IONDRIVE LIMITED — AGM Information 2014

Oct 27, 2014

ABN 30 107 424 519

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

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Southern Gold Limited will be held at Southern Gold Limited, 229 Greenhill Road, Dulwich, South Australia, 5065 on Thursday 27 November 2014 at 4:00pm (CST).

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NOTICE OF ANNUAL GENERAL MEETING

Ordinary Business

Financial Report

To receive and consider the Company’s financial statements and independent audit report for the year ended 30 June 2014.

The 2014 Annual Report will be available to view online at www.southerngold.com.au and despatched to those Shareholders who did not elect to receive the report electronically by 28[th] October 2014.

Resolution 1 - Adoption of the Remuneration Report for the year ended 30 June 2014

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 2014 as set out in the Directors’ Report in the 2014 Annual Report.

Voting Exclusion Statement

The Company will disregard any votes cast (in any capacity) on Resolution 1 by any Key Management Personnel, the details of whose remuneration are included in the Remuneration Report, and any Closely Related Party of such Key Management Personnel.

However, a person described above may cast a vote on Resolution 1 if the vote is not cast on behalf of a person described above and either:

• (a) the person does so as proxy appointed in writing that specifies how the proxy is to vote on the proposed resolution; or

• (b) the Chair of the meeting is appointed as proxy and the proxy form expressly authorises the Chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

Resolution 2 - Re-election of Mr Michael Billing as a Director

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

That Mr Michael Billing, 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.

Resolution 3 – Approve the issue of free Options attaching to the Share Purchase Plan

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

That, for the purposes of ASX Listing Rule 7.1 and all other purposes, the issue and allotment by the Company of up to 57.75 million free Options attaching to Shares issued under the Share Purchase Plan, on the terms and conditions set out in the Explanatory Memorandum accompanying the notice of this meeting, is approved.

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The Company will disregard any votes cast on Resolution 3 by a person that may participate in the proposed issue (based on applications received by the closing date of 21 November 2014), any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 4 – Approval to issue the free options attaching to the Share Purchase Plan to Directors and related parties who participate in the Share Purchase Plan

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

That, for the purposes of ASX Listing Rule 10.11 and all other purposes, the issue and allotment by the Company to each Director or related party of the Company that participates in the Share Purchase Plan of up to 833,333 free Options attaching to Shares issued under the Share Purchase Plan, on the terms and conditions set out in the Explanatory Memorandum accompanying the notice of this meeting, is approved.

The Company will disregard any votes cast on Resolution 4 by each Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Other Business

Resolution 5 - Approval of 10% Placement Facility

To consider, and if thought fit, pass the following resolution as a special resolution:

That, for the purposes of Listing Rule 7.1A and all other purposes, Shareholders authorise the Company to have the additional capacity to issue Equity Securities comprising up to 10% of the issued capital of the Company under Listing Rule 7.1A calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions in the Explanatory Memorandum.

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 5 by a person who may participate in the proposed issue and a 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 associates. However, the Company need not disregard

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a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form or it is cast by the 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 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 4,000,000 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.

The Company will disregard any votes cast on Resolution 6 by each Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 7 - Approval of the issue of Options to Mr Greg Boulton 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 2,000,000 unlisted Options to the Chairman, Mr Greg Boulton, 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 Resolution 7 by each Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 8 - Approval of the issue of Options to Mr Michael Billing 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 2,000,000 unlisted Options to the non executive director, Mr Michael Billing, or his 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 Resolution 8 by each Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 9 - 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 2,000,000 unlisted 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 Resolution 9 by each Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

By order of the Board

==> picture [59 x 28] intentionally omitted <==

D Hill Company Secretary Dated this 28th Day of October 2014

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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 25 November 2014 at 7pm (AEDT).

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 Company’s registered office, 229 Greenhill Road, Dulwich, SA 5065, or by facsimile to Southern Gold Ltd on +61 8 8431 5619, 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. The Explanatory Memorandum contains a glossary that defines capitalised terms as used in both this Notice of Meeting and the Explanatory Memorandum.

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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 27 November 2014 at the Southern Gold Ltd, 229 Greenhill Road, Dulwich, 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 2014

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 2014.

The Remuneration Report is contained in the Directors’ Report in the 2014 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 Remuneration 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 2014.

The Company has undertaken further reductions in overheads and has implemented, in the September quarter, Directors taking a 50% cut in fees for 6 months along with management and staff reducing their hours or salaries by 15% or 20%.

