IONDRIVE LIMITED — Capital/Financing Update 2005

Aug 3, 2005

ABN 30 107 424 519

4 August 2005

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

Dear Sir /Madam

FORMATION OF NEW URANIUM COMPANY

HIGHLIGHTS

• Southern Uranium Limited (wholly-owned by Southern Gold Limited) formed to house and manage Southern Gold's uranium only assets.
• Uranium assets cover over 4,000 square kilometers (km) of the Gawler Craton in South Australia.
• Hardrock targets similar to BHP Billiton's Olympic Dam deposit in South Australia and palaeochannel targets similar to Paladin Resources Limited's Langer Heinrich deposit in Namibia.
• 4 hardrock targets and 4 major uranium bearing palaeochannel systems.
• Uranium exploration programme underway including radiometric surveying and drilling of palaeochannel and hardrock targets.

The Board of Adelaide-based and ASX-listed Southern Gold Limited is pleased to announce the creation of a new uranium company called Southern Uranium Limited.

Southern Uranium is a wholly-owned subsidiary of Southern Gold and has been formed to house and manage Southern Gold's uranium only assets and related activities.

The new Company provides a vehicle dedicated to rapidly developing the uranium interests of Southern Gold in order to capitalise on the current and forecast state of the world uranium market for the benefit of all Southern Gold shareholders. Southern Uranium also enables greater flexibility for the development and financing of the uranium assets.

Assets and Location

Southern Uranium will have uranium interests in a number of tenements covering over 4,000 square kilometres (km) of the Gawler Craton in South Australia. This province houses the world's second largest uranium mine, BHP Billiton's Olympic Dam Iron Oxide Copper Gold Uranium (IOCGU) deposit and hosts 38% of the world's uranium resources.

The Company's combined uranium assets in South Australia are both hardrock IOCGU targets similar to Olympic Dam and palaeochannel uranium targets similar to Paladin Resources Limited's Langer Heinrich deposit in Namibia. The tenements cover 2 established IOCGU "Olympic Dam" style targets at Victory and Westpoint and 5 additional targets awaiting further definition.

Importantly, these are within the same geological setting as Olympic Dam and show IOCGU target signatures, providing an excellent opportunity for the discovery of new uranium bearing deposits.

Southern Gold's tenements also cover over 250 km length of palaeochannels draining from the uranium-rich Gawler Craton. Preliminary exploration, abandoned largely due to political policies since the early 1980's, showed the palaeochannels in the Gawler Craton had the right processes and environments to form secondary uranium deposits like Beverley and Honeymoon in eastern South Australia.

The Southern Gold portfolio currently includes:

• Drill-ready Victory IOCGU target at Southern Gawler Arc, in Joint Venture (JV) with Hindmarsh Resources Limited (HMR).
• Prospective IOCGU holdings at Yarlbrinda, also in JV with HMR.
• Established Westpoint IOCGU targets at Challenger West.
• Yarlbrinda South, IOCGU targets close to the "hot" Hiltaba granites.

Southern Uranium Limited will acquire the rights to

• Uranium only interests at Challenger West, which are themselves in JV with HMR, covering over 150 km of uranium bearing palaeochannel systems.
• Yarlbrinda South, 10 km upstream from the Yarranna uranium deposit within the Narlaby Palaeochannel.
• Uranium only targets on EL 3284 that are now interpreted by government geologists to be 25 km downstream from the "Warrior" uranium palaeochannel occurrence near Tarcoola.

Southern Gold has also applied for other uranium tenements in the Gawler Craton to build on its strong uranium portfolio.

South Australia and Uranium

Southern Gold identified an evolving opportunity to explore for and develop uranium resources in Australia. In particular, the State of South Australia has significant unexplored uranium potential and is demonstrating a greater preparedness to develop a uranium industry than other States in Australia. South Australia already hosts two of the three producing uranium mines in Australia. The State Government of South Australia currently provides incentives for exploration by junior explorers through the Plan for Accelerating Exploration (PACE) which includes acquisition and provision of geological, geochemical and geophysical data and subsidised exploratory drilling programs.

Government support for South Australia's untapped mineral potential has already shown success through the recent Carrapateena IOCGU discovery intersected on a "greenfields" gravity target approximately 100 km from Olympic Dam on the Gawler Craton.

