IONDRIVE LIMITED — Capital/Financing Update 2005

Feb 8, 2005

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SEUS $(1)$ to $(20, 10)$

ENGLIS

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Contents

Children Contains

• Chamazokhever .
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• Details of the Offer
• Barbara Ŵ.
• 20 Exclusion Programs and Auplication of Funds
• 22 Dice on Provide
• Corporate Governance Ŵ
• m biskuperna
• 1999 Independent Reports
• D. independent Geologists Report
• 46 independent Acro im ants Fender
• 14 Soluttors Report
• 36 Augusta vol Material Contracts
• Sale Terms of Securities
• 91 Aciducinal Mormance
• 94 Denniuns

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Important Notices

Tris Picturictus is cared 23 Ianuary 2007. It was incluent with ASC on 28 January 2005. Neither ASC 100 the ASC take any responsibility for the contents of this Prospective

• No frains of Attaching Options will be issued on the basis of this Property aternative that the date of the Properties.
• An electronic version of this discussed is available on the internet at weeksaarsemaalisemaa

If you have received an Application fight without a complete and unancrook copy of this Prospectus please contact the Company which will send you free of variet sitter a plutted or electronic version of the Marca (Stor Gorf)

The offer is securities under this Prospectus is made in Australia only. as the States and Attaching Option. Take only been outdiffed for same it Australia The Climatics (of this Prospectify in polycic books cutsing Australia may be technicipal by law and this Prospective does not constitute. an ofter or multation in any place in minds, and any person to whom, it was to be awful to make such offer or multanon. The Company is enthed to refuse an application for securities under this Prospectus if it. believes that the applicant did not receive the offer in Australia Non-Residents should refer to Additional Information for further information.

Par Offersbruiche souschered meaninhus mid 1030 in annunction with the risk factors and all other information provided to this Prospectus.

In accordance with the Cambridges Act, this Protoectus's scheen to an exposure person of seven days from the date of colorersent with ASC of such other period (not excessing 14 Gays short be date of fortgement) as AN may exile.

The mistoric of the exposure period is to enable the Prospectus to be examined by market participants prior to the raising of funds No. Applications received during the exposure period will be processed. during the exposure period. No preference will be quen to Applications. received during the exposure period and all Applications received during that period will be treated as ? They were simultaneously received on the dae die Offersoerd

If the Prospectus is futured to be debelent. Applications received during the experime nemod will be neat with in accordance with section 724 of WE CONTANTING ACT

Certain terms and abony rangers used in this Prospectus have defined meanings when are expanded in the Definitions section of this Prospectus

Project and Corporate Highlights

• A new Australian mineral resources company focussed on growth by discovering and developing gold, copper and nickel resources in southern Australia.
• Secure land positions in established and emerging world class mining belts with an initial emphasis on the Gawler Craton of South Australia, Eastern Goldfields of Western Australia and the Lachlan Fold Belt of New South Wales.
• A portfolio of high quality exploration projects with potential for the quick discovery of economic resources with cost and developmental advantages.
• Drill ready targets with potential for high-grade gold mineralisation.
• A paraílel program of developing targets with excellent potential for large copper-gold, uranium and nickel deposits.
• Aggressive target definition programs will be undertaken to rapidly upgrade other warranted targets to drill testing at the earliest opportunity and at the most effective cost.

• Managed by a Board with eminent expertise in minerals exploration, commerce, land access, discovery and development within the region.

• On-going use of experience to generate innovative ideas and to acquire new projects with potential for significant resource discovery.

• An opportunity to contribute to the resurgence in Australian minerals. exploration by using the recent
• advances in data, concepts and technologies developed for the challenges of making discoveries in the high-potential areas of the region.
• Established infrastructure provides potential for toll processing of oregenerated by successful exploration.

Summary of the Offer

Offer Price	20 cents per Share
Minimum Shares to be issued pursuant to the Offer	20.000.000
Maximum Shares to be issued pursuant to the Offer	26,000,000
Minimum amount to be raised pursuant to the Offer.	\$4,000,000
Maximum amount to be raised pursuant to the Offer	55.000.000
Minimum Total Shares on issue at the Listing Date	38,586,800
Maximum fotal shares on issue at the Usting Date	43.586.800

Indicative Timetable

Offer Opening Date (1998), and the contract of the Streamy 2005.
interaction of the control ------------------------------------- Offer Closing Date Alms (1992)
Listing Date and all accessions and produced in the first section of the section of the section of the section The contract of the section of the section of the section of the section of the section of the section of the s

The above dates are indicative only and may be altered without notice.

Chairman's Letter

Welcome to Southern Gold Limited, a new diversified resources business based in South Australia with a portfolio of advanced mineral exploration assets located in South Australia, Western Australia and New South Wales.

Message from the Chairman

Dear Investor

On behalf of the Directors of Southern Gold Limited ('Southern Gold'), I have great pleasure in presenting you with this Prospectus outlining a dynamic new gold, nickel and base metal mineral exploration company, and invite you to subscribe for this initial public offer of its shares.

The purpose of the offer is to generate funds for the acquisition, exploration and development of the Company's prospective exploration and mining tenements, and to increase the asset base of the shareholders.

The Company's primary focus is the exploration and development of mineral deposits in the under explored Gawler Craton of South Australia which hosts the massive Olympic Dam copper-golduranium mine and the exciting new highgrade Challenger gold mine.

The new Weednanna, Tunkillia and Barns prospects and the recent discovery of the major copper-gold deposit at Prominent

Hill, further enhance the potential of the Gawler Craton, Exploration for Olympic. Dam-style mineralisation has accelerated under the Government funded PACE scheme and continues to demonstrate the potential of the Gawler Craton for new gold. and base metal resources.

The Board of Southern Gold firmly believes the revitalized mineral potential and the Government exploration initiatives will make South Australia the resurgent exploration destination in the Australian mining industry and has positioned Southern Gold to participate competitively and successfully in the new exploration. wave. Southern Gold's projects in South-Australia are strategically located in prospective geology and are almed to benefit from new data and targeting concepts directed towards the discovery and development of mineral resources.

Southern Gold's Challenger West project comprises two Exploration Licences (ELs 3080 and 3097) and an Exploration Licence. Application (ELA 654/04) (expected to be granted as an EL prior to the end of February 2005) covering 1510 square kilometres adjacent to the Challenger gold mine and mill operated by Dominion. Mining Limited (Dominion). Commissioned in October 2002, the Challenger mine has produced 98,736 ounces of gold to the end of Jane 2004. In late 2004 Dominion announced a resource of 1,151,000 tonnes. @ 10.5 g/t gold containing 391,900 ounces with underground reserves of 161,000 ounces. Underground diamond drilling recently intersected high-grade drill intersections which are likely to develop additional high-grade reserves.

Dominion has indicated in correspondence with Southern Gold that there will likely be spare capacity in the Challenger processing plant once underground production. commences and that it welcomes the opportunity to toll treat ore from Southern.

Gold or participate in any discovery from the Challenger West project area, from an early date. In the event of exploration success by Southern Gold, access to Dominion's facility will allow Southern Gold to save significant capital expenditure.

The Company has executed a Native Title Agreement for ELs 3080 and 3097 and has undertaken an Aboriginal heritage survey. of the prospects targeted for immediate drilling, providing shareholders with the opportunity for an early discovery.

Southern Gold has also acquired other exploration tenements on the Gawler Craton, firstly at the Southern Gawler Arc project with copper-gold targets immediately west of the Menninnie Dam lead-zinc-silver prospect and north east of the Barns gold prospect, and secondly, over the Yarlbrinda shear zone south of the Tunkillia gold prospect, further enhancing the Company's highly prospective ground on the Gawler Craton.

Southern Gold has been granted an Exploration Licence, EL 3284, covering the prospective nickel and gold terrain at the west end of the Harris Greenstone belt which has a similar geology and age to the Greenstone beits of the Kambalda-Kalgoorlie area of Western Australia.

The Company has acquired tenements and has an option to acquire a further tenement. at Bulong South, near Kalgoorlie in Western Australia. Bulong South is considered by the Directors to be highly prospective for both gold and nickel deposits and provides early drilling targets.

Southern Gold has negotiated an option, which it intends to exercise, to acquire EL 6122 covering the Grenfell goldfield in New South Wafes which has an estimated historical production in excess of ten tonnes of gold. The Directors believe there is significant potential for undiscovered hard. rock gold sources adjacent to the Coolac-Natromine fault system which traverses the tenement.

Southern Gold has a highly motivated. management team, skilled in the many and varied facets of mineral exploration. and mine development. The Board of Directors has special skills and extensive experience in the exploration of the Gawler Craton and has been directly involved in previous exploration and discoveries. The Company's Managing Director, Stephen-Biggins, has formulated an aggressive and sound program of exploration aimed. at establishing resources which can be brought into production at an early stage.

The Company has a number of drill-ready targets on quality ground with good prospectivity for the discovery of high-grade. gold deposits. Southern Gold is continuing to evaluate projects for future acquisition to ensure shareholders will be provided with the best opportunity to increase their asset base.

Southern Gold is an exploration company. and investment should be considered speculative. Please examine this document thoroughly and discuss with your financial advisor before investing. On behalf of the Directors of Southern Gold Limited I commend this Offer to you and look forward to your participation as a Shareholder of the Company.

Ric Horn Chairman

Introduction

The information set out in this section is not intended to be comprehensive and should be read together with the more detailed information appearing elsewhere in this Prospectus.

The Offer

Southern Gold is offering Shares for subscription at a price of \$0.20 per Share together with one Attaching Option for every two Shares issued to subscribers. pursuant to this Prospectus.

Shares

Shares will be issued at a price of \$0.20, payable in full on Application. Newly issued Shares will rank equally in all respects with all other existing shares on issue.

Options

One Attaching Option will be offered for every two new Shares. Attaching Options are exercisable at \$0.20 on or before 31 March 2007.

A summary of the rights and liabilities attaching to Shares and the terms of the Attaching Options are set out under the Terms of Securities section.

Subscriptions

The minimum subscription is \$4,000,000 by the issue of 20,000,000 Shares carrying an entitlement of 10,000,000 Attaching Options. The Company reserves the right to accept oversubscriptions prior to the Closing Date up to a maximum additional 5,000,000 Shares and 2,500,000 Attaching Options. The maximum subscription is therefore \$5,000,000 by issue of 25,000,000 Shares at \$0.20 carrying an entitlement to 12,500,000 Attaching Options.

Offer Period

• Opening Date for receipt of Applications - 9 February 2005
• Closing Date for receipt of Applications - 5pm, 11 March 2005

(all times are CST and subject to variation).

Applicants are encouraged to submit their Applications as early as possible. The Company reserves the right to close the Issue at an earlier time or date or to extend the closing time and date without prior notice.

Purpose of the Offer

The purpose of the Offer is to provide the Company with sufficient funds to enable it to carry out its exploration programs as outlined in this Prospectus.

It is intended that the funds raised by the Offer will be utilised as set out in the table on page 5.

Capital raised pursuant to this offer will be applied to Company overheads, capital expenditure and exploration programs as well as in any other manner consistent with achieving the Company's objectives. The Directors are satisfied that, upon completion of the Offer, the Company will have sufficient funds to meet its stated objectives.

Capital Structure

The proposed capital structure of the Company following completion of the Offeris as set out in the table on page 5.

Applying for Shares

Applications must be for a minimum of 10,000 Shares at the Application Price of \$0.20 per Share. Applications for more than 10,000 Shares must be in multiples of 1,000 Shares.

If you wish to participate in the Offer, you should complete the Application. form accompanying this Prospectus in accordance with the instructions set out on the reverse of the Application. form. Alternatively you may apply online and fodge subscription funds via BPaythrough the Company's website at www.southerngold.com.au. The Board

Proposed use of total funds raised

820 QS	Martin Manual I	Tanah Salah Ba Mainline Storegione Merchine Silectioner
ChallengerWest	515	655
Southern Gawler Arc.
Yarlorinda	295	415
Harris Greenstone (1999) Services		1.1.1.1.1.1.1 $420$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$
Bulong South	340	485
Grenfell ( )	$4301$	560
New project generation	240	420
Total exploration budget	2590	:3520
Management/corporate	970	970
ASX listing	$-440$	510
Proposed use of total funds raised	4000	5000

reserves the right to accept any Application. in whole or in part, or to reject any Application. Application monies will be held in trust on behalf of Applicants until the Shares are issued. If any Application is rejected (in whole or in part), the amount tendered in respect of Shares that have not been issued will be repaid to the unsuccessful Applicant, without interest.

Issue of Shares

If the Company decides to accept your Application and issue the Shares and Attaching Options, either in whole or inpart, it will issue the Shares and Attaching Options and dispatch a holding statement. to you as soon as practicable after the

Closing Date together with any Application. mobiles received in excess of the number of Shares issued to you. The issue of Shares and Attaching Options pursuant to this Prospectus is subject to ASX granting official quotation of the company's securities and the minimum subscription being raised. It is the responsibility of Applicants to determine their allocation prior to trading in Shares and Attaching Options. Applicants who self Shares or Attaching Options before they receive their holding statements will do so at their own risk.

Dividend Policy

The Company does not yet have a dividend policy. The Company has no immediate

intention to declare or distribute dividends. Payment of future dividends will depend upon the future profitability and financial position of the Company.

Details of the Offe

Risk Factors

The Shares offered by this Prospectus should be considered speculative in nature. Risk factors which should be considered in relation to an investment in the Company. are set out at page 25.

Stock Exchange Quotation

The Company will apply within 7 days after the date of this Prospectus for the Shares and Attaching Options offered by

Capital structure

Total	38,586,800	19,646,700	43,586,800	22,146,700
Axis options		1.500.000		1.500.000.
Shares and Attaching Options to be issued pursuant to the Offer-	20,000,000	10,000,000	25,000,000	- 12,500,000.
Seed Capitalists	8586800		8586800	5,146,700
1. Project Acquisition [1900] $\ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots$		$2,500,000$ , $\cdots$ 500,000	$-2,500,000$
Promoters	7500000	250000000000000000000000000000000000000	- 7.500.000	2,500,000
Shares and options presently on issue!
		and the complete state of the state of the complete state of the complete state of the complete state of the c
		$\hat{M}$ inimum subscription $\hat{s}$ 4M $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$ $\hat{M}$

1 Shares and options issued to promoters, project acquisition, Axis and some seed capitalists will be subject to escrow. Refer to Tenns of Securities section.

this Prospectus to be quoted on the ASX. If the Application is not made within 7 days. after the date of this Prospectus, or if the Shares are not granted quotation within 4 months after the date of this Prospectus, the Company will repay all Application monies received with respect to the Offer, without interest.

The fact that the ASX may grant quotation. of the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares.

CHESS

Southern Gold Limited will participate in the Clearing House Electronic Subregister System, known as CHESS. ASTC a wholly owned subsidiary of the ASX, operates CHESS in accordance with the Eisting Rules and the SCH Business Rules.

Under CHESS, a holder of Shares will not receive a certificate but will receive a statement of their holding in Southern Gold Limited.

If a holder is broker sponsored, ASTC will send the holder a CHESS statement. The CHESS statement will set out the number of Shares allotted to each holder under the Prospectus, give details of the holder's HiN and give the participant identification number of the sponsor.

If you are registered on the issuer sponsored subregister, your statement will be despatched by Computershare, and will contain the number of Shares affotted under the Prospectus and the holder's security holder reference number.

A CHESS statement or issuer sponsored statement will routinely be sent to holders. at the end of any calendar month during which the balance of their holding changes. A holder may request a statement at any other time, however, a charge may be made for additional statements.

Holders of existing shares that are subject to an escrow period will, following release from escrow and official quotation of those shares, receive holding statements to replace the certificates for those shares.

Underwriting

The Offer is not underwritten. The Company has an agreement with Axis to act as Financial Advisor and Broker to the Issue. The agreement is summarised in the Summary of Material Contracts section. By agreement, Axis is to assist the Company to obtain subscriptions to the issue. Brokerage and/or handling fees on Applications for Shares will be payable to member firms of the ASX or licensed investment advisers on such Applications bearing their stampand accepted by the Company. Any such brokerage or handling fees will be paid by Axis out of its brokerage fee in accordance with the Corporations Act.

How to Apply

Completed Application forms and payment. must be received by Southern Gold, Axis or Computershare by 5pm CST on the Closing Date. Postal and delivery addresses are as follows:

Southern Gold Limited

262-266 Pirie Street, Adelaide SA 5000 PO Box 3216, Rundle Mall SA 5000 Ph: (08) 8227 1103

Computershare Investor Services Pty Ltd

Level 5, 115 Grenfell Street Adelaide SA 5000 GPO Box 1903, Adelaide SA 5001 Ph: 1300 556 161

Axis Financial Group (Australia) Limited

Level 25, Roval Exchange Building 56 Pitt Street Sydney NSW 2000 PO Box R1464, Roval Exchange NSW 1225 Ph: (02) 9375 0100

Applications and payments may also be made online by visiting the Company's website at www.southergold.com.au

Applications may not be withdrawn after lodgement unless permitted under the Corporations Act following issue of a supplementary disclosure document.

Further important instructions on how to apply are contained on the Application form. or may be obtained by calling the Company, Computershare or Axis.

Financial Forecasts

The Directors believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations. of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad. range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

Enquiries Additional copies of the Prospectus or further
advice on how to complete the Application can
be obtained through Axis, by telephoning or
visiting:
Axis Financial Group (Australia) Limited
Level 25, Royal Exchange Building
56 Pitt Street Sydney NSW 2000
PO Box R1464, Royal Exchange NSW 1225
Contact: Gregory Wood
Ph; (02) 9375 0100
Fax; (02) 9247 4844,
email:
gregory.wood@axisfinanciał.com,au -
web: www.axisfinancial.com.au

Overview

Southern Gold Limited was incorporated in January 2004 to establish a new minerals exploration and development venture in southern Aristralia.

The Company's objective is to increase shareholder value by company growth through the discovery, acquisition and development of substantial economic. mineral resources.

The foundations of the Company are a strong partfolio of projects presenting key exploration opportunities; a two-year program planned to meet the exploration. and corporate objectives and a Board of Directors which has exceptional commercial and technical expertise with prior success in minerals exploration, discovery and development, particularly in southern Australia.

The initial focus is exploration of the established portfolio of projects and the generation of new opportunities for gold, copper and nickel resources in the resurging world-class mining provinces of the Gawler. Craton of South Australia, Eastern Goldfields of Western Australia, and the Lachlan Fold Belt of New South Wales. The general locations of the provinces and projects are shown on Figure 1.

The opportunities to evaluate the uranium potential of Olympic Dam style targets and tertiary palaeochannel deposits within Southern Gold tenements will also be pursued.

The Investment Opportunity

The upturn in minerals' prices, including the recent upward movement in the US Dollar. gold price, has re-invigorated minerals. exploration diobally. The prior period of reduced exploration and consolidation of mining companies has enabled Southern. Gold to assemble the projects and expertise. to faunch a new exploration enterprise. in the world class but under-explored provinces of southern Australia.

Another strong basis for re-activated exploration is the poof of exploration data. generated by the last exploration cycle. that peaked, in Australia and globally, in 1997. This data has been largely neglected or under-utilised by explorers during the downturn of the past five years and offers a valuable start-up asset for explorers.

The other key drivers for renewed exploration and discovery success in the targeted provinces are the significant advances being made in the industry's

ability to predict and find ore deposits. facilitated by a concerted research effort by Government and industry groups. These advances are creating a stepchange in the ability to explore through the extensive but generally thin cover of younger geology in these highly prospective provinces. Expertapplication of these new data, funds and exploration techniques by experienced explorers will increase the discovery rate and realise the potential of the targeted provinces to produce additional high quality. mining operations.

