Southern Gold Flies Solo on Cannon Gold Mine Development

Southern Gold (ASX:SAU) will make a solo attempt on advancing the development of the Cannon gold mine in Australia, the company announced on Monday (December 10). 

The miner revealed that Northern Star Resources (ASX:NST) has chosen not to exercise the right-to-mine with Southern Gold that it acquired in March through a deal with Westgold Resources (ASX:WGX).

In a new agreement between Northern Star and Southern Gold, the latter will accept a transfer of the mining lease for the Georges Reward deposit, immediately to the north of Cannon, from Northern Star. 

 

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“The execution of this agreement with Northern Star is an important development. It enables Southern Gold to move forward with the asset where there is considerable value to be unlocked by a small underground mining operation,” said Southern Gold Managing Director Simon Mitchell.

In return for the transfer, Southern Gold will assume Northern Star’s half of the rehabilitation liability for the open pit, which is roughly around AU$ 77,500, and does not include the cost of rehabilitating the haul road, which will remain active.

Mitchell noted that the new deal would allow the miner to drill the structure without restriction.

“Cannon is a very well defined orebody at excellent grade and represents a very good development opportunity,” he said.

“With the addition of the mining lease to the north it also enables Southern Gold to have unfettered access, simplified and better optimized development scenarios and potential upside in the longer term, should the Cannon ore body continue to plunge to the north,” Mitchell added.

Given the quality of the deposit mined during the open pit phase, the company is now looking forward to optimizing value for shareholders in the near term.

In addition to its projects in Australia, South Gold has added a significant amount of value to its South Korean portfolio thanks to the grant of several epithermal gold-silver projects.

These grants include the miner’s Aphae, Beopseongpo, Deokon and Neungju projects, some of which have demonstrable very high‑grade gold-silver mineralization outcropping at or near surface.

As of 1:27 p.m. EST, Southern Gold was down 2.94 percent, trading at AU$ 0.165.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.  

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