---

Mitsubishi and SGI International Negotiating Joint Venture

6 July 1998

Mitsubishi Corporation and SGI International Negotiating Letter of Intent

    LA JOLLA, Calif.,  July 6 -- SGI International,
(OTC Bulletin Board: SGII).  Mitsubishi Corporation and SGI International are
negotiating a Letter of Intent, which will call for, among other things,
forming a joint venture to market and license the Liquids from Coal ("LFC")
Technology worldwide.  The LFC Technology is a patented process which upgrades
low-rank coal.
    Joseph A. Savoca, Chairman/CEO of SGI stated: "I expect a Letter of Intent
to be executed in the near future, which will establish the framework for a
joint venture that will accelerate commercialization of the LFC Technology.
We expect this joint venture will result in meeting capital needs and will
provide that Mitsubishi assume the costs of development, coal derived liquid
("CDL") upgrading, as well as international marketing of the LFC Process and
its products through its worldwide marketing network.  The parties to the
joint venture will share the costs of further technology development, and in
the United States will market the LFC process and its products and continue to
pursue the development of commercial LFC projects.  SGI will bear the expense
of its laboratory efforts in upgrading CDL into higher value chemical products
and will seek additional strategic partners from the utility, coal mining,
transportation and chemical industries."
    Savoca further noted:  "I believe this joint venture with Mitsubishi will
open doors to a number of other business opportunities.  This is the first of
a number of strategic steps being taken by SGI, which includes continuing to
negotiate with Zeigler to acquire its ENCOAL demonstration plant and its other
LFC assets."
    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.)