Last year was another year of change for SouthGobi, with a number of improvements delivered by the management team throughout the course of the year amid challenging market conditions.Message From the ChairmanKay PriestlyChairman of the Board, Non- Executive Director14000484-02-Chairman E 1st Proof 2014-03-22 07:03 Translation: 75 P.4SouthGobi Resources Ltd. Annual Report 2013Message From the ChairmanFollowing the board and management changes in 2012, the Company undertook a comprehensive strategic review of the business, which resulted in a specifically designed program to return SouthGobi to sustainable and profitable long-term operations. A key component of the program was a safe, cost effective and sustainable restart of operations at the Ovoot Tolgoi Mine which recommenced on March 22, 2013. The Company produced 3.06 million tonnes of coal to meet total sales of 3.26 million tonnes during 2013. Since operations have recommenced at the mine in March 2013 there have been no lost time injuries recorded and I would like to take this opportunity to commend the management team on this important achievement.One of the key objectives for the Board for 2013 was to ensure the Company had a senior management team in place to support Ross Tromans, President & CEO, in driving improved business performance. The Company welcomed Bertrand Troiano in April 2013 as Chief Financial Officer of SouthGobi Resources. Bertrand spent the last 13 years in finance roles in the mining and metals industry, most recently as Finance Director for Rio Tinto Alcans Business Development, Major Projects and Technology group.In July, our Mongolian subsidiary SouthGobi Sands LLC welcomed Enkh-Amgalan Sengee as the new President and Executive Director. Enkh-Amgalan is a seasoned executive with extensive management skills and in-depth knowledge of the Mongolian mining and energy industries. Also in July we have announced that one of our non-executive directors and member of the Mergers and Acquisition Committee, Brett Salt, would resign from the Board and be appointed as Chief Commercial Officer. Brett brings onboard extensive experience in a variety of senior Rio Tinto commercial roles including General Manager Business Development for Rio Tinto and Chief Financial Officer of the Rio Tinto Marine business.The Board is confident that the additions we made to SouthGobis senior management team during 2013 provide a broad set of complementary skills which will strengthen the company.We have also further strengthened our collective Board experience by appointing Bold Baatar, currently President, International Operations of Rio Tinto Copper group, to the SouthGobi Board in September 2013. Prior to joining Rio Tinto, Mr. Baatar was CEO of Golden East LLC, a gold exploration and mining company in Mongolia. He also held senior-level investment banking positions with JP Morgan in London, Moscow and New York, where he acquired extensive experience in leveraged buyouts and mergers and acquisitions.Two of our current directors Sean Hinton and Lindsay Dove will not be standing for re-election at the Companys 2014 annual meeting of shareholders. I would like to personally thank Sean and Lindsay for their valuable service to the company.The Board of Directors will continue to ensure the Company complies with the best practice in all aspects of corporate governance, and will serve the best interest of the Company.Despite continuing coal market weakness, I still believe that the Companys fundamentals remain strong in the long run. SouthGobis Ovoot Tolgoi Mine is strategically positioned next to China, the worlds largest coal consumer. Furthermore, the Companys access to critical infrastructure, flexible product offering and large resource base underpin SouthGobis competitive strengths.This year will involve consolidating and building on the first improvements made as part of the program focused on laying the foundation for sustainable long- term operations that capture SouthGobis competitive advantages.On behalf of the Board of Directors, I would like to thank all SouthGobi staff for their dedication and hard work during this difficult year. I am also very grateful to the Directors for the invaluable advice and assistance and to all our customers and you our shareholders for your unwavering support.Kay Priestly Chairman of the Board, Non-Executive Director514000484-02-Chairman E 1st Proof 2014-03-22 09:03 Translation: 75 P.5