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

Since 1 July 2011, if more than 25% of the votes cast on a resolution to adopt the remuneration report are against the adoption of the remuneration report for two consecutive annual general meetings, Shareholders will be required to vote at the second of those annual general meetings on a resolution (“Spill Resolution”) that another meeting be held within 90 days, at which all of the Company’s Directors must go up for re-election.

At the 2013 AGM, the Company’s remuneration report for the year ended 30 June 2013 did not receive a ‘no’ vote of 25% or more.

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

Important information for Shareholders:

Please note, in accordance with sections 250R(4) and (5) of the Corporations Act, the Chair will not vote any undirected proxies in relation to Resolution 1 unless the Shareholder expressly authorizes the Chair to vote in accordance with the Chair’s stated voting intentions. Please note that if the Chair of the meeting is your proxy (or becomes your proxy by default), by completing the attached proxy form, you will expressly authorize the Chair to exercise your proxy on Resolution 1 even though it is connected directly or indirectly with the remuneration of a member of Key Management Personnel for the Company, which includes the Chair.

Alternatively, if you appoint the Chair as your proxy, you can direct the Chair to vote for or against or abstain from voting on Resolution 1 by marking the appropriate box on the proxy form.

As a further alternative, Shareholders can nominate as their proxy for the purposes of Resolution 1, a proxy who is not a member of the Company’s Key Management Personnel or any of their Closely Related Parties. That person would be permitted to vote undirected proxies (subject to the Listing Rules).

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Resolution 2 – Re-election of Mr Michael Billing 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 re-appointment 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. This rule does not apply to the Managing Director.

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

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

The resume of Mr Billing is as follows:-

Mr Michael Billing CPA, BBus MA/CD

Mr Billing is an accountant with in excess of 35 years of mining industry experience in company secretarial, senior commercial, and chief financial officer roles including lengthy periods with Bougainville Copper Ltd and WMC Resources Ltd. He has worked extensively with junior resource companies since the late 1990’s. Mr Billing is also Executive Chairman of ASX and AIM listed Thor Mining PLC, and Non-executive Chairman of ASX listed Black Fire Minerals Limited.

An assessment of the performance of Mr Billing has been conducted in the context of his skills, experience, knowledge and understanding of the Company’s business. The Directors (other than Mr Billing) recommend Shareholders vote in favour of Resolution 2. The Chairman intends to vote undirected proxies in favour of Resolution 2.

Resolution 3 – Approve the issue of free Options attaching to the Share Purchase Plan

The Company intends to undertake a Share Purchase Plan, whereby each Shareholder of the Company will be offered the opportunity to subscribe for up to $15,000 worth of Shares at an issue price of 0.9cents per Share, subject to the terms of the Share Purchase Plan. The Company will also offer one free attaching Option for every 2 Shares subscribed for under the Share Purchase Plan. A maximum of 115.5 million Shares will be offered under the Share Purchase Plan, together with a maximum of 57.75 million free attaching Options.

The issue and allotment of the Shares under the Share Purchase Plan come within Exception 15 of Listing Rule 7.2. There is no exception that will apply to the issue of the free attaching Options, but the Company will be able to accommodate this issue under its capacity under Listing Rule 7.1. However, the Company would like to maintain flexibility during the next 12 months to enable the Company to supplement its working capital requirements and undertaken further capital transactions, should the Directors determine this to be in the best interests of the Company.

Accordingly, Resolution 3 seeks Shareholder approval for the issue and allotment of up to 57.75 million free attaching Options under Listing Rule 7.1. If Resolution 3 is approved, the free Options attaching to the Share Purchase Plan will not be counted towards the 15% 12 month limit on the issue of equity securities permitted by Listing Rule 7.1.

If Resolution 3 is not passed by Shareholders, the Company will issue the Options within its capacity under Listing Rule 7.1 and those Options will be counted towards the 15% limit on the issue of equity securities permitted by Listing Rule 7.1 for the next 12 months.

