Southern Gold Exploring Gangnam Style in South Korea
THE INSIDE STORY: Southern Gold (ASX: SAU) may not sit alongside its grander gold producing cousins, but it has developed a model that is paying off.
Southern Gold is producing gold from the company’s Cannon open pit mine, located east of Kalgoorlie in Western Australia.
The mine is managed by Westgold Resources (ASX: WGX) with ore treated at Westgold’s South Kalgoorlie Operations (SKO) Jubilee plant, in a profit share arrangement, with both parties entitled to 50 per cent of the profits.
Southern Gold recently completed its sixth processing campaign from Cannon taking the total gold produced at the mine to 30,320 ounces of gold, resulting in the company becoming cash flow positive, enabling it to make payment of project distributions.
“Cannon has developed into being a significant cash injection, probably somewhere north of $12 million, and we will be able to survive on the financing from the mine for quite a few years to come,” Southern Gold managing director Simon Mitchell told The Resources Roadhouse.
“Once the money is in, we will be able to consider our options moving forward, which includes the possibility of paying a special, modest, return to shareholders.
“We’re now making good money from the Cannon open pit, so it would be good to be able to return some of that to shareholders who have stuck with us through thick and thin.”
With Cannon paying its way, Southern Gold is considering the next project in its portfolio for development.
Most favoured is the Glandore project, a Farm-in and Joint Venture with Aruma Exploration, covering approximately 28.7 square kilometres of highly-prospective exploration terrain consisting of 14 tenements, situated on the south¬western shore of Lake Yindarlgooda, east of Kalgoorlie.
Previous exploration by Aruma and earlier explorers identified several zones of near surface mineralisation plus other targets, including potentially economic gold intersections, which have not received detailed economic evaluation.
“Glandore probably has the most potential to be moved forward in the near term,” Mitchell said.
“That’s because a lot of historical drilling been done and we can already see the outline of an orebody, it’s just that it is all pre-JORC code.
“We’ll get in there and do some technical work and advance the project to the point where we can approach somebody in the region with the intention of striking a Cannon-style deal.”
Southern Gold’s portfolio has an international reach with substantial orogenic gold projects in South Korea.
Growing in importance is the Weolyu project, in particular, Weolyu South where three major quartz vein zones, Moonlight, Mystery and Summit, have been mapped ranging between 0.6m to 1.3m true width, within a broad zone of variably developed sheeted to network quartz veins.
In an innovative approach, Southern Gold engaged cave explorers to access the underground area at Weolyu South and confirmed the presence of epithermal quartz veins in situ in the walls of the drive.
Southern Gold believes potential exists to discover elevated gold and silver grades at depth and is currently making inroads to opening this existing artisanal mine so safe access can be gained to the veining for company geologists.
This will enable confirmation of both the tenor of the mineralisation and more importantly, structural orientation of the vein to ensure accurate drill targeting from 3D modelling.
“Weolyu South is a very technically-driven story, however any geologist worth their salt would look at the results we are getting and recognise it is a very exciting project and something that could potentially be quite substantial,” Mitchell said.
Southern Gold’s South Korean exploration includes the Kochang project, located southeast of the capital Seoul.
Recent drilling by Government-backed Korean Resources Corporation (KORES) confirmed the main mineralised structure at Kochang is near surface and open down dip and along strike.
“There are opportunities at Gubong, Taechang and Kochang projects to reopen the decommissioned gold mines and get them back into operation quickly,” Mitchell said.
“There is a large amount of underground development already in place, so we won’t need to spend millions of dollars in new underground development making the projects much less capital intensive, which is important for an aggressively growing junior company.”
Southern Gold Ltd (ASX: SAU)
… The Short Story
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Email: info@southerngold.com.au
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DIRECTORS
Greg Boulton, Simon Mitchell, Michael Billing, David Turvey