Southern Uranium will however also look for opportunities outside South Australia including where appropriate overseas.

Uranium Market

The uranium market is currently being driven by growing world demand as a fuel for power generation.

There are a number of nuclear power stations under construction globally including in China which is planning to build 27 plants by 2020 and in India which is planning to build 17 plants by 2012, according to the Energy Bulletin.

The World's supply of uranium is expected to fall well short of demand according to the World Nuclear Association.

The price of uranium has risen by 118% since 2003 from an annual month-end spot price average of US\$11.54/lb to US\$29.50/lb as at the end of July 2005, according to the Ux Consulting Company.

Plans

Exploration

Southern Uranium plans to commence an exploration programme initially on the Yarlbrinda South Project during August 2005 in an effort to begin to unveil the uranium potential of the Company's assets. In addition, Southern Gold also plans to start drilling the Victory (IOCGU) gravity target in September 2005.

Financing

Southern Gold Limited and Southern Uranium are actively reviewing all possible options for sustainable funding of this increased level of activity

Yours faithfully

Hirl Biges

S BIGGINS Managing Director

Contact:

Mr Stephen Biggins Managing Director Phone: +61 (0) 8 8132 0044 +61 (0) 8 8132 0199 Fax:

The information in this report has been compiled by Stephen Biggins 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.

Please visit our website at www.southerngold.com.au

Thursday 4^th August 2005

FORMATION OF NEW URANIUM COMPANY

A new company has been formed by diversified minerals explorer, Southern Gold Limited (ASX Code: "SAU") to solely house its expanding uranium assets and exploration programs.

The new entity, Southern Uranium Pty Ltd, will remain a wholly-owned subsidiary of its parent but will hold and manage all of Southern Gold's uranium assets.

Southern Uranium will waste no time commencing work, initiating an exploration program this month on the Yarlbrinda South Project, with a drilling program scheduled next month on the Victory Iron Oxide Copper Gold Uranium (IOCGU) gravity target.

"Southern Uranium provides a pure and very specific focus on our uranium interests which have expanded since Southern Gold floated on the ASX in April this year," Southern Gold's Managing Director, Mr Stephen Biggins, said today.

"Given the strong current and forward outlook globally for uranium, it made sense to ensure our uranium strategy, which is a core business within Southern Gold, received as a priority. the attention and resources more suitably aligned with market opportunities," Mr Biggins said.

"Our uranium growth strategy includes further additions to the existing portfolio of key partners, projects and personnel, with the new structure also providing greater flexibility for the development and financing of these uranium assets."

The Southern Gold portfolio currently includes:

• Drill-ready Victory IOCGU target at Southern Gawler Arc, in Joint Venture (JV) with Hindmarsh Resources Limited (HMR).
• Prospective IOCGU holdings at Yarlbrinda, also in JV with HMR.
• Established Westpoint IOCGU targets at Challenger West.
• Yarlbrinda South, IOCGU targets close to the "hot" Hiltaba granites.

Southern Uranium Limited will acquire the rights to

• Uranium only interests at Challenger West, which are themselves in JV with HMR, covering over 150 km of uranium bearing palaeochannel systems.
• Yarlbrinda South, 10 km upstream from the Yarranna uranium deposit within the Narlaby Palaeochannel.
• Uranium only targets on EL 3284 that are now interpreted by government geologists to be 25 km downstream from the "Warrior" uranium palaeochannel occurrence near Tarcoola.

The mineral rights for all other commodities within the above projects will remain within Southern Gold.

Southern Gold has also applied for a number of tenements on the Gawler Craton in South Australia targeting the development of both hard-rock "Olympic Dam" and sedimentary "Beverley" type uranium deposits.

Mr Biggins said Southern Uranium would also have the opportunity to participate in any respect to the development of uranium-only deposits on any of Southern Gold's new projects.

Adelaide-based Southern Gold has gold, nickel and copper interests in the Challenger area of the Gawler Craton province, gold and nickel targets at Bulong east of Kalgoorlie in Western Australia, and gold interests in the Lachlan Fold Belt in NSW.

MEDIA CONTACTS:

Stephen Biggins Southern Gold Limited (08) 8132 0044 / 0419 859 600 Kevin Skinner Field Public Relations (08) 8234 9555 / 0414 822 631