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For the purposes of Listing Rule 7.3, the following information is provided to Shareholders:

• (a) the maximum number of Options that may be issued and allotted to participants in the Share Purchase Plan is 57.75 million Option;

• (b) the Company will issue and allot the Options following the issue and allotment of the Shares under the Share Purchase Plan (which is expected to occur on 1 December2014) and, in any event, no later than 3 months after the date of the meeting;

• (c) the issue price for the Options is nil;

• (d) the Options will be issued and allotted to the Shareholders that participate in the Share Purchase Plan on the basis of 1 Option for every 2 Shares subscribed;

• (e) each Option will be exercisable for one Share at an exercise price of $0.015 and will expire on 30 November 2015 (see Annexure A to this Explanatory Memorandum for the full terms and conditions of the Options); and

• (f) no funds will be raised from the issue of the Options and it is intended that any funds raised from the exercise of the Options will be used for the Company’s general working capital.

Closing date for subscriptions in the proposed issue is 21 November 2014.

The Company will disregard any votes cast on Resolution 3 by a person that may participate in the proposed issue (based on applications received by the closing date of 21 November 2014), any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the resolution is passed. However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 4 – Approval to issue free Options attaching to the Share Purchase Plan to Directors and related parties

ASX Listing Rule 10.11 requires that Shareholder approval must be obtained for the issue of securities to a Director or related party of the Company, unless an exception in Listing Rule 10.12 applies.

Directors and related parties of the Company that are Shareholders may participate in the Share Purchase Plan. The issue and allotment of Shares under the Share Purchase Plan to Directors and related parties of the Company comes within Exception 8 of Listing Rule 10.12. However, there is no exception that will apply to the issue of free attaching Options to Directors and related parties of the Company. Therefore, unless Shareholder approval is obtained for the purposes of Listing Rule 10.11, no Director or related party of the Company will be issued free attaching Options if they participate in the Share Purchase Plan.

Resolution 4 seeks Shareholder approval for purposes of Listing Rule 10.11 the issue and allotment of up to 833,333 free Options attaching to Shares issued under the Share Purchase Plan to each Director and related party of the Company that participates in the Share Purchase Plan.

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. Resolution 3, however, seeks approval for the issue of these Options under Listing Rule 7.1 in any event.

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For the purposes of Listing Rule 10.13, the following information is provided to Shareholders:

• (a) Shareholders that are Directors or related parties of the Company and that may participate in the Share Purchase Plan are as follows:

  • (i) Greg Boulton (Chairman) and G Boulton Pty Ltd;

  • (ii) Nanette Anderson (Managing Director) and in her capacity as trustee for the Arete Trust;

  • (iii) Michael Billing (Director) and Lapun Kamap Superannuation Fund and MBB Trading Pty Ltd;

  • (iv) David Turvey (Director) and Red Balloon Superannuation Fund.

• (b) the maximum number of Options to be issued to each participant in the Share Purchase Plan is 833,333 Options (with participants to receive one Option for every two Shares subscribed for);

• (c) the Options will be issued following the issue of Shares under the Share Purchase Plan (which is expected to occur on 1 December 2014) and will be issued no later than one month after the date of the meeting;

• (d) the issue price for the Options is nil;

• (e) each Option will be exercisable for one Share at an exercise price of $0.015 and will expire on 30 November 2015 (see Annexure A to this Explanatory Memorandum for the full terms and conditions of the Options); and

• (f) no funds will be raised from the issue of the Options and it is intended that any funds raised from the exercise of the Options will be used for:-

• the expansion of the Company’s existing core business which is focused on:

  • (i) the development of the Cannon Gold resource,

  • (ii) follow up work of Tier 1, near resource targets,

  • (iii) exploration of Bulong and Cowarna project areas;

• provide funds for the acquisition and development of new opportunities that may arise, in line with the Company’s growth strategy;

The Company will disregard any votes cast on Resolution 4 by a Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 5 – Approval of 10% Placement Facility

Background to Resolution 5

ASX Listing Rule 7.1A enables eligible entities to issue Equity Securities up to 10% of its issued share capital through placements over a 12 month period after the Annual General Meeting ( 10% Placement Facility ). The 10% Placement Facility is in addition to the Company’s 15% placement capacity under ASX Listing Rule 7.1. An eligible entity for the purposes of ASX Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation of $300 million or less. The Company’s market capitalisation as at 20 October 2014 was $3.1 million

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(385,957,580 issued shares at $0.008 closing price per share). Further, the Company is not included in the S&P/ASX 300 Index, and is therefore an eligible entity for the purposes of ASX Listing Rule 7.1A.

