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ASX Release Monday 12 December 2016

ASX Code: SAU

Multiple gold-silver mineralised quartz vein zones

identified at Weolyu, South Korea Three major epithermal quartz vein zones have been identified at

Weolyu South, one linking up to previously reported artisanal workings.

Vertical and lateral extent of mineralisation exposed at surface at

Weolyu is over hundreds of metres, significantly lifting prospectivity.

Vein textures demonstrate that Weolyu South is a classic example of

high-level, low-sulphidation epithermal veining.

New surface rock chip samples returned high grade gold and silver,

with peak assay results 8.41g/t Au and 200g/t Ag in sample KRS202027.

Recent Work Confirms Quality of Weolyu South Drill Target

Southern Gold provides the following update to work undertaken at the Weolyu

gold project, approximately 175km south east of Seoul in South Korea (Figure 1).

An expert consultant in volcanic rocks and epithermal systems completed an initial

program of detailed field work. Three major quartz vein zones, Moonlight, Mystery

and Summit Vein Zones, have been mapped at Weolyu South that range between

0.6m to 1.3m true width (Photo 1), within a broad zone of variably developed

sheeted to network quartz veins (Figure 2). The vertical and lateral extents of

mineralisation at Weolyu are over hundreds of metres within a broader alteration

footprint, indicating significant continuity and scale (Figure 3).

Rock slabs cut from surface samples display these classic high-level low-sulidation

epithermal vein textures (see Plate 1, page 5). Surface rock chip peak assay results

include 8.41 g/t Au & 200 g/t Ag in sample KRS202027 (see Table 1). The tenor of

results for this surface programme is typical of a high level epithermal system.

Photo 1: Moonlight Vein, Weolyu South.

Southern Gold Ltd’s Managing Director, Mr Simon Mitchell: “Weolyu South continues to excite the geological and

corporate team at Southern Gold. It has all the hallmarks of a significant discovery unfolding: multiple quartz vein

zones with a complex history of mineralisation, extensive wall rock alteration, including across the broader district,

and mineralisation being confirmed by surface rock samples at outcrop scale as well as nearby silver-gold-germanium

mining in the early 1990’s proving that the area has demonstrated economic outcomes in the past. We expect the

geological and economic picture at Weolyu South to move forward very quickly during the course of 2017.”

Shares Issued: 46.4m

Directors

Greg Boulton AM (Chairman)

Simon Mitchell (MD)

Michael Billing

David Turvey

Head Office

Southern Gold Ltd

Level 1, 8 Beulah Rd

Norwood SA 5067

Telephone: (08) 8368 8888

Facsimile: (08) 8363 0697

[email protected]

www.southerngold.com.au

ABN: 30 107 424 519

Postal Address

Southern Gold Ltd

PO Box 255

Kent Town SA 5071

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http://www.southerngold.com.au/

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Figure 1: Weolyu Project Location in central South Korea, ca.175km south east of Seoul.

Table 1: Significant results (>2g/t Au Eq.) Weolyu South surface rock chip samples (Note: Ge results pending)

See highlighted samples as photographed rock slabs in Plate 1.

Sample ID Easting Northing Au (g/t) Ag (g/t) Au Eq. (g/t)*

KRS202008 400340 4009703 1.52 120 3.23

KRS202019 400282 4009773 2.52 84.8 3.73

KRS202020 400243 4009828 4.15 180 6.72

KRS202022 400243 4009828 6.12 170 8.55

KRS202023 400243 4009828 3.74 81.3 4.90

KRS202024 400243 4009828 4.57 110 6.14

KRS202025 400243 4009828 0.06 200 2.92

KRS202026 400243 4009828 5.06 150 7.20

KRS202027 400243 4009828 8.41 200 11.27

KRS202028 400243 4009828 3.27 120 4.98

KRS202040 400294 4009876 1.52 62.5 2.41

KRS202042 400297 4009876 1.65 69.1 2.64

KRS202043 400282 4009905 2.37 150 4.51

KRS202044 400284 4009911 2.12 150 4.26

KRS202045 400327 4009861 3.22 140 5.22

KRS202047 400326 4009877 1.55 67.9 2.52 *Au equivalent using 1:70 Au:Ag ratio based on Bulliondesk 5/12/16 Au/ Ag price of US$1177/oz /US$16.75 respectively.

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Figure 2: Weolyu Project simplified geology map with surface rock sample locations and summary results.

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Figure 3: Weolyu Project stylised long section highlighting degree of vertical and horizontal relief from

mineralised high level epithermal quartz veins and historic Ag-Ge mining to the North.

