- Cannon Gold Mine profit share of $1.5 million received
- $1.2 million of this distribution applied to Westgold debt facility
- The Westgold debt facility is now fully repaid
- Further significant cash distributions expected in coming months
$1.5 Million Profit Share Distribution Paid
The Directors of gold producer, Southern Gold Ltd (‘Southern Gold’, ASX Code “SAU”) are very pleased to advise the payment to the Company of a second profit share distribution from the Cannon Gold Mine 30km east of Kalgoorlie in WA’s Eastern Goldfields. The Cannon Gold Mine Operations Committee resolved to pay a total of $3 million in distributions, or $1.5 million to each of Westgold Resources Ltd (‘Westgold’, ASX Code “WGX”, formally Metals X Ltd) and Southern Gold.
Westgold is managing operations at the Cannon gold mine and processing the ore at the South Kalgoorlie Operations Jubilee plant 35km to the south west of Cannon, under a 50:50 profit sharing arrangement with Southern Gold.
Southern Gold has applied $1.2 million of the latest $1.5 million distribution to the repayment of the working capital debt facility provided by Westgold which is now fully repaid. The remainder of this second distribution will be received as cash.
The Current Gold Ore Processing Campaign and Further Cash Distributions
As outlined in the ASX release of 28 December 2016, which announced the maiden profit share distribution to Southern Gold, the seventh processing campaign of Cannon ore commenced on the 7 January and will continue to 23 February 2017.
It is expected that further significant cash distributions as per previous guidance will be paid by the Cannon operation to Southern Gold over the next 4-6 months.
Due to delays caused by geotechnical issues and inclement weather, mining at Cannon will continue until the end of February or March. Final mine designs for the last phase of the operation are being completed, including the potential for a ‘goodbye cut’. This creates some variability in the exact timing and quantum of future profit share distributions but the macro picture remains one of significant cash flow to Southern Gold over the course of the first half of this year.
Southern Gold Managing Director, Simon Mitchell: “Having fully paid off the Westgold debt facility from the proceeds of just our first two profit share payments, Southern Gold is now seeing the direct benefits of being a true gold producer: significant cash flow over the next few months. This puts the company into a unique class in the junior gold space and one with a very compelling economic return for its shareholders.”