IONDRIVE LIMITED — AGM Information 2010

Oct 11, 2010

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SOUTHERN GOLD LIMITED ACN 107 424 519 NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Southern Gold Limited will be held at the Broughton Room, National Wine Centre, corner of Hackney Road and Botanic Road, Adelaide, South Australia, 5000 on Thursday 11 November 2010 at 4:00pm (Adelaide time).

Ordinary Business

Financial Report

To receive and consider the Company’s financial statements and independent audit report for the year ended 30 June 2010.

The 2010 Annual Report will be available to view online at www.southerngold.com.au and dispatched to those Shareholders who did not elect to receive the report electronically by 19 October 2010.

Resolution 1. Adoption of the Remuneration Report for the year ended 30 June 2010

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That, for the purposes of Section 250R(2) of the Corporations Act, the Company adopt the Remuneration Report for the period ended 30 June 2010 as set out in the Directors’ Report in the 2010 Annual Report.

Resolution 2. Re-election of Mr David Turvey as a Director

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That Mr David Turvey, having retired as a Director in accordance with ASX Listing Rule 14.4 and rule 110 of the Company’s Constitution and being eligible and having offered himself for re-election, is re-elected as a Director with immediate effect.

Resolution 3. Re-election of Mr Greg Boulton as a Director

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That Mr Greg Boulton, having retired by rotation in accordance with ASX Listing Rule 14.4 and rule 117 of the Company’s Constitution and being eligible and having offered himself for re-election, is re-elected as a Director of the Company with immediate effect.

Other Business

Resolution 4. Approval of the issue of Options to Ms Nanette Anderson or her nominee

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That for the purpose of ASX Listing Rule 10.11 and for all other purposes, the grant by the Company of 1,000,000 unlisted Options to the Managing Director, Ms Nanette Anderson, or her nominee on, and subject to, the terms and conditions set out in the attached Explanatory Memorandum, is approved.

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The Company will disregard any votes cast on this resolution by Ms Anderson, any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed and any of their respective associates.

However the company will not disregard a vote if:

• It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• It is cast by a person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 5. Approval of the issue of Options to Mr David Turvey or his nominee

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That for the purpose of ASX Listing Rule 10.11 and for all other purposes, the grant by the Company of 500,000 Options to the Non-Executive Director, Mr David Turvey or his nominee, on, and subject to, the terms and conditions set out in the attached Explanatory Memorandum, is approved.

The Company will disregard any votes cast on this resolution by Mr Turvey, any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed and any of their respective associates.

However the company will not disregard a vote if:

• It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• It is cast by a person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 6. Approval of Employee Share Option Scheme

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

That, for the purpose of ASX Listing Rule 7.2 Exception 9 and for all other purposes, any issue of securities made within the three year period ending 11 November 2013 under the terms and conditions of the Company’s employee incentive scheme known as the ‘Southern Gold Limited Employee Share Option Plan’, as set out in Annexure B to the attached Explanatory Memorandum (and as amended from time to time), is approved as an exception to ASX Listing Rule 7.1.

The Company will disregard any votes cast on this resolution by the Directors or any associate of a Director.

However the company will not disregard a vote if:

• It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• It is cast by a person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

By order of the Board

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N Harding

Company Secretary Dated this 8th Day of October 2010

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Voting Entitlements

Pursuant to Regulation 7.11.37 of the Corporations Regulations 2001, made pursuant to Section 1074E(2)(g) of the Corporations Act 2001, the Directors have determined that the shareholding of each shareholder for the purposes of ascertaining the voting entitlements for the Annual General Meeting will be as it appears in the share register on Tuesday 9 November 2010 at close of business (Adelaide time).

Proxies

A shareholder entitled to attend and vote at the meeting has the right to appoint a proxy, who need not be a shareholder of the Company. If a shareholder is entitled to cast two or more votes they may appoint two proxies and may specify the percentage of votes each proxy is appointed to exercise.The Proxy form must be deposited at the share registry of the Company, Computershare Investor Services Pty Limited, located at GPO Box 242, Melbourne VIC 3001, or at the Company’s registered office, 47 Tynte Street, North Adelaide, SA 5006, or by facsimile to Computershare on 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia) or to the Company on 61 8 8132 0199, not later than 48 hours before the commencement of the meeting. For Intermediary Online subscribers only (custodians), please visit www.intermediaryonline.com to submit your voting intentions, which must be submitted by not later than 48 hours before the commencement of the meeting.

Corporate Representative

A corporation that is a Shareholder or a proxy may elect to appoint a person to act as its corporate representative at the meeting, in which case the corporate Shareholder or proxy (as applicable) must provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that Shareholder’s or proxy’s (as applicable) corporate representative. The authority must be sent to the Company and/or the Company’s Share Registry (detailed above) in advance of the meeting or handed in at the meeting when registering as a corporate representative.

Explanatory Memorandum

The Explanatory Memorandum accompanying this Notice of Annual General Meeting is incorporated in and comprises part of this Notice of Annual General Meeting and should be read in conjunction with this Notice.