The veins identified at Weolyu South are characterised by polyphasal quartz-sulfide textures, typified by

complex colloform quartz-adularia-sulfide-silver sulfosalt banding and quartz sulphide re-healed hydraulic

brecciation, with common quartz pseudomorphs after bladed calcite. This is indicative of extensive boiling

and confirms Weolyu South as an excellent target for potentially economic gold-silver mineralisation,

possibly commencing at or near surface.

The potential exists for significantly elevated grades at lower relative elevations, and the amount of vertical

relief (Figure 3) indicates the degree of erosion is muted at Weolyu South compared to the north. This

implies significant potential exists to discover elevated gold and silver grades at depth at the critical boiling

zones.

Weolyu Project Background

The Weolyu Project is an historic underground mine that exploited epithermal style silver-gold-germanium

mineralisation on several structures. The bulk of historical mining occurred on the north side of the river,

referred to as Weolyu North (see Figure 2). The south side of the river is referred to as Weolyu South, and is

some 200m or more higher in elevation than Weolyu North (Figure 3). Drill testing of Weolyu North as well

as reconnaissance work on Weolyu South was conducted late in 2015 by Asiatic Gold Ltd and an

identification of classic high-level low-sulfidation epithermal quartz veining renewed a push to further

investigate this southern area, including Southern Gold’s employment of experienced cavers to confirm in-

situ veining below surface in historic adits (ASX Release ‘Korean Projects Update’ 10 August 2016).

The new work outlined in today’s announcement has built upon these earlier observations and has

significantly progressed the Weolyu Project to drill-ready status. For example, one of the mapped vein

systems aligns well with the vein identified by the professional cavers mentioned above. The new

observations and assay results further support and confirm the initial discovery by Southern Gold geologists

that Weolyu South represents high-level, low-sulfidation epithermal veining with significant upside potential.

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Plate 1: Weolyu South Rock Slabs from recent detailed mapping and sampling programme

Photo 1. KRS202008: 1.5g/t Au, 120g/t Ag

15cm wide polyphasal vein float, comprised of hydraulic rip-up

breccias and crude mesocrystalline to chalcedonic quartz colloform band development.


Polyphasal hydraulic vein breccia & colloform-banded vein comprised of white mesocrystalline quartz with grey-black

sulfidic inter-bands and wispy fills.


Polyphasal, crudely banded mesocrystalline grey-white quartz vein with localised ghosted quartz pseudomorphs after bladed

calcite & wisps of bluish-grey sulfides & sulfosalts.


Polyphasal hydraulic vein breccia with rip-up vein fragments and a central black sulfidic band comprised of fine-grained

pyrite & sulfosalts.


Hydraulic quartz vein and rhyolite host rock breccia,

pervasively flooded by mesocrystalline quartz and fine-grained pyrite. Highly oxidised with ubiquitous limonite after pyrite.


Slip fragment from Mystery Vein Zone, comprised of

colloform-banded, sulfide-bearing hydraulic vein breccia.

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Next Steps

Progress is being made to open up the old artisanal mine at Weolyu South so that safe access can be gained

to the veining. This will enable access to the underground site and confirm both the tenor of the

mineralisation and more importantly, the structural orientation of the vein to ensure accurate drill targeting

from 3D modelling. Southern Gold aims to do this over the Korean winter season (December to February).

Assuming safe access can be gained, another round of technical assessment by the geological expert will be

conducted in conjunction with the Company’s first drill programme at Weolyu South, currently scheduled for

after winter next year. A circa 2,000m programme of diamond drilling is planned and drilling contractors are

currently being engaged for the programme.Initial first pass mapping of the broader area has highlighted

significant district scale alteration, particularly on the north-east trend paralleling the major peninsular wide

Yeongdong fault system. This fault is a major partition between the younger Cretaceous sediments and

volcaniclastic rocks to the north-west and the older Precambrian gneiss to the south-east. Because of the

district scale prospectivity, Southern Gold has made new applications for tenure along this trend (Figure 4).

Figure 4: Weolyu Project Tenure: J15/66 and J15/67 are granted mining tenements 100% held by Southern

Gold under the pre-2011 tenure system. Southern Gold has made applications for additional tenements

shown in purple (post 2011 a new tenement grid system was implemented, hence the gap between the two,

a gap that cannot be applied for by any third party).

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Southern Gold Limited: Company Profile

Southern Gold Ltd is a successful gold explorer and producer listed on the Australian Securities Exchange (under ASX ticker

“SAU”). The Company’s main focus is its Bulong Gold Project located 30 km east of the world renowned gold district of Kalgoorlie

(WA) with the flagship Cannon Gold Mine projected to produce around 50koz gold.

