SOUTHERNGOLD Compelling Value in a Unique Gold Explorer ASX Ticker: SAU
Disclaimer Forward-looking statements The information in this presentation is published to inform you about Southern Gold Limited ( Southern Gold ) and its activities. Some statements in this presentation 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 and increasing the company s resource base 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 me be required under applicable laws. Recipients should make their own enquiries in relation to any investment decisions from a licensed investment advisor. Competent Person s statements The information in this report that relates to Exploration Results has been compiled under the supervision of Mr. Justin Gum (MAIG). Mr Gum who is an employee of Southern Gold Limited and a Member of the Australasian Institute of Geoscientist, 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 Mineral Resources and Ore Reserves. Mr Gum 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 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 Mineral Resources has been compiled under the supervision of Mr Paul Androvic (MAusIMM). Mr Androvic, who is an employee of Southern Gold Limited and a member 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. ). Mr Androvic consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. 2
Compelling? How many gold exploration companies with market capitalisation of $12 million have. Cash flow $4.5m cash in the bank 1 operating mine 2 mines being developed Multiple kilometre scale mineralised systems under active exploration <50m shares Paid a 3/c per share special dividend 3
Unique? South Korea Gubong and Kochang Au Mines Bluebird Merchant Ventures as operators Gubong Gold Mine historic underground workings draped on Google Earth image, centre field of view approximately 1.5km wide Epithermal Au-Ag targets of exploration Kalgoorlie, WA Cannon Au Mine Westgold Resources Ltd as operators Conceptual Underground with block model, Cannon Gold Mine, Kalgoorlie, WA Cash generation underpinning the organic funding model 4
Corporate Strategy Search for Tier 1 gold deposits, organically funded Tier 1 = large, long life, low cos deposits Net Present Value > $1 billion Turn assets into cash, keeping a tight capital structure Develop mine operations in JV with expertise Cannon Westgold Resources (in Australia) Gubong/ Kochang Bluebird Merchant Ventures (in South Korea) 5
Southern Gold: a Blue Chip Explorer Good People Good Ground Funding Capital Structure Shareholder Return Tier 1 Potential 6
Good People Board Greg Boulton, Chairman Simon Mitchell, Managing Director David Turvey, Non-Executive Director Mick Billing, Non-Executive Director Peter Bamford, Non-Executive Director Dan Hill, Company Secretary Technical Key Managerial Doug Kirwin, Technical Advisor Paul Androvic, General Manager Exploration and Development Chris Bowden, Exploration Manager, Korea Justin Gum, Principal Geologist, Australia Ray Ridge, CFO Joseph Lee, Country Manager, Korea 7
Good Ground Kalgoorlie, 46 tenements, 262km 2 South Korea, 44 graticules, 120km 2 8
South Korea: an incredible jurisdiction Think North Asia, not SE Asia Zero royalty, tax rate 24.2% Government funding possible Ubiquitous infrastructure Significant manufacturing base Population 50 million Surface area 50% size of Victoria 9