This scenario is particularly applicable to South Australia where the government through its agency PIRSA is building on over ten years of exploration encouragement initiatives with further incentives. PIRSA's PACE exploration acceleration program includes collaborative drilling funds overthe next five years. Southern Gold's focus and expertise in South Australia will be well placed to put forward proposals and applications for the additional funding. Proposals will be submitted for PACE drillfunding in the next round of submissions. due in March 2005.

Southern Gold is using the opportunity to integrate its expertise with under-utilised exploration data and these emerging

. . . . . . . . . . . . . . . . . . . .

Overview of Projects

Southern Gold has selected six projects incorporating approximately 3000 square kilometres within world-class mining provinces of southern Australia. The project ground was secured on the technical criterion of having under-explored high quality targets identified by either: a) under-utilised data; b) new geological models at prospect and regional scales; or c) prospective extensions of established mineralisation under cover that is amenable to modern search technologies.

The principal project that seeks to fulfil the goal of early production is Challenger West in the Gawler Craton where underexplored calcrete targets and the undrilled extensions to known gold mineralisation. offer prospectivity for shallow gold deposits. Discoveries in this area are potentially within trucking distance of Dominion's Challenger processing plant that is expected to have spare capacity as the mine switches from open pit to underground operations. The Bulong South project in Western Australia also offers early drill testing for satellite gold and nickel resources amongst established infrastructure in the Kalgoorlie-Kambalda area

The strategic goal of substantive longterm growth will be initially addressed by exploration of large copper gold targets. in the Southern Gawier Arc project and Challenger West projects, gold exploration in the Yaribrinda trend, nickel exploration of the

Harris Greenstone project and the Grenfell Goldfield project in New South Wales.

The regional settings, exploration rationales and project outlines are described in the following sections. The reader is referred to the report of the Independent Geofogist for a detailed assessment of the projects.

GAWLER CRATON

GOLD-BASE METAL PROVINCE, SOUTH AUSTRALIA

Regional Setting (Figure 2)

Underpinned by the large and expanding Olympic Dam operation, the Gawler Craton continues to generate positive prospectivity news. The progressive discovery and development of new mineral resources. and prospects at Challenger, Prominent-Hill, Tunkillia and Barns demonstrate the opportunity to make new economic. discoveries in the Craton. This potential

is being supported by high profile government research and initiatives to improve on the past exploration with new data, targeting concepts and search technologies.

The Craton's potential for world-class deposits was confirmed with the 1975 discovery of the giant copper uranium. gold resource at Olympic Dam. The revision of the Olympic Dam model into the Iron Oxide Copper Gold (IOCG) class of ore deposits and the discovery of another IOCG deposit at Prominent Hill in 2001 opened up new data and ideas for refining the target models. The Olympic-Dam ore is now recognised as having. formed in hydrothermal breccias of Hiltaba Granite directly beneath the Gawler Range Volcanics. The identification of newgeological attributes and regional orecontrolling fault zones is drawing attention. to other areas of the Craton. Southern Gold

Figure 2 Location of Projects Gawler Craton, South Australia.

recognises the entire margin of the Gawler Range Volcanic Domain as prospective for IOCG deposits.

Application of the new calcrete geochemical technique to thinly-covered areas of the Craton resulted in the discovery. of the Challenger gold deposit in 1995, followed by the discoveries of several other deposits and prospects up to the present time. The discoveries include the Tunkillia, Nuckulla Hill, Barns and Weednanna prospects within an arcuate zone recently defined as the Central Gawler Craton Gold Province (CGCGP). All the gold deposits within the CGCGP are now considered to have formed from the same. granite fluids during the same mineralizing event at Olympic Dam. The successful commissioning of the Challenger gold mine. and the upgrading of the Tunkillia gold resource further enhanced the Craton's potential during the past year

The Craton's potential for nickel is also developing with major companies. re-entering the Craton to undertake exploration. The Archaean rocks include belts of greenstones that are similar to those hosting the Kambalda nickel deposits whereas the younger Proterozoic rocks offerpotential for fayered nickeliferous intrusive rocks analogous to mined examples. overseas.

The understanding of the cover geochemistry and exploration applications of the calcrete technique continue to be improved by government research while the introduction of modern electrical geophysics into the Craton permits better prioritisation of geochemical, magnetic and gravity targets.

The South Australian Government endorses the State's world class mining potential and exploration opportunities with the recognition of the likelihood of the discovery of another giant Olympic. Dam-style deposit and the role smaller explorers play in the future of the State's resource development. In March 2004, the Premier of South Australia announced the new PACE exploration acceleration program. costing \$15 million that will include funding drill partnerships with private exploration companies on a dollar for dollar basis. Southern Gold is well placed to participate in this initiative.

Challenger West Project GOLD AND COPPER GOLD.

The Challenger West project comprises two Exploration Licences ("EEs") EE3080 and EL3097 and an Exploration Licence. Application ("ELA") 654/04 (expected to be granted as an EL prior to the end of February 2005). Together these total 1510 square kilometers located within 10 to 50 kilometres to the north and west of the Challenger gold operation. Southern Gold has acquired 100% of the tenements.

The Challenger gold deposit was discovered in 1995 by the drilling of anomalous gold. geochemistry in the calcrete overburden. Dominion Mining Limited ("Dominion") successfully commissioned the Challenger mining operation early in 2003. The original reserves contained 465,000 ounces of gold that were partially extracted by anopencut operation. Decline development is underway for the underground mining. phase. This may result in the processing plant receiving higher-grade ore at a lower tonnage throughput rate and the likelihood. of spare plant capacity in the near future. Dominion is continuing to discover highgrade extensions to the underground. resource that are likely to extend the life of the operation and consequently the time. the processing plant is available to treat additional ore sources.

The Challenger West project is well positioned with targets that are potentially within trucking distance of the Challenger plant. Dominion and Southern Gold have exchanged letters expressing mutual interest in treating ore that Southern Gold. develops in the Dominion plant.

Southern Gold's project areas contain the same geofogy of Archaean gneisses that hosts the Challenger deposit. At the Garford-Prospect, the unexplored extension of the Endor gold prospect into EL 3080 offers the opportunity to establish an early drill target with RAB drilling. Drilling at Endor is reported to have produced intersections. up to 4 m @ 3.3 g/t gold. A coincident magnetic structure is delineated by broad. government aeromagnetic data to extend from Endor for three kilometres into the project area and subsequently confirmed. and defined by Southern Gold's detailed airborne magnetic survey.

The project area has an extensive coverage of calcrete geochemical data bequeathed by previous explorers although some parts still require first-pass sampling. Several farge areas of calcrete anomalism are underexplored with the departure of explorers following the exploration downturn in 1997. and prior to the development decision for the Challenger mine. Much of the calcrete sampling is on reconnaissance patterns. The coarsely delineated anomalies may be subdued by variable cover depths in

contrast with the high amplitude of the calcrete response at Challenger where it was enhanced by the rare situation of gold mineralisation nearly at the ground surface.

A greenstone belt in the northern part of the tenements has potential for Kalgoorlie style gold and nickel targets.

EL 3097 also contains a significant magnetic and gravity domain of 5km x 10 km extent at Westpoint Hill. The single drill test on its margins established the presence of ironaltered granites similar to those at Olympic Dam. Variations in the relative magnetic and gravity responses are encouraging. for the possible presence of a prospective haematite envelope to target mineralisation.

Southern Gold has already progressed the project with a detailed aeromagnetic survey to refine definition of the nominated targets. A Native Title agreement has been executed and Aboriginal heritage clearances undertaken in preparation for ground exploration of key areas.

The Company proposes to complete infill geochemical definition of the calcrete anomalies and the Westpoint domain and to driff the Garford, Contender and Blowout targets at the earliest opportunity after listing. The large project area requires additional magnetics and calcrete geochemistry to be budgeted in the second year and sufficient drill budget to test the expected multiple targets.

Southern Gawler Arc Project COPPER GOLD

The Southern Gawler Arc project is located in the northern Eyre Peninsula district about 300km northeast of Adelaide. The project is secured by 100% acquisition of EL 3158. The 583 square kilometre area of the tenement lies on the southern margin of the Gawler. Range Volcanics and abuts the Mennishie Dam and Weednanna tenements to the east and the various tenements comprising the Barns project to the southwest.

Major companies have explored the area. using target models that progressively evoived from Broken Bill-style zinc-lead to Tunkillia style gold and copper gold targets, then to recently initiated exploration for Olympic Dam-style copper gold.

Southern Gold generated a new prospectivity model based on the Company's experience with the district and review of the public exploration and research data. There is regional coincidence of a) favourable fault trends; b) Hiltaba Granite intruded into the base of the Volcanics; c) extensive but poorly exposed indications of subvolcanic breccias, haematite and fluorite alteration; and d) zinc. lead silver, copper and gold mineralisation. in geological environments ranging through epithermal to hydrothermal breccia to skarns. The evidence points to a metal pregnant and structurally disrupted area.

that underwent considerable hydrothermal activity during the emplacement of the Hiltaba Granites and the coeval Gawler Range Volcanics.

The structurally-controlled zinc mineralisation at Menninnie Dam and the gold and copper skarp mineralisation in the Weednanna area are considered to have formed in high temperature environments. close to the Hiltaba Granites whereas the Barns group of gold prospects formed at lower temperatures further from the source. grapite. EL 3158 occupies the intervening area where interpreted deeper granites liedirectly below the base of the Gawler Range. Volcanics, Geological modelling suggests this is the ideal position for the formation. of large subvolcanic deposits similar to Olympic Dam.

Prior exploration had not addressed this potential for large copper gold deposits. The early Broken Hill zinc models focused explorers on different geology whereas. the recent gold exploration used empirical targeting with calcrete geochemistry that was subdued by the fan of alluvial covershedding from the Gawler Ranges to the north.

A significant target with copper and gold potential is identified at the Victory Prospect. The key feature is a gravity anomaly in the size and amplitude range that is prospective for IOCG deposits. Southern Gold interprets

the Victory anomaly to be caused by a large dense body under the talus cover and in the most prospective structural and geological position according to the new model. There is weak gold lead zinc and copper mineralisation in the magnetic structures that bound the interpreted gravity source. MIM Exploration Pty Limited ("MIM") tested the marginal structures with shallow drilling where these gave chargeable responses. from induced Polarisation ("IP") surveying. The drillholes variously intersected anomalous zinc and copper values in pyritic. rocks and anomalous fead and silver in the saprolith within two to seven hundred. metres of the interpreted gravity source. The shallow drilling also intersected thick zones of copper-anomalous saprolith that indicate copper may be dispersing from the target into a blanket buried beneath the talus cover. The prime gravity anomaly and associated deeper chargeable IP anomalies. are untested. These offer ready drill targets at 100 to 450 in depths that are comparable. with the drilling depths at Prominent Hill.

Southern Gold has undertaken an initial MMI survey to refine drill targets and proposes to submit an application for PACE collaborative drill funding in March. 2005 and to drill test the Victory target at the earliest opportunity in Year One of the proposed two year exploration program. With encouragement, the budget provisions for Year Two will be used to follow up that target and investigate the regional calcrete and magnetic anomalies.

Yarlbrinda Project GOLD

The Yarlbrinda shear zone is of regional extent and hosts Equinox's Nuckulla Hill gold. prospects and the substantial gold resource. at Helix's Tunkillia project. Exploration Licence ("EL") 3217 covers a 372 square kilometre area at the southern end of the shear zone and adiacent to the Nuckulla Hill prospects.

The Tunkillia deposit was recently elevated to an indicated and Inferred Resource. containing 730,000 ounces of gold. In contrast, the Nuckulla Hill area has not undergone significant exploration since 1997 after three local prospects were identified with intersections of up to 7 m @ 3.1 g/t gold in granite breccias.

The Yarlbrinda project area was selected for its proximity to Nuckulla Bill mineralisation, favourable structures that appear to control the source Hiltaba Granites and the recognition of untested calcrete anomalies. Subsidiary splays adjacent to the main shear zone are equally prospective. Of particular note is the Yathong locality, where an untested calcrete copper-gold anomaly. is coincident with a proposed IOCG. aeromagnetic target.

PIRSA proposes to conduct regional gravity. surveys over the Yarlbrinda project area in 2005 as part of its PACE program at no cost to Southern Gold.

Southern Gold proposes to apply the Tunkillia model to position calcrete sampling over magnetically delineated shears.

and to investigate the untested calcrete, magnetic and gravity anomalies. Follow upgeochemical Rotary Airblast ("RAB") drilling and target drilling are provided for later in Year One and in Year Two.

Harris Greenstone Project NICKEL AND GOLD

EL 3284 covers 321 square kilometres of highly prospective nickel and gold terrain at the west end of the Harris Greenstone Beft. During the last decade, PIRSA geologists scout drilled the belt, demonstrating a similar Archaean geology and age to the komatiite-basalt greenstone belts of the Kalgooriie-Kambalda area. The project area is poorly exposed and under-explored for nickel copper deposits and gold deposits of the Eastern Goldfields stvies.

The project is located near rail infrastructure. and the nickel exploration projects of other companies. The tenement lies within the Yelfabinna Regional Reserve. The exploration licence is subject to dual proclamation. conditions with prescribed procedures for environmental management.

Southern Gold proposes to conduct airborne and ground Electromagnetic ("EM") geophysical surveys and calcrete sampling of the ultramafics and shears delineated by the regional aeromagnetics to delineate targets for drilling in Year One. Further drilling and ore-deposit scale EM surveys of this highly prospective area are planned in Year Two

. . . . . . . . . . . . . . . . . . . .

Figure 3 Central Eastern Goldfields, regional geology and mineralisation. (After Geological Survey of Western Australia, 2001).

EASTERN GOLDFIELDS PROVINCE

WESTERN AUSTRALIA)

Regional Setting (Figure 3)

The Bulong South project is situated close. to Kalgoorlie in the Eastern Goldfields of Western Australia. The project area is underlain by geology of the Gindalbie Terrane that forms part of the Norseman-Wiluna greenstone belt of the Archaean Yilgarn Craton.

Although the Eastern Goldfields have undergone intensive exploration for Archaean nickel and gold deposits since the nickel boom of the late sixties and the gold boom from the late seventies, the province continually resurges under cyclic commodity prices. The improvement in exploration and processing technologies has also created pulses of exploration and development activity.

The latest upturn in activity is driven by the increases in nickel prices and the entry of

smaller mining groups into sulphide nickel. mining as satellite sources to the established processing facilities. Increasing international gold prices are similarly restimulating gold. exploration in the region.

The broad geological framework was revised by the mapping of the Geological Survey of Western Australia. The nickel deposits are hosted in komatiitic volcanics and intrusives of the greenstone belts. The gold deposits are closely associated with fault zones in mafic rocks often in close. proximity to the komatiites. Mixed gold and nickel mining centres such as Kambalda-Lake Lefroy are common.

Southern Gold has acquired ground that is prospective for nickel and gold resources and close to infrastructure. This is an excellent apportunity for establishment of an exploration presence in this world-class region.

historic Bulong gold camp and suspended lateritic nickel operation and 10 km. northeast of the Blair nickel sulphide mine. The tenement area contains scattered outcrops of basalts and ultramatics similar to the Blair area.

A quartz vein system that sporadically outcrops over 1.5 km strike has been the focus of previous shallow mining and exploration. The project area has extensive shallow alluvium cover. During the past decade various companies have explored the area for gold with shallow auger and RAB drilling delineating several areas of gold and nickel anomalous values in the overburden. The Valley Prospect has been percussion driffed on a RAB intersection of 3 m @ 19.9 g/t gold. Haif of these eight deeper holes achieved intersections of better than 1 m @ 1.0 g/t Au including 4 m @ 6.9 g/t and this zone of mineralisation is open and untested in both strike directions.

Recent scraping of the eluvium over a second parallel zone of 200 x 500 m area, nominated as target Au1, has recovered 170 ounces of gold-in-quartz nuggets. It

Figure 4 Eastern Lachlan Fold Belt, regional geology and mineralisation.

has also exposed an underlying quartz vein assaying up to 3.4 g/t Au from selected rock chipping and this is an indication. of the direct source to the nuggets. The mined zone coincides with a prior auger geochemical anomaly that may join with other anomalies and extend the zone of prospectivity.

The only record of exploration for nickel was of reconnaissance conducted in the early seventies that focused on a reported copper gossan in the project area. Scattered anomalous nickel results were obtained. from limited nickel assaying of the auger and RAB drill sampling for gold targets. The best results of 3 m @ 0.61% Ni and 2 m @ 0.84% Ni are indicative of untested nickel potential.

Southern Gold proposes to undertake modern mapping and further RAB drilling to investigate the preliminary anomalies with the objective of rapidly drill testing the two main gold anomalous zones at the Valley Prospect. RAB drilling and Electromagnetic ("EM") geophysical surveying are also planned to develop the nickel targets at the earliest opportunity.

LACHLAN FOLD BELT PROVINCE NEW SOUTH WALES

Regional Setting (Figure 4)

The Lachlan Fold Belt is a group of Palaeozoic rocks containing a variety of mineral deposits throughout Tasmania, Victoria and New South Wales. It offers world-class mining centres in the historic Bendigo-Ballarat Goldfields, the mature tinand base metals belt of western Tasmania and the emerging porphyry copper gold belt in the Cadia-Parkes district of central New South Wafes. There are other substantial base metal mining areas in the Benambra district of Victoria and in the Woodlawn and Cobar districts of New South Wales.

The Cadia-Parkes region was a relatively modest producer of historic gold that has developed in recent years into a worldclass belt of major resources amenable to modern bulk mining and processing technologies. The district produced about 3 million ounces of historic gold from veins and alluvials dominantly in the Parkes, Forbes and West Wyalong areas. The

recognition of major porphyry style gold. and copper-gold deposits commenced with the North Parkes discovery in 1977, the Cowal discovery in 1988 then the discovery of the world class Cadia system. in 1992. These were followed by the recent Ridgeway and Tomingley discoveries that demonstrate the variety of porphyry deposit styles and exploration opportunities. The total gold resource in all the modern discoveries of the Cadia-Parkes region. stands at 18 million ounces.

Although the region continues to produce significant discoveries, the prospectivity has also benefited from ongoing acquisition. and research. New mapping, aeromagnetics and age dating by Geoscience Australia have particularly improved the understanding of the extent of prospective rocks and regional fault zones. The significant goldfields and major moderndiscoveries are now recognized to be closely associated with Ordovician volcanics and intrusives and major regional faults. It is postulated by Geoscience Australia that the primary source of the copper and gold. mineralisation is the Ordovician magmatism.

with later structural remobilization of the metals into younger deposits along the fault zones. The Grenfell Goldfield is such a prospective situation that has not benefited from reanalysis using these new ideas.

Grenfell Goldfield (Lawson's Line Project) GOLD

Southern Gold intends to exercise an option. to acquire EL 6122 covering a 239 square kilometres area over the Grenfell Goldfield. The Goidfield is situated within the Coolac-Narromine Fault Zone that defines the eastern margin of the belt of prospective Ordovician rocks containing the Cowal deposit and Northparkes mine.

The Grenfell Goldfield is one of the significant historic goldfields in New South Wales. It was discovered in 1865 with an ensuing rush. Most of the mining was undertaken before official records were kept from 1875, however at least 10 tonnes of gold are estimated to have been produced from the field. Significant

hardrock production came from a northeast. en-echeion pattern of quartz veins within the Silurian Glenisla Volcanics (historically referred to as "porphyry") immediately east of the township. The Grenfell veins sourced gold accumulations in Tertiary deep leads. draining to the west of the town. Three other deep fead systems focated two to ten kilometres to the southeast of Grenfell were also reported to be substantial contributors. to the field's production. The southeasternleads are in a separate drainage to the Grenfell system but attributable hardrock sources to these substantial leads are yet. to be discovered. The primary target area for the hardrock sources is the north-south zone of headwaters to the three main leads. referred to as the "Lawson's Line".

