Third profit share distribution of $2 million received from Cannon gold mine, WA

28 February 2017
  • Third profit share distribution of $2 million received
  • A total of $5.5 million of profit share distributions has now been received by Southern Gold from the Cannon mine
  • Debt free after repayment of Convertible Debt Facility
  • Additional distributions expected over the coming months

Further $2 Million Profit Share Distribution Received

The Directors of Southern Gold Ltd (‘Southern Gold’) are very pleased to advise the payment to the Company of the third profit share distribution from the operating Cannon open-pit gold mine near Kalgoorlie in Western Australia. The Cannon gold mine operations committee resolved to pay $4 million in distributions, or $2 million to each of Westgold Resources Ltd (‘Westgold’, ASX Code “WGX”) and 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 approximately 35km to the south west of Cannon.

Debt Free Status on full repayment of Convertible Debt Facility

Southern Gold will direct approximately $1 million of this distribution to the repayment of the Convertible Debt Facility (See ASX Release 1 April 2016) over the next few days. After this repayment, Southern Gold will be debt free.

Status of Processing Campaigns and Further Distributions

The seventh processing campaign of Cannon ore commenced on the 7th January 2017 and continued until the 22nd February 2017. Detailed and complete figures from this campaign will be released shortly. The eighth processing campaign is currently projected to commence during March 2017 but 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 A$1600/oz gold price and 90% recovery).

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. While details are yet to be determined, Southern Gold is confident that this final mine plan will deliver further excellent outcomes for our shareholders.