SouthGobi Resources Ltd said the proposed
sale of the Tsagaan Tolgoi thermal coal project in Mongolia to
Australian-listed Modun Resources Ltd has been cancelled.

The Mongolia-focused coal miner said it was
evaluating options for the deposit, which remained non-core to its operations.
The deal value was estimated at $30 million.

SouthGobi owns large coal projects close to
China, which has a huge demand for energy and minerals.

Aluminum Corp of China Ltd, better known as
Chalco, announced a $926 million bid for a controlling interest in SouthGobi in
April.

SouthGobi faced political opposition within
Mongolia, which is growing wary about China”s increasing presence in its mining
sector. The company recently said it expects Chalco to drop the takeover offer.

SouthGobi shares closed at C$3.00 on the
Toronto Stock Exchange on Tuesday.

Aug 29 (Reuters)