervising the conduct of the Company's affairs and the management of its business. The Directors' mandate includes setting long term goals and objectives for the Company, formulating the plans and strategies necessary to achieve those objectives and supervising senior management in their implementation. Although the Board delegates the responsibility for managing the day to day affairs of the Company to senior management personnel, the Board retains a supervisory role in respect of, and ultimate responsibility for, all matters relating to the Company and its business.

The Board's mandate requires that it be satisfied that the Company's senior management will manage the affairs of the Company in the best interest of the shareholders, in accordance with the Company's principles, and that the arrangements made for the management of the Company's business and affairs are consistent with their duties described above. The Board is responsible for protecting shareholder interests and ensuring that the incentives of the shareholders and of management are aligned. The obligations of the Board must be performed continuously, and not merely from time to time, and in times of crisis or emergency the Board may have to assume a more direct role in managing the affairs of the Company.

In discharging its responsibilities, the Board's mandate provides that it oversees and monitors significant corporate plans and strategic initiatives. The Board's strategic planning process includes annual and quarterly budget reviews and approvals, and discussions with management relating to strategic and budgetary issues. At least one (1) Board meeting per year is devoted to a comprehensive review of strategic corporate plans proposed by management.

As part of its ongoing review of business operations, the Board periodically reviews the principal risks inherent in the Company's business, including financial risks, through periodic reports from management of such risks, and assesses the systems established to manage those risks. Directly and through the Audit Committee, the Board also assesses the integrity of internal controls over financial reporting and management information systems.

In addition to those matters that must, by law, be approved by the Board, the Board is required under its mandate to approve annual operating and capital budgets, any material dispositions, acquisitions and investments outside of the ordinary course of business or not provided for in the approved budgets, long-term strategy, organizational development plans and the appointment of senior executive officers. Management is authorized to act, without Board approval, on all ordinary course matters relating to the Company's business.

The mandate provides that the Board also expects management to provide the Directors, on a timely basis, with information concerning the business and affairs of the Company, including financial and operating information and information concerning industry developments as they occur, all with a view to enabling the Board to discharge its stewardship obligations effectively. The Board expects management to implement its strategic plans for the Company efficiently, to keep the Board fully apprised of its progress in doing so and to be fully accountable to the Board in respect to all matters for which it has been assigned responsibility.

The Board has instructed management to maintain procedures to monitor and promptly address shareholder concerns and has directed and will continue to direct management to apprise the Board of any major concerns expressed by shareholders.

Each Committee of the Board is empowered to engage external advisors as it sees fit. Any individual Director is entitled to engage an outside advisor at the expense of the Company provided such Director has obtained the approval of the Nominating and Governance Committee to do so.

In order to ensure that the principal business risks borne by the Company are identified and appropriately managed, the Board receives periodic reports from management of the Company's assessment and management of such risks. With respect to the Board's review of operations, the Board considers risk issues when appropriate and approves corporate policies addressing the management of risk with respect to the Company's business.

A copy of the Board Mandate may be obtained upon request to: SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783, or on the Company's website at www.SouthGobi.com.

Meetings of the Board

The Board holds regular and quarterly meetings. Between the quarterly meetings, the Board meets as required, generally by means of telephone conferencing facilities. As part of the annual and quarterly meetings, the INEDs also have the opportunity to meet separate from management. If required, between regularly scheduled Board meetings, meetings of the INED, chaired by the Lead Director, are held by teleconference to update the Directors on corporate developments since the last Board meeting. Management also communicates informally with members of the Board on a regular basis and solicits the advice of Board members on matters falling within their special knowledge or experience.

Not all meetings of INED are regularly scheduled but communication among this group occurs on an ongoing basis as needs arise between regularly scheduled meetings of the Board. No

scheduled meetings of the INED took place during the fiscal year that commenced on January 1, 2019. The Board believes that adequate structures and processes are in place to facilitate the functioning of the Board with a level of independence from the Company's management.

The complete text of the Board's mandate, including a list of specific responsibilities, is available on the Company's website at www.SouthGobi.com.

AUDIT COMMITTEE

The Board maintains an Audit Committee consisting of three (3) INED, being Messrs. He, Sun and Ms. Quan. Mr. Sun is the Chair of the Audit Committee. All of the members of the Audit Committee are independent, in accordance with the independence requirements of NI 52-110. If management's nominees set forth herein are elected or re-elected, as applicable at the Meeting, it is expected that the Audit Committee will continue to be composed solely of independent Directors.