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SOUTHERN GOLD LIMITED ACN 107 424 519 EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared to assist shareholders in consideration of resolutions proposed for the Annual General Meeting of the Company to be held on Thursday 11 November 2010 at the Broughton Room, The National Wine Centre, corner of Hackney & Botanic Roads, Adelaide, South Australia, commencing at 4:00pm (Adelaide time).

It should be read in conjunction with the accompanying Notice of Annual General Meeting.

Resolution 1 – Adoption of the Remuneration Report for the year ended 30 June 2010

In accordance with Section 250R(2) of the Corporations Act, Shareholders are required to vote on the Company’s Remuneration Report for the year ended 30 June 2010.

The Remuneration Report is contained in the Directors’ Report in the 2010 Annual Report, which will be available to view online at the Company’s website www.southerngold.com.au and dispatched to those shareholders who did not elect to receive Company reports electronically.

The Report describes the underlying policies and structure of the remuneration arrangements of the Company and sets out the remuneration arrangements in place for Directors and senior executives for the year ended 30 June 2010.

The Corporations Act requires that a resolution to adopt the Remuneration Report be put to the vote of the Company. Members should note that the vote on Resolution 1 is not binding on the Company or the Directors.

The Directors recommend Shareholders vote in favour of Resolution 1. The Chairman intends to vote undirected proxies in favour of the Resolution.

Resolution 2– Re-election of Mr David Turvey

ASX Listing Rule 14.4 and rule 110 of the Constitution require that any Director appointed by the Board, either to fill a casual vacancy or as an addition to the Board, must retire at the next annual general meeting following his or her appointment, but is eligible for re-election at that annual general meeting.

Mr David Turvey has been appointed as an addition to the Board since the Company’s last Annual General Meeting and retires as a Director pursuant to ASX Listing Rule 14.4 and rule 110 of the Constitution. Mr Turvey is eligible for, and has offered himself for, re-election.

The Resume of Mr Turvey is as follows:-

Mr David Turvey (Non-Executive Director)

Mr David Turvey is a geologist with over 27 years experience in the Australian and Asian mining industry where he has driven business development and corporate merger and acquisition activities in precious metals, bulk commodities and industrial minerals. His experiences include holding key management roles and consulting assignments in mineral exploration, technical marketing, project development and commercial evaluation of mineral asset investments. Mr Turvey is currently a Director of ASX listed company Lawson Gold Limited. He is a former Managing Director of FerrAus Limited and has previously held senior management positions over 8 years with Normandy Mining Limited.

An assessment of the performance of Mr Turvey has been conducted in the context of his skills, experience, knowledge and understanding of the Company’s business. The Directors (other than Mr

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Turvey) recommend Shareholders vote in favour of Resolution 2. The Chairman intends to vote undirected proxies in favour of this Resolution.

Resolution 3 – Re-election of Mr Greg Boulton as a Director

In accordance with Listing Rule 14.4 and rule 117 of the Constitution, at every Annual General Meeting, one third of the Directors for the time being must retire from office and are eligible for re-election. The Directors to retire are to be those who have been in office for 3 years since their appointment or last reappointment or who have been longest in office since their appointment or last re-appointment or, if the Directors have been in office for an equal length of time, by agreement.

The Directors presently in office are Mr Greg Boulton, Mr Michael Billing, Ms Nanette Anderson and Mr David Turvey.

Mr Boulton has been longest in office since his last re-appointment and will retire by rotation at the Annual General Meeting. Mr Boulton is eligible for, and has offered himself for, re-election.

The resume of Mr Boulton is as follows:-

Mr Greg Boulton AM B.A (Accounting), FCA, FCPA, FAICD (Non-Executive Chairman)

Mr Boulton has extensive commercial experience spanning over 25 years as CEO and Non-Executive Director for many private and public companies. He has broad experience in capital raisings, acquisitions and commercial negotiations and is a Fellow of the Institute of Chartered Accountants, CPA Australia and the Australian Institute of Company Directors. Mr Boulton is currently Chairman of Paragon Equity Limited, an Adelaide based private equity firm and Deputy Chairman of ASX listed K&S Corporation Limited. He is also on the board of the Statewide Superannuation Trust.

An assessment of the performance of Mr Boulton has been conducted in the context of his skills, experience, knowledge and understanding of the Company’s business. The Directors (other than Mr Boulton) recommend Shareholders vote in favour of Resolution 3. The Chairman intends to vote undirected proxies in favour of this Resolution.

Resolution 4 – Approval of the issue of Options to Ms Nanette Anderson or her nominee

It is proposed that 1,000,000 Options be granted by the Company to Ms Nanette Anderson or her nominee. The Options will have a five year term. They may be exercised at any time during the term at an exercise price equal to 150% of the volume weighted average Share price for the 5 days the Shares were traded immediately preceding (but not including) the issue date. The full terms of the Options are set out in Annexure A to this Explanatory Memorandum.

