Kochang Project Approved by South Gyeonsang Province

18 December 2019

Kochang Project ‘Permit to Develop’ Approved by South Gyeonsang Province

• JV Partner, Bluebird Merchant Ventures has reported it has secured approval to mine
• Approval is subject to several conditions largely related to mine development requirements

Southern Gold Ltd (Southern Gold) has been advised by its Joint Venture partner, London listed Bluebird Merchant Ventures Ltd (‘Bluebird’,, that it has received confirmation that the Permit to Develop for the Kochang Gold Mine has been approved by the South Gyeonsang Provincial Government. Mine development in South Korea is formally approved through a process run by the provincial government.

The approval is subject to several conditions largely in relation to physical development requirements regarding safety and environmental management.

Bluebird will now present this approval document to the local County government prior to initiating any site works, for which County government approval is required. From a practical point of view, the approval is now in hand and allows for the next stage of development works to begin, subject to presentation of these activities to local community members.

Southern Gold and Bluebird each hold a 50% equity interest in Singaporean company Kochang Project JV Co Ltd which in turn holds 100% of South Korean company Geochang Project Co Ltd which holds the Kochang gold development project. Joint Venture costs are currently shared 50/50 while Bluebird is responsible for day to day operations.

Because the proposed development at Kochang is essentially the re-opening of an historical mine with substantial underground workings already in place, the next stage of work at Kochang will entail very modest capital costs, with Bluebird current estimate being US$2.2m, of which Southern Gold 50% share is US$1.1m, to achieve first gold production. Southern Gold is currently exploring various funding options that will be non-dilutive to current shareholders.

Note that the Bluebird development proposal is not based on any Resources or Reserves defined in accordance with the JORC Code 2012 and as such Southern Gold does not provide estimates of gold production levels, operating costs or estimated cash flows at this stage of development.

Kochang Project ‘Permit to Develop’ Approved by South Gyeonsang Province