Each member of the Audit Committee is "financially literate" within the meaning of NI 52-110.

For more information on the Audit Committee, please refer to the Company's AIF, in the section titled "Audit Committee Information". A copy of the AIF is available under the Company's profile on SEDAR at www.sedar.com.

NOMINATING AND GOVERNANCE COMMITTEE

For information on the Nominating and Governance Committee, please refer to the section titled "Nomination of Directors" in this Management Proxy Circular.

COMPENSATION AND BENEFITS COMMITTEE

The Board has established the Compensation Committee and it is composed exclusively of INED, being Messrs. He, Sun and Ms. Quan. Ms. Quan is the Chair of the Compensation Committee.

To encourage an objective nomination process, the Board has appointed all of the independent Board members to the Compensation Committee. If management's nominees set forth herein are elected or re-elected, as applicable at the Meeting, it is expected that the Compensation Committee will be composed solely of independent Directors.

The members of the Compensation Committee have diverse professional backgrounds, with prior experience in executive compensation. Mr. He is a mining professional with over 30 years of Board and senior executive experience in the mining industry. Mr. Sun is a founding partner of a private accounting firm and Ms. Quan is a former partner of an international accounting firm in Sydney, Australia. Given that the Compensation Committee is independent; this encourages an objective process for determining compensation.

The Compensation Committee has responsibility for recommending compensation for the Company's Directors and senior executive officers to the Board. See "Statement of Executive Compensation" in this Management Proxy Circular.

For further information respecting the Compensation Committees' policies and decisions, please see the section titled "Compensation Discussion and Analysis" in this Management Proxy Circular.

A copy of the Compensation Committee's Charter may be obtained upon request from the Company by mail addressed to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604-762-6783, or on the Company's website at www.SouthGobi.com.

OTHER BOARD COMMITTEES

HEALTH, ENVIRONMENT, SAFETY AND SOCIAL RESPONSIBILITY COMMITTEE

The Company's HESS Committee consists of three (3) members, including two (2) Directors and one (1) member of senior management, namely Messrs. Dalanguerban, He and Aiming Guo, the Company's COO. Mr. Dalanguerban joined the HESS Committee on March 31, 2020 and was appointed Chair at that time. Mr. Shougao Wang ceased to be the Chair and HESS Committee member on March 31, 2020.

The primary objective of the HESS Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by monitoring and reviewing performance, and recommending for approval policies and management systems, with respect to health, environmental, safety and social responsibility related matters affecting the Company.

A copy of the HESS Committee's Charter may be obtained upon request from the Company by mail addressed to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604- 762-6783, or on the Company's website at www.SouthGobi.com.

OPERATIONS COMMITTEE

The Board of Directors approved the formation of the Operations Committee on July 14, 2020. The Operations Committee is composed of three (3) Directors namely, Messrs. Dalanguerban, He and Niu. Mr. He is the Chair of the Operations Committee.

The primary objective of the Operations Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with respect to mine operations and product marketing.

A copy of the Operations Committee's Charter may be obtained upon request from the Company by mail addressed to SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, or by phone to 604- 762-6783, or on the Company's website at www.SouthGobi.com.

Ad Hoc/Special Committees

In appropriate circumstances, the Board may establish a special committee to review a matter in which certain Directors or management may have a conflict of interest.

Formal Investigation

In December 2018, after becoming aware of certain information relating to past conduct engaged in by former senior executive officers and employees of the Company ("Former Management and Employees") which raised suspicions of serious fraud, misappropriation of Company assets and other criminal acts by the Former Management and Employees relating to prior transactions ("Suspicious Transactions") between 2016 and the first half of 2018 involving the Company, a certain Mongolian subsidiary of the Company and certain coal trading and transportation

companies, some of which are allegedly related to or controlled by the Former Management and Employees or their related persons, the Board expanded the Special Committee to include a formal investigation (the "Formal Investigation") of the Suspicious Transactions, the implicated Former Management and Employees, and their impact, if any, on the business and affairs of the Company implicated Former Management and Employees, and their impact, if any, on the business and affairs of the Company. The Special Committee engaged Blake, Cassels & Graydon LLP as independent Canadian legal counsel, and Ernst & Young (China) Advisory Limited (the "Forensic Accountant"), as forensic accountants, to assist in the Formal Investigation. The Special Committee and the Forensic Accountant jointly engaged Zhong Lun Law Firm, as independent Chinese legal counsel.