The Board considers it reasonable to grant 1,000,000 Options on the terms set out in Annexure A to Ms Anderson or her nominee, as part of Ms Anderson’s reasonable remuneration, having regard to the circumstances of the Company and the responsibilities of her position as Managing Director. Ms Anderson’s remuneration package comprises a base salary of $230,000 per annum (exclusive of government mandated superannuation contributions) plus a performance bonus of up to $36,000 (exclusive of government mandated superannuation contributions) for the first year of her employment, on terms approved by the Board.

The Options will not be quoted on the ASX, will lapse if Ms Anderson ceases to be a Director, will be transferable only with the consent of the Board and will otherwise be issued on standard terms set out in ASX Listing Rules insofar as treatment of the Options in the case of reconstructions, bonus and rights issues.

ASX Listing Rule 10.11 requires, subject to certain exceptions, shareholder approval for the issue of securities to a related party of the Company. Ms Anderson, as a Director of the Company, is a related

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party of the Company. Accordingly, approval under Listing Rule 10.11 is sought for the grant of Options to Ms Anderson or her nominee.

As approval of shareholders is being sought pursuant to Listing Rule 10.11, Listing Rule 7.2 Exception 14 provides that the Company is not required to seek approval under Listing Rule 7.1. By approving the grant of Options under Listing Rule 10.11, the 1,000,000 Options will not be included in the 15% calculation of the Company’s security placement capacity pursuant to Listing Rule 7.1.

The following information is provided to Shareholders for the purposes of Listing Rule 10.13:

• I. 1,000,000 Options will be granted to Ms Nanette Anderson or her nominee;

• II. The Options will be issued no later than one month after the date of the Annual General Meeting at which this resolution is considered;

• III. The Options will be issued for no consideration;

• IV. The terms and conditions of the Options are set out in Annexure A to this Explanatory Memorandum.

• V. No funds will be raised by the grant of the Options. In the event of exercise of the Options, funds raised will be used to augment the working capital of the Company.

The Directors (other than Ms Anderson) recommend Shareholders vote in favour of Resolution 4. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on this resolution by Ms Anderson, any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed and any of their respective associates.

However the company will not disregard a vote if:

• It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• It is cast by a person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides

Resolution 5– Approval of the issue of Options to Mr David Turvey or his nominee

It is proposed that 500,000 Options be granted by the Company to Mr David Turvey or his nominee. The Options will have a four year term. They may be exercised at any time during the term at an exercise price equal to 150% of the volume weighted average Share price for the 5 days the Shares were traded immediately preceding (but not including) the issue date. The full terms of the Options are set out in Annexure B to this Explanatory Memorandum.

The Board considers it is reasonable to grant 500,000 Options to Mr Turvey or his nominee, as part of Mr Turvey’s remuneration, having regard to the circumstances of the Company and the responsibilities of his position as Non-Executive Director. Mr Turvey receives an annual Directors’ fee of $40,000 (inclusive of government mandated superannuation contributions).

The Options will not be quoted on the ASX, will lapse if Mr Turvey ceases to be a Director, will be transferable only with the consent of the Board and will otherwise be issued on standard terms set out in ASX Listing Rules insofar as treatment of the Options in the case of reconstructions, bonus and rights issues.

ASX Listing Rule 10.11 requires, subject to certain exceptions, shareholder approval for the issue of securities to a related party of the Company. Mr Turvey is a Director of the Company and, as such, a related party of the Company. Accordingly, approval under Listing Rule 10.11 is sought for the grant of Options to Mr Turvey or his nominee.

As approval of Shareholders is being sought pursuant to Listing Rule 10.11, Listing Rule 7.2 Exception 14 provides that the Company is not required to seek approval under Listing Rule 7.1. By approving the grant of Options under Listing Rule 10.11, the 500,000 Options will not be included in the 15% calculation of the Company’s security placement capacity pursuant to Listing Rule 7.1.

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The following information is provided to Shareholders for the purposes of Listing Rule 10.13:

• I. 500,000 Options will be granted to Mr David Turvey or his nominee;

• II. The Options will be granted no later than one month after the date of the Annual General Meeting at which this resolution is considered;

• III. The Options will be granted for no consideration;

• IV. The terms and conditions of the Options are set out in Annexure B of this Explanatory Memorandum.

• V. No funds will be raised by the grant of the Options. In the event of exercise of the Options, funds raised will be used to augment the working capital of the Company

The Directors (other than Mr Turvey) recommend Shareholders vote in favour of Resolution 5. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on this resolution by Mr. Turvey, any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed and any of their respective associates.

• However the company will not disregard a vote if:

• It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• It is cast by a person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides

Resolution 6 - Approval of Employee Share Option Plan

The Company currently has in place the “Southern Gold Limited Employee Share Option Plan” ( Plan ) under which Eligible Persons may be offered the opportunity to receive Options in the Company in order to assist in the attraction, retention and motivation of employees and Directors. The Directors consider that Options are a cost effective and efficient means of incentivising employees and Directors.

Under the Plan, the Board may offer Eligible Persons the opportunity to receive such number of Options in the Company as the Board may decide on the terms and conditions set out in Annexure C of the Explanatory Memorandum.