The Company is now seeking shareholder approval by way of a Special Resolution to have the ability to issue Equity Securities under the 10% Placement Facility. The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in ASX Listing Rule 7.1A.2. It is the Company’s intention that funds received under the 10% Placement Facility will be used to further develop the Cannon Gold Project in Western Australia. Funds raised under the 10% Placement Facility may also be used to supplement the Company’s working capital requirements and undertake further transactions to acquire new assets or investments should the Directors determine this to be in the best interests of the Company.

Description of Listing Rule 7.1A

a) Shareholder approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to Shareholder approval by way of a special resolution at an Annual General Meeting.

b) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company.

The Company, as at the date of this Notice, has on issue two classes of Equity Securities being Listed Shares and Unlisted Options.

c) Formula for calculating 10% Placement Facility

ASX Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an Annual General Meeting may issue or agree to issue, during the 12 month period after the date of the Annual General Meeting, a number of Equity Securities calculated in accordance with the following formula:

(A x D) – E

A is the number of shares on issue 12 months before the date of issue or agreement:

• 1) plus the number of fully paid shares issued in the 12 months under an exception in Listing Rule 7.2;

• 2) plus the number of partly paid shares that became fully paid in the 12 months;

• 3) plus the number of fully paid shares issued in the 12 months with approval of holders of shares under Listing Rule 7.1 and 7.4. This does not include an issue of fully paid shares under the entity’s 15% placement capacity without shareholder approval;

• 4) less the number of fully paid shares cancelled in the 12 months.

Note that A has the same meaning in Listing Rule 7.1 when calculating an entity’s 15% placement capacity.

D is 10%

• E is the number of Equity Securities issued or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of the issue or agreement to issue that are not issued with the approval of shareholders under Listing Rule 7.1 or 7.4.

Listing Rule 7.1 and Listing Rule 7.1A

The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity’s 15% placement capacity under Listing Rule 7.1.

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At the date of this Notice, the Company has on issue 385,957,580 Shares and therefore has a capacity to issue:

• 1) 57,893,637 Equity Securities under Listing Rule 7.1; and

• 2) subject to Shareholder approval being sought under Resolution 5, 38,595,758 Equity Securities under Listing Rule 7.1A.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at the date of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2.

Up to approximately 115.5 million Shares may be issued under the Share Purchase Plan and, if fully subscribed, the total number of Shares on issue will increase to approximately 501.5 million (meaning the capacity under Listing Rule 7.1 will increase to approximately 75.2 million Equity Securities and the capacity under Listing Rule 7.1A will increase to approximately 50.2 million Equity Securities.

Minimum Issue Price

The issue price of Equity Securities issued under Listing Rule 7.1A must not be less than 75% of the VWAP of Equity Securities in the same class calculated over the 15 Trading Days on which trades in that class were recorded immediately before:

• 1) the date on which the price at which the Equity Securities are to be issued is agreed; or

• 2) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (1) above, the date on which the Equity Securities are issued.

The Company may also issue Equity Securities under the 10% Placement Facility as consideration for the acquisition of a new asset, in which case the Company will release to the market a valuation of those Equity Securities that demonstrates that the issue price of the securities complies with the rule above.

10% Placement Period

Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the Annual General Meeting at which the approval is obtained and expires on the earlier to occur of:

• 1) the date that is 12 months after the Annual General Meeting at which the approval is obtained; or

• 2) the date of the approval by Shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking),

or such longer period if allowed by ASX ( 10% Placement Period ).

Listing Rule 7.1A

The effect of Resolution 5 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the 10% Placement Period without using the Company’s placement capacity under Listing Rule 7.1.

Resolution 5 is a Special Resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative).

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Specific information required by Listing Rule 7.3A

Pursuant to and in accordance with Listing Rule 7.3A, information is provided in relation to the approval of the 10% Placement Facility as follows:

• a) the Equity Securities will be issued at an issue price of not less than 75% of the VWAP for the Company’s Equity Securities over the 15 Trading Days on which trades in that class were recorded immediately before:

• 1) the date on which the price at which the Equity Securities are to be issued is agreed; or

• 2) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (1) above, the date on which the Equity Securities are issued.

• b) if Resolution 5 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, existing Shareholders may be subject to both economic and voting power dilution. There is a risk that:

• 1) the market price for the Company’s Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting;

• 2) the Equity Securities may be issued at a price that is at a discount to the market price for the Company’s Equity Securities on the issue date; and

• 3) the Equity Securities are issued as part of consideration for the acquisition of a new asset, in which case, no funds will be raised by the issue of the Equity Securities.