Early miners and geologists reported altered sediments, gold bearing quartz veins and "porphyry" being exposed by the alluvial workings but these were largely reblanketed. with soil by rehabilitation and farming. Two small "porphyry" outcrops were relocated at each end of Lawson's Line close to the

headwaters of deep lead workings and are encouraging veined and altered felsic. volcanics and intrusives. Past explorers have undertaken reconnaissance investigations. of the area without detailed attention to Lawson's Line and without the knowledge. of the new research data. Sparse rock chip, soil and stream sediment sampling further demonstrate the anomalism of the Line but the shedding of barren sediment. talus from the hill scarp formed by the Coolac-Narromine Fault Zone to the east of the target zone has obscured most of the geofogy and subdued geochemical dispersion.

Southern Gold has concluded the Lawson's Line has a high potential for shallow gold deposits. Two geological models will be applied to the target zone. The Lawson's Line is most likely a mirror image of the Grenfell setting and therefore has excellent potential to contain high-grade gold veins or large stockwork systems that shed into the deep leads and were subsequently covered by talus. Alternatively the target

geology may contain a thin wedge of Ordovician porphyry along the Coolac-Narromine Fault Zone with additional substantial gold-copper potential in possible porphyry settings.

Southern Gold proposes to addressively explore the Lawson's Line with detailed IP and bedrock drilling in Year One with deeperdrilling of defined targets in Year Two. Investigations will be undertaken of other historically mined areas of the Goldfield.

PROGRAM STRATEGY AND SCHEDULE

The scheduling and tactics for the proposed two-year exploration program are summarized on Table 1.

Early focus will be on drilling the targets in projects at Challenger West, Southern Gawler Arc, Bulong South and Grenfell.

Aggressive target definition programs will be undertaken to rapidly upgrade. other warranted targets to drill testing at the earliest opportunity and at the most effective cost. Modern and provengeochemical and geophysical search

technologies will be efficiently applied to priority areas. Geochemistry based tactics will be applied in covered areas where the regalith cover is connected with the bedrock to produce geochemical dispersion. haloes of the target metals. Calcrete geochemistry will be the main technique. for target definition in the Gawler Craton. projects. The Grenfell project is amenable. to the more conventional geochemical techniques of stream sediment and soil sampling. RAB drilling will be used to follow up positive surface geochemistry to establish three-dimensional geochemical and lithological data.

Where the surface geochemical signatures are subdued by deep or transported alluvial cover, or other land uses requireless invasive exploration techniques, the electrical geophysical techniques of IP and EM will be used to measure subsurface. electrical currents and fields indicative of the presence of ore sulphides and afteration. mineralogy. The IP technique will be used in the talus-covered and farming areas of the Grenfell project while EM is the successful tool for exploration of massive nickel

sulphides in the Eastern Goldfields and will be applied to the Bulong South and Harris-Greenstone projects.

in parallel with the project exploration, project generation and acquisition will continue to provide Southern Gold with access to new opportunities that will enhance the asset portfolio for the Company's shareholders.

The Company shall conduct its exploration in accordance with statutory obligations. by undertaking industry best practice for safety, commercial, technical, land access and environmental procedures.

The results of exploration shall be constantly monitored to ensure shareholders funds. are applied in the most cost effective. manner. The two-year budget is based uponpresent knowledge and prioritization of the projects and the assumption they will show improved potential as Southern Goldadvances the exploration program.

. . . . . . . . . . . . . . . . . . . .

Table 1 Southern Gold Limited - Exploration Program Schedule.

MARISTAN		Mille Ni			MEXIMENTO
	ER ESTRENT	Finishers	61480196194319	ANTONIA STATISTIC	Machala	Programment	ANTIBURIE	Engelfriede
Challenger West	Aeromagii interpretation Infil regional oeochero. RAB antling Klarford	Target drilling a Cartord and calcrete targets		Review	Aeromad Intil calcrete geochem RAB drill new targets		Follow up and new Target drilling
Southern Gawler Arc		Target Drilling - Victory	Review		Geochem - new targets		Target drilling - new targets
Yarlorinda	Data review	Kaldrata Geochem		RAB dollar	Target drilling
Harris Greenstone	Airborne geophysics	Calcrete and EM surveys	Access and RAB drilling		Targeted EM-		Target drilling -- nickel, gold
Bulong South	Mapping, RAB drilling,	Target drilling Valley and Railway Au EM geophysics Mi	Target drilling mickel		Review Geochem/ RAG drilling new m. targets		Target drilling new targets
Grentel	Geology Ground IP geophysics	RAB and Target drilling -Lawson's Line		Review	Ground IP geophysics	Line	Follow up drilling - Lawson's
Generation/ new project		Orgaing assessments provision for property examinations. deochemical testing and initial option payments plus first pass. aeromagnetic surveying of a new project.				prospects or target drilling of new projects.	Ongoing assessments, provision to infill drilling of advanced

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1 ning en 194 11. Szellinsson lingua

PÖDI BÖRGAN

Exploration Programs and Application of Funds

Budget

The funds raised from the Offer are primarily for the purpose of mineral exploration. The proposed expenditure to undertake the exploration objectives is summarized in Table 2.

The budget is classified to projects and the tactical categories of geology, geochemistry, geophysics, drilling and tenure/access. Budgets for all the tactical categories include the salaries and wages for field operation and supervision; contractor charges; consumables, travel and accommodation. The geology category includes project management, interpretation, reporting and field mapping. Geochemistry includes regional and detailed sampling of stream sediments, soils and calcrete. Geophysics includes aeromagnetics and ground surveying with IP and EM techniques. Drilling includes shallow RAB drilling, deeper target drilling by reverse circulation percussion and diamond coring; and all estimated sample handling and assaying costs. Tenure/access includes all estimated statutory, legal and landowner compensation costs to maintain the tenure and gain access the project areas.

The table summarises the budget required to execute the two year exploration. program.

If oversubscriptions are received in excess of the minimum \$4,000,000 subscription, these additional funds will be used to accelerate drill programs, advance projects and generate new projects during the 2 year program period.

SOUTHERN COLD LIMITED PROSPECTUS

Table 2 Exploration programs and application of funds.

			512451610						Mang (33)
ERELESE	Gro oor	Greener	Geophys	EXTING	ičtino, ANGELIA	SUBJOILS ana tai	Gleology	Exploration	Cepphys	oming	Tenute 13331	SHYORI MANE	merrik
Challenger West	25	-50	20.	150	35.	280	25	30	30.	1201	30.	215	545.
Southern Gawler Arc $\sim$	.25	20	20	90	30.	$\cdots$ 185 .	25				30	-165 $\ddot{\phantom{a}}$	350.
Yarlbrinda	-25	30.	10.	50.	30.	145	20	30.	30.	60.	30.	150.	295
Harris Greenstone	20	30	-70	80	35	235	20	30	25	80.	$-30$	$-185$	$-420$
Bulong South	20.	$20^{\circ}$	40	90.	$20\,$	190	$20\,$	$20\,$	$\mathbb{C}$	90.	20.	150.	340
Grenfell	20.	40.	40	80	30	210	20	30	$^{\circ}40$	100	.30.	220 $\epsilon_{\rm{max}}$	430
New Project Generation	40	Ø.	20 1	30.	40.	130.	40	$\overline{0}$	Ō.	30	40 1	-110	240.
Total Exploration Budget	$-175$	190	220.	570	$220 -$	11375	170.	170.	105	560	210	$-1215$	2590
Management/ Corporate						510						460.	970.
ASX Listing						$-440$							$-440$
Proposed Use of Funds Raised						2325						1675	4000

Directors' Profiles

Members of the Board are highly experienced in the discovery of new mineral resources, the development of new mineral projects and their operation and management. The Board comprises:

Cedric (Ric) Murray Horn

CHAIRMAN

Recently retired as the Managing Director of Magnesium International Limited (formerly Pima Mining NL). Ric introduced Pima to the potential to develop a commercial magnesium processing facility based on large magnesite deposits identified at Leigh-Creek in South Australia. Ric was responsible for managing the \$1 billion project through the recent completion of bankable. feasibility.

Ric ioined Pima Mining as Managing Director in 1996 after 18 years service with the Department of Mines and Energy South Australia (MESA) where, as Director of Mineral Resources, he successfully led the South Australian Exploration Initiative (SAEI). commenced in 1993 to promote mineral exploration in covered terrains.

Prior to joining MESA, Ric was Chief Mine Geologist at the Emperor Gold mine in Fiji, overseeing the discovery and development of several new gold lodes. Prior to this he was involved in exploration projects in NSW, Queensland, Tasmania and the Eastern Goldfields of WA. Ric has been a key figure in the South Australian exploration and mining industry for many years and has the reputation for innovative ventures and delivering success to stakeholders. Ric is a Fellow of the Aus®MM, a Certified Practising Geologist and is a Member of the Geological Society of Australia.

Stephen Richard Biggins

MANAGING DIRECTOR

Stephen has accumulated broad experience as a geologist in mineral exploration, development and mining throughout Australia over the past 15 years. He has also applied his MBA to the management. of exploration, resource definition and feasibility studies for SAMAG's magnesite. mine at Leigh Creek. Stephen joined Pima-Mining in the mid 1990s as an exploration. deologist, supervising various exploration. projects in gold and base metals on the Gawler Craton, Prior to this, he spent 3 years. with Mines and Energy SA (MESA) as an exploration geophysicist during the South-Australian Exploration Initiative (SAE). As a mineral geophysicist, Stephen has also worked with BHP (Iron Duke) and Hamersley iron (Tom Price) in near-mine and in-pit iron. ore exploration.

Stephen is a director of Genex Resources Pty Etd, which was founded for the purpose. of acquiring and conducting exploration on strategic mineral tenements throughout Australia.

John Alexander Anderson

NON-EXECUTIVE DIRECTOR

John is a Brisbane-based geologist and exploration manager of 26 years experience. with Aberfoyle and MiM, most recently as General Manager - Exploration Australia for MIM Exploration Pty Ltd.

John has explored in all Australian jurisdictions and for most commodities with an emphasis on the major base metal/gold mining centres of the Proterozoic including Broken Hill, Mount Isa/Ernest Henry and the Gawler Craton. He has considerable experience with generative and brownfields exploration for both large and small resources using a variety of conceptual, empirical and high technology targeting techniques.

John led teams in the discoveries of the Angas zinc resource, the major portion of the Menninnie Dam zinc deposit, the White Dam gold copper deposit and several mineral sands deposits in the Murray Basin. He is former President of the South Australian Chamber of Mines and Energy.

Michael Walsh McDonald

NON-EXECUTIVE DIRECTOR

Mike is a fawyer and partner in specialist resources faw firm McDonald Steed McGrath Lawyers. Mike has over 25 years experience working within the resources sector, having been in-house counsel for the Bell Group and Defhi Petroleum prior to founding McDonald Steed McGrath in 1988.

Mike has specialised in providing start up and operation services to mining and infrastructure projects in South Australia and elsewhere and has extensive experience in native title matters. He has negotiated various exploration and production agreements including recently for the Beverley Uranium Mine, the SAMAG magnesium project and the Dominion. Challenger Mine. Mike was nominated by the Australian Legal Businesses' Legal "Who's Who" in 2003 as one of Australia's leading practitioners in energy & resources.

Michael Robert Billing

NON-EXECUTIVE DIRECTOR AND COMPANY SECRETARY

Directors' Profiles

Mick is an accountant with in excess of 25 years of mining industry experience in company secretarial and chief financial officer roles, including extensive periods in senior accounting and commercial roles with Bougainville Copper Etd and WMC. Resources Ltd. He has had experience with debt and equity raising and project. evaluation and feasibility studies in Australia and overseas.

He is company secretary and an alternate director of Flinders Diamonds Limited and company secretary of Adelaide Resources Limited and Australian Orthopaedic Innovations Limited.

Ric Horn Chairman

Stephen Biggins Managing Director

John Anderson Non-Executive Director

Michael McDonald Non-Executive Director

Michael Billing Non-Executive Director and Company Secretary

Corporate Governance

The Directors are committed to the principles underpinning best practice in corporate governance. A description of the Company's main corporate governance practices is set out below.

Board Responsibility

The Board of Directors takes responsibility for corporate governance and operates according to the Company's Constitution.

The Board is to be compared of a majority of non-executive directors, including the Chairman, The Chairman of the Board is to be elected by the Board and the performance of the Directors is to be reviewed on a reqular basis.

Directors have the right, in connection with their duties as Directors to seek independent professional advice at the expense of the Company, subject to prior approval of the Chairman, which may not be unreasonably withheld.

The Board has responsibility for internal control procedures within the Company. Compliance covering financial reporting. quality and integrity of information. personnel, and operations shall be regularly monitored

All Directors, managers, and employees are expected to act with the utmost integrity. and objectivity, striving at all times to enhance the performance and requtation of the Company.

Audit Committee

The audit committee, comprising Mr. CM From, Mr JA Anderson, and Mr MW McDonald reviews:

• The annual and half vear financial reportprior to their approval by the Board
• The effectiveness of management information systems and systems of .
  Internal control
• The appointment of external auditors

Remuneration Committee

The role of the Remuneration Committee, comprehig Mr MR Billing, Mr JA Anderson and Mr MW McDonald is to:

• Review the engagement performance and remuneration of senior executives or the Company and
• Recommend to the Board appropriate terms and conditions of engagement. and remuneration of Directors within aggregate limits approved by shareholders.

Where necessary, the Committee may obtain external advice in respect of the structure and level of remuneration packages

Ethical Standards

All executives and employees are required. to adhere to laws and requlations, and act with the highest standards of nonesty. integrity, and objectivity in all dealings with each other, the Company, and suppliers and the community.

The codes of conduct adopted by the Company shall be requiarly reviewed and updated as necessary to ensure they reflect the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control o the highest standards of behaviour and the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the professionalism.

Continuous Disclosure

The Directors are committed to keeping the market fully informed of material developments to ensure compliance with ASX Listing Rules and the Corporations. Act. At each Board meeting specific consideration is given to disclosure of any matters which should be disclosed under the Company's continuous disclosure policy.

Related Party Matters

Directors and semor management will be required to advise the Chairman of any related party contract or potential. contract. The Chairman will inform the Board, and that person will not participate in ciscussions involving the matter.

Shareholder Relations

The Directors aim to ensure that shareholders are informed of all matters. necessary to assess the performance of the minimum Company

information on all major developments. affecting the Company shall be communicated to snareholders through.

• The Annual Report
• Quarterly and half yearly reports,
• The Annual General Meeting and other Æ General Meetings of shareholders called as appropriate;
• Other announcements in accordance with the Company's continuous disclosure policy; and
• The Company's web site

Risk Factors

This section identifies areas the Directors regard as risks associated with an investment in the Company. It is not exhaustive. The Directors recommend that potential investors consider the risks described below and other information contained in this Prospectus, as well as consulting with their professional advisors before deciding whether or not to apply for Shares.

General

There are numerous risks associated with investing in any form of business and with investing in shares generally. There are also specific risks associated with the Company's business and its involvement in the exploration and mining industry. General risks associated with investment in the Company may include:

fluctuation of the price at which the Company's Shares and Options trade due to market factors;

high volatility of the Company's Shares in response to factors such as:

• (i) additions or departures of key personnel:
• (ii) litigation and legislative change;
• (iii) press newspaper or other media reports:
• (iv) actual or anticipated variations in the Company's operating results;
• (v) new services provided by the Company or its competitors.

Value of Shares

The Shares and Attaching Options allotted under this Prospectus carry no quarantee in respect of profitability, dividends, return on capital, or the price at which they may trade on the ASX.

Exploration

Exploration is inherently associated with risk. Notwithstanding the experience, knowledge and careful evaluation a company brings to an exploration project there is no assurance that recoverable mineral resources will be identified. Even if identified, other factors such as technical difficulties, geological

conditions, adverse changes in government. policy or legislation or lack of access to sufficient funding may mean that the resource is not economically recoverable or may otherwise preclude the Company from successfully exploiting the resource.

Development and Mining

Possible future development of mining operations at any of the Company's projects. is also subject to numerous risks. The Company's operations may be delayed or prevented as a result of weather conditions. mechanical difficulties, shortage of technical expertise or equipment. There may be difficulties with obtaining government and/or third party approvals, operational difficulties encountered with extraction and production activities, unexpected shortages or increase in the price of consumables, plant and equipment, cost overruns or lack of access to required levels of funding.

If the Company commences production, its operations may be curtailed or disrupted by a number of risks beyond its control such as environmental hazards, industrial accidents and disputes, technical failures, unusual or unexpected geological conditions, fires, explosions, adverse weather conditions and other accidents.

The Company's operations may be adversely affected by higher than anticipated oretreatment costs, worse than anticipated metallurgical conditions, fluctuations in base and precious metal prices or lack of availability of smelter capacity.

No assurance can be given that the Company will achieve commercial viability through development of any of its tenements or projects.

Limited Operating Experience and Reliance on Key Personnel

The Company was incorporated in January. 2004. While its Directors and officers have significant experience in the mining. industry, the Company has only limited historical, financial or operating information. If growth objectives are to be met, this will depend on the ability of the Directors to implement the current exploration and development strategies and to adapt, where necessary, to accommodate and manage any unforseen difficulties. Initially, the Company will rely heavily on the experience of its three technical directors Mr Ric Horn, Mr Stephen Biggins and Mr John-Anderson. Mr Biggins has been engaged for a contract period of two years as managing. director with an option for the company to renew that engagement for a further period. Technical services of the other nonexecutive directors have been secured for an initial period of up to three years, subject to Board membership.

Resource Estimations

Resource estimates are inherently imprecise as they are expressions of judgement. at a particular time based on available. information, interpreted through experience. and resource modelling techniques. The estimates, while made by qualified professionals, may change over time as other information becomes available which differs from information known or predicted. by past drilling, sampling and geological interpretation. Estimates remain subject to change which may adversely affect the Company's operations or the commercial viability or its projects.

Commodity and Currency Price Volatility

Commodity prices are subject to influencing factors bevond the control of the Company and can be subject to significant fluctuations. Just some of these influencing factors include:

(a) world demand for particular commodities:

ang lan

• (b) the level of production costs in major commodity producing regions;
• (c) expectations regarding inflation, interest rates and US dollar exchange rates.

Any significant and/or sustained fluctuation in exchange rates or commodity prices could have a materially adverse affect on the Company's operations and its financial position.

Native Title and Aboriginal Heritage

The Native Title Act 1993 (Cth) recognises certain rights of indigenous Australians over land where those rights have not been extinquished. These rights, where they exist, may impact on the ability of the Company to carry out exploration or obtain production tenements, in applying for certain production tenements, the Company must observe the provisions of Native Title legislation. In carrying out exploration and/or mining operations. it must observe Native Title legislation (where applicable) and Aboriginal Heritage. legislation which protects Aboriginal sites and objects of significance.

In certain circumstance the consent of registered Native Title Claimants must be obtained prior to carrying out certain activities on land to which their claim relates. It is possible that the conditions imposed by Native Title Claimants on such consent may be on terms unacceptable to the Company. While the Company has been able to establish that Native Title does not impinge on a number of the tenements in which it has an interest or may obtain an

interest, it is difficult to quantify, at this time the impact (if any) which Native Title issues may have in those areas of the Company's tenements where Native Title has not been extinguished. (See Soficitor's Report for further information).

Tenure and Access

Mining and exploration tenements are subject to periodic renewal. There is no quarantee that current or future tenements. or future applications for production tenements will be approved.

The Company's tenements are subject. to numerous State-specific legislative conditions. The renewal of the term of a granted tenement is also subject. to discretion of the relevant Minister. Renewal conditions may include increased expenditure and work commitments or compulsory relinquishment of areas of the tenements comprising the Company's projects. The imposition of new conditions or the inability to meet those conditions. may adversely affect the operations, financial position and/or performance of the Company.