ASX Listing Rule 7.1 restricts the number of equity securities a listed entity can issue without shareholder approval. ASX Listing Rule 7.2 contains a number of exceptions to ASX Listing Rule 7.1. Exception 9(b) of ASX Listing Rule 7.2 provides that ASX Listing Rule 7.1 does not apply to an issue under an employee incentive scheme if within 3 years before the date of issue, holders of ordinary securities have approved the issue of securities under the scheme as an exception to ASX Listing Rule 7.1. In order for future issues of securities made within the three year period ending 11 November 2013 under the terms and conditions of the Plan to come within Exception 9(b) of ASX Listing Rule 7.2, the Company is seeking Shareholder approval for such issues of securities.

In accordance with the requirements of ASX Listing Rule 7.2 Exception 9(b) the following information is provided:

• I. a copy of the terms and conditions of the Plan is attached as Annexure C to this Explanatory Memorandum. There have been no substantive changes to the terms and conditions of the Plan since it was last approved by Shareholders;

• II. 5,125,000 Options have been issued under the Plan since the date of its last approval; and

• III. The Company will disregard any votes cast on Resolution 6 by the Directors or any of their respective associates.

As the Directors are excluded from voting on Resolution 6 they do not wish to make a recommendation as to how shareholders ought to vote in respect of this resolution. The Chairman intends to vote any undirected proxies in favour of Resolution 6.

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GLOSSARY

In this Explanatory Memorandum, the following terms have the following unless the context otherwise requires:

• " ASX " means ASX Limited ACN 008 624 691 or the securities exchange operated by ASX Limited (as the context requires);

• " Board " means the Board of Directors from time to time.

• " Company " means Southern Gold Limited (ACN 107 424 519).

• " Constitution " means the constitution of the Company from time to time.

• " Corporations Act " means the Corporations Act 2001 (Cth).

• " Directors " means the directors of the Company from time to time and " Director " means any one of them.

• “ Eligible Person ” has the meaning given to that term set out in the Southern Gold Limited Employee Share Option Plan, as set out in Annexure C to this Explanatory Memorandum.

• " Explanatory Memorandum " means this explanatory memorandum.

• " Listing Rules " means the listing rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the official list of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

• " Option " means an option to subscribe for one fully paid ordinary share in the capital of the Company.

• " Related party " has the meaning given to that term in Section 228 of the Corporations Act.

• “ Share ” means a fully paid ordinary share in the capital of the Company.

• " Shareholder " means a holder of Shares in the Company.

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ANNEXURE A

Terms of Options to be issued to Ms Nanette Anderson or her nominee

1. Each Option is an option to subscribe for one ordinary fully paid share in the capital of the Company (subject to possible adjustment in accordance with these terms and conditions).

2. The exercise price of the Options will be equal to 150% of the Company’s volume weighted average share price for the 5 days the Company’s shares were traded immediately preceding (but not including) the issue date.

3. Shares issued on exercise of the Options will rank pari passu with all existing ordinary shares in the Company from the date of issue.

4. The Options may be exercised wholly or in part by notice in writing to the Company received at any time on or before the expiry date (being the date 5 years after the date of grant of the Options), together with payment for the exercise price and the Option certificates (if any) for those Options for cancellation by the Company.

5. The Company will allot the number of shares the subject of any exercise notice, and apply, at its cost, for quotation of the shares so allotted.

6. The Option holder will be permitted to participate in new issues of securities of the Company only if the Options are exercised prior to the record date for the new issue of securities.

7. In the event of any reconstruction (including consolidation, reduction, or return) of the issued capital of the Company:

8. 7.1. the number of Options, the exercise price of the Options, or both will be reconstructed (as appropriate) in a manner consistent with the ASX Listing Rules, but with the intention that such reconstruction will not result in any benefits being conferred on the holder of the Option which are not conferred on Shareholders; and

9. 7.2. subject to the provisions with respect to rounding of entitlements as sanctioned by a meeting of Shareholders approving a reconstruction of capital, in all other respects the terms for the exercise of the Options will remain unchanged.

10. If there is to be a pro rata issue (except a bonus issue) to holders of ordinary shares in the capital of the Company, the exercise price of an Option may be reduced according to the following formulae:

Oⁿ = O – E[P-(S+D)] N + 1

Where

• Oⁿ = the new exercise price of the Option;

• O = the old exercise price of the Option;

• E = the number of underlying securities into which one Option is exercisable;

• P = the average market price per security (weighted by reference to volume) of the underlying securities during the 5 day trading period ending on the day before the ex rights date or the ex entitlement date;

• S = the subscription price for a security under the pro rata issue

• D = dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rata issue);

• N = the number of securities with rights or entitlements which must be held to receive a right to one new security.

• If there is a bonus issue to the holders of shares in the Company, the number of shares over which the Option is exercisable may be increased by the number of shares which the Option holder would have received if the Option had been exercised prior to the record date for the bonus issue.

• The terms of the Options shall be changed if holders (whose votes are not to be disregarded) of ordinary shares in the Company approve such a change. However the terms of the Options shall not be changed to reduce the exercise price, increase the number of Shares over which the Options is exercisable, or increase the period for exercise of the Options.