The below table shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable “A” calculated in accordance with the formula in Listing Rule 7.1A(2) as at the date of this Notice.

The table also shows:

• 1) two examples where variable “A” has increased, by 50% and 100%. Variable “A” is based on the number of ordinary securities the Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or script issued under a takeover) or future specific placements under Listing Rule 7.1 that are approved at a future Shareholders’ meeting; and

• 2) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against the current market price.

Variable ‘A’ in Listing Rule 7.1A.2			Dilution
		$0.004 50% decrease in issueprice	$0.008 Issue price	S0.016 100% increase in issueprice
Current Variable A 385,957,580 Shares	10% voting dilution	38,595,758 Shares	38,595,758 Shares	38,595,758 Shares
	Funds raised	$154,383	$308,766	$617,532
50% increase in current Variable A 578,936,370 Shares	10% voting dilution	57,893,637 Shares	57,893,637 Shares	57,893,637 Shares
	Funds raised	$231,574	$463,149	$926,298
100% increase in current Variable A 771,915,160 Shares	10% voting dilution	77,191,516 Shares	77,191,516 Shares	77,191,516 Shares
	Funds raised	$308,766	$617,532	$1,235,064

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The table has been prepared on the following assumptions:

  - i. the Company issues the maximum number of Equity Securities available under the 10% Placement Facility;

  - ii. no Unlisted Options (including any Unlisted Options issued under the 10% Placement Facility) are exercised into Shares before the date of the issue of the Equity Securities. The table also does not take into account the impact of any Shares or Options issued under the Share Purchase Plan;

  - iii. the 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%;

  - iv. the table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Facility, based on that Shareholder’s holding at the date of the meeting;

  - v. the table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placement capacity under Listing Rule 7.1. Dilution experienced by Shareholders may be greater if issues have been made utilising the capacity in Listing Rule 7.1 as well;

  - vi. the issue of Equity Securities under the 10% Placement Facility consists only of Shares;

  - vii. the issue price is $0.008, being the closing price of the Shares on ASX on 20 October 2014;

• c) the Company will only issue and allot the Equity Securities during the 10% Placement Period. The approval under Resolution 5 for the issue of Equity Securities will cease to be valid in the event that Shareholders approve a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities or Listing Rule 11.2 (disposal of main undertaking).

• d) the Company may seek to issue the Equity Securities for the following purposes:

• i. non-cash consideration for the acquisition of new resources, assets and investments. In such circumstances the Company will provide a valuation of the non-cash consideration as required by Listing Rule 7.1A.3; or

• ii. cash consideration. In such circumstances, the Company intends to use the funds raised towards an acquisition of new assets or investments (including expenses associated with such acquisitions or investments), continued exploration and development expenditure on the Company’s current assets (including its Cannon Gold Project in Western Australia) and/or general working capital.

The Company will comply with the disclosure obligations under Listing Rules 7.1A (4) and 3.10.5A upon issue of any Equity Securities.

• e) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of Equity Securities will be determined on a case-by-case basis having regard to the factors including but not limited to the following:

• i. the methods of raising funds that are available to the Company, including but not limited to, rights issue or other issue in which existing security holders can participate;

• ii. the effect of the issue of the Equity Securities on the control of the Company;

• iii. the financial situation and solvency of the Company; and

• iv. advice from corporate, financial and broking advisers (if applicable).

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The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existing substantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

Further, if the Company acquires new assets, it is likely that the allottees under the 10% Placement Facility will be the vendors of the new assets.

If Resolution 5 is approved by Shareholders, the Company may issue Equity Securities under the 10% Placement Facility during the Placement Period as and when the circumstances of the Company require.

• f) The Company has previously obtained Shareholder approval under Listing Rule 7.1A on 21 November 2013. The following is detailed information required under Listing Rule 7.3A.6 regarding Equity Securities issued since 21 November 2013;

• i) The total number of equity securities issued in since 21 November 2013 is 25,360,599 fully paid ordinary shares representing 7.03% of the total number of equity securities on issue at 21 November 2013;

• ii) The details comprising the issue of 25,360,599 shares in the Company are as follows;

  • a. 23,518, 926 fully paid ordinary shares were issued pursuant to a 3 for 8 rights issue on 11 December 2013, at a price equivalent to $0.015 per share, being market price at the time of issue (nil discount to the closing price on 11 December 2013). The issue raised $352,784. All cash raised has been used to meet the ongoing administrative costs of the business.