Compulsory Work Obligations

Each of the Company's tenements is subject to expenditure and work commitments which must be met in order to keep such tenement in good standing. These commitments may be varied on application of the tenement holder but any such variation is at the sole discretion. of the Minister administering the relevant State mining fegislation. If no variation is approved, and there is a failure to meet the commitments, this could lead to forfeiture of the tenement.

Environmental

The Company's projects are subject to both the relevant State and also Commonwealth laws and regulations relating to environmental matters. Should the Company proceed to development of one or more mines, it could be expected that such developments would have numerous environmental impacts which would require various statutory approvais to be put in place. There is no guarantee that such approvals would be granted. The Company intends to conduct its operations in an environmentally responsible manner. and in accordance with relevant legislation. However, the Company is unable to predict the effect of future changes to environmental legislation or policy and the cost effect of such changes on its operations and financial position.

Shortage of Funding

The funds raised by the Offer will be used to carry out the Company's projects as detailed in this Prospectus. If the Company incurs unexpected costs or is unable to generate sufficient operating income from its proposed developments, further funding may be required. The Company may require additional funding to carry out. further exploration, undertake feasibility studies, develop mining operations and/or acquire new projects. Any additional financing through share issues may dilute shareholdings acquired under this Prospectus. Debt financing may not be available to support the scope and extent of proposed developments. If available, it may impose restrictions on operating activities or anticipated expansion of the Company's operations.

Joint Ventures

The Company may wish to develop its projects or future projects through joint venture arrangements. Any joint ventures entered into by, or interests in joint ventures. assigned to, the Company could be affected by the failure or default of any of the joint venture participants.

Indeper TER 42 ₩

Independent Geologist's Report

DAVID TONKIN & ASSOCIATES

25 Palmerston Road, Unley, S.A. 5061 Telephone (08) 8272 0999

22 October 2004

The Directors Southern Gold Limited 262-266 Pirie Street Adelaide SA 5061

Gentiemen.

INDEPENDENT CONSULTING GEOLOGIST'S REPORT

Southern Gold Limited ("Southern Gold") commissioned David Tonkin & Associates to prepare an Independent Geologist's Report on six gold and base metal exploration projects located in southern mainland Australia. This report is to be included in a Prospectus to be lodged with the Australian Securities and Investments Commission, offering for subscription Shares, at an issue price of 20 cents per Share, to raise up to \$5 million. The funds raised will be employed in exploration and evaluation of the mineral properties. David Tonkin & Associates has provided consent for the inclusion of the Independent Geologist's Report in the Prospectus, in the form and context in which the Report appears, for the purpose of informing prospective shareholders.

The sources used in preparing this Report, included information provided by Southern Gold, technical reports and data provided by Government agencies, open file technical reports by previous tenement holders, other relevant published and unpublished information and the consultant's professional experience of the geological setting of similar mineral properties. A listing of the principal sources of information is included in the Report. Consultant David Tonkin visited the four Gawler Craton Projects in February 2004, and visited the Bulong South and Grenfell Goldfield Projects in March 2004. As far as possible, every reasonable effort was made to ensure that all information relevant to a proper assessment of the exploration potential of the mineral properties was presented and that the proposed exploration concepts and technical programs are appropriate.

1999 - Andrew Gedacht ann an 1999

The six Southern Gold projects are understood to comprise six granted Exploration Licences, two granted Prospecting Licences, one Exploration Licence application and one Prospecting Licence application, covering a total area of approximately 3,043 square kilometres. It should be noted that matters concerning valuation of the mineral properties, the status of the tenements, the terms of any joint ventures and possible government or land ownership impacts have not been considered in this report and are addressed elsewhere in the Prospectus. A list of all mineral properties and associated tenement details is provided in the Solicitor's Report, also elsewhere in this Prospectus.

The independent Geologist's Report has been prepared in accordance with the Code for Technical Assessment and/or Valuation of Mineral and Petroleum Assets and Mineral and Petroleum Securities for Independent Expert Reports (The Valmin Code), which is binding on Members of the Australian Institute of Geoscientists (AIG).

The mineral properties secured by Southern Gold are considered to be "exploration projects" or "advanced exploration areas", which are Inherently of a speculative nature. Nevertheless, it is evident that the mineral properties have been acquired by Southern Gold on the basis of sound geofogical concepts and technical merit. Each is considered to be prospective to varying degrees for the discovery of gold and/or base metals and further exploration is justified. Southern Gold has proposed exploration programs and budgets that are in accordance with the perceived prospectivity and in balance with the funds to be raised. Southern Gold's budget is considered reasonable and sufficient to meet the anticipated combined annual statutory expenditure requirement of approximately \$388,000 on the exploration tenements.

The principals of Southern Gold Limited are technically well qualified to oversee the implementation of the proposed exploration programs. and to keep abreast of new developments and opportunities as they arise. In my opinion, Southern Gold has developed satisfactory and welldefined exploration programs and budgets that are consistent with the exploration targets indicated.

This report was prepared by consulting geologist David Tonkin, who has worked for the past nineteen years as an independent consultant, providing professional services to clients including major international resource companies and the South Australian Department of Primary Industries and Resources. Much of this consulting work involved base metals and/or gold exploration in the Gawler Craton and Stuart Sheif regions of South Australia. This followed twenty years previous experience with a major Australian resource company, during which time he developed geofogical models that fead to the discovery of concealed copper-silver ore bodies at Mount Gunson and directed exploration programs that discovered further copper-cobalt-silver resources on the Stuart Shelf. He is an author of several research papers on the geology, geochemistry and mineral deposits of the Stuart Sheff, having made significant contributions on the geology of that region.

The author therefore has expert knowledge of the geological terrains covered by this Prospectus. He is a Member of the Australian Institute of Geoscientists, a Member of the Geological Society of Australia and as detailed above has appropriate qualifications, experience and competence to be considered as an "Expert" and as a "Competent Person" under the relevant codes.

David Tonkin & Associates and the writer have no conflicts of interest in preparing this report and the sole benefit is cash remuneration paid at negotiated commercial rates. Payment of these fees is in no way contingent on the results in this report.

Yours faithfully

Tanice Sank"

1989 - Johann Maria Barbara, marka mwaka wa 1989 - Amerika amin' amin' amin' amin' amin' amin' amin' amin' a Martin San Andrew Martin Martin Martin San Andrew Martin Martin San Andrew Martin Martin Martin Martin Marti

David Tonkin B Sc, M AIG, M GSA

Independent Geologist's Report

EXECUTIVE SUMMARY

Southern Gold Limited (Southern Gold) has secured a portfolio of mineral properties forated across the southern mainland of Australia.

These properties are considered prospective for gold, nickel or copper-gold mineralisation. Four projects on the Gawler Craton in South Australia are variously prospective for gold, nickel or copper-gold mineralisation. The Bulong South Project in Western Australia and the Grenfell Goldfield Project in New South Wales, are both prospective for high grade gold mineralisation (Figure 1).

Challenger West Projection the northern Gawler Craton in South Australia comprises two pranted Exploration Licences and an Exploration Licence Application covering a total area of 1,510 square kilometres, approximately 15 km west of the producing Challenger Gold Mine. In two locations this project covers strike extensions of known gold mineralisation in rocks similar to those hosting the Challenger gold deposit. There are several significant calcrete geochemical anomalies within the project that have vet to be followed up with detailed sampling and/or drilling. Some of these anomalies are associated with structural lineaments in the basement rocks, interpreted as major faults or shear zones. There are also strong coincident gravity and aeromagnetic

anomalies with potential for Iron Oxide Copper Gold (IOCG) mineralisation of the Olympic Dam or Prominent Hill type.

Southern Gawler Arc Projection the southern central Gawler Craton covers one granted Exploration Licence with an area of 583 square kilometres. The project lies in an area of high level subvoícanic igneous intrusions related to Hiltaba Suite granitic magmatism on the margin of the Gawler Range Volcanics Domain. This geological environment is recognised as a favourable setting for IOCG mineralisation of the Olympic Dam type. The principal target in this area is a strong gravity anomaly located at the intersection of two strong structural lineaments, interpreted as major faults or shear zones. This project also lies within a recognised belt of gold mineralisation. that follows the edge of the Gawler Range Volcanics Domain from Weednanna prospect to the east through to the Tarcoola goldfield in the northwest. This belt contains advanced exploration prospects at Barns, Nuckulla H#I, Tunkillia and Perseverance.

Yarlbrinda Project covers one Exploration. Licence with an area of 372 square kilometres, located on the western margin of the Gawler Range Volcanics Domain on the central Gawler Craton. The project straddles the Yarlbrinda Shear Zone, a major tectonic structure that was the locus of dold mineralisation related to Hiltaba Suite granite intrusions at Tunkillia and Nuckulla Bill. The tenement area contains several significant calcrete geochemical anomalies identified by previous exploration that have yet to be followed up with detailed sampling and/or drilling. The area also contains several aeromagnetic targets, previously identified as potential IOCG mineralisation, that have yet to be further investigated by geophysical surveys and/or drillina.

Harris Greenstone Project covers one Exploration Licence with an area of 321 square kilometres, located at the western end of the recently recognised. Harris Greenstone Domain, a belt of Archaean rocks similar to the Kalgoorlie-Kambaída region of Western Australia. The presence of komatiite rocks within the previously unexplored Harris Greenstone. sequence makes this area prospective for nickel suiphide mineralisation of the Kambalda type. This project is also

prospective for gold mineralisation, either associated with the Archaean greenstones or related to Hiltaba Suite granites intruded along the Yerda Shear Zone, analogous to the gold mineralisation at Tunkillia, 80 km to the southeast.

Bulona South Project covers two Prospecting Licences and one Prospecting Licence Application with a total area of 454 hectares, located about 30 km east of Kalgoorlie-Boulder, on the Eastern Goldfields of Western Australia. The project area contains Archaean greenstone terrane typical of the gold and nickel producing Kalgoorlie-Kambaida region. Oid workings show that gold was won historically from shallow pits and dry blowing activities. Recent prospecting and low impact mining has recovered about 170 oz of gold nuggets. from the project area and exposed a quartz vein system that is believed to be the source. of the gold. Previous exploration identified significant geochemical anomalies that have not yet been adequately tested by more detailed sampling and drilling. The rocks of this greenstone belt are also prospective for nickel, but there has been no modern nickel. exploration within the project area. Past exploration results identify several potential nickel targets in the licences.

Grenfell Goldfield Project covers one granted Exploration Licence with an area of 252 square kilometres surrounding the historic Grenfell goldfield, which was a significant New South Wales gold. producer in the period 1866 to 1935. Recent geological interpretation and mapping by government geological surveys has identified a major structure, the Coolac-Narromine Fault Zone, bisecting the lease. This fault zone crosses the headwaters of two major alluvial gold systems. whose sources are not readily explained. Re-interpretation by Southern Gold of reconnaissance exploration results obtained

Figure 2 Regional setting of the Gawler Craton.

by previous companies suggests this fault zone was a focus for gold mineralisation. east of the historic Grenfell workings. Focussed and technically sound exploration. along the Coolac-Narromine Fault Zone will provide an opportunity to identify further high grade gold mineralisation in this under-explored area.

GAWLER CRATON $\mathbf{1}$

GOLD - BASE METAL PROVINCE, SOUTH AUSTRALIA

$1.1$ Regional setting

The Gawler Craton is an ancient crystalline shield area comprising metasediments, volcanics and igneous intrusive rocks ragging in age from Archaean to Mesoproterozoic (Figure 2). The craton has been tectonically stable since ~1450 Ma. Because of a paucity of basement outcrop, the geology of the Gawler Craton is poorly understood compared to other Australian cratonic areas.

Archaean metasediments of the northern Gawler Craton host the Challenger gold. mine, which went into production in 2002, in an area with no previous history. of gold mining. This region of sparse basement outcrop now contains numerous gold prospects, mostly generated by geochemical sampling of surficial calcrete horizons. The Archaean Harris Greenstones Domain is a newly recognised belt containing komatiite, basalt and lesser metasediments extending over a strike length of up to 300 km and at least 300 m. thick. This belt is virtually unexplored and isconsidered to have significant potential for nickel and gold mineralisation.

Palaeoproterozoic rocks host gold mineralisation at the historic Tarcoolagoldfield, although as elsewhere in proximity to the Gawler Volcanic Domain, the mineralisation appears to be related to intruding Mesoproterozoic Hiltaba Suite granite. At Weednanna on the southern margin of the Gawler Volcanic Domain, gold ing
Sabab

mineralisation hosted by Palaeoproterozoic. Hutchison Group sediments is probably derived from intruding Hiltaba Suite granite, as is the adjacent lead-zinc-silver mineralisation at Menninnie Dam and Telephone Dam prospects.

Mesoproterozoic rocks of the eastern Gawler Craton contain one of the largest hydrothermal fron Oxide Copper Gold (IOCG) provinces in the world. This province extends for approximately 700 km from the Peake and Denison Ranges in the north, southwards through the Mount Woods Inlier, which contains the Prominent Bill discovery, and the Stuart Shelf basement. with its Olympic Dam deposit, to the Moonta-Wallaroo mining district in the south. The Olympic Dam deposit is one of the largest accumulations of metals in the world. Mineralisation is hosted by a large hydrothermal haematite-granite breccial complex within Mesoproterozoic Hiltaba Suite granite. The deposit at Olympic Damappears to have formed in a large highlevel hydrothermal, intrusive and volcanic system, probably related to igneous activity. associated with the Gawier Range Volcanics and the similar aged Hiltaba Suite granites. On the western margin of the Gawler Range Voícanic Domain, gold mineralisation at Tunkillia and Nuckulla Hill is related to the north-south trending Yarlbrinda Shear Zone. At Tunkillia, gold mineralisation occurs as narrow high-grade zones associated with elongated de-magnetised zones along the margins of the shear. At Nuckulia Hill, gold mineralisation is within the shear. zone, in a pronounced de-magnetised zone. At both Tunkillia and Nuckulla Hill the gold mineralisation is accompanied by alteration related to Hiltaba Suite granite. At Barns prospect, on the southern rim of the Gawler Range Volcanics Domain, gold mineralisation is found within brecciated and hydrothermally altered Hiltaba Suite granite.

Major structures that seem to be important. in determining the focations of mineral deposits are evident on the Gawler Cratori. A north-northwest trending structure named the G2 corridor is expressed in gravity data. (Figure 2). This corridor, which is a crustal feature of continental extent, appears to partly define the eastern margin of the Gawier Craton and is believed to be a major control on the formation of the Olympic Dam deposit. An intersecting west-northwest trending structure known as the 4A-48 corridor is also a feature of continental extent, representing a fundamental crustal break that can be followed off-shore. This corridor contains a number of major oredeposits, including those at Broken Hill and Olympic Dam, Ring structures have also been identified on the Gawler Craton, Several mineral deposits occur on the margin of the Ceduna Ring, including the Cu-Au-U at Olympic Dam, the Cu-Au at Prominent Hill and the Culat Mount Gunson. The smaller Woornera Ring also has important deposits at its margin, including Cu-Au at Prominent Hill, Au at Tarcoola and the iron ore deposits at Bawks Nest and Giffen Well.

1999 - André Maria (Alemania alemania alemania

1989 - Johann Stoff, fransk politik (f. 1989)

Challenger West Project $1.2$

1.2.1 Introduction

The Challenger West Project area comprises two Exploration Licences. EL 3080 and EL 3097 and an Exploration Licence Application ELA 654/04 (expected to be granted as an EL prior to the end of February 2005). These cover a total area of approximately 1,510 square kilometres, straddling the southern boundary between. the COOBER PEDY and TALLARINGA. 1:250.000 map sheets, on the northernmargin of the Gawler Craton, 130 km southwest of Coober Pedy (Figure 3). The entire Project area lies within approximately. 50 km of the Challenger Gold Mine, which began production in October 2002, with

a total resource (to a depth of 500 m). of 1,700,000 tonnes averaging 8.5 g/t Au, containing 465,000 ounces of gold. Challenger is the first gold mine in the Archaean terrane of the Gawler Craton. This region attracted intense exploration activity following the Challenger discovery in 1995, generating numerous gold prospects, especially to the east of the Project, but also within the Project area. Many of these arenow the subject of renewed exploration. activity.

1.2.2 Project Geology

The Project area is underlain by a basement of Archaean rocks belonging to the Mukjathing Complex, which comprises mainly high grade metamorphic felsic. gneiss and granite, together with lesser schists, slates and sheared mafic and ultramafic rocks. The Archaean gneisses are part of the metasedimentary Christie. Gneiss, which is dominated by quartzfeldspar-biotite-garnet gnelss very similar to that which hosts the Challenger gold. deposit, located 12 km east of the southernpart of the Project area. The sequence also contains banded iron formations and a range of mafic and ultramafic rocks, and is intruded by Archaean and Proterozoic. granitoids. Mesoptoterozoic mafic dykes of the Gairdner Dyke Swarm also intrude the older basement rocks. Localiv, Mesozoic-Algebuckina Sandstone and fluviatile, lacustrine and aeolian sediments of Cainozoic age overlie the basement. The Tertiary Garford palaeochannel crosses the northern part of the Project area from east to west. Outcrop in the Project area is very limited, with the surface covered by aeolian sand and pedogenic calcrete, which is generally widespread, although not well. developed marginal to playa lakes. Silcrete is well developed locally, forming lowtopographic highs in many places. Ferricrete is developed to a lesser extent.

. . . . . . . . . . . . . . . . . . . .

Figure 3 Challenger West regional setting.

1.2.3 Previous Exploration

This area remained largely unexplored until 1968-69, when Kennecott Explorations (Australia) Pty Etd carried out reconnaissance in the Tarcoola region, covering an area that extended immediately southeast of the Project area. That search targeted nickel mineralisation in possible ultramafic intrusions adjacent to banded Iron formation of the Christie Gnelss.

The region has been the subject of several searches for sedimentary uranium, mostly In the Tertiary Tallaringa palaeochannel and the tributary Garford palaeochannel, which crosses the northern section of the Project area. Two holes drilled in 1977 intersected basement granulite and encountered only weak radioactivity. Between 1978 and 1981 8P Mining Development Australia Pty Ltd (BP) undertook radiometric surveys and drilling of 121 rotary/percussion holes, which outlined a channel system containing weak uranium mineralisation. In 1981 BP switched their focus from uranium to base metal exploration. Gravity and magnetic interpretation identified several geophysical targets, the most interesting of which was at location "E", in Lake Anthony, where ground magnetic and gravity surveys defined a strong circular magnetic anomaly with a coincident gravity anomaly. The project geologist recommended drilling this target, but BP relinquished the ground without further work. This area is now part of Southern Gold's Westpoint Hill prospect.

Coal and fignite were also sought in the region between 1973 and 1984, by Btah-Development Company, Southern Cross Exploration NL and CRA Exploration Pty Ltd (CRAE). Although 10 drill holes intersected Tertiary lignite at depths between 30 and 110 m, the seams were less than 2 m thick, and the area was thought to have little potential for either economic lignite or uranium mineralisation.

Cainozoic cover Mesozoic Palapoznic Palaeozoic ffould Complex/Lincoln Complex Archaean Mulgathing Complex Banded Iron Formation Mobella Tonalite Probable fault, interpreted from geophysics inferred fault, interpreted from geophysics Track Lake 癸 Gold prospect 父 Operating gold mine EL 3097 Southern Gold Exploration Licence

Stockdale Prospecting Etd (Stockdale) assessed the diamond potential of an extensive region between 1981 and 1985. Within the Project area, a photogeological study and a review of previous drillhole data defined the location of the Garford Palaeochannel and showed that the extent of Tertiary and Quaternary cover precluded the effective use of heavy mineral sampling for kimberlite indicator minerals. The thickness of Tertiary cover in the Garford channel was found to be up to 62 m.