• In the event that Ms Anderson ceases to be a Director of the Company, for any reason, any Options not exercised prior to that event will lapse.

• The Options will only be transferable with the consent of the Board.

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ANNEXURE B

Terms of options to be issued to Mr David Turvey or his nominee

1. Each Option is an option to subscribe for one ordinary fully paid share in the capital of the Company (subject to possible adjustment in accordance with these terms and conditions).

2. The exercise price of the Options will be equal to 150% of the Company’s volume weighted average share price for the 5 days the Company’s shares were traded immediately preceding (but not including) the issue date.

3. Shares issued on exercise of the Options will rank pari passu with all existing ordinary shares in the Company from the date of issue.

4. The Options may be exercised wholly or in part by notice in writing to the Company received at any time on or before the expiry date (being the date 4 years after the date of grant of the Options), together with payment for the exercise price and the Option certificates (if any) for those Options for cancellation by the Company.

5. The Company will allot the number of shares the subject of any exercise notice, and apply, at its cost, for quotation of the shares so allotted.

6. The Option holder will be permitted to participate in new issues of securities of the Company only if the Options are exercised prior to the record date for the new issue of securities.

7. In the event of any reconstruction (including consolidation, reduction, or return) of the issued capital of the Company:

8. 7.1. the number of Options, the exercise price of the Options, or both will be reconstructed (as appropriate) in a manner consistent with the ASX Listing Rules, but with the intention that such reconstruction will not result in any benefits being conferred on the holder of the Option which are not conferred on Shareholders; and

9. 7.2. subject to the provisions with respect to rounding of entitlements as sanctioned by a meeting of Shareholders approving a reconstruction of capital, in all other respects the terms for the exercise of the Options will remain unchanged.

10. If there is to be a pro rata issue (except a bonus issue) to holders of ordinary shares in the capital of the Company, the exercise price of an Option may be reduced according to the following formulae:

Oⁿ = O – E[P-(S+D)]

N + 1

Where

• Oⁿ = the new exercise price of the Option;

• O = the old exercise price of the Option;

• E = the number of underlying securities into which one Option is exercisable;

• P = the average market price per security (weighted by reference to volume) of the underlying securities during the 5 day trading period ending on the day before the ex rights date or the ex entitlement date;

• S = the subscription price for a security under the pro rata issue

• D = dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rata issue);

• N = the number of securities with rights or entitlements which must be held to receive a right to one new security.

• If there is a bonus issue to the holders of shares in the Company, the number of shares over which the Option is exercisable may be increased by the number of shares which the Option holder would have received if the Option had been exercised prior to the record date for the bonus issue.

• The terms of the Options shall be changed if holders (whose votes are not to be disregarded) of ordinary shares in the Company approve such a change. However the terms of the Options shall not be changed to reduce the exercise price, increase the number of Shares over which an Option is exercisable, or increase the period for exercise of the Options.

• In the event that Mr Turvey ceases to be a Director of the Company, for any reason, any Options not exercised prior to that event will lapse.

• The Options will only be transferable with the consent of the Board.

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Annexure C

RULES OF THE SOUTHERN GOLD LIMITED EMPLOYEE SHARE OPTION PLAN

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In these Rules, unless the contrary intention appears:

“ Associated Company” means at any time any body corporate that at that time is a related body corporate of the Company within the meaning of section 50 of the Corporations Law;

“ASX” means Australian Stock Exchange Limited and includes any body corporate which may hereafter succeed to the powers, functions and duties of Australian Stock Exchange Limited;

“Board” means the directors acting as the board of directors of the Company;

“Business Day” means a day on which the stock market of ASX is open for trading in securities;

“Certificate” means the certificate issued by the Company to a Holder in respect of an Option;

“Company” means Southern Gold Limited ACN 104 757 904;

“Director” means a director of a Group Company from time to time;

“Eligible Person” means at any time a person who then is an employee, or a director of Southern Gold Limited (whether full-time or part-time);

“Exercise Price” means, in respect of an Option, the subscription price per Share, determined in accordance with clause 12, payable by a Holder on exercise of the Option;

“Expiry Date” means, in relation to an Option, the period of 5 years from and including the Issue Date of the Option;

“Group” means, collectively the Company and each of the Associated Companies;

“Group Company” means the Company or any Associated Company;

“Holder” means, in relation to an Option, the person (whether an Eligible Person or a Permitted Nominee) entered in the Company’s register of options as the holder of that Option;

“Issue Date” means, in relation to an Option, the date on which the Company grants that Option;

“Listing Rules” means the Official Listing Rules of ASX;

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“Market Value” means:

• (a) the average closing sale price per Share (weighted by reference to volume) recorded on the stock market of ASX during the five trading days immediately preceding the day on which the Board resolves to offer an Option (excluding special crossings and overnight sales); or

• (b) in circumstances where there has been no trading in the Shares during the five trading days immediately preceding the day on which the Board resolves to offer an Option, the last sale price recorded on the stock market of ASX (excluding special crossings and overnight sales);

“Option” means an Option issued under the Plan to subscribe (subject to clause 11) for a Share;

