Southern Gold receives third $2M profit share distribution from Cannon gold mine

THE BOURSE WHISPERER: Southern Gold (ASX: SAU) has received payment of the third profit share distribution from the company’s operating Cannon open-pit gold mine near Kalgoorlie in Western Australia.

Southern Gold explained the Cannon gold mine operations committee resolved to pay $4 million in distributions: $2 million to the company with the processing plant, Westgold Resources (ASX: WGX) and $2 million to Southern Gold.

This takes total payments so far to Southern Gold from the Cannon mine to $5.5 million.

Westgold is managing operations at the Cannon gold mine and processing Cannon ore at the South Kalgoorlie Operations Jubilee plant.

Southern Gold it intends directing approximately $1 million of this distribution to the repayment of the Convertible Debt Facility, after which the company shall be debt free.

Southern Gold’s seventh processing campaign of Cannon ore has just been completed and the eighth is currently projected to commence during March 2017, however, the exact start date is yet to be confirmed.

“Assuming the mine is taken to completion, Southern Gold expects to receive further distributions during the period to 30 June 2017 of approximately $10 million under the base case (assuming $1600 per ounce gold price and 90 per cent recovery),” Southern Gold said I its ASX announcement.

“The exact timing and quantum of distributions will be optimised over the coming month with final mine plans being designed to take account of ‘goodbye cuts’ and the extraction of higher grade gold ore while also managing geotechnical issues.”