Gold exploration in the Project area followed development work by SADME between 1991 and 1993. A government bedrock drilling program in the Tarcoola-Tallaringa region in 1991 identified Archaean and Proterozoic. basement rocks with good potential for precious and base metals. Archaean rocks of the Mulgathing Complex contained anomalous concentrations of gold, especially associated with paragneiss and banded iron formation rocks. Mafic rocks of the Mułgathing Complex contained anomalous levels of nickel, chromium, platinum groupmetals, copper and zinc. Interest in the region was further sparked by detailed aeromagnetic surveys made by SADME as part of the South Australia Exploration Initiative (SAEI) in 1993. Release of this data enabled the recognition of farge tracts. of prospective Archaean terrain beneath shallow Tertiary and Quaternary cover.

CRA Exploration Pty Ltd and Goldstream Mining NL conducted the earliest company gold exploration program in the Project area, beginning in 1994. Reconnaissance

lag geochemistry (prior to the discoveryof the nearby Challenger gold deposit using calcrete) disclosed weakly elevated. Sb-As-Bi-Mo values on the flanks of a large discordant magnetic anomaly inthe north of Garford "B", west of Garford Outstation. The anomaly lies near the junction of several lineaments/faults and a set of northwest trending Gairdner dykes, with the highest lag gold values coincident with a subtle east-west fault zone. Elevated Min and Pt lag geochemistry also occurs. near a manganiferous gossan and discrete magnetic high in the south of Garford "B". In Garford "A", a discrete magnetic high near the Karari Fault is associated with weakly elevated Pt-Au-Zn and Sb-As-Bi-Mo lag geochemistry. Ground magnetics indicate a broad anomaly about 350 m deep, with a shallower component at 100 m depth.

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Drilling on a magnetic feature west of Garford Outstation (Nestling prospect) led to low order anomalous gold and base. metal results. These included 0.13% Ni. 0.18% Cr, 4.8 ppb Pt and 3.4 ppb Pd in a weakly serpentinised ultramafic in hole. AC95GA18 and 25 ppb Au, 220 ppm Cu, 12 ppb Pt and 5 ppb Pd in a chlorite schist in hole AC95GA19.

Regional auger drilling and hand calcrete sampling on an 800 x 800 m grid identified. a number of anomalous areas. Peak calcrete gold values in Garford "B" were 25 ppb and 19 ppb. In Garford "A", the highest calcrete gold value was 6 ppb. A broad northeasterly trending anomalous gold zone crosses area. "B". The northern section of this anomaly

(Nestling prospect) is at least 10 km long. and 2.5 km wide. Blowout anomaly, in the south of Garford "B", is at least 5 km long and 1.5 km wide.

in-fill calcrete completed over aeromagnetic. targets in Garford "A" and around previous. samples on Garford "B" returned up to 7 ppb gold in Garford "A", but no cohesive anomalies, in-fill calcrete sampling near Blowout prospect in Garford "B" outlined a greater than 10 ppb gold anomaly with a north-south strike extent of 1,200 m and a width of 400 m. A second large anomalous area around Garford Outstation vielded 5-10 ppb gold along a strike length of about 10 km and a width of 2.5 km.

Drilling at Blowout calcrete prospect intersected basement rocks comprising felsic garnet gneiss and sheared mafics. in some holes, disseminated pyrite and possible arsenopyrite were identified. Drilling assays yielded a peak of 5 m. @ 31 ppb Au from 25 m depth in hole 97BT026, in a weakly anomalous, north trending gold zone. Blowaut prospect lies on the northern extension of a target drilled by the Resolute/Dominion joint venture in the adjoining licence area to the south. The drilling carried out by CRAE and Goldstream appears to be mis-focated with respect to the calcrete anomaly and the drilling to the south, on indooroopilly prospect. Although a number of fow order calcrete gold/arsenic. anomalies in the Garford "8" area remain untested. Goldstream withdrew from the joint venture with CRAE and the ground was relinguished.

han aran temant femar

The most important gold explorer in the Project area was the Dominion - Resolute Joint Venture, whose discovery of the nearby Challenger gold deposit in May 1995 triggered a surge in gold exploration. on the Gawler Craton, Regional calcrete sampling on a 1.6 km by 1.6 km off-set. grid pattern outlined a gold anomaly at Challenger measuring 3 km by 1.5 km, containing greater than 10 ppb gold and with values up to 296 ppb gold. Regional calciete sampling covered a substantial proportion of the Project area, leading to the identification of numerous gold. deochemical anomalies. In-fill sampling upgraded many of these to significant. anomalies warranting follow-up by RAB. drilling. Other regional anomalies remain to be followed up by re-sampling and in-fill calcrete sampling, presumably because the Joint Venture had higher priority targets. to investigate, such as Challenger. Some of these un-tested targets now lie within the Challenger West Project area (Figure 4). The only drilling by the Joint Venture within the Challenger West Project area was that in five RAB hofes at Thunderbolt Tank calcrete anomaly. These holes intersected Christie-Gneiss, granite, mafics and pegmatites, but no significant mineralisation.

From 1997, Pima Mining NL explored a small tenement that is enclosed by the Challenger. West Project area, 5 km south of Garford Outstation (Figure 4). Calcrete sampling at Endor prospect outlined a gold anomaly measuring 2 km by 0.5 km, containing greater than 3 ppb gold and a peak value

of 47 ppb gold. This calcrete anomaly continues northward into the Project area. (Figure 4). RAB drilling at Endor in 1997. intersected 9 m @ 1.60 g/t Au (including 4 m @ 3.64 g/t Au) from 33 m in hole EN 76. RAB intercepts up to 5.5 o/t Au were made at Endor. The best intersection in follow up RC drilling to date intersected 2 m @ 1.80 g/t Au from 40 m in hole ENRC02. Gold and associated copper mineralisation at Endor appears to be structurally controlled by a major northeast trending shear zone. in Archaean Christie Gneiss, Iving adiacent to a parallel body of quartzo-feldspathic granite. Mineralisation apparently coincides with a demagnetised area within the magnetic shear zone, and has a total strike length greater than 2 km. Quartz veining and abundant pyrite accompanies the mineralisation

1.2.4 Exploration Potential

The Challenger West Project lies in a regional structural and geological setting favourable for the discovery of gold and base metal mineralisation. Structurally, the Project lies on the margin of the Cedunal Ring and within the west-northwest trending 4A-4B structural corridor (Figure 2). Both are regional structures with apparent. importance to ore deposition. Geologically, the Project area overlies Archaean basement rocks with known potential for gold mineralisation, as demonstrated by the Challenger gold mine, which began operation 15 km southeast of the Project in 2002.

Local scale structures may also be important as foci for gold and base metal. mineralisation. Two major northwest trending structural breaks are defined by gravity and aeromagnetic data. One of these lineaments traverses each sector of the Project (Figure 3). Aeromagnetics also defines a set of north-northeast trending. lineaments, which may be magnetised. shear zones. Gold mineralisation at Endoris associated with one such linear, which extends into the Project area at Garford. prospect and has associated calcrete gold. anomalism. Past drilling at Dog Fence Shear prospect encountered greenstones and ultramatics intruded and deformed. by magnetic granites. A local gravity high coincident with an inflexion in the magnetic. anomaly at this prospect offers potential for gold or base metal mineralisation. An extension of this shear zone continues. through the southern sector of the Project, where it is overlain by a calcrete gold. anomaly at Westpoint Shear prospect.

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The northern sector of the Project contains several calcrete gold anomalies identified by previous exploration. At Garford, besides the continuation of the Endor trend. there are the calcrete anomalies of West Garford prospect. At Blowout prospect. incompletely tested calcrete gold anomalies. with a peak value of 39 ppb Au overlie the northward continuation of Indooroopilly prospect, which has been drilled up to the southern boundary of the West Challenger tenement. Five kilometres northwest of Blowout is the Contender calcrete gold

Figure 4 Challenger West Project, exploration targets and gravity contours overlaid on magnetic image.

anomaly, with values up to 21 ppb Au. In the southern sector of the Project are the Provident calcrete gold anomalies, with values up to 22 ppb Au, straddling a major northwest trending structural lineament.

Geophysical data highlight the presence of coincident gravity and aeromagnetic targets at the Westpoint Hill prospect. These anomalies have been interpreted as iron-altered granitoids, and therefore may be targets for IOCG mineralisation. of the Olympic Dam type. Interpreted northeast trending stratigraphy appears to wrap around the southeastern margin. of this geophysical target area, possibly representing a zone of local dilation, making it a preferred locus for concentration of metals during a mineralising event.

$1.2.5$ Proposed Exploration Program

Exploration in Year 1 will focus on verification of the continuation of gold mineralisation into Garford prospect. This will involve geochemical and ground geophysical surveys, followed by RAB drilling. Elsewhere, in-fill sampling will test high order calcrete anomalies, to be followed by RAB drilling where warranted.

In Year 2, deeper RC drilling will be employed to prove deep extensions of shallow mineralised zones outlined by RA8. drilling at Garford and any other targets. identified. At Westpoint Hill, geophysical modelling will be used to identify large scale IOCG targets for drill testing.

• orges. Gravity contours - contour interval 1 mgal
• Fault interpreted from geophysics
• 父 Gold prospect

. . . . . . . . . . . . . . . . . . . .

$\boldsymbol{\times}$ Operating gold mine

EL 3097 Southern Gold Exploration Licence

CH 2 Calcrete geochemical gold anomaties eq. Constructor Southern Gold Prospect

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Kabupatèn Kabupatèn Kabu

Figure 5 Southern Gawler Arc Project, project geology.

$1.3$ Southern Gawler Arc Project

Introduction $1.3.1$

The Project area encompasses EL 3158, which covers an area of 583 square kilometres on northern Eyre Peninsula, straddling the southern margin of the Gawler Range Volcanics Domain (Figure 5). The Southern Gawler Arc region, which contains Menninnie Dam lead-zinc-silver prospect and the Weednanna and Barns gold prospects, is a recently recognised and under-explored section of the central Gawler Craton gold province, a regional zone of gold mineralisation flanking the Gawler Range Volcanics Domain from west of Tarcoola in the northwest to Weednanna and its associated gold prospects in the southeast (Figure 2).

1.3.2 Project Geology

The Project fies on the southern Gawler Craton, on the southern boundary of the Gawler Range Volcanics Domain, where the

basal units of the Gawier Range Volcanics overlie Archaean and Proterozoic rocks. The lowermost unit, the Waganny Dacite, occurs as scattered outcrops in the west of the Project area, beneath Bittall Rhyolite, which crops out more prominently in the east and north of the area and comprises welded ashflows, lavas, lava domes and feeder dykes. In the north of the Project area, the Bittali Rhyolite is separated by the Uno Fault from the younger Eucarro Dacite (Figure 5). The lower Gawler Range Volcanics appear to have been deposited in restricted volcanic centres, such as the Oxys volcanic centre. Several sub-circular features interpreted as volcanic eruptive centres have been identified in this region.

The Gawler Range Volcanics overlie Palaeoproterozoic metasediments of the Hutchison Group, comprising outcrops of the basal Warrow Quartzite and poorly exposed micaceous schists, amphibolitic metasediments and ironstones of the Middleback Subgroup. Intruding the

	Cainozoic cover
	Mesoproterozoic Interpreted Hiltaba Suite subcrop
	Hiltaba Suite Granite
	Pihyolite breccía
	Upper Gawler Range Volcanics
	Younger sequence of Lower Gawler Flange Volcanics
	Older sequence of Lower Gawler Range Volcanics
	Palaeoproterozoic Banded Iron Formation
	Warrow Quartzite
	Lincoln Comptex
	Archaean Sleaford Complex
	Fault
₩	Victory gravity target
╋	Nankivel epithermal target
. Martij	Calcrete gold anomaly
E.	Calcrete copper anomaly
父	Gold - copper skarn prospect
癸	Lead - zinc - silver prospect
缪	Copper prospect
	Gold - base metal prospect

J.

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Hutchison Group are syntectonic Lincoln Complex granitoids, which were probably emplaced during the Kimban Orogeny.

Much less evident are Mesoproterozoic granites of the Hiltaba Suite, which intrude the co-magmatic Gawier Range Volcanics as well as the older rock units. Recent company exploration has noted widespread gold, copper, lead, zinc and silver mineralisation of Hilitaba Suite age, associated with extensive hydrothermal iron oxide alteration. A broad circular magnetic feature with coincident gravity low is interpreted to be a Hiltaba Suite granite complex (Wilcherry Complex), responsible for gold and base metal mineralisation at Weednanna, Menninnie Dam and other prospects immediately southeast of the Project area.

Structure in the Project area is dominated by magnetic lineaments interpreted as major faults. The sinuous east-west Uno Fault separates two units of the lower Gawler Range Volcanics, Major northeast and northwest trending lineaments intersect in the southeast part of the Project area, near Victory Dam.

$1.3.3$ Previous Exploration

Previous exploration in the Project area since 1978 has provided a substantial amount of data. Menninnie Dam prospect has been the most significant discovery. The accumulated data provides a strong

foundation for building a new exploration. model for the area.

Challenger Project area.

Pancontinental Mining Ltd, in 1978-79, explored for unconformity/vein type uranium mineralisation in the Proterozoic basement rocks. Pegmin Ltd also searched for uranium, from 1979 to 1980.

Exploration initiated in 1980 by Shell Company of Australia Ltd (Shell) lead to the discovery of sub-economic lead-zincsilver mineralisation in Palaeoproterozoic. Hutchison Group metasediments at Meoningie Dam, immediately east of the Project area. An inferred resource of 1.7 Mt @ 5% Pb, 8% 2n and 100 g/t Ag is reported for Menninnie Dam. Subsequent exploration of this Wikcherry Hill area by Aberfoyle Resources Ltd discovered a smaller leadzinc-silver prospect at Telephone Dam, where a northwest trending geochemical corridor yielded a best drill hole intersection. of 6 m @ 8.9% Pb, 6.4% 2n and 320 g/t Ag. Further exploration at Wilcherry Bill by Acacia Resources Ltd from 1997 employed systematic calcrete sampling over a nor-norwest trending linear magnetic anomaly at Weednanna prospect, outlining a gold and arsenic calcrete anomaly. RC and diamond drilling partly defined a gold mineralised. lens with a strike length of about 1 km, hosted by Pafaeoproterozoic Hutchison. Group banded iron formation (BIF). RC and diamond drilling intersected up to 9 m @ 24.6 g/t gold, at depths ranging from 40 m to 130 m.

From 1981 to 1988, Stockdale Prospecting Ltd (Stockdafe) explored for diamonds throughout the region. Follow up with ground magnetic, gravity and Sirotemgeophysical surveys and two drill holes. failed to locate potential kimberlites or kimberiític indicators. Subsequent exploration for stratiform lead-zinc-sliver mineralisation included geological mapping, soil and rock chip geochemistry and ground magnetic and Sirotem surveys. This was followed by drilling of 383 RAB and percussion holes and two diamond drill holes. Forty four of the RAB and percussion. holes were in the Project area, although

. . . . . . . . . . . . . . . . . . . .

independent Geologist : Bapon

......................................

the diamond core holes were not, with the majority of holes drilled in the Nankivel Damarea.

CRA Exploration Pty Etd (CRAE) explored the Unalia Bill area immediately north of the Project area from 1990-91, in a search for gold and base metals associated with volcanic centres, as well as for diamonds. Geochemical surveys and geological mapping, together with ground and airborne geophysical surveys, located minor lead-zinc-copper-arsenic-antimony mineralisation at Sherry Dam prospect. which CRAE interpreted from geophysical data as a possible volcanic centre or caldera collapse structure.

From 1993 to 1996 Aberfoyle Resources Ltd (Aberfovie) explored the Mount Miccollo area to the immediate northeast of the Project area, Interpretation of detailed aeromagnetic data collected under the SAEI identified a number of major features. such as the Uno Fault, which continues into the Project area. Also identified with some confidence was a pronounced. circular anomaly that was evident in both the aeromagnetic data and on aerial photographs, which revealed the presence of a radial fracture set. Aberfoyle geologists interpreted this circular feature as a Gawler Range Volcanics vent.

Aberfoyle Resources Ltd explored the wider region from 1989 to 1999. Regional exploration highlighted an area of gold. anomalism at Nankivel Dam prospect, within the Southern Gawler Arc Project area. Subsequent exploration by Aberfoyle and a number of joint venture partners. focussed on a reduced area around Mount. Ive Gate. Soil sampling covered a 110 square kilometres area centred on the Nankivel Dam prospect. Geochemical results revealed an 8 km circular feature in copper, zinc, iron, manganese and cobalt data. A smaller ring also appeared in the copperdata. Aberfoyle geologists suggested these rings reflect events related to the Gawler Range Volcanics. The core of the smaller ring is anomalous in silver, uranium, thorium and rubidium, the last of which is likely to be associated with K-feldspar. Therefore it was concluded that the smaller ring feature could be interpreted as a zone of potassic. alteration and enrichment, with associated enrichment of base and precious metals.

Aberfoyle also investigated the area of the Death Adder and Olympic Hill prospects, immediately south of the eastern endof the Project area (Figure 5). Rock chip sampling followed by RAB and RC drilling highlighted a northwest trending gold and base metal geochemical anomaly at Death Adder prospect. Rock chip sampling of an old prospecting pit at nearby Olympic Hill prospect returned anomalous gold and lead. values.

Further exploration of the Mount Ive Gate area was undertaken by M.I.M. Exploration Pty Ltd (MIM), in a joint venture with Aberfoyle in 1995-96. Work centred on the Nankive! Dam prospect where previous work by Aberfovle had focated a silicified. haematite matrix breccia complex, with a gold-lead anomalous zone to the north. MIM reported that their observations were consistent with hydrothermal alteration of original acid volcanic rocks. The alteration was seen as epithermal in origin, possibly emanating from a deeper volcanic vent. which fractured the rocks and produced the haematite breccia and associated silicification. However, surface geochemical sampling and three RC drill holes by MIM. produced disappointing results, aithough the presence of fluorite and probable epithermal pyrite was encouraging. Moderately elevated lead (up to 3,450 ppm). and zinc (up to 7,000 ppm) were recorded. Seven RC holes drifted to test geochemical targets in the Death Adder area also yielded. negative results.

Acacia Metals Pty Ltd (Acacia) continued exploration of the Mount Ive Gate area in a subsequent joint venture with Aberfovie, from 1997 to 1999. Acacia concentrated on a search for gold mineralisation, using calcrete geochemical surveys as the prospecting tool. Regional calcrete sampling covered 72% of the Southern Gawler Arc.

Figure 6a Southern Arc Project, Victory Dam prospect, geology and exploration plan.

40

Project area. Acadia reported two low order anomalous sites to the northeast of Nankivel Dam, where samples with 6 ppb and 7 ppb Au were collected. In-fill sampling confirmed the anomalies and outlined two small areas with greater than 5 ppb Au, with peaks of 7 ppb and 11 ppb Au respectively. Acacia concluded the area has potential for gold and copper mineralisation, but undertook no further work.

Anglogold explored the Peterlumbo area to the immediate south from 1998 to 2001, targeting gold and copper. Regional calcrete sampling at 800 by 800 m centres was infilled in some locations at 400 by 400 m and 200 by 200 m. This sampling covered the southern part of the Project area, adjoining the calcrete survey made by Acacia. Assays up to 8 ppb Au were recorded, with six samples assaying greater than 5 ppb Au. Anglogold dropped this ground without further work in 2001.