Mining at Cannon is now well advanced with Westgold Resources Ltd (a gold spin-out from Metals X Ltd) financing and

developing the deposit under a 50/50 profit share arrangement. Westgold Resources is responsible for all mining, haulage and

processing activities (ASX announcement 11/11/2014) with this mandate recently expanded to incorporate the commercial

terms of a larger open pit development (ASX announcement 3/11/2015).

In addition to its cornerstone position in Kalgoorlie, Southern Gold has recently acquired a portfolio of high grade gold projects

in South Korea. These projects are a mix of decommissioned gold mines with orogenic gold mineralisation and greenfield

epithermal gold targets such as Weolyu South. The aim is to move one or more of the orogenic gold mines into production in

the medium term as well as test for world-class epithermal gold deposits.

Competent Person’s Statements

The information in this report that relates to Exploration Results has been compiled under the supervision of Dr Chris Bowden

(FAusIMM(CP)). Dr Bowden, who is an employee of Southern Gold Limited and a Fellow and Chartered Professional of The

Australasian Institute of Mining and Metallurgy, has sufficient experience which is relevant to the style of mineralisation and

type of deposit under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the

2012 Edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Bowden

consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Cannon Mineral Resources is based on information compiled by Mr Ian Blucher

(MAusIMM). Mr Blucher is an employee of Southern Gold Limited and has sufficient experience that is relevant to the style of

mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as

defined in the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC, 2012).

Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it

appears.

Forward-looking statements

Some statements in this release regarding estimates or future events are forward looking statements. These may include,

without limitation:

Estimates of future cash flows, the sensitivity of cash flows to metal prices and foreign exchange rate movements;

Estimates of future metal production; and

Estimates of the resource base and statements regarding future exploration results.

Such forward looking statements are based on a number of estimates and assumptions made by the Company and its

consultants in light of experience, current conditions and expectations of future developments which the Company believes are

appropriate in the current circumstances. Such statements are expressed in good faith and believed to have a reasonable

basis. However the estimates are subject to known and unknown risks and uncertainties that could cause actual results to

differ materially from estimated results.

All reasonable efforts have been made to provide accurate information, but the Company does not undertake any obligation to

release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of this

presentation, except as may be required under applicable laws. Recipients should make their own enquiries in relation to any

investment decisions from a licensed investment advisor.

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data (Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation Commentary

Sampling techniques

Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc.). These examples should not be taken as limiting the broad meaning of sampling.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

Aspects of the determination of mineralisation that are Material to the Public Report.

In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases, more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.

Sample sites were chosen selectively to reflect geological features relevant to the style of mineralisation.

All samples were double bagged (plastic inner with ticket book tag, calico outer), bags both labeled with sample number, and recorded in a hard-copy sample register and digital database.

All samples were sent to MAS laboratories in Thailand for further preparation and assay. MAS is an ISO/IEC 17025:2005 certified laboratory.

Drilling techniques

Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc.).

Not applicable.

Drill sample recovery

Method of recording and assessing core and chip sample recoveries and results assessed.

Measures taken to maximise sample recovery and ensure representative nature of the samples.

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

Not applicable.

Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc.) photography.

The total length and percentage of the relevant intersections logged.

All samples were geologically described.

Interpretive hard-copy mapping was undertaken using tape and compass and GPS, to a level suitable to produce maps at a scale of 1:2,000.

Sample descriptions were recorded in hardcopy and later transposed into Company digital excel templates, and then imported into the Company’s database.

Sub-sampling techniques

If core, whether cut or sawn and whether quarter, half or all core taken.

If non-core, whether riffled, tube sampled, rotary split,

Sawn slaps of selected samples were prepared for later reference.

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and sample preparation

etc. and whether sampled wet or dry.

For all sample types, the nature, quality and appropriateness of the sample preparation technique.

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

Whether sample sizes are appropriate to the grain size of the material being sampled.

Sample size ranged from 0.95 kg to 4.1 kg (2.2 kg average).

Sample size is considered appropriate for the style of mineralisation sought.

Internal laboratory standards used.

Quality of assay data and laboratory tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

All samples were sent to MAS laboratories in Thailand for further preparation and assay. MAS is an ISO/IEC 17025:2005 certified laboratory.

Samples were dried and pulverized to 90% passing 150 mesh.

Gold was analysed by fire assay using a 50g charge with atomic absorption spectroscopy finish. Detection limit range is 0.01ppm to 100ppm Au.

A 23 multi-element suite was undertaken via aqua regia leach and ICP-ES finish.

Silver was analysed as part of the multi-element aqua-regia digest ICP-MS method up to 100ppm Ag.