“Permanent Disablement” means, in relation to an Eligible Person, that the Eligible Person has, in the opinion of the Board, after considering such medical and other evidence as it sees fit, become incapacitated to such an extent as to render the Eligible Person unlikely ever to engage in any occupation for which he is reasonably qualified by education, training or experience;

“Permitted Nominee” has the meaning given to it by clause 5.4;

“Plan” means the Southern Gold Limited Employee Share Option Plan established in accordance with these Rules;

“Redundancy” means, in relation to an Eligible Person, a determination by the Board that the relevant Group Company’s need to employ a person for the particular kind of work carried out by that Eligible Person has ceased (but, for the avoidance of any doubt, does not include the dismissal of an Eligible Person for personal or disciplinary reasons or where the Eligible Person leaves the employ of any Group Company of his own accord);

“Retirement” means, in relation to an Eligible Person, retirement by that Eligible Person from any Group Company at age 60 or over or such earlier age as considered appropriate by the Board;

“Rules” means these rules, as amended from time to time:

“Shares” means fully paid ordinary shares in the capital of the Company.

“Trigger Event” means:

• (a) the despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or any members or members or any class thereof pursuant to section 411 of the Corporations Act;

• (b) the service of a bidder’s statement or a like document on the Company

• (c) the date upon which a person or a group of associated persons becomes entitled, subsequent to the Issue Date of the Option, to sufficient Shares to give it or them the ability in general meeting to replace all or elect a majority of the Board in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

1.2 Interpretation

In these Rules, unless the contrary intention appears:

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• (a) where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning;

• (b) the singular includes the plural and vice versa;

• (c) a reference to a gender includes all genders; and

• (d) an expression defined in, or given a meaning for the purposes of, the Corporations Law or the Listing Rules has the same meaning where used in these Rules.

2. ESTABLISHMENT AND TERMINATION OF THE PLAN

• 2.1 The Board may establish and administer the Plan in accordance with the terms and conditions set out in these Rules and otherwise as it determines from time to time in its absolute and uncontrolled discretion.

• 2.2 The Board may terminate the Plan, or suspend its operation for any period it considers desirable, at any time that it considers appropriate.

• 2.3 The Board may not issue any further Options after the Plan has been terminated. However, theses Rules will continue to apply to Options on issue at the date of such termination until the last of those Options lapses or is exercised.

3. NUMBER OF OPTIONS TO BE ISSUED

The Company shall not offer or issue Options to any Eligible Person in accordance with the plan if the total number of shares the subject of Options, when aggregated with:

• 3.1 the number of shares in the same class which would be issued were each outstanding offer or invitation or option to acquire unissued shares in the Company, being an offer or invitation made or option acquired pursuant to the Plan or any other employee share scheme extended only to employees (including directors) of Group Companies, to be accepted or exercised (as the case may be); and

• 3.2 the number of shares in the same class issued during the previous five years pursuant to the Plan or any other employee share scheme extended only to employees (including directors) of Group Companies,

(disregarding any offer or invitation made, or option acquired or share issued following the making of an offer or invitation, to a person situated at the time of receipt of the offer or invitation outside Australia or any offer or invitation which, pursuant to Chapter 6D of the Corporations Law, does not need disclosure to investors), would exceed 5% of the total number of issued shares in that class of the Company as at the time of the proposed offer or issue.

4. ENTITLEMENT TO PARTICIPATE

• 4.1 The Board may from time to time determine in its absolute and uncontrolled discretion that any Eligible Person is entitled to participate in the Plan and the extent of that participation. The determination of the Board shall be binding and neither the Board nor any director of the Company shall be obliged to give any reason for a determination.

• 4.2 The Board may exercise its powers in relation to the participation of any Eligible Person on any number of occasions.

• 4.3 An Eligible Person may not participate in the Plan unless that Eligible Person has been in continuous employment with a Group Company for at least 6 months prior to the Issue Date.

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• 4.4 Future entitlements under the Plan shall not form part of any contract of employment between any Group Company and any of its employees. Participation in the Plan by an Eligible Person shall not confer directly or indirectly on any such employee any legal or equitable right whatsoever against any Group Company.

5. OFFER OF OPTIONS

• 5.1 Subject to these Rules and to the Listing Rules, the Company (acting through the Board) may offer Options to any Eligible Persons at such times and on such terms as the Board considers appropriate in its absolute and uncontrolled discretion. Each offer must state:

• (a) that the Eligible Person to whom it is addressed may accept the whole or any lesser number of Options offered. The offer may stipulate a minimum number of Options and any multiple of such minimum or any other number which may be accepted;

• (b) the period within which the offer may be accepted; and

• (c) any other matters which the Board may determine.

• 5.2 Upon receipt of an offer of Options, an Eligible Person may, within the period specified in the offer;

• (a) accept the whole or any lesser number of Options offered by notice in writing to the Board;

• (b) nominate a nominee in whose favour the Eligible Person wishes to renounce the offer by notice in writing to the Board. The Board may, in its absolute and uncontrolled discretion, resolve not to allow such renunciation of an offer in favour of a nominee without giving any reason for such decision; or

• (c) reject the offer.