M.I.M. Exploration Pty Etd (MIM) conducted the most recent investigation of the Project area, in 2002-03. MiM interpretations of existing geophysical, geochemical and geofogical data highlighted the presence of a gravity anomaly focated at the intersection

2400N IP traverses

$\mathcal{E}{\mathcal{J}{\alpha}}^{(1)}$ Gold - base metal prospect

of major northeast and northwest trending magnetic lineaments, in the eastern part of the Project area. MIM proposed this anomaly represents potential IOCG mineralisation, i.e. possibly an Olympic. Dam style deposit. Work by MIM included a detailed gravity survey, which defined a 6 milligal anomaly near the southern boundary of the tenement (Figure 5).

This anomaly was further tested with two lines of MIMDAS IP, placed across the gravity peak. The MIMDAS survey defined several shallow, highly chargeable and conductive anomalies, apparently flanking the gravity anomaly. There is also a deeper chargeable

anomaly that seems to coincide with the eastern edge of the top of a higher density body, as modelled from the gravity data.

MiM recommended percussion drill testing of the highest ranked chargeable anomalies. and possible diamond drilling of the deeper chargeable feature. MIM completed four RC drill holes, one each on four chargeable. anomalies (Figure 6). All holes intersected pyrite. The three eastern holes did not encounter significant mineralisation, except for anomalous fead and sliver in the collar of the southeastern-most hole. That anomaly probably corresponds with a northeasterly extension of the Olympic Hill structure. The

SOUTHERN COLD LIMITED PROSPECTUS

1953 - John John Stock (by John John John John John John John John

Figure 6b Southern Arc Project, Victory Dam prospect, geophysics and drilling section.

the contract of the contract of the contract of

westernmost hole intersected anomalous. copper and zinc in amphibolitic hornfels. rocks. MIM reported that this copper and zinc anomalism lay on an up-dip extension. of the western edge of the gravity anomaly. The ground was relinguished without testing the main body of the gravity anomaly, which was interpreted to lie at greater depth.

1.3.4 Exploration Potential

The geological setting of the Project represents an ancient sub-volcanic environment, similar to that previously identified at Menninnie Dam, where lead-zinc-silver mineralisation is associated with a volcanic vent at the unconformity between Palaeoproterozoic Hutchison Group metasediments and the base of the Gawler Range Volcanics. The Menninnie Dam deposit represents a mineralised hydrothermal system associated with highlevel igneous intrusives, breccias and ironrich alteration, features typical of an IOCG deposit, such as Olympic Dam. The leadzinc-silver mineralisation at Menninnie Dam and Telephone Dam overlies the margins of the largely concealed Wilcherry intrusive

complex, which was recognised from geophysical data (Figure 5). Subcropping Hiltaba Suite granite is exposed in the centre of the Wilcherry complex, where skarns formed at the contacts with Hutchison Group sediments host gold mineralisation, as at Weednanna prospect. Within the Project area, basal Gawier Range Volcanics are less eroded, preserving a higher level sub-volcanic environment, potentially containing hydrothermal breccias in volcanic centres overlying Hiltaba Suite granites. Two particular target areas have been recognised:

Victory Dam prospect: This prospect lies at the intersection of major northeast and northwest trending faults interpreted from geophysical data. The northwest trending structure hosts copper, lead-zinc and gold mineralisation, for example at Olympic. Hill prospect, where anomalous gold and lead was found in haematite veins, and at Mawson prospect, where drilling intersected 29 m @ 0.9 % Cu. At the intersection of the northeast and northwest structures lies a discrete 6 milligal gravity anomaly, which is subtly reflected in the state gravity dataset. MIM investigated this anomaly with detailed

gravity and an IP survey, which led them to drill on the shallow IP responses in the structures on either side of the interpreted source of the gravity anomaly (Figure 6a). However, the gravity source and the associated deeper IP responses remain untested as an (OCG target (Figure 6b).

Nankivel prospect: This prospect fies within an interpreted volcanic feature, the Oxys volcanic centre (Figure 5). Elevated calcrete gold anomalism overlies high-level. intrusives associated with sub-cropping Hiltaba Suite granite. Epithermai ciays, haematite alteration, brecciated silicified volcanics and gold anomalism in rock chips. and calcrete have been recognised in this area. These features indicate outcropping epithermal mineralisation, with potential for larger underlying gold-copper targets.

Proposed Exploration Program $1.3.5$

The high priority gravity target at Victory prospect will be tested by deep RC and diamond core drilling to 400 m and 600 m. depth. If the potential of the project is enhanced by drilling, the calcrete anomalies in the Nankivel area will be investigated with RAB drilling.

$1.4$ Yarlbrinda Project

$1.4.1$ Introduction

The Yarlbrinda Project, EL 3217, covers 372 square kilometres straddling the Yarlbrinda Shear Zone, which since its recognition from detailed aeromagnetic. data acquired in 1993, has proved to be the host structure for several significant gold deposits, centred on two areas: the Nuckulla-Hilf region, which includes the Project area, and the Tunkillia Well region 50 km to the north.

1.4.2 Project Geology

The geology of the Project area is dominated by the Yarlbrinda Shear Zone, a major crustal feature, which can be traced for about 170 km from Poochera in the south to Tunkillia in the north, where it merges with the east-west oriented Yerda Shear Zone (Figure 7). It includes a number of narrow, sinuous, demagnetised zones which anastomose around thin slithers of less deformed gneiss, granite and amphibolite. The shear zone appears to pre-date the Biltaba Suite granites, but was also active during and/or after granite emplacement. The interaction between the granite intrusions and deformation of the shear zone appears to have provided both a source for mineralising fluids and associated. hydrothermal alteration, as well as potential fluid pathways and accommodation zones for gold mineralisation. Company exploration has shown that ultra-mylonite zone rocks at one location within the Yarlbrinda Shear Zone contain significant gold concentrations compared to

adjacent foliated granites and gneiss, demonstrating that the ultra-mylonite itself. hosts mineralisation. A conclusion of this observation is that there must be a very large volume of gold contained in the shear zone

The Yarlbrinda Shear Zone separates the western margin of the Gawler Ranges Volcanic Domain from the area to the west, which is dominated by Palaeoproterozoic granite gneisses of the Saint Peter and Tunkillia Suites, intruded by Mesoproterozoic Hiltaba Suite granites. The Yarlbrinda Shear Zone was active about the time of emplacement of Hiltaba Suite and related granites, which are of comparable. age and chemistry to granites associated with the Olympic Dam and Prominent Hill IOCG deposits.

Basement rock exposure in the Project areais sparse, because of a blanket cover of soil, sand and calcrete overlying a 30 to 40 m thick saprolite profile (Figure 7).

1.4.3 Previous Exploration

Prior to 1994 there was very little significant. gold or base metal exploration in the Yarlbrinda Project area. This was mainly due to a lack of basement rock outcrop, together with a perception of low potential for mineralisation.

Between 1972 and 1983, CRA Exploration Pty Ltd and Carpentaria Exploration Company Pty Ltd (Carpentaria) explored for uranium. Carpentaria focussed on uranium in Tertiary palaeochannels, but drilling did not extend into the Project area. In 1980-1981, Utah Development Company

conducted rock chip and stream sediment. geochemical surveys over the northern part of the Project area, in an unsuccessful search for base metals in Gawler Range Volcanics and Hiltaba Suite granite. A search for diamonds by Stockdale Prospecting Ltd in 1981-82 extended into the southern part of the Project area, but was unsuccessful.

BHP Gold Mines Ltd targeted part of the northern Project area between 1988. and 1990, in a search for volcanic hosted. epithermal dold mineralisation at Lake Everard. Bulk leach assaying of stream sediment samples yielded only low order gold anomalies, consistent with normal background fevels for this redion.

National Mineral Sands (SA) NL and Oolanta Pty Etd (Oofanta) explored for heavy mineral sands from 1989 to 1991, but RC drilling did not extend into the Project area. Geochemical auger sampling by Oolanta yielded one gold assay of 3.15 g/t.

Equinox Resources NL (Equinox) conducted the most comprehensive gold and base metal exploration in the Project area to date, between 1994 and 2003. Following the release by the South Australian Department of Mines and Energy of detailed aeromagnetic and radiometric. data collected under the South Australian Exploration Initiative (SAEI) in 1992-93, Equinox recognised the potential for IOCG and structurally controlled gold mineralisation in the Nuckulla Hill region. Equinox identified a major north-southtrending structure, the Yarlbrinda Shear Zone, running through the Project area. (Figure 7). This and other structures both-

pre-dated and were contemporaneous. with Hiltaba Suite granite emplacement, thus furnishing both structural sites for the potential deposition of mineral deposits and fluid pathways for the introduction of metals.

Equinox identified 25 aeromagnetic anomalies in the region as potential targets for IOCG mineralisation (Figure 7). Of the five aeromagnetic targets that lie within or on the boundary of the Project area, only two, those at Yarlbrinda West, have been drill tested. Drilling at Yaribrinda West intersected very strongly foliated, intercollated mafics and felsic mylonites. No mineralisation was found, but subsequent

MMI geochemical sampling suggested that a slightly smaller magnetic anomaly to the north may warrant future investigation.

Geochemical surveys by Equinox included rock chip sampling and regional BLEG. stream sediment and calcrete surveys. Rock chip and BLEG surveys revealed no significant anomalism. However, calcrete surveys with a 1.5 km spacing, reducing to 1 km over the Yaribrinda Shear Zone, outlined several geochemical anomalies. In-fill sampling confirmed significant anomalies at Myali, Sheoak and Bimba prospects (Figure 7). Regional sampling gave original maximum gold assays at

Probable fault, interpreted from geophysics Inferred fault, interpreted from geophysics 父 Historic goldfield 父 Gold prospect Lake

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Southern Gold Exploration Licence BL 32R4

Figure 8 Yalbrinda plan showing exploration targets.

In-fill calcrete sampling at Yathong confirmed earlier results, with gold assays up to 10 ppb. Regional sampling returned copper assays up to 34 ppm, but no additional copper anomalism was found. The Yathong calcrete anomaly overlies a zone of magnetite alteration associated with a large Hiltaba Suite batholith. This calcrete gold-copper anomalism at Yathong was not followed up with either detailed calcrete sampling or drilling.

Geophysical surveys by Equinox included a detailed low level aeromagnetic survey. flown along east-west oriented flight

lines, imaging of this data enhanced interpretation within the Yarlbrinda Shear. Zone, which was originally recognised in regional aeromagnetic data collected along north-south oriented flight lines. Induced polarisation (IP) surveys at Sheoak and Myall prospects defined anomalies at both prospects, but are believed to largely reflect development of saprolite and distribution of groundwater.

Exploration at Nuckulla Hill has been at a greatly reduced scale since 1997, leading to the relinquishment of the area now covered by EL 3217.

at Myall and 340 ppb Au at Sheoak. The Bimba anomaly was defined within a weak. regional gold anomaly (3-5 ppb) at Swamp Paddock. In-fill calcrete sampling outlined a long, sinuous anomaly at Bimba, with up to 40 ppb Au. RAB, aircore, RC and diamond drilling

these maximum gold values to 88 ppb Au-

at Myall, Sheoak and Bimba prospects intersected significant gold mineralisation. The best drill intercepts were:

• Miyall prospect 11 m @ 0.5 g/t Au
• Sheoak prospect 22 m @ 1.1 g/t Au
• Bimba prospect 24 m @ 1.0 g/t Au

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1.4.4 Exploration Potential

. . . . . . . . . . . . . . . . . . .

The prospectivity of the region defined by the Yarlbrinda Shear Zone is highlighted by previous exploration results and by new concepts concerning the region developed by Geoscience Australia and PIRSA.

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Equinox Resources demonstrated the potential for gold mineralisation with their discoveries at Nuckulla Hill. That mineralisation is clearly related structurally to the Yarlbrinda Shear Zone and is probably sourced from Biltaba Suite granites, which outcrop throughout the region. Subsidiary splays adiacent to the main shear zone. may be more prospective than the mainzone. Equinox identified a number of aeromagnetic anomalies that were potential EOCG targets (Figure 8), but did not follow up all targets. Not all the gold anomalies identified by their regional calcrete sampling were followed up. Several such targets lie within the Yarlbrinda Project area. Of particular note is the Yathong focality, where a calcrete copper-gold anomaly. appears to be coincident with an IOCG aeromagnetic target. Drilling at Yarlbrinda West aeromagnetic target did not intersect mineralisation, but a Mobile Metal lon-(MMI) geochemical survey suggested that a smaller magnetic feature immediately to the north may be worth investigating.

Major lineaments crossing the Yarlbrinda Shear Zone may be important. For instance, a west-northwest trending structural corridor apparently controlled the

emplacement of the Kondoolka and Hiltaba batholiths. The southern margin of this corridor crosses near the Yarlbrinda West aeromagnetic target. A structural controi with a west to northwest orientation is also evident for Hiltaba Suite intrusives and gold mineralisation at Barns prospect, near Wudinna on the southern margin of the Gawier Range Volcanics Domain.

A geological conceptual model developed by the South Australian Geological Survey recoonises an arcuate, progenic goldprovince in the central Gawler Craton, wrapping around the western and southern margins of the Gawler Range Volcanics. Domain (Figure 2). An alternative view is that IOCG deposits of the Olympic Damand Prominent Hill types were deposited. from Hiltaba Suite plutons in a sub-volcanic. environment, which is now to be found inan annular zone surrounding the Gawler Range Volcanics Domain. The existing data can be interpreted to support either hypothesis, so the Yarlbrinda Project area should be regarded as also having potential. for Olympic Dam type IOCG deposits.

1.4.5 Proposed Exploration Program

Detailed geochemical surveys are proposed to follow up gold and base metal anomalies. identified by previous explorers. Targeted RAB drilling will be planned on the basis. of exploration results, with the majority of drilling undertaken in Year 2 of the exploration program.

$1.5$ Harris Greenstone Project

$151$ Introduction

The presence of a concealed greenstone. belt in this region only became apparent. relatively recently. Kennecott Exploration. (Aust.) Pty Ltd first reported poorly outcropping aftered metabasic rock at Lake. Harris in 1969. Petrology identified altered ultramafic rocks, in which geochemical analyses revealed significant nickel contents. In 1973, Abadon Hofdings NL sampled tholelitic metabasalts, now recognised as Archaean, at Bopeful Bill, At nearby Kenella Rocks, diamond drill holes intersected rocks now recognised as probable Archaean. gneiss.

Strong similarities between the Harris Greenstone Domain and the Kalgoorlie-Kambalda region in the Eastern Goldfields of Western Australia were reported by SADME in 1991, when two diamond drill holes. at Lake Harris intersected a sequence of komatiite flows. At Hopeful Hill in 1996 MiM Exploration Pty Ltd identified an Archaean mafic sequence containing thin komatiite. intervals. The following year Pima Mining NL identified komatiitic rock at Mullina Well.

EL 3284 (Mount Finke area), which has an area of 321 square kilometres on the TARCOOLA 1:250 000 sheet area about 70 km soutbwest of the Tarcoola Goldfield, covers the Harris Greenstone. Project. This encompasses the tightly folded western extremity of the Barris-Greenstone Domain, a comparatively

ستستحدث

Figure 9 Harris Greenstone Project, regional geological setting.

recently recognised Archaean greenstone belt (Figure 9). The full extent of this greenstone beft is now appreciated from interpretation of aeromagnetic imagery, but was unsuspected a decade ago because, except at a few localities, the greenstones are concealed beneath younger cover sediments and regolith.

1.5.2 Project Geology

The Harris Greenstone Project area has a thin blanket cover of regolith and Quaternary and Tertiary sediments, which conceal the sparsely outcropping basement. rock (Figure 10). One exploration drill hole intersected metamorphosed granitic rock from 41 m. A second did not penetrate beneath Tertiary sediments at 75 m depth. The only recorded basement outcrop in the area is that surrounding Mount Finke, on the eastern margin of the Project area, where quartzite of the Mesoproterozoic Tarcoola Formation and associated quartz veining crop out. The concealed presence of Archaean greenstones at relatively shallow depth is confidently interpreted from aeromagnetic data by PIRSA, but these rocks have yet to be intersected in drill holes. Similarly, the presence of the Yerda Shear Zone crossing the southern portion. of the Project area can be recognised in the aeromagnetics. The remaining basement is interpreted as Precambrian granite,

orthogneiss and paragneiss, and includes Hiltaba Suite granite.

$1.5.3$ Previous Exploration

Several companies conducted reconnaissance exploration for precious metals, base metals and diamonds in areas adjacent to the Harris Greenstone Project between 1970 and 1991, employing a range of airborne and ground geophysical techniques, geochemical surveys and some follow-up drilling.

Amoco Mineraís Australia Company explored the Harris Greenstone Project area. itself for gold and base metals from 1980. to 1984, conducting airborne magnetic surveys followed by ground magnetic and gravity surveys. Two RA8 drill holes were sited on a gravity target. MFRP 1 intersected foliated granitic rock of possible Archaean. age at 41 m depth, beneath Quaternary and Tertiary sediments. MFRP 2 bottomed at 75 m without reaching basement. The greater thickness of Tertiary sediments and presence of lignite in the second. hole suggests the presence of a Tertiary pałaeochannel.

Placer Exploration Pty Etd explored the western and southern portions of the Harris Greenstone Project area between 1995 and 2000, collecting regional calcrete samples on a 1.6 km by 1.6 km grid, with samples offset by 800 m on alternate lines. Calcrete

Pandurra Formation
Hiltaba Suite Granitel
Gawler Range Volcanics
Muckanippie Anorthusite Suite
Tarcoola Formation
Symons Granite. St Peter Suite
Wilgena Hill Jaspilite
Glentoth Granite
Harris Greenstone Sequence
Undifferentiated Precambrian basement
Gairdeer dyke, interpreted from geophysics
Shear zone, interpreted from geophysics.
Probable fault, interpreted from geophysics
Inferred fault, interpreted from geophysics
Historic goldfield
Komatiite intersections in drill hotes
taiter Hoaison et al 2002)

analyses disclosed weak gold anomalism. partly coincident with interesting aeromagnetic and gravity features. The highest calcrete gold assay of 4.8 ppb. was recorded near the western boundary. of the tenement and appears to lie on a nor-nor-west trend of higher calcrete gold. values. Slightly raised gold values in the northeast of the calcrete survey orld appear. to form a northeast trend. Both areas of gold anomalism also exhibit slightly raised. calcrete copper values, with a peak of 20 ppm Cu against a background of about 5 ppm Cu.

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1893 to 1901 and 1930s 3154 Glenlath
and 1933 to 1941 59.2 Dam - 54
Tarcoola 1901 to 1986 2,387
191 Lake Lab .

Table 1 Historical gold production from the Tarcoola region.

1.5.4 Exploration Potential

The Harris Greenstone Domain is an eastwest oriented, wedge shaped region of Archaean rocks about 150 km long and 40 km wide, situated immediately south of Tarcoola. As well as potentially nickeliferous greenstones, the Domain contains the Glenloth and Earea Dam coldfields. whilst the Tarcoola and Lake Labyrinth doldfields lie near the northern boundary of the Domain. Recorded historical gold production from these four fields is shown in Table 1

1.5.4.1 Greenstone Nickel

Archaean komatiites, similar in age and composition to those now identified as the Lake Harris Komatiite, host nickel mines at Kambalda in the Eastern Goldfields of Western Australia. Because of the lack of outcrop of greenstones in the Harris Domain these rocks, which are prospective for nickel sulphide mineralisation, remain largely untested. The Harris Greenstone Project area contains approximately 60 km of strike length of concealed greenstones, distributed on two limbs of a tight fold structure.

