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Southern Gold focuses on South Korean gold development prospects

Southern Gold and its partner Bluebird Merchant Ventures are looking to develop gold project ventures in South Korea.
gold key
A government committee is expected to look at a development permit application this quarter
  • South Korea is Southern Gold’s focus as the company looks to develop gold assets with London-listed Bluebird Merchant Ventures

  • The South Australian company is following a sales process for three Western Australian Goldfields assets with PCF Capital

  • Southern Gold’s rights issue for investors closes later this month

What does Southern Gold do?

Southern Gold Limited (ASX:SAU) is an explorer and developer focused on its assets in South Korea which include two priority projects the South Australian company holds with its London-listed joint venture partner Bluebird Merchant Ventures Ltd (LON:BMV).

Stepney-based Southern Gold is focused on a series of Korean projects and plans to develop its South Korea Development BMV JV assets, the Kochang and Gubong gold projects, with Bluebird’s help then prioritise its other projects in the Asian country.

Southern Gold also holds a number of assets in Australia it is looking to sell in order to fund development and exploration in South Korea.

The company has been raising up to $2.5 million from shareholders to pursue project developments and execute its Korean strategy.

Under the rights issue investors can pick up 1 new share priced at 11 cents each for every 3 shares held.

Southern Gold’s new shares come up 1 free-attaching option for every 2 new shares picked up on under the offer expected to close on July 18, 2019.

The company is headed up Simon Mitchell, a senior geologist and financial modeller with more than 27 years energy and resources and banking industry experience.

Mitchell has led Southern Gold as its managing director for more than four years, previously captaining Asiatic Gold as its MD and working as a metals and mining director at Commonwealth Bank of Australia after stints as a geologist at a number of companies.

What does Southern Gold own in South Korea?

Southern Gold’s key asset is the potentially company-making large Gubong Gold Project and the smaller Kochang Gold Project.

Development-focused Southern Gold and its partner Bluebird both hold 50-50 joint stakes in the gold projects through two project-specific JV companies, with the London company acting as manager for the JVs.

London-listed Bluebird has previously targeted this year as being for first gold production in the underexplored Asian nation.

Last Friday, Southern Gold confirmed a South Korean central government panel would consider its Gubong project development permit application in August 2019 after the JV cleared a local government authority assessment stage.

The high-grade Gubong project is housed in the entity Gubong Project JV Co Ltd.

A regional trend at the high-grade project is more than 5 kilometres long, and an exploration target range is 1.2-2.3 million tonnes grading 6-8 g/t gold containing 230,000-580,000 ounces of gold.

The target range relates to a small part of the project site, Vein No 6 at Gubong South.

Kochang project has previously been viewed as the nearer-term option of the two Bluebird-Southern Gold JVs and is owned by Kochang Project JV Co Ltd.

Korean Resources Corporation (KORES) drilling funding for Kochang is currently on hold as a new Counter Measure Against Natural Disasters Act (CMANDA) proclamation is being distributed to government agencies.

Southern Gold said on July 5, 2019 it believed the government’s CMANDA clarification would enable a permit to develop application for the Kochang JV to be moved to the next stage.

The company reported last week Kochang gold project application had been delayed due to the government law reform process but remained on track.

Southern Gold group’s other projects in South Korea are wholly owned by the Australian explorer-developer and include prospective greenfields projects in underexplored territory.

What does Southern Gold own in Australia?

The company has the Cannon Gold Project 30 kilometres of Kalgoorlie-Boulder in the Goldfields region of Western Australia where the Diggers & Dealers Mining Forum is held each year.

Southern Gold owns all of the Cannon gold mine project after picking up a lease and mining rights from its former JV partner Northern Star Resources (ASX:NST) (FRA:NS7) (OTCMKTS:NESRF).

Also in the Kalgoorlie area, Southern Gold has the Cowarna Gold Project and the Glandore Gold Project it is farming into as part of a JV with Aruma Resources Ltd (ASX:AAJ).

Southern Gold is following a sales process for the three Australian assets with PCF Capital.

Inflection points

  • Bluebird and South Korean joint ventures’ progress with the Gubong and Kochang ventures’ permit to develop applications

  • Success of current fundraising drive

  • Asset sales progress

  • Quarterly and annual results

Gubong project a potential company maker, says MD Simon Mitchell

“In South Korea, we do have indeed the Bluebird joint venture and that is the most likely near-term cashflow source,” Southern Gold managing director Simon Mitchell previously told Proactive Investors.

“Gubong is by far the larger (South Korean gold project of the Bluebird JVs) and will represent the larger challenge to reactivate because it’s going to take a lot of effort to reopen and dewater and really extract the potential from there.

“It’s … got huge company-making potential in the medium term.”


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