Announcement

Cannon Mine - 7th Gold Processing Campaign

08 March 2017
  • 14,257oz gold produced from WA mine in January and February
  • Recovery continues to be well ahead of forecast at 90.67%

January - February 2017 Processing Campaign

Gold producer, Southern Gold Ltd (‘Southern Gold’) is pleased to report the results of the seventh processing campaign of ore treated during January and February 2017 (Table 1) from the Company’s Cannon Gold Mine southeast of Kalgoorlie in WA which is being managed by Westgold Resources Ltd (‘Westgold’, ASX Code “WGX”).

When the results of this campaign are added to the six previous campaigns, total gold produced at Cannon now stands at 44,576 oz. gold, or approximately 81% of the gold estimated to be recovered under the current base case (~55koz). Recovery continues to be excellent and above the original forecast of 86.4% with the seventh campaign achieving 90.67%.

The Next Processing Campaign and Mining Update

The eighth processing campaign of approximately 40,000t of Cannon gold ore is anticipated to commence towards the end of March and extend into April. The final ninth processing campaign from the open-pit is currently scheduled for June.

Although not impacting the above processing schedule, substantial rain since the start of the year coupled with the ongoing management of geotechnical issues has impacted mining production. A number of final mine designs to enable the geotechnical issues to be managed are currently being evaluated. One such scenario involves the construction of a redeveloped northern access ramp combined with the development of underground access. This underground access may provide a drill platform for testing of extensions to the Cannon ore body.

Managing Director’s Comment

Southern Gold’s Managing Director, Mr Simon Mitchell: “The seventh processing campaign was a substantial one for us, providing a window to sell gold into the current spot price north of A$1,600/oz. Our recently announced hedge at A$1,621/oz covers a portion of production yet to come. The Cannon proceeds account is now well in the black, providing Southern Gold with optionality on various final mine designs, including the potential to develop underground access that will enable the drilling of Cannon extensions at depth. These deliverables are providing significant upside and reward for our shareholders over 2017.