1542 Shear Hosted Gold

The Yerda Shear Zone, which crosses the southern portion of EL 3284 in an east-west

EL 3284

kéometres

.
31° C

MERP

orientation, forms the southern boundary. of the Harris Greenstone Domain. The shear is a crustal scale ductile fault, separating predominantly Archaean rocks from Proterozoic rocks to the south, including Mesoproterozoic Hiltaba Suite granites, which host copper-gold mineralisation at Olympic Dam and gold mineralisation at Tunkillia. Gold at Tunkillia is associated with de-magnetised areas within the northsouth oriented Yarlorinda Shear Zone. The Yerda Shear Zone appears to be a western extension of the Yarlbrinda Shear Zone and is therefore a potential target area for both Archaean and Mesoproterozoic gold mineralisation.

1.5.5 Proposed Exploration Program

Nickel exploration and definition of specific targets for the Harris Greenstone Project will begin with detailed modelling of aeromagnetic data. PIRSA investigations showed that aeromagnetic data could be used to piapoint magnetic bands of Lake Harris Komatiite, which is the target for nickel mineralisation. These modelled

magnetic bands will then be tested for the presence of conductive primary nickel suiphides by ground electromagnetic (EM). surveys. In addition, calcrete sampling will be conducted over magnetic targets. Targets will then be tested by RAB drilling in the first instance, to focus follow-up drilling. The primary source of any shallowmineralisation identified by initial drilling. will be confirmed at depth using RC drilling.

Gold exploration will focus primarily on the Yerda Shear Zone. Aeromagnetic data will be used to establish the accurate position. of the shear zone and any de-magnetised areas contained within it. Calcrete sampling over target zones will provide an effective gold exploration tool, as elsewhere on the Gawler Craton. In-fill calcrete sampling will also further test anomalous areas previously identified by Placer Exploration Pty Ltd. Gold targets will be tested initially by RAB drilling, with follow-up RC drilling to confirm primary mineralisation at depth.

Figure 11 Regional setting of the Bulong South Project.

$\overline{2}$ EASTERN GOLDFIELDS PROVINCE

WESTERN AUSTRALIA

$2.1$ Bulong South Project

Introduction $2.1.1$

A,

The Bulong South Project comprises two prospecting licences, P25/1680 and P25/1681, and one prospecting licence application, P25/1729, which together cover a total area of 454 hectares. The Project lies in the Eastern Goldfields region of Western Australia, approximately 28 km east-southeast of Kalgoorlie-Boulder and about 8 km south-southeast of the abandoned townsite of Bulong, it is located in the Bulong District of the East Coolgardie Mineral Field and on the Hampton Hill pastoral lease. Access to the Project area is via the sealed Bulong road to Hampton Hill homestead and southwards from there via station tracks. Alternative access is via the Trans Australia Railway access road, then northwards on station tracks.

2.1.2 Project Geology

Redionally, the Bulong South Project lies within the Gindalbie Terrane, which forms part of the extensive Norseman-Willima greenstone belt of the Archaean Yilgam Craton. The Project area overlies a package of predominantly ultramafic and mafic extrusive rocks, forming part of the western limb of the Bulong Anticline, which dominates the southern Gindalbie Terrane. Other major structures include several northerly trending faults, such as the Hampton Fault, which crosses the western section of the Project area. Regional metamorphism is lower to mid greenschist. facies

Basement within the Project area comprises predominantly high MgO basalts with lesser komatites. There are also several black shale units, which probably represent sedimentary horizons intercalated between. the mafic and ultramafic flows. A small granitoid body dominated by monzogranite intrudes the southern section of P25/1680. Outcrop and sub-outcrop of basement

rocks is best developed in P25/1680 and the western part of P25/1681, where high-MgO. basalt and monzogranite outcrop or are covered by a thin layer of calcareous and/or ferruginous soil. Drilling by past explorers showed that the weathered regolith profile extends to only a relatively shallow depth, commonly less than 20 m to fresh bedrock or saprock. An alluvial plain extends over the eastern part of P25/1681, where there are few areas of basement outcrop (Jorgensen, 2002).

A prominent, northerly trending quartz veintraverses the eastern part of P25/1680, cross cutting both the mafic-ultramafic package. and the monzogranite. Smaller quartz veins run sub-parallel to the main vein. These veins were a focus of historical prospecting and shallow workings in the northeast of P25/1680, although total gold production. would have been small. Shallow pits and alluviai workings are also scattered over a ferricrete capped hill to the north of the outcropping vein system, in the northeast corner of P25/1680. Several of these workings exploited gold concentrated at or immediately beneath a calcrete horizon. in the northwest of P25/1681 there is also evidence of minor historical dry blowing. activity (Jorgensen, 2002).

2.1.3 Previous Mining and Exploration

The presence of numerous shallow workings indicates that there was some historical gold production from the Project area, especially from the northeastern part of P25/1680 and the northwestern part of P25/1681 (Figure 12). Small quantities of gold were apparently won from shallow

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Archaean Granitoid rock; moszograsite dominant Metamorphosed mafic intrusive rock; metagabbro and metadolerite Ultramafic volcanic rock; komatiitic basalt; high-Mg basalt; and tremolite-chiorite-talc schist Peridotite; commosty serpentinized; olivine-camulate texture Komatilte; minor basalt; dolerite; and sedimentary rock Felsic to intermediate volcanic and volcanogenic rock Metasedimentary rock Quartz vein Probable fault, interpreted from geophysics Inferred fault, interpreted from geophysics Track

PL26/1680 Southern Gold licence area

pits along a quartz vein system and from a ferricrete-capped hill to the north of the vein system, where there is evidence of shallow workings and of dry blowing activity. Several workings exploited gold associated with a calcrete horizon, which extends through much of the region. Recent prospecting by the lease holder has recovered gold nuggets from this area, confirming the presence of gold mineralisation.

Since 1965, several companies have explored in this area for nickel and gold. Western Nickel Pty Ltd explored for nickel and base metals from 1965 to 1977, with some of this work covering the Project area. A soil geochemical survey identified a copper anomaly overlying the contact

between mafic-ultramafic rocks and an interpreted intercalated sediment horizon, at a location named the "Rest Dam Gossan" by Western Nickel (Equre 13). A recent inspection showed no evidence of a gossanat this locality, but there is an abundance of a bright green schist probably containing abundant fuchsite, which suggests the presence of ultramafic rocks. Five percussion drill holes sited on this anomaly returned intersections assaying up to 0.5% copper, but because the mineralisation. was interpreted as sediment-hosted and because there were no acid volcanic rocks. identified, the area was down-graded as a target for massive copper-zinc sulphide mineralisation. No record of nickel assays has been found and Western Nickel apparently

Figure 12 Bulong South Project, project geology.

did not consider the possibility that the copper anomaly may be associated with the base of an ultramafic flow and potential nickel minerafisation (Jorgensen, 2004).

Gold exploration by Anaconda Australia Inc. from 1981-83 covered the easternpart of the Project area, but was mostly concentrated elsewhere. Anaconda completed geological mapping, groundmagnetic surveys and RAB drilling programs, which returned few results of significance, sone of which were in the Project area.

Ashton Gold (W.A.) Limited explored the Project area in 1992-93. Ashton collected rock chip samples from old workings, from laterite and quartz vein occurrences and from the sparse outcrops of bedrock where possible. Of 32 samples collected within the Project area, three returned significant gold assays (2.95 g/t Au, 0.37 g/t Au and 0.13 g/t Au). From eight RAB hofes drilled to follow up the highest rock chip gold assay, the best results were:

• HHR7 t, 12 m @ 0.21 a/t Au from 6 m in weathered ultramafic rock
• HHR8 6 m @ 0.13 g/t Au from 36 m in ultramafic rock.

Roebuck Resources NE (Roebuck) explored the area from 1993-95. Roebuck's Valley Zone prospect covered an area similar to the present Project area. Work completed included rock chip sampling, surface lagsampling and RAB drilling. The best four rock chip samples, which were collected from old workings in the north of the

Old working

PL25/1680 Southern Gold licence area - PLA25/1721 Calcrete geochemical gold anomalies 30 ppb 40 ppb 50 ppb Drilling SOR022 Acacia Resources RAB drilhole specoa Cyprus Gold RC drithole Exploration targets Gold ø Nickel Base metal ൫ وسيام Low impact mining area

Project area, returned 6.9 g/t Au, 6.30 g/t Au, 0.30 g/t Au, 0.105 g/t Au. An extensive lag sampling program, in which most of the samples were pisolitic lag, outlined several gold anomalies in the Project area, generally coincident with the rock chip anomalies. Anomalies were defined by a 4 ppb gold contour, and most values ranged from 4-20 ppb Au, with a peak of 1,450 ppb Au. Lag sampling also identified a coincident antimony-copper-lead anomaly, which lies

jafter Jorgensen, 2004)

Figure 13 Bulong South Project, exploration targets.

over a contact between mafic rocks and sediments. This anomaly was never drill tested

Roebuck drilled 246 geochemical RAB holes over the Valley Zone, to test unweathered bedrock beneath the saprolite horizon. Bottom hole assaving of a 3 m composite sample identified three main gold anomalies, the "northern", "central" and "southern" anomalies. These anomalies coincided with three of Roebuck's earlier rock chip and surface lag anomalies. The best RAB intercepts were:

• 973-B095 3 m @ 20.50 g/t Au from 9 m
• 973-8138

3 m @ 2.10 g/t Au from 12 m.

Several RAB samples also yielded significant nickel values, suggesting there is some potential for nickel mineralisation. The best intercepts were:

• 973-B059 2 m @ 8,400 ppm Ni from 13 m
• 973-8060 3 m @ 5,600 ppm Ni from 9 m
• 973-B084 3 m @ 5,200 ppm Ni from 9 m.

Roebuck did not follow up these encouraging gold and nickel results.

From 1994-97, Cyprus Gold Australia Corporation (Cyprus Gold) conducted regional exploration. Cyprus Gold undertook detailed geological mapping at 1:2,500 scale and solid geology interpretation over the Valley Zone, attempting to map out possible structural controls to mineralisation. Two RAB holes drifled at Valley Zone prospect intersected 16 m @ 467 ppb Au and 16 m @ 341 ppb Au respectively. Subsequently, Cyprus Gold drilled eight RC holes to test the fresh bedrock zone beneath Roebuck's bottom hole RAB anomalies. The RC drilling also targeted outcropping quartz-veined porphyry and a large quartz vein. Most holes intersected mineralisation, the best being a narrow, high grade intercept in SDRC004, which yielded 3 m @ 5.50 g/t Au from 80 m, including 1 m @ 12.77 g/t Au from 80 m. Gold mineralisation in this intersection was hosted by a narrow pyritic quartz vein in a silicified shear zone within ultramafic rocks. Other significant intersections were:

• SDRC002 6 m @ 0.67 a/t Au from 26 m, including 1 m @ 1.28 g/t Au from 29 m
• SDRC003 1 m @ 1.87 g/t Au from 30 m
• SDRC006 22 m @ 0.36 g/t Au from 20 m, including 2 m @ 1.31 g/t Au from 22 m.

Acacia Resources Limited (Acacia) subsequently assumed management of exploration over the Valley Zone prospect, from 1997 to 2000. A review of previous exploration highlighted a fack of soil. geochemicaí sampling over target areas. Acacia therefore undertook an extensive auger soil sampling program, targeting the near-surface pedogenic carbonate horizon at 100 m intervals on lines spaced either 400 m or 800 m apart. This work confirmed

1999 - John Amerikaans III (m. 1988), menjadi pada pada 2000 - Personal Personal Personal Personal Personal

the anomalism of two existing areas, the Valley Zone and a second anomaly to the south of the Project area. Further in-fill augersampling better defined anomalous areas. with $+20$ ppb Au.

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At Valley Zone prospect, 28 vertical, blade refusal RAB drill holes tested the auger soil apomaly. Holes were drilled at 100 m. intervals on five lines spaced 200 m apart. Assaving of 4 m composite samples returned several anomalous intercepts, but no gold values above 1 g/t Au. The best intersections were:

• SDR022 4 m @ 207 ppb Au from 12 m
• SDR 023 4 m @ 670 ppb Au from 8 m.

A further 25 in-fill RAB holes tested the most prospective parts of the Valley Zone at 100 m by 50 m spacing. Re-sampling of 4 m composite samples yielded several intercepts assaying above 0.1 g/t Au and some individual 1 m samples with greater than 1 g/t Au. The best intercepts were:

• SDR051 3 m @ 0.31 g/t Au from 14 m
• SDR060 2 m @ 0.23 g/t Au from surface
• SDR060 1 m @ 1.09 g/t Au from 7 m.

Except for some detailed mapping at 1:5,000 scale, Acacia did no further work at Valley Zone prospect.

Since 2001, the previous licence holder of the Bulong South Project area. Mr C.D. Zappelli, has prospected the tenements for eluvial and alluvial accumulations of natural gold nuggets, which are relatively plentiful in the general Bulong region (Jorgensen, 2002, 2003). One significant accumulation within central P25/1680 was exploited by fow impact mining between 2001 and 2003 (Figure 13). Several other,

much smaller accumulations were also discovered and exploited within P25/1680. and P25/1681, especially on either side of the boundary between the tenements at their northern end. Here nuggets were detected from an area containing old. shallow workings and dry blown gullies, within a large area of ferricrete.

A total of about 170 ounces of natural abid nucaets has been recovered from the current tenements (Jorgensen, 2004). Prospecting was largely conducted with metal detectors, whilst mining was assisted by use of a small buildozer. At the main occurrence in P25/1680, many nuggets were attached to quartz, although a large number, especially the larger ones, were quartz free. Crystalline gold nuggets were also found. The largest nugget found weighed approximately 4 ounces (124 g), but most were less than 10 g in weight. Generally, the nuggets were recovered from a well developed nodular calcrete and calcareous soil horizon, which is deneral to the region.

Prior to mining, patchy zones of quartz sub-outcrop and float were observed in the area of the main occurrence. These zones trended roughly north-northeast. Most near surface nuggets found prior to mining. tended to be found near quartz sub-crop or at least near quartz float, although this was not always the rule. Low impact mining exposed in-situ quartz veining in more or less the same area. This is clearly the source. of the surface and near surface quartz. Whether it is also the source of the gold nuggets is uncertain. No coarse gold was found in-situ within the quartz vein itself, but nuggets attached to very similar quartz. were found in close proximity, it appears likely that many of the natural gold nuggets. were derived from in-situ quartz veining, although many nuggets are probably the result of gold remobilisation within the

regolith profile, especially the larger and the crystalline gold nuggets. The quartz vein may still have been the original source of this remobilised gold. A program of rock chip sampling along the quartz vein didnot resolve this question. Although results overall were not particularly encouraging, several samples of the main quartz veinyielded more than 1 g/t Au, showing that the vein is anomalous in gold and may potentially host small patchy zones of high grade gold. It appears that few of the shallow RAB drill holes actually intersected the quartz veining, which therefore was probably not adequately tested for high grade gold mineralisation (Jorgensen, 2002).

2.1.4 Exploration Potential 2.1.4.1 Gold

Previous gold exploration in the Project area was conducted by large companies. whose minimum target was a one million. ounce gold deposit. Exploration by Roebuckand Acacia in particular was reasonably systematic and probably excluded the likelihood of discovering a large scale. gold deposit. However, previous explorers identified at least four targets that may yield small but high grade deposits that could be profitably exploited (Jorgensen, 2004).

Target Au1: The primary source of the natural gold nuggets recovered from the main eluvial occurrence by Zappelli has yet to be found. Sub-cropping quartz veins exposed by low impact mining here. returned rock chip assays up to 3.40 g/t Au. This zone of quartz sub-crop and float is also one where auger soil geochemical values. are elevated and RAB drilling by Cyprus. Gold and Acacia identified significant gold anomalism in the regolith profile. This area warrants detailed assessment and RC. drilling to test the primary mineralised zone.

Target Au2: Cyprus RC hole SDRC004 intersected narrow but high grade gold.

1999 - Johann Amerikaanse Staatsmanner (

intercepts whilst following up previous highgrade RAB intersections made by Roebuck. These holes intersected a silica-pyrite altered shear in a structurally complex zone adjacent to a large outcropping quartz vein. Numerous anomalous intersections in surrounding holes have not closed off this area of mineralisation, which also warrants further RC drill testing.

Target Au3: Numerous historical shallow workings and dry blowings are found in the north of the Project area, sear the boundary between P25/1680 and P25/1681, on a ferricrete capped hill. This indicates that there was sufficient surface gold here to attract the early prospectors. Surface, shallow auger and RAB geochemical surveys by Ashton, Roebuck and Acacia all identified gold anomalies in this area. Limited RAB drilling by Ashton and Roebuck did not adequately test their anomalies. Acacia did not drill the auger soil anomaly they identified in this area. This target warrants further systematic investigation, including RAB drilling.

Target Au4: Auger soil sampling by Acacia outlined an area of significant geochemical anomalism to the east of Target Au3. in the north of P25/1681. Gold anomalism of 420 ppb Au covers an area of about 800 m by 400 m against the northern boundary. of the Project. Within this anomaly are two discrete highs above 30 ppb Au, each measuring about 200 by 200 m. These two highs have peaks of 96 ppb Au and 60 ppb Au. Acacia tested the anomalies with vertical blade-refusal RAB drilling at 100 m. centres along two lines spaced 200 m apart.

Although RAB encountered no intersections above 100 ppb Au, it is possible that the holes and the drill traverses were too. widely spaced to identify a small high grade mineralised system. In-fill RAB drilling is recommended to adequately test this significant auger soil anomaly.

2.1.4.2 Nickel

There has been no modern nickel exploration in the Project area. Work by Western Nickel between 1965 and 1977 relied on finding near surface indicators. of nickel, such as gossan searches and soil. sampling, with limited geophysical and drilling follow up. These methods were relatively ineffective compared to the use of current geofogical models and moderngeophysical techniques. Three nickel targets are recommended for further investigation. (Jorgensen, 2004).

Target Ni1: Acacia's RAB hole SDR062 intersected elevated nickel and copper values (3 m @ 6,050 ppm Ni from 40 m) in saprolite, close to possible dunite/peridotite outcrop. This intersection suggests the possibility of a lateritic nickel target, and warrants further assessment by geological mapping, geophysics and drilling.

Target Ni2: Roebuck's RAB drilling over the ferricrete covered hill in the northeast of P25/1680 encountered several +5,000 ppm. Ni assays in bottom hole samples, indicating potential for sulphide and lateritic nickelmineralisation in this area.

Target Ni3: Western Nickel apparently regarded the "Rest Dam Gossan" as a

voícanogenic copper-lead-zinc suiphide. target rather than a nickel sulphide target, downgrading it when no acid volcanics. were identified. Field inspections have identified probable fuchsite-bearing ultramafics as well as black shales at this locality. Therefore the potential exists for nickel sulphide mineralisation, should this turn out to be the base of a volcanic pile.

2.1.4.3 Other Base Metals

Roebuck identified a copper-lead-antimony. base metal anomaly in pisolitic lag surface. sampling in southern P25/1681. This anomaly overlies the interpreted contact between mafic rocks and sediments. (Figure 13). It is not clear whether this location is at the base or the top of the sediment package, as facing direction is not known. This low order anomaly, which has not been drilled or investigated in detail, should be followed up.

2.1.5 Proposed Exploration Program

Exploration will focus on the delineation of high grade gold mineralisation and the identification of sulphide or lateritic nickel mineralisation in target areas defined by previous exploration. RC drilling will be employed to test for primary gold. mineralisation at depth beneath identified. quartz vein systems. RAB drilling will be used to follow up and in-fill areas of significant gold geochemical anomalism. in the north of the Project area. Nickel and other base metal targets will be investigated. in detail with appropriate geological and geophysical techniques, prior to drilling.

Figure 14 Grenfell Goldfield Project, regional geology.

