IONDRIVE LIMITED — AGM Information 2016

Oct 25, 2016

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SOUTHERN GOLD

A UNIQUE GOLD EXPLORER WITH GOLD PRODUCTION

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The Cannon Gold Mine, late August 2016 ASX Ticker: SAU Annual General Meeting, Wednesday 26 October 2016

Disclaimer

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Forward-looking statements

The information in this presentation is published to inform you about Southern Gold Limited (“Southern Gold”) and its activities. Some statements in this presentation regarding estimates or future events are forward looking statements. These may include, without limitation:

• Estimates of future cash flows, the sensitivity of cash flows to metal prices and foreign exchange rate movements;

• Estimates of future metal production; and

• Estimates of the resource base and statements regarding future exploration results and increasing the company’s resource base

Such forward looking statements are based on a number of estimates and assumptions made by the Company and its consultants in light of experience, current conditions and expectations of future developments which the Company believes are appropriate in the current circumstances. Such statements are expressed in good faith and believed to have a reasonable basis. However the estimates are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from estimated results.

All reasonable efforts have been made to provide accurate information, but the Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of this presentation, except as me be required under applicable laws. Recipients should make their own enquiries in relation to any investment decisions from a licensed investment advisor.

Competent Person’s statements

The information in this report that relates to Exploration Results and Exploration Targets has been compiled under the supervision of Mr. Ian Blucher (MAusIMM). Mr Blucher, who is a full time employee of Southern Gold Limited and a Member of the Australian Institute of Mining and Metallurgy, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Mineral Resources is based on information compiled by Mr Ian Blucher (MAusIMM). Mr. Blucher is a full time employee of Southern Gold Limited and has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC, 2012). Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Exploration Results has been compiled under the supervision of Dr Chris Bowden (FAusIMM(CP)). Dr Bowden, who is an employee of Southern Gold Limited and a Fellow and Chartered Professional of The Australasian Institute of Mining and Metallurgy, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Bowden consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

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Kalgoorlie Au Production, Korean Au Exploration

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 Cannon Gold Mine

 Cash generation

• Potential to go underground

• Potential for additional projects

 High grade gold exploration/development  Jurisdiction ticks all the key boxes  Potential for world class discovery  Potential for near term production

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Corporate Strategy

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• Focus on cash generation

• Maintain a tight capital structure

• Add to JORC Resource base

• Develop a second mine operation

• Culture of technical excellence

• Search for ‘world class’ gold deposits (organically funded)

Total Shareholder Return Benchmark

Southern Gold to consider a formal dividend/capital return policy at appropriate time

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Australian Strategy: Find Gold Near A Mill

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Cannon Mine
1 Open Pit 4
2 3
Underground?
1
2
3 Glandore
5
4 Bulong
5 Cowarna
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Cannon Gold Mine: Cash Generation

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		Expanded Pit Total
Mined Ounces	koz Au	57.9
Recovery (LOM average)	%	89%
Recovered Ounces	koz Au	51.5
Total Cash Cost/oz, including capital	A$/oz	$995
Hedge($530/oz cash margin)	20koz fixed A$1530/oz =$10.6mprofit
Cash Sales($650/oz cash margin)	31.5koz spot A$1650/oz = $20.5mprofit
Total Profit(100% Basis)	$31m
Attributable Profit to Southern Gold	A$m	=50% Net Profit = $15.5m
RepayMLX Debt, includinginterest	A$m	A$2.6m
Cash to Southern Gold Net of Debt	A$m	~A$13m

First Ore Load – Aug ‘15

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Maiden Gold Pour – Nov ‘15

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Net Cash Flow – Dec ‘16

$$$

A$13m is the equivalent of 28c/share (currently trading 37c/share)

*See ASX announcement 6 September 2016 for details.

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Cannon Underground? Kundana/Daisy Milano?

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BSRCD273 0.27m @ 76.4g/t  Deposit open at depth  Cannon style mineralisation intersected below resource envelope  Potential for underground mining?

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South Korea

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 A mix of the old and the new;

• ‘Time capsule’ mining industry;

• No royalties, no government free carry, corporate tax rate is 24.2%;

• Government funding available (e.g.: KORES sponsored drilling at Kochang);

• Ubiquitous infrastructure such as road, rail, electricity, internet networks;

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• Low cost base compared to Australia with salaries perhaps 50% Australian equivalents;

• Large manufacturing base, population of 50 million;

• For example, Hanjin D&B, based in Gwangju, is one of the biggest manufacturers of drill rigs in the world.

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The South Korean Assets

• 44 granted tenements across 17 project areas in a jurisdiction where tenure is difficult to secure. One of the largest tenure positions of any foreign company.

• All host historic gold/silver mining operations ranging from formal underground operations to artisanal workings, including remanent tailings.