On March 30, 2019, the Company announced that the Special Committee concluded the Formal Investigation and delivered a final report summarizing its key findings to the Board, which was adopted and approved at a meeting held on March 30, 2019. Please refer to the Company's MD&A for the three months ended March 31, 2019 for a summary of the key findings of the Formal Investigation, a copy of which is available under the Company's profile on SEDAR at www.sedar.com.

Based on the key findings of and information obtained from the Formal Investigation, the Company considered the resulting financial impact on its prior financial statements and restated certain items in the Company's financial statements for the years ended December 31, 2016 and December 31, 2017 (the "Prior Restatement"), as disclosed in the Company's audited annual consolidated financial statements and related management's discussion and analysis for the year ended December 31, 2018, copies of which are available under the Company's profile on SEDAR at www.sedar.com. The Prior Restatement reflects the impact of the misappropriation of assets as well as the reclassification of certain balances of assets in the prior years

Remedial Actions and Preventative Measures

On April 30, 2019, the Company announced that the Special Committee, with the assistance of the Forensic Accountant, completed its assessment of the potential remedial actions and preventative measures to improve and strengthen the Company's commitment to a culture of honesty, integrity and accountability and compliance with the highest standards of professional and ethical conduct. The Special Committee delivered its report setting out a set of recommended remedial actions and preventative measures (the "Remedial Actions and Preventative Measures") to the Board which was approved at a meeting of the Board held on April 28, 2019. Please refer to the Company's MD&A for the three months ended March 31, 2019 for a summary of the Remedial Actions and Preventative Measures which were adopted and approved by the Board and the actions that the Company has taken to implement the Remedial Actions and Preventative Measures, a copy of which is available under the Company's profile on SEDAR at www.sedar.com.

ADDITIONAL INFORMATION

Additional information relating to the Company is available under the Company's profile on SEDAR at www.sedar.com. Shareholders may contact the Company's Corporate Secretary by phone at: 604-762-6783 or by mail at: SouthGobi Resources Ltd., 20th floor – 250 Howe Street, Vancouver, British Columbia, Canada V6C 3R8, for the attention of the Corporate Secretary, to request copies of the Company's AIF, Annual Report, Financial Statements and Management's Discussion & Analysis, without charge.

Financial information for the Company's most recently completed financial year is provided in its comparative financial statements and MD&A which are filed under the Company's profile on SEDAR at www.sedar.com and available on the Company's website at www.SouthGobi.com.

DIRECTORS' APPROVAL

The contents of this Management Proxy Circular and its distribution to shareholders have been approved by the Board.

DATED at Vancouver, British Columbia, this 9 th day of December, 2020.

BY ORDER OF THE BOARD OF DIRECTORS

"Allison Snetsinger"

Allison Snetsinger Corporate Secretary Schedule "A"

Reporting Package

SOUTHGOBI RESOURCES LTD.

Change of Auditor Notice

TO: PricewaterhouseCoopers LLP
AND TO: BDO Limited
AND TO: British Columbia Securities Commission Alberta Securities Commission Financial and Consumer Affairs Authority of Saskatchewan The Manitoba Securities Commission Ontario Securities Commission Autorité des Marchés Financiers Financial and Consumer Services Commission (New Brunswick) Nova Scotia Securities Commission The Office of the Superintendent Securities (Prince Edward Island) Office of the Superintendent of Securities (Newfoundland and Labrador)

In accordance with Section 4.11 of National Instrument 51-102 - Continuous Disclosure Obligations ("NI 51-102"), SouthGobi Resources Ltd. (the "Company") hereby gives notice and confirms that:

1. effective as of November 13, 2019, PricewaterhouseCoopers LLP (the "Former Auditor") resigned at its own initiative as auditor of the Company;
1. effective on the resignation of the Former Auditor, BDO Limited (the "Successor Auditor") was appointed as the successor auditor of the Company, to hold office commencing as of November 13, 2019 until the close of the next annual general meeting of the Company;
1. the audit committee of the Company has considered the resignation of the Former Auditor as the Company's auditor and recommended the appointment of the Successor Auditor as the Company's auditor;
1. the resignation of the Former Auditor as the Company's auditor was accepted, and the appointment of the Successor Auditor as the Company's auditor was approved, by the Board of Directors of the Company;
1. the Former Auditor has not expressed any modified opinion in its audit reports for the period commencing at the beginning of the Company's two most recent financial years and ending on the date of the Former Auditor's resignation; and
1. there is no "reportable event" (as such term is defined in NI 51-102) in connection with the change of auditor.

DATED the 13th day of November, 2019.

SOUTHGOBI RESOURCES LTD.