$\overline{3}$ LACHLAN FOLD BELT PROVINCE

NEW SOUTH WALES

$3.1$ Grenfell Goldfield Project

$3.1.1$ Introduction

EL 6122 covers an area of approximately 250 square kilometres surrounding the town of Grenfeli, about 380 km west of Sydney, in Central Western New South Wales (Figure 14). The Project tenement includes the majority of the historic Grenfell goldfield, which has produced approximately 10 tonnes of gold since the initial discovery at Grenfell in 1865. Most of that production was in the period 1866 to 1880. The area fles in the Forbes Anticlinorial Zone, a north-south trending region 380 km long and up to 80 km wide, extending from Narromine in the north to south of Tumut. Gold is the most important mineral commodity produced from the zone.

3.1.2 Project Geology

The ofdest rocks are the Ordovician metasediments and chert of the Kirribilli Formation (Figure 15). In many places the Kirribilli Formation is covered by thick Cainozoic alluvium and colluvium. Where the formation is exposed it is often only as weathered subcrop. The Kirribilli Formation commonly forms fow hills on which bedrock is covered by a thin layer of soil containing abundant metamorphic quartz float.

The sequence contains several gold-quartz vein deposits. These are associated with andesitic intrusives in the Peak Hill-Parkes-Forbes district and with "porphyry" in the Grenfell district. Porphyry was the name given in older reports to the Silurian felsic. intrusives now known as the Glenisla Volcanics, which belong to the Douro-Group.

The Glenisla Volcanics form small outcrops up to 2.5 km wide located at intervals. along the Coolac-Narromine Fault Zone. At Grenfell, the Glenisia Volcanics host the majority of the auriferous quartz veins, which occupy zones of fracturing within the host. These gold reefs were in turn the source of a large proportion of the gold contained in the rich alluvial leads of the Grenfell field.

Overlying the Ordovician sediments to the east the Coolac-Narromine Fault Zone are Late Silurian to Early Devonian sediments and volcanics of the Derriwong Group, which forms more prominent topography inthe southeastern part of the Project.

Middle Devonian and Late Devonian sediments are found in the northeast and easternmost sectors of the Project area. Intruding the Ordovician sediments in

Figure 15 Grenfell Project, project geology.

the northwest of the Project is the Middle Devonian Grenfell Granite. Within the Grenfell Granite northwest of Grenfell is a 12 km by 1.5 km block of metabasaits and minor chert named the Brangan Volcanics. This block has been interpreted to be a detached slab of Ordovician basement incorporated into the granite as a roof. pendant.

Valleys in the Project area are filled with Cainozoic alluvium to a depth of 60 m to 90 m.

Structurally the Project area is dominated by the north-northeast trending Coolac-Narromine Fault Zone, a major structure 600 km long and up to 5 km wide. The fault zone is not seen in outcrop, but its presence is interpreted from magnetic data and geofogical inference. Spatially associated with the fault zone are small outcrops of

aftered igneous rocks, possibly high-level intrusives, referred to as "porphyry" in older reports. The age of these rocks is unknown. They may be equivalents of the Glenisla Volcanics (Silurian) or they could be part of an Ordovician wedge included in the fault. zone. The Coolac-Narromine Fault Zone appears to be a locus of gold mineralisation. in the southeastern corner of the FORBES map sheet area.

Previous Mining and Exploration $3.1.3$

Gold was discovered at Grenfell in 1865. and mining began on O'Briens reef the following year. Alluvial gold was then found immediately to the south, in the Main lead. Further reefs and alluvial leads were discovered soon after in the same area (Figure 15). By 1867 alluvial gold had been found on the eastern side of the hilfs

428998 -422	Late Devonian Hervey Group
	Middle Devonian Grenfell Granite
	Rocky Ponds Group
	Early Devonian - Late Silurian Derriwang Group
	Early Silurian Douro Group; Glenisla Volcanics
	Mid-Late Ordovician Jindatee Group, inc. Brangan Volcanics
20088888	Kirribilli Formation
	Porphyry or altered voicanics - age uncertain
	Interpreted fault
	Historic gold reef workings
i Samanan	Historic alluvial gold workings
mmedia (	Creek
,,,,,,,,,,,,,,,,,,	Road
	EL 6122 Southern Gold Exploration Licence
о	Helix stream sediment sample (Au ≤2ppb).
٥	Helix stream sediment sample (Au ≥2ppb).
	Lawson's Line priority target

Kanadian Conggo Basi

its tributaries. Alluvial gold was also found 10 km south of Grenfell, at the Seven Mile lead, where workings extended for more than 5.6 km. The gold reefs were very rich in their upper sections and in the period 1866. to 1876 the reefs produced an estimated 150,000 oz of gold. Alluvial diggings yielded about the same amount. Government records show that total gold production. from the Grenfell goldfield between 1866 and 1935 was 321,000 ez, although most of the mines had finished by 1895.

east of the town, at Quandong lead and

Gold bearing quartz veins are hosted by the Silurian Glenisla Volcanics (described as a quartz-feldspar porphyry in older reports). The veins appear to be replacements of the volcanics along zones of fracturing. Strike is generally about 045°, with dips to the northwest of 45° to 80°. Widths range up to 3 m, but most are less than 1 m wide. Minor arsenopyrite, pyrite, chaicopyrite and galenaare associated with the gold in the quartz veins, along with minor calcite gangue. Goldgrades are enriched above the water table. (~113 m). Numerous small cross-faults offset the veins. Numerous quartz veins are also developed in the adjacent Ordovician rocks. These veins are narrow, short and lenticular, but otherwise seem to be of similar origin to those in the volcanics. Although these veins carry low gold values, they are thought to

have been the source of the rich alluvial leads of the Quandong and Seven Mile systems.

Alluvial leads on the Grenfell goldfield are of two types. The Main Lead group of alluvial gold deposits derived their gold from the reefs at Grenfell. Most of the gold was found downstream from the Glenisla Volcanics. with workings extending for about 1.6 km. Depth of sinking was down to about 25 m. Government records show recoveries of 8-16 g/t Au, but grades of more than 60 g/t were reported. The second type of lead is represented by the Quandong and Seven-Mile groups, in contrast to the Main Lead group, these leads have their headwaters in Ordovician to Devonian age sediments. The alluvium comprises clay and sand above a quartz gravel "wash". Depth of sinking on the old workings ranged to 65 m at Quondong and 60 m at Seven Mile. Government records show yields of between 4 g/t and 18 g/t Au.

Modern exploration of the Project area has been fairly limited. Mt Hope Minerals NE explored the area in 1971, making a photogeological study and a geochemical survey, which was outside the Project. Central Pacific Minerals NE undertook limited mapping and geochemical sampling for base metals in 1973, without encouragement.

Alkane Exploration NL (Alkane) investigated the vein gold workings at Grenfell in 1981-82. Soif geochemistry on the Victory grid defined a narrow zone anomalous in As, Hq, Pb and Zn north of Lucknow mine and a second anomalous zone near Homeward Bound mine. Alkane drilled two angled diamond core holes on the Enterprise fode. Hole DDH GD1 intersected a true width of 2.48 m @ 0.27 g/t Au. This contained a true. width of 0.55 m @ 0.77 g/t Au, from 186 m depth. At the point of intersection the lode lav 186 m below surface and 80 m below. the deepest mine workings. Hole DDH GD2, drilled on a strong soil anomaly just to the west, intersected a true width of 0.7 m @ 23.57 g/t Au and 0.3 g/t Ag. Small flakes of gold were visible in this core. Petrology on the drill core showed that the quartzfeldspar rock hosting the Grenfell lodes is an altered pyroclastic rock made up of farge. lithic fragments in a matrix of coarse crystal. tuff.

nsi ng

Alkane also undertook a regional stream. sediment survey for base metals, but not gold. That low density sampling located copper and arsenic anomalies near the head of Seven Mile lead, where detailed soil. sampling over a limited area followed up a linear arsenic anomaly. Stream sediments draining from unprospective Siluro-Devonian sediments east of the Primrose area were not encouraging.

Twelve kilometres southeast of Grenfell, Alkane investigated an area of quartz float derived from stockwork quartz veins along a ridge just south of the Project area. Many of these veins were worked for gold on a small scale in the 1800s. Alkane obtained anomalous fead, zinc and copper values. in streams draining north and south of this ridge. Subsequently a well defined soil anomaly was found near old workings. associated with quartz veins. Pyrite pseudomorphs were noted in the quartz. It has been suggested that the gold found in the Seven Mile alluvial lead system was derived from quartz veins such as these.

In 1985-86 Young Mining Company Pty Etd (Devex Limited) made a literature survey, an air photo interpretation, an aeromagnetic interpretation and collected reconnaissance. rock chip samples. Assays returned gold up to 70 ppb Au and anomalous arsenic from "grapite dykes" east of Primrose homestead. and from sediments northwest of the homestead

Helix Resources Ltd (Helix) explored more extensively, from 1992-94. Following a literature survey and orientation

geochemistry, Bellx collecting 236 stream sediment samples from a larger area that included the Grenfell Goldfreld Project, assaying for gold (BLEG) and base metals. Helix followed up encouraging results from outside the Project, but discounted anomalies near Grenfell and in the headwaters of the Seven Mile lead as contamination by old workings. Helix also drilled 19 RC holes sited at the Enterprise mine and 10 RC holes at Warraderry Forest prospect, north of the Project area. Drilling at Enterprise intersected gold mineralisation, e.g. 4 m @ 2.92 g/t Au in GRC 32, in what appeared to be a previously unrecognised auriferous reef. Drilling on the western extension indicated mineralisation. was patchy, but possibly continued at depth.

Perilya Mines NL in 1998 undertook a literature review and an interpretation. of regional aeromagnetics, then flew a 9,600 line km detailed aeromagnetic survey. Perilya identified several targets related to broad magnetic lows and major fault systems, but withdrew after limited field reconnaissance.

3.1.4 Exploration Potential

Mapping and geophysical interpretation. recently published by AGSO and the Geological Survey of NSW identified a major structure, the Coolac-Narromine Fault Zone running north-south through the Project area (Figure 15). Clustering of historic mine workings suggests this structure was a locus for structurally controlled gold. mineralisation.

Examination of the deplogical and geomorphological setting of the deeplead systems 4 km east and 10 km south of Grenfell shows their alluvial gold was not derived from the reefs of the Grenfellvein system. It has been speculated in the past that the gold in these alluvials. originated from low grade quartz veining. in the Ordovician sediments. However, Southern Gold has noted that these alluvial systems drain areas crossed by the Coolac-Narromine Fault Zone, suggesting the source of gold is related to the structure. Although Helix discounted anomalies in these areas as probable contamination by old workings, not all the anomalies.

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Indian derivative Report

can be explained in this way. The finding of anomalous stream sediments in the modern drainages of the Quandong and Seven Mile systems supports the anomalism of their headwaters. There is potential for discovery of hard rock gold sources along the seven kilometre long north-south line. of headwaters to the Quondong and Seven Mile lead systems, it is likely the Coolac-Narromine Fault was the locus for hard rock dold mineralisation that was subsequently concealed beneath alluvium and talus. shed from the uplifted Siluro- Devonian sediments east of the fault zone. Southern Gold has named this target zone Lawson's i ine.

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Stream and soil samples collected by Alkane from close to the fault zone were anomalous in copper and arsenic. Two small outcrops of altered igneous rock close to the fault zone are interpreted as high-level intrusive dykes of felsic volcanics, similar to the "porphyry" host at Greafell.

A combination of factors points to the potential for discovery of Grenfell style. high grade gold veins associated with the Coofac-Narromine Fault Zone within the Project area. Exploration along Lawson's Line target zone by Southern Gold during 2004. identified previously unrecorded outcrops and sup-outcrops of felsic igneous rocks, with associated geochemical anomalies. Gold-bearing 'porphyry' sampled at the headwaters of Two Mile lead returned grades between 0.1 and 0.9 g/t gold (Biggins, 2004). These targets warrant further focussed and detailed exploration.

Recent aeromagnetic data highlights the known deep feads very clearly. The data also indicate several similar features where no known alluvials were mined. These features also warrant investigation, as potential alluvial gold targets.

3.1.5 Proposed Exploration Program

Detailed geofogical mapping and rock chip sampling along Lawson's Line target area. This work will be directed towards determining the extent of talus cover within the target area and

to obtaining information from outcropand float material regarding all igneous rocks, fault structures and rock alteration. styles.

• Detailed stream sediment sampling and base-of-slope soil sampling over anomalous drainage compartments. identified from Helix stream sediment data.
• Follow-up definition of stream sediment targets with 50 m by 100 m soil sample. grids.
• Testing of soil targets, contingent on results, with IP surveys.
• Drilling, contingent on soil geochemistry and IP results, with a minimum of 5 RC holes.

PRINCIPAL SOURCES OF INFORMATION

Gawler Craton 4.1

• Daly, S.J., Fanning, C.M., and Fairclough, M.C., 1998. Tectonic evolution and exploration potential of the Gawler Craton. AGSO Journal of Australian Geology and Geophysics Vol. 17, part 3.
• Drexel, J.F., Preiss, W.V., and Parker, A.J., 1993. The geology of South Australia, Vol. 1, The Precambrian, South Australia. Department of Primary Industry and Resources. Geological Survey, Bulletin 54.
• Fanning, C.M., 1997 (Preliminary draft). Geochronological synthesis of southern Australia, Part II: The Gawler Craton, Research School of Earth Sciences, Australian National University, PRISE report (unpublished).
• Ferris, G.M., Schwarz, M.P., and Heithersay, P., 2002. The geological framework. distribution and controls of Fe-oxide and related alteration, and Cu-Au mineralisation in the Gawler Craton, South Australia: Part I: geological and tectonic framework. In: Porter, T.M., (Ed.), Hydrothermal iron oxide coppergold and related deposits: a global perspective. Vol. 2. PGC Publishing, Adelaide.
• Ferris, G.M., and Schwarz, M.P., 2003. Proterozoic gold province of the central Gawler Craton, South Australia, Department of Primary Industry and Resources. MESA Journal Voi 30
• Geological Survey of South Australia, 1997. Gawler Craton excursion. South Australia. Department of Primary Industry and Resources. Adelaide.
• Geological Survey of South Australia, 2003a. South Australia Geoscientific GIS Dataset, South Australia. Department of Primary Industry and Resources. December 2003 release C.D.
• Geological Survey of South Australia, 2003b. South Australia MINDEP database. South Australia. Department of Primary Industry and Resources, Adelaide.

Heithersay, P., 2002. Prominent Hill discovery - URN 1: The best Cu-Au intersection in 25 years. South Australia. Department of Primary Industry and Resources. MESA Journal Vol. 24.

MAMARA MAMARA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA MARKA

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WANGIL

• O'Driscoll, E.S.T., 1985. The application of lineament tectonics in the discovery of the Olympic Dam Cu-Au-U deposit at Roxby Downs, South Australia. Global Tectonics and Metallogeny, 3 (1): 43 - 57.
• O'Driscoll, E.S.T. and Campbell, I.B., 1997. Mineral deposits related to Australian continental ring and rift structures, with some terrestrial and planetary analogies. Global Tectonics and Metallogeny, 6 (2): 83 - 101.
• O'Driscoll, E.S.T, and Boucher, R.K., 2002. The metal-rich 4A-4B west-northwesterly crustal corridor through the Curnamona Craton, South Australia, Global Tectonics and Metallogeny, 7 (3&4): 203 - 207.
• Reynolds, L.J., 2001. Geology of the Olympic. Dam Cu-U-Au-Aq-RÉÉ deposit. South Australia. Department of Primary Industry and Resources. MESA Journal Vol. 23.
• Schwarz, M.P., Morris, B.J., Sheard, M.J., Ferris, G.M., Daly, S.J., and Davies, M.B., 2002. Gawier Craton. In: Heithersay, P.S., Drexel, J.F., Hibburt, J.E., and Thomas. C.A., (Eds) 2002. South Australian mineral explorers quide, draft edn. Office of Minerals and Energy Resources. South Australian Department of Primary Industry and Resources, Adelaide, CD.
• Skirrow, R.G., Bastrakov, E., Davidson, G., Raymond, O.L., and Heithersay, P., 2002. The geological framework, distribution and controls of Fe-oxide and related alteration. and Cu-Au mineralisation in the Gawler Craton, South Australia: Part II: alteration and mineralisation. In: Porter, T.M., (Ed.), Hydrothermal iron oxide copper-gold and related deposits: a global perspective. Vol. 2. PGC Publishing, Adefalde.

Challenger West Project $4.2$

• Argonaut Resources NL, 2003. Report to the Australian Stock Exchange, 27 November 2003. Argonaut Resources NL. Adelaide.
• Benbow, M.C., 1981. COOBER PEDY map sheet. South Australia, South Australia, Geological Survey. Geological Atlas 1:250 000 Series, sheet \$1453-6
• Benbow, M.C., 1982, COOBER PEDY. South Australia, sheet SH53-6. South Australia. Geological Survey. 1:250 000 Series - Explanatory notes.
• Benbow, M.C., 1986. TALLARINGA map sheet. South Australia. South Australia. Geological Survey, Geological Atlas 1:250 000 Series, sheet SHS3-5
• Benbow, M.C., 1993, TALLARINGA, South Australia, sheet SH53-5, South Australia. Geological Survey, 1:250 000 Series - Explanatory notes.
• CRA Exploration, 1996. Annual report year ending 30th June 1996. CRA Exploration Pty Ltd.
• Edgecombe, D.R., and Robinson, P., 1996. EL 2018 Sandstone joint venture, first partial surrender report for the period 9/9/94 to 8/3/96. South Australia. Department of Primary Industry and Resources. Open file envelope 9054 (unpublished).
• Edgecombe, D.R., 1997. Challenger gold deposit - exploration case history. South Australia. Department of Primary Industry and Resources, MESA Journal Vol.4
• Greenhill, P., Moody, T.C., and Stewart, W.A., 2000, EL 1932 and EL 2621, Garford, Annual and final reports for the period 7/6/94 to 14/6/2000. South Australia. Department of Primary Industry and Resources. Open file envelope 8932 (unpublished).
• Keeling, J.L., Ferris, G.M., and Statham-Lee, L., 1995. Palygorskite clay investigations, Garford Pafaeochannel, South Australia: results of drilling April-May, 1995. South Australia. Department of Primary Industry and Resources. Report book 95/48.

.......................................

1999 - Johann Marian, Amerikaansk fisikaler (d. 1988)

Lintern, M.J., and Sheard, M.J., 1999. Regolith studies refated to the Challenger gold. deposit, Gawler Craton, South Australia. Geochemistry and stratigraphy of the Challenger gold deposit, Vol. 1: Text. South Australia. Department of Primary Industry and Resources. Report book 98/10.

a katika katika matsayan da da sa sa sa sa sa sa sa sa sa sa sa sa sa

• MESA, 1995, SAEI success -- new gold discovery. South Australia. Department of Mines and Energy. Mineral Industry Quarterly No.78
• Morris, B.J., 2002. Industrial minerals. In: Heithersay, P.S., Drexel, J.F., Hibburt, J.E., and Thomas, C.A., (Eds), 2002. South Australian mineral explorers guide. Draft edn. South Australia. Department of Primary Industries and Resources. Office of Minerals and Eneroy Resources. Adelaide, C.D.
• Pima Mining NL, 1998. Quarterly report to the Australian Stock Exchange, Quarter Ending 31 December 1997, Pima Minina NL, Adelaide,
• PIRSA, 1998. Company exploration highlights. South Australia. Department of Primary Industry and Resources. MESA Journal Vol.10.
• PIRSA, 2001. Challenger -- a new gold mine for South Australia. South Australia. Department of Primary Industry and Resources. MESA Journal Vol. 23.
• Poustie, A., Bamford, P., and Daly, S.J., 2002. Chalfenger -- South Australia's first Archaean gold mine. South Australia. Department of Primary Industry and Resources. MESA Journal Vol. 27
• Robertson, R.S., Morris, B.J., Janz, J.K., Hill. P.W., and Crettenden, