SOUTHERNGOLD ABN 30 107 424 519

04 October 2004

Company Announcements Office Australian Stock Exchange Limited 20 Bridge Street SYDNEY NSW 2000

Dear Sir /Madam

DRILLING TO START AT MAJOR COPPER GOLD URANIUM TARGET IN THE GAWLER CRATON

HIGHLIGHTS

Three hole diamond drilling program to test the Victory gravity target in the Gawler Craton starting October 2005.
Extensive geological, geophysical and geochemical work has characterized Victory as an Iron Oxide Copper Gold Uranium (IOCGU) "Olympic Dam" style target.

Southern Gold Limited and Hindmarsh Resources Limited are pleased to announce a drill contractor has been secured to test the Victory gravity target in the Southern Gawler Arc project near Kimba on the Gawler Craton in South Australia.

Victory is a high priority Iron Oxide Copper Gold Uranium (IOCGU) "Olympic Dam style" target that has funding support from the State Government's Plan for Accelerated Exploration ("PACE") scheme. The 6mgal gravity anomaly is similar to the signature of the recent Carrapateena IOCGU discovery.

Importantly, the southern margin of the Gawler Craton is interpreted to have the same geological setting as the Olympic Dam area. The Victory target is located at a highly prospective geological position (Figure 1) supported by minor hematite mineralisation in the nearest outcrop two kilometres distance.

The gravity source is modeled as a large body situated within 100-200m of the surface (Figure 2). The target area has anomalous copper-gold-uranium anomalism at the surface despite transported cover obscuring the target geology.

A major company drilled shallow holes into Induced Polarisation (IP) geophysical anomalies within 200m of the gravity target, intersecting anomalous values of copper, lead, silver, cerium and lanthanum.

Victory provides an excellent opportunity for the discovery of a major copper gold uranium deposit of the "Olympic Dam style".

The Victory prospect is considered to have high potential for an "Olympic Dam style" IOCGU style deposit. Olympic Dam holds 38% of the world's uranium resources and 11 million tonnes of copper ore reserves (according to BHP Billiton as at 31/12/04).

Drilling Program

Three deep cored drill holes (Figure 3) are designed to variously test the modeled gravity source at the shallowest point and where it is coincident with the best geochemical and IP responses.

A 1,600m diamond drilling program comprising two 600m holes and one 400m deep hole has been confirmed to start at Victory before the end of October.

This deep drilling program will be jointly funded by Joint Venture partners Southern Gold Limited and Hindmarsh Resources Ltd (earning 25%) and is supported by \$80,000 of Government PACE funding.

Yours faithfully

S BIGGINS

Managing Director

Contact: Mr Stephen Biggins Managing Director Phone: $+61(0)881320044$ +61 (0) 8 8132 0199 Fax:

The information in this report has been compiled by Stephen Biggins (MBA, BSc(Hons)Geol) who is a member of the Australasian Institute of Mining and Metallurgy and is bound by and follows the Institute's codes and recommended practices. He has a minimum of 5 years experience in the types of activities being reported.