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Mitsubishi Corporation and SGI International Joint Venture

13 August 1998

Mitsubishi Corporation and SGI International Sign Letter of Intent To Form Joint Venture

    LA JOLLA, Calif., Aug. 13 -- SGI International, August 13,
1998 (OTC Bulletin Board: SGII).  On August 6, 1998, Mitsubishi Corporation
and SGI International executed a Letter of Intent to form a joint venture.
The Letter of Intent provides for the formation of a Company (the "Company")
to be owned equally by Mitsubishi and SGI.  Mitsubishi and SGI will share in
the costs of this Company.  The Company's primary objective will be developing
LFC projects in the Powder River Basin and further developing and marketing
the LFC technology and its products.  The LFC technology is a patented process
which upgrades low-rank coal and produces coal liquids that contain valuable
hydrocarbon chemicals.
    SGI will provide personnel for engineering, technology and product
marketing in the United States and LFC project development.  In addition, SGI
will develop strategic relationships (including U. S. Government agencies),
and refine the CDL upgrading process in its laboratory.
    Mitsubishi will provide engineering to further improve the LFC technology,
to reduce the cost of LFC plant equipment (including Mitsubishi's proprietary
circular grate), to improve the CDL upgrading process, and will market the
technology and products outside the United States.  SGI will continue to own
the LFC patents and intellectual property until the occurrence of certain
milestones.  At that time, the parties will convert the Company into an
operating entity, and SGI will transfer the LFC patents to that entity for an
agreed-upon payment.
    Joseph A. Savoca, Chairman/CEO of SGI stated:  "This joint venture with
Mitsubishi will partner SGI with one of the largest corporations in the world.
I believe this alliance has the necessary elements to successfully deploy the
LFC technology.  The joint venture intends to apply for new patents for LFC
process improvements developed by Mitsubishi and SGI in order to increase
their competitive advantages.  Both SGI and Mitsubishi intend to aggressively
seek additional partners from the utility, coal mining, transportation and
chemical industries to strengthen the financial resources devoted to
commercializing the LFC technology."

    SGI International's core business is developing, commercializing and
licensing new energy technologies.  Its corporate headquarters are in La
Jolla, California.

    (This news release contains forward-looking statements.  Actual results
could vary from those expected due to a variety of risk factors, including,
but not limited to, the uncertainty of successful completion of contemplated
or proposed business transactions.)