• 5.3 Each Option will be issued free.

• 5.4 Upon:

• (a) receipt of the acceptance referred to in paragraph 5.2(a); or

• (b) the Board resolving to allow a renunciation of an offer in favour of a nominee ( “Permitted Nominee”) and the Permitted Nominee accepting as Holder or joint Holder the whole or any lesser number of Options offered by notice in writing to the Board,

then the Eligible Person and/or the Permitted Nominee, as the case may be, will be taken to have agreed to be bound by these Rules and will be issued Options subject to these Rules.

• 5.5 Certificates for Options will be dispatched within 10 Business Days after their Issue Date (or within such lesser period (if any) as may be required by the Listing Rules). Certificates will be accompanied by advice of the Issue Date, Number of Options, Exercise Price, Expiry Date, and any additional terms or conditions attaching to the offer.

• 5.6 If Options are issued to a Permitted Nominee of an Eligible Person, the Eligible Person must, without limiting any provision in these Rules, ensure that the Permitted Nominee complies with these Rules.

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6. QUOTATION

• 6.1 The Company will not apply for official quotation by ASX of any Options under this Plan

• 6.2 Application will be made to ASX within 10 business days after the date of allotment (or within such lesser period as may be required by the Listing Rules) for official quotation of Shares issued pursuant to the exercise of Options, if the Shares are listed on ASX at that time.

7. NOT TRANSFERABLE

• 7.1 Subject to clause 10.3, Options are not transferable.

• 7.2 Options will lapse upon receipt by the Company of a notice of surrender from a Holder, specifying the details of the Options to be surrendered, and accompanied by the relevant Certificate.

8. EXERCISE OF OPTIONS

• 8.1 Subject to these Rules, Options may be exercised at any time during the period commencing after the Issue Date and ending on the Expiry Date.

• 8.2 Options not exercised on or before the Expiry Date will automatically lapse.

• 8.3 Options may only be exercised by notice in writing to the Board delivered to the registered office of the Company. The notice must specify the number of Options being exercised and must be accompanied by:

• (a) the Exercise Price for the number of Options specified in the notice; and

• (b) the Certificate for those Options, for cancellation by the Company.

The notice is only effective (and only becomes effective) when the Company has received value for the full amount of the Exercise Price (for example, if the Exercise Price is paid by cheque, by clearance of that cheque).

• 8.4 Subject to clause 8.2, within 10 Business Days after the notice referred to in clause 8.3 becomes effective (or within such lesser period (if any) as may be required by the Listing Rules), the Board must;

• (a) allot and issue the number of Shares specified in the notice to the Holder;

• (b) cancel the Certificate for the Options being exercised; and

• (c) if application, issue a new Certificate for any remaining Options covered by the Certificate accompanying the notice.

9. SHARES ALLOTTED ON EXERCISE OF OPTIONS

All Shares allotted upon exercise of Options rank pari passu in all respects with Shares previously issued and, in particular, entitle the Holders to participate fully in;

• 9.1 dividends declared by the Company after the date of allotment; and

• 9.2 all issues of securities made or offered pro rata to holders of Shares.

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10. CEASING TO BE AN ELIGIBLE PERSON

• 10.1(a) If at any time prior to the Expiry Date of any Options, an Eligible Person ceases to be an Eligible Person for any reason other than Retirement, Permanent Disability, Redundancy or death, all Options held by such Eligible Person or his Permitted Nominee (as the case may be), will, to the extent that they have not been exercised beforehand, automatically lapse on the first to occur of;

i.The expiry of the period of 3 calendar months form the date of such occurrence, and

ii.The Expiry Date.

• 10.1 (b) Notwithstanding the provisions of Clause 10.1(a), in the event that in the reasonable opinion of the Board an Eligible Person is dismissed for a reason which entitles a Group Company to dismiss that person without notice, or in circumstances of an act of fraud, defalcation or gross misconduct in relation to the affairs of a Group Company or doing any act which brings a Group Company into disrepute, then Options held by the person or their nominee will lapse forthwith

• 10.2 A certificate signed by the company secretary of the Company stating that a person ceased for any reason to be an Eligible Person shall (in the absence of manifest error) be conclusive for the purposes of the Plan, both as to such occurrence and the date of such occurrence.

• 10.3 If at any time prior to the Expiry Date of any Options a Holder dies, the deceased Holder’s legal personal representative may:

• (a) elect to be registered as the new Holder of the deceased Holder’s Options;

• (b) whether or not he becomes so registered, exercise those Options as if it were the Holder of them in accordance with these Rules; and

• (c) if the deceased Holder had already given the Company a notice of exercise of his Options, pay the Exercise Price in respect of those Options.

11. ENTITLEMENT TO PARTICIPATE IN FUTURE ISSUES

11.1 New Issues

Holders may only participate in new issues of securities to holders of Shares if an Option has been exercised and Shares allotted in respect of the Option before the record date for determining entitlements to the issue. The Company must give at least nine Business Days’ notice (or such greater period of notice (if any) as may be required by the Listing Rules) to Holders of any new issue before the record date for determining entitlements to the issue in accordance with the Listing Rules.