Funding, Capital Structure, Business Model Number of ordinary shares on issue 49.15m Staff and Director Options ~6.04m Total Fully Diluted Shares 55.19m Share price (20 February 2018) A$0.24 Market capitalisation (undiluted) A$11.8m Cash (31 January 2018) A$4.5m Enterprise value A$7.3m Special Dividend Paid (August 2017) 3c/share unfranked = 12% pre tax return. Taken as either as cash or 25c shares under Dividend Reinvestment Plan. Cash cost to the company = $1m or 7% of Cannon open pit net profit. 10
The Organic Funding Model: Cannon Au Mine Open Pit: ~95koz Au Resource ~52koz Au recovered ~A$13.7m Profit to Southern Underground JORC Resource: Category Level mrl Tonnes Grade g/t Ounces Total Indicated 170 -> 240 121,600 5.68 22,170 Total Inferred 145 -> 240 20,700 2.21 1,470 Total Resource 145 -> 240 142,200 5.18 23,640 Westgold Resources Ltd (WGX) purchased 5 year right to mine for $1.5m WGX to pay $160/oz for the first 15koz and $180/oz thereafter +$30/oz if Au price >A$1800/oz Underground mining phase commenced 11
Organic Funding: Merchant Ventures Colin Patterson: 40+ years, ex Apex (Philippines), Olympus Pacific (Vietnam), Emperor Mines (Fiji) Charles Barclay: 25+ years, ex Olympus Pacific (Vietnam), Highlands Pacific (PNG), Vatukoula (Fiji) Farm in and 50/50 JV on Gubong, Kochang and Taechang Historic Mines Fast track mine restart for capex <US$10m (or US$5m each max) Development scenario report Q2 2018 with full feasibility & construction Q4 2019 Bluebird to invest total of US$1.5m across all 3 projects in farm in phase Bluebird (or associates) to invest A$0.75m into Southern Gold at $0.386/share or A$0.25m/project advanced to feasibility. 12
Gubong Historical mine maps 7km north-south trend 9 veins identified 13
Gubong 14
Kochang 15
Epithermal Targets: Weolyu Hole ID From (m) Interval (m) Au (g/t) Ag (g/t) Target WUDD005 169.94 8.54 0.22 3.57 Summit Vein Zone WUDD006 222.40 2.47 2.36 37.64 Summit Vein Zone including: 222.40 0.70 3.19 64.60 Summit Vein Zone 231.40 0.30 21.10 49.10 Summit Vein Zone WUDD007 152.90 3.58 4.80 129.10 Moonlight Vein Zone 165.70 0.92 13.55 447.38 Moonlight Vein Zone including: 166.10 0.30 35.00 1,110.0 Moonlight Vein Zone Line_ID from interval Au g/t Ag g/t Target FS310N_001 0.65 0.55 8.36 184 Moonlight/Surprise Zone FS310N_002 0.40 0.70 17.70 469 Moonlight/Surprise Zone FS310N_004 0.20 1.00 5.06 229 Moonlight/Surprise Zone FS310N_019 1.28 0.34 12.91 285 Moonlight/Surprise Zone including 1.28 0.18 17.40 323 Moonlight/Surprise Zone FS310N_020 1.28 0.09 10.60 272 Moonlight/Surprise Zone FS310S_001 1.00 0.45 11.00 161 Moonlight/Surprise Zone FS320N_001 1.10 0.67 7.62 284 Moonlight/Surprise Zone FS330N_001 0.90 0.50 9.26 503 Moonlight/Surprise Zone FS330N_011 0.70 0.40 5.11 137 Moonlight/Surprise Zone FS330S_001 0.10 0.60 8.04 502 Moonlight/Surprise Zone including 0.10 0.30 11.60 770 Moonlight/Surprise Zone KRS202116 16
Weolyu: Underground sampling KRS202116 17
Epithermal2: Hampyeong A Cha Vein Outcrop 5m 4m Saseun Vein Outcrop KRS202116 18
With an EV < $8m : Compelling Value Underground gold mine at Cannon generating cash flow Potential underground gold mines at Gubong and Kochang, South Korea Multiple kilometre scale epithermal Au-Ag systems being actively explored: Weolyu Hampyeong Project Generation (Kirwin database) Very tight capital structure Premium placements: 2 in the last 3 years, 35c and 38.6c per share Monetisation of assets and savvy M&A 19
Research and Contacts ERA, Keith Goode, April 2017 (price target >$0.40/share) http://www.eagleres.com.au/reports/item/apr-2017-southern-gold-ltd Simon Mitchell Managing Director +61 8 8368 8888 info@southerngold.com.au www.southerngold.com.au Level 1, 8 Beulah Road Norwood, SA 5065 PO Box 255 Kent Town SA 5071 20