  • b. 1,669,780 fully paid ordinary shares were issued to Directors in lieu of cash remuneration on 19 December 2013, in accordance to the resolutions passed by shareholders on 21 November 2013, at a price equivalent to the volume weighted average price from 1 September 2013 to 15 December 2013, being $0.01517 per share. The issue price was at a nil discount to the closing price on 19 December. The issue did not raise any cash. The non cash consideration of the service provided was $25,331. The market value of the Shares at 22 October 2014 is $16,698.

  • c. 171,893 fully paid ordinary shares were issued to a consultant in lieu of cash payment on 17 February 2014 relating to services provided by Bayfront Nominees Pty Ltd, an entity related to the Company Secretary at a price equivalent to $0.01517 per share. The issue price was at a nil discount to the closing price on 19 December. The issue did not raise any cash. The non cash consideration of the service provided was $2,608. The market value of the Shares at 22 October 2014 is $1,719.

• g) A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not approached any particular existing Shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities. No existing Shareholder’s votes will therefore be excluded under the voting exclusion in the Notice.

The Board considers that the approval of the issue of the 10% Placement Facility described above is beneficial for the Company as it provides the Company with the flexibility to issue up to the maximum number of securities permitted under Listing Rule 7.1A in the next 12 months (without further Shareholder approval), should it be required. At the date of the notice of meeting, the Company has no plans to use the 10% Placement Facility should it be approved. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of Resolution 5. The Chairman intends to vote all undirected proxies in favour of Resolution 5.

Resolution 6 – Approval of the issue of Options to Ms Nanette Anderson or her nominee

It is proposed that 4,000,000 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 the greater of 2.5 cents or 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 reasonable to grant 4,000,000 Options on the terms set out in Annexure B 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

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salary of $245,072 per annum (exclusive of government mandated superannuation contributions) on terms approved by the Board, which has been further decreased by 15% since 1 January 2014 on a temporary basis.

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 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 4,000,000 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. 4,000,000 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 B 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 6. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on Resolution 6 by a Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 7– Approval of the issue of Options to Mr Greg Boulton or his nominee

It is proposed that 2,000,000 Options be granted by the Company to Mr Greg Boulton 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 the greater of 2.5 cents or 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 2,000,000 Options to Mr Boulton or his nominee, as part of Mr Boulton’s remuneration, having regard to the circumstances of the Company and the responsibilities of his position as Chairman. Mr Boulton receives an annual Directors’ fee of $40,000 (inclusive of government mandated superannuation contributions), which represents a 50% reduction in fees from 1 January 2014 on a temporary basis.

The Options will not be quoted on the ASX, will lapse if Mr Boulton 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.

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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 Boulton 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 Boulton 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 2,000,000 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. 2,000,000 Options will be granted to Mr Greg Boulton 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 Boulton) recommend Shareholders vote in favour of Resolution 7. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on Resolution 7 by a Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 8– Approval of the issue of Options to Mr Michael Billing or his nominee

It is proposed that 2,000,000 Options be granted by the Company to Mr Michael Billing 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 the greater of 2.5 cents or 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 2,000,000 Options to Mr Billing or his nominee, as part of Mr Billing’s remuneration, having regard to the circumstances of the Company and the responsibilities of his position as non executive director. Mr Billing receives an annual Directors’ fee of $20,000 (inclusive of government mandated superannuation contributions), which represents a 50% reduction in fees from 1 January 2014 on a temporary basis.

The Options will not be quoted on the ASX, will lapse if Mr Billing 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 Billing 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 Billing 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 2,000,000 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. 2,000,000 Options will be granted to Mr Michael Billing 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 Billing) recommend Shareholders vote in favour of Resolution 8. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on Resolution 8 by a Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

Resolution 8– Approval of the issue of Options to Mr David Turvey or his nominee

It is proposed that 2,000,000 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 the greater of 2.5 cents or 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 2,000,000 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 nonexecutive director. Mr Turvey receives an annual Directors’ fee of $20,000 (inclusive of government mandated superannuation contributions), which represents a 50% reduction in fees from 1 January 2014 on a temporary basis.

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 2,000,000 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. 2,000,000 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 9. The Chairman intends to vote undirected proxies in favour of this Resolution.