All silver assays reporting greater than initial upper limit of detection were re-assayed by a four-acid digest and AAS finish with a detection range of 100 ppm to 20,000 ppm (2%) Ag.

The nature of the laboratory preparation and assay sampling techniques are considered appropriate.

Given the nature of the rock sampling, internal lab standards were considered appropriate for reconnaissance rock samples.

No data from geophysical tools were used to determine analytical results.

Verification of sampling and assaying

The verification of significant intersections by either independent or alternative company personnel.

The use of twinned holes.

Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

Discuss any adjustment to assay data.

Samples returning significant gold and silver values were visually inspected and verified by the Competent Person (Dr. Chris Bowden), as well as alternative company personnel.

No drilling was undertaken as part of this program.

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Geological descriptions of samples are initially recorded in hardcopy and later transposed into Company Microsoft Excel templates, and then imported into the Company’s database under validation and verification rules. Failures are sent back to the responsible geologist for correction and re-submission.

Sample weights are recorded in a hardcopy sample register and imported into the Company database.

All original hardcopy logs and sample ticket-book stubs are kept for reference.

Assay data is imported into the Company database from original lab files via automated queries, thus minimizing error in tagging samples with results.

The Company database is a custom MS Access database managed by a data administrator. The database is hosted on an off-site server, and is mirrored daily providing on- and off-site backups.

No adjustments are made to the assay data.

Location of data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Specification of the grid system used.

Quality and adequacy of topographic control.

Sample field location data is initially obtained by tape and compass plus GPS.

The grid system used is Universal Transverse Mercator (WGS84), Zone 52 Northern Hemisphere.

Data spacing and distribution

Data spacing for reporting of Exploration Results.

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

Whether sample compositing has been applied.

No Mineral Resource has been estimated.

No sample compositing has been applied.

Orientation of data in relation to geological structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

Sampling was undertaken to prepare a map of lithological boundaries and structural trends. The sampling undertaken targeted all rock types present in outcrop or in mullock dumps.

Sample security

The measures taken to ensure sample security. From the point of sample generation to courier pickup and delivery to the laboratory, samples are under the full security and custody of the

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Company. This is done by the following procedures:

Samples are securely locked overnight on-site in a secure facility. Post on-site logging and processing, samples are transported to the Company’s long-term storage facility under the direct supervision of a Company representative. Samples are securely locked at the long term storage. Samples requiring further processing, e.g. slabbing for photography is under the supervision of the Competent Person. Bagged samples are secured by tags and delivered by a Company representative to a courier service to deliver to the laboratory. The laboratory reports if any tampering is evident (none to date).

Audits or reviews

The results of any audits or reviews of sampling techniques and data.

No audits or reviews have been undertaken.

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Section 2 Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section.)


Mineral tenement and land tenure status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a license to operate in the area.

The portfolio of tenements is held by Southern Gold Korea, a fully owned subsidiary of Southern Gold (see Figure 4). And can be seen in previous ASX release on 8th of July 2016.

There are no material issues with third parties.

There are no known impediments to obtaining a license to operate.

Exploration done by other parties

Acknowledgment and appraisal of exploration by other parties.

The Weolyu mine, located 0.5 km to 1 km to the north operated up to mid-1990’s. Apart from small scale adits excavated by unknown parties, no other details of previous work in the vicinity is known to the best of our knowledge.

Geology Deposit type, geological setting and style of mineralisation. Exploration is targeting epithermal precious metal (Au, Ag) in Cretaceous volcanic rocks of the Korean Peninsula.

Drill hole Information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level – elevation above sea

level in meters) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length.

If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

A summary of exploration results and associated grades is shown in Table 1 of this release.

Data aggregation methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.

Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

The assumptions used for any reporting of metal equivalent values should be clearly stated.

No data aggregation methods have been used.

Gold metal equivalent values shown in Table 1 of this release have been calculated as a 1:70 (Au:Ag) ratio based on the Bulliondesk price data as of 5/12/2016.

Relationship between

These relationships are particularly important in the reporting of Exploration Results.

Not applicable.

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mineralisation widths and intercept lengths

If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).

Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

Appropriate tables and diagrams have been included.

Balanced reporting

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

Not all sample assay data has been included in this report as it is not considered material.

Other substantive exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

All relevant observations have been noted in the release.

Further work The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large-scale step-out drilling).

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

Southern Gold is reviewing the data to determine the best way to advance the projects, and will notify such plans once confirmed.

Southern Gold intends to complete substantial surface mapping and sampling, underground mapping and sampling (where access can be made safe) and substantial drilling both from surface and in some cases underground.

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for personal use only - australian securities exchange · asx release monday 12 december 2016 asx...

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