Per: "Weiguo Zhang"

Name: Weiguo Zhang Title: Chief Financial Officer

November 13, 2019

To:

British Columbia Securities Commission Alberta Securities Commission Financial and Consumer Affairs Authority of Saskatchewan The Manitoba Securities Commission Ontario Securities Commission Autorité des marchés financiers (Québec) Financial and Consumer Services Commission (New Brunswick) Nova Scotia Securities Commission Office of the Superintendent of Securities, Service Newfoundland & Labrador Office of the Superintendent of Securities, Government of Prince Edward Island

We have read the statements made by SouthGobi Resources Ltd. in the attached copy of change of auditor notice dated November 13, 2019, which we understand will be filed pursuant to Section 4.11 of National Instrument 51-102.

We agree with the statements in the change of auditor notice dated November 13, 2019.

Yours very truly,

Chartered Professional Accountants

AI assistant

SouthGobi Resources Ltd. — Proxy Solicitation & Information Statement 2020

45340_rns_2020-12-17_2b76ece9-70de-49fb-a3fb-638f1c1e5ccb.pdf

SouthGobi Resources Ltd.

OF SHAREHOLDERS

MANAGEMENT PROXY CIRCULAR

TAKE ACTION AND VOTE TODAY

SOUTHGOBI RESOURCES LTD.

Notice of the annual and special meeting of Shareholders to be held on Thursday, January 21, 2021

Caution regarding COVID-19

Voting

Approvals to Hold 2020 Annual General Meeting in 2021

SHAREHOLDERS ARE REMINDED TO REVIEW THE MANAGEMENT PROXY CIRCULAR CAREFULLY BEFORE EXERCISING THEIR RIGHT TO VOTE.

BY ORDER OF THE BOARD OF DIRECTORS OF SOUTHGOBI RESOURCES LTD.

Telephone: 604-762-6783

MANAGEMENT PROXY CIRCULAR

Caution regarding COVID-19

SOLICITATION OF PROXIES

The enclosed Form of Proxy is solicited by and on behalf of management of the Company.

VOTING OF PROXIES

The Company does not intend to pay for Intermediaries to forward to OBOs the proxyrelated materials under NI 54-101 and Form 54-101F7 – Request for Voting Instructions Made by Intermediary and OBOs will not receive the Meeting Materials unless the OBO's Intermediary assumes the cost of delivery.

APPOINTMENT AND REVOCATION OF PROXIES

APPROVALS TO HOLD 2020 ANNUAL GENERAL MEETING IN 2021

VOTING SHARES AND RECORD DATE

Voting Shares

Record Date

VOTES NECESSARY TO PASS RESOLUTIONS

PRINCIPAL HOLDERS OF VOTING SHARES

ELECTION OF DIRECTORS

Fixing the Number of Directors

Term of Office

Majority Voting Policy

Contractual Director Nomination Rights

Novel Sunrise

CIC

Director Nominees

Dalanguerban

Jianmin Bao

Zhiwei Chen

Yingbin Ian He

Principal Occupation, Business or Employment (1)

Ka Lee Ku

Ben Niu

Director Since: May 2019

Jin Lan Quan

Mao Sun

Principal Occupation, Business or Employment (1)

Summary of Board and Committee Meetings Held

Independent Non-Executive Directors

BOARD OF DIRECTORS

Directors and Officers Insurance

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

APPOINTMENT OF AUDITORS

Pre-Approval Policies and Procedures

APPROVAL OF NOVEMBER 2020 DEFERRAL AGREEMENT

Background to the November 2020 Deferral Agreement

Convertible Debenture and Cooperation Agreement

June 2017 Deferral Agreement

2019 Deferral Agreement and Amended and Restated Cooperation Agreement

Events in 2020

November 2020 Deferral Agreement

Effectiveness of the November 2020 Deferral Agreement

Deferral

Covenants

Events of Default

Reasons and Benefits for the November 2020 Deferral Agreement

Canadian Securities Law Matters

Requirements under Multilateral Instrument 61-101

Shareholder Approval Pursuant to TSX Requirements

Voting on the November 2020 Deferral Agreement Resolution

"BE IT RESOLVED THAT:

OTHER BUSINESS

STATEMENT OF EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Overview for 2019

Compensation and Benefits Committee

Outside Consultants and Peer Comparator Group

Compensation and Benefits Philosophy and Goals

How We Make Compensation Decisions

Management of Risk

SouthGobi Resources Ltd. Proxy Solicitation & Information Statement 2020