Southern Gold : Cannon Gold Mine Underground Development

Southern Gold's Cannon gold mine in WA to proceed to underground phase

A New Deal with Westgold

Australian gold producer, Southern Gold Ltd, has announced a new agreement with development partner, Westgold Resources Ltd ('Westgold', ASX code 'WGX') for the underground development phase at Southern Gold's Cannon gold mine, near Kalgoorlie, WA (Figure 1, next page). The features of the agreement comprise:

· Westgold to have a 5 year right-to-mine over a defined 1km radius on mining license M25/333 which essentially covers the Cannon Gold deposit (see Figure 2, next page) with Westgold assuming all financing and operating risk;

· Westgold will have the right and flexibility to devise its own mine plan;

· In exchange for this right to mine, Westgold will pay Southern Gold $1.5 million within 5 business days and a production payment on a $/troy oz of gold produced as follows:

• Southern Gold Managing Director, Mr Simon Mitchell: 'Southern Gold has turned a cash consuming asset into a cash generating one. And it has done so in alignment with Southern Gold's development philosophy of bringing in third parties who know how to mine and manage risk, particularly the elevated risks of underground mining. This deal with Westgold should generate cash for Southern Gold based on the high grade gold resource at Cannon which stands at 24kozAu at 5.2g/t gold in the Indicated and Inferred categories. The arrangement also ensures Southern Gold remains significantly exposed to the upside should the deposit continue at depth.'
  
• To read the complete announcement please download the pdf below:

  Cannon Underground Development