11.2 Bonus Issues

If there is a bonus share issue ( “Bonus Issue” ) to the holders of Shares, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the Holder would have received if the Option had been exercised before the record date for the Bonus Issue ( “Bonus Shares” ). Upon issue the Bonus Shares will rank pari passu in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares.

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11.3 Pro Rata Issue

If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares, the Exercise Price of an Option will be reduced according to the following formula:

A = O – E[P – (S+D)]

N + 1

A = the new exercise price of the Option O = the old exercise price of the Option

E = the number of Shares into which one Option is exercisable

P = the average closing sale price per Share (weighted by reference to volume) recorded on the stock market of ASX during the 5 trading days immediately preceding the ex rights date or ex entitlements date (excluding special crossings and overnight sales).

S = the subscription price for a security under the pro rata issue

D = the dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rate issue).

N = the number of securities with rights or entitlements that must be held to receive a right to one new security.

11.4 Reorganisation of Capital

• (a) If, prior to the expiry or lapse of any Options, there is a reorganisation of the issued capital of the Company, those Options will be reorganised to the extent necessary to comply with the Listing Rules.

• (b) If, prior to the expiry or lapse of any Options, the Company offers other securities to shareholders, the Board will determine in its absolute discretion whether the other securities are to be offered to Holders upon the exercise of Options or whether any other equivalent securities, interest or rights will be offered to them, and the basis thereof, to the intent that on the Exercise of the Options, the Holders may be treated whenever possible as if they were Shareholders at the Issue Date

• (c) If a Trigger Event occurs, the Board may determine:

(i) that a Holder may Exercise the Options at any time after the date of such an event until a date determined by the board acting bona fide so as to permit the holder to participate in any change of control rising from a Trigger Event provided that the Board will as soon as practicable advise each Holder in writing of such determination. Thereafter Options which have not been exercise shall lapse.

(ii) to use its reasonable endeavours to procure that an offer is made to Holders on like terms (having regard to the nature and value of the Options) to the terms proposed under the Trigger Event in which case the Board shall determine an appropriate period during which Holders may elect to accept the offer and, if the Holder has not so elected at the end of that period, the Options shall immediately become exercisable, and if not exercised within 10 days, shall lapse.

11.5 Advice

In accordance with the Listing Rules, the Company must give notice to each Holder of any adjustment to the number of Shares for which the Holder is entitled to subscribe or to the Exercise Price pursuant to the provisions of clauses 11.2, 11.3 or 11.4.

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12. EXERCISE PRICE OF OPTIONS

The Exercise Price of each Option will be determined by the Board when it resolves to offer the Option and will be not less than 90% of the Market Value of a Share at that time.

13. AMENDMENTS TO THE RULES

The Board may alter, delete or add to these Rules at any time (save for the provisions of clause 3), but, where the Company is admitted to the Official List of ASX, its resolution to do so has no effect unless the requirements of the Listing Rules in relation to the alteration, deletion or addition have been complied with.

14. NOTICES

Where possible notices will be despatched to Holders electronically to relevant addresses supplied by holders. Otherwise, notices may be given by the Company to any Holder either personally or by sending by post to his address as noted in the Company’s records or to the address (if any) within the Commonwealth of Australia supplied by him to the Company for the giving of notices. Notices of any overseas Holders shall be forwarded and posted by airmail. Where a notice is sent by post the notice shall be deemed to be served on the second day after posting. The signature of any notice may be given by any Director or Secretary of the Company. A notice of exercise of Options shall not be deemed to be served on the Company until actually received.

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Lodge your vote:

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By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 556 161 (outside Australia) +61 3 9415 4000

Proxy Form

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For your vote to be effective it must be received by 4:00pm (Adelaide time) Tuesday 9 November 2010

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

Turn over to complete the form

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View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Your secure access information is:

Update your securityholding

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

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Proxy Form

Please mark to indicate your directions

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Appoint a Proxy to Vote on Your Behalf

I/We being a member/s of Southern Gold Limited hereby appoint

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

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the Chairman OR of the Meeting

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Southern Gold Limited to be held at The National Wine Centre, The Broughton Room, Cnr Hackney Road and Botanic Road, Adelaide SA 5000 on Thursday 11 November 2010 at 4:00pm (Adelaide time) and at any adjournment of that meeting.

Important for Item 6: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Item 6 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Item 6 and your votes will not be counted in computing the required majority if a poll is called on this Item. The Chairman of the Meeting intends to vote undirected proxies in favour of item 6 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

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PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

Items of Business

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ORDINARY BUSINESS

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• 1 Adoption of Remuneration Report

• 2 Re-Election of Mr David Turvey as a Director

• 3 Re-Election of Mr Greg Boulton as a Director

SPECIAL BUSINESS

• 4 Approval of Issue of Options to Ms Nanette Anderson or her nominee

• 5 Approval of Issue of Options to Mr David Turvey or his nominee

• 6 Approval of Employee Share Option Scheme

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The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) This section must be completed.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Contact Daytime Name Telephone Date / /

Sole Director and Sole Company Secretary Contact Name

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S A U

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