• Key highlight projects from north to south:

• 1 Taechang – recent underground access achieved

• 2 Gubong – potential to open underground access

• 3 Weolyu – new epithermal Au-Ag discovery

• 4 Heungdeok – 9 veins, no drilling

• 5 Kochang – drilling started, evolving big picture

• 6 Hampyeong – new epithermal Au-Ag discovery

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Foreign Estimates of Resources

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See ASX Release 8 July 2016

Foreign Estimate

In line with JORC “Exploration Target”, suggesting a potential range of: 1Mt to 4.5Mt at between 6g/t and 12g/t Au (or ca. 500,000oz to 1.5Moz of Au).

The exploration carried out to-date is insufficient to estimate a resource and it is uncertain whether further exploration will result in the estimation of a resource. Future exploration activities that will test the validity of this exploration target will include drill testing of the historical and newly discovered zones of mineralisation, diamond drilling and underground sampling, which is expected to be undertaken over the next 18 months.

3 Potential Geographic Based Production Centres

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People

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Exploration Manager – South Korea , Dr Chris Bowden, PhD, GCMEE, FAusIMM(CP), FSEG :

• More than 20 years’ experience with an excellent discovery record

• PhD completed on the epithermal gold mineralisation in South Korea

• Experience in South Korea with Ivanhoe Mines on the Eunsan/Moisan discoveries and NE China

• Discovery & delineation of Dish Mountain Gold Deposit in Ethiopia (2Moz JORC resource)

Country Manager – South Korea, Joseph Lee :

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• Korean born Australian finance and business development professional

• Over 12 years’ experience, including capital raisings, IPO’s, M&A, and investor relations

• Extensive experience in South Korea as a corporate advisor

• Educated in Australia, Joseph is bilingual and now based in South Korea.

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Senior Consulting Geologist and Advisor – South Korea , Douglas Kirwin :

• World renowned geologist with more than 45 years international exploration experience

• Excellent discovery record including:

• Hugo Drummett deposit at Oyu Tolgoi in Mongolia

• Jelai Mewet and Seryung epithermal deposits in Kalimantan

• Eunsan-Moisan gold mines in South Korea

• Moditaung gold deposit in Myanmar

• Merlin Re-Mo deposit in Australia.

• Doug has held senior positions with Anglo American, Amax, Indochina Goldfields and Ivanhoe Mines Ltd until it was acquired by Rio Tinto in 2012.

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Gubong: Potential Large Scale Project

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• Multiple veins on district scale. Huge zone of potential targets in 4km x 7km area.

• Tailings storage facility represents early cash flow opportunity

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3 Weolyu South: New Discovery

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Ag-Ge Mine
A
B
C
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A Field reconnaissance - discovery of classic low sulphidation bladed carbonate boulders.

B Follow-up field recon – discovery of classic banded low sulphidation mineralised quartz veins.

E.g.: KRS200052: 17.6g/t Au, 820g/t Ag

C Cave explorers confirm vein in situ in the wall at bottom of artisanal mine (mid 2016).

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5 Kochang

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Corporate Overview

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Year to date price performance

The Board
Greg Boulton AM	Chairman
Simon Mitchell	Managing Director
Mick Billing	Non Executive Director
David Turvey	Non Executive Director

Financial information

Number of shares	46.4 m
Call Options ($0.375, $0.90)	~0.85m
Call Options ($0.32, 30 June 2017)	1.39m
Call Options ($0.40, 30 June 2017)	1.39m
Call Options ($0.375, 30 June 2021)	1.24m
Total Fully Diluted Shares	51.3m
Share price (24 October 2016)	A$0.375
Market capitalisation (undiluted)	A$17.4m
Debt (Metals X)	A$2.6m
“Convertible Debt”	A$1.0m
Cash (30 September 2016, unaudited)	~A$1.5m
Enterprise value	~A$19.6m
Cash Expected in next 6 months = ~A$13m
+ Cannon underground potential production?
+ South Korea potential production?
+ New discoveries in South Korea/ Australia

option conversion repays convertible debt principal

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Next 6-9 Months

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Australia

• Cannon Gold Mine – bank cash flow and investigate below pit for underground?

• Bulong Gold Project – further exploration drilling across our broader Kalgoorlie tenure

• Cowarna Gold Project – project reconnaissance and “boots on the ground” exploration

South Korea

• Kochang – drill results and recon rocks imminent, further drilling at Kochang NW Sanpo Mine

• Taechang – recent underground sampling results and detailed mine studies

• Gubong – near term production scenarios investigated

• Weolyu South – incredible blue sky / new discovery potential

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Research and Contacts

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 RCR Research Report by John Wilson, August 2016 (NAV @ $0.45/share and price target >$0.50/share)

http://www.southerngold.com.au/investors/broker-media-reports/

Simon Mitchell Managing Director +61 8 8368 8888 info@southerngold.com.au www.southerngold.com.au Level 1, 8 Beulah Road Norwood, SA 5065 PO Box 255 Kent Town SA 5071

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South Korean Photography Copyright Erin van der Wyk

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