The Company will disregard any votes cast on Resolution 9 by a Director or related party that participates in the Share Purchase Plan, any person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, and any of their respective associates, if the Resolution is passed.

However the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the relevant proxy form; or

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the relevant proxy form to vote as the proxy decides.

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Annexure A – terms of the Share Purchase Plan Options

The terms and conditions of the Options are as follows:

• 1) Each Option will be exercisable for one fully paid ordinary share in the capital of Southern Gold Limited.

• 2) Each Option will have an exercise price of $0.015.

• 3) Each Option will have an expiry date of 30 November 2015.

• 4) Each Option will be listed, subject to the ASX granting Official Quotation. If the ASX does not grant Official Quotation the Options will be unlisted;

• 5) Shares issued upon exercise of any Options will rank equally with all existing shares on issue for which quotation on the ASX will be sought.

• 6) There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in any new issue to Shareholders of the Company during the currency of the Options (i.e. without exercising the Option).

• 7) If there is any reorganisation of the capital of the Company including, without limitation, a consolidation or subdivision of any of the issued capital of the Company, or a pro rata bonus issue of Shares, the Options must be reorganised in the way required under the ASX Listing Rules.

• 8) The rights of the Option holder may be changed to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

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Annexure B - Terms of Options to be issued to Directors

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, but in any case, not less than 2.5 cents.

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 any recipient Director 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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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.

“Closely Related Party” of a member of the Key Management Personnel means:

• (a) a spouse or child of the member;

• (b) a child of the member’s spouse;

• (c) a dependant of the member or of the member’s spouse;

• (d) anyone else who is one of the member’s family and may be expected to influence the member or be influenced by the member, in the member’s dealings with the Company; or

• (e) a company that the member controls.

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

" Constitution " means they 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.

“ Equity Securities ” has the meaning given to that term in the Listing Rules.

" Explanatory Memorandum " means this explanatory memorandum.

“ Key Management Personnel ” means those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any Director.

" 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 on the terms and conditions set out in Annexure A for the options related to the Share Purchase Plan and Annexure B for options issued to Directors.

" 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.

“ Share Purchase Plan ” means the share purchase plan described in the Explanatory Memorandum for Resolution 3.

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

“ Trading Day ” means a day determined by ASX to be a trading day in accordance with the Listing Rules.

“ VWAP ” means Volume Weighted Average Price of the Company’s ASX-listed Shares trading under the code SAU.

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SOUTHERN GOLD LIMITED ACN 107 424 519

ANNUAL GENERAL MEETING 27 NOVEMBER 2014 AT 4PM (CST)

PROXY FORM

Company Secretary Southern Gold Limited 229 Greenhilll Road Dulwich South Australia 5065

FACSIMILE: +61 (0) 8 8431 5619

I/We ______________

Being a member of Southern Gold Limited,

of (address) ______________

hereby appoint _________________

or failing him/her, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the annual general meeting of the Company to be held on 27 November 2014 at Southern Gold Limited, 229 Greenhill Road, Dulwich, Adelaide, South Australia, and at any adjournment thereof. If no voting directions are given, the Chairman will vote in favour of each resolution.

Instructions on Voting

			FOR	AGAINST ABSTAIN	AGAINST ABSTAIN
Resolution	1	Adoption of the Remuneration Report
Resolution	2	Re-election of Mr Michael Billing as a Director
Resolution	3	Approval of the issue of free Options attaching to the
		Share Purchase Plan
Resolution	4	Approval of issue of free Options attaching to Share
		Purchase Plan to Directors and related parties
Resolution	5	Approval of a 10% placement facility
Resolution	6	Approval of the issue of options to Ms Nanette Anderson
Resolution	7	Approval of the issue of options to Mr Greg Boulton
Resolution	8	Approval of the issue of options to Mr Michael Billing
Resolution	9	Approval of the issue of options to Mr David Turvey

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Where I/we have appointed the Chairman as my our/proxy (or the Chairman becomes my/our proxy) I/we expressly authorise the Chairman to exercise my/our proxy on Resolution 1 even though Resolution 1 is connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman.

==> picture [433 x 205] intentionally omitted <==

----- Start of picture text -----

Dated this __ day of ________2014
Individuals and joint holders to sign: Companies to sign (affix common seal if applicable):
_____ __________
Signature Director, or sole Director / Secretary
______ _______
Signature Director / Company Secretary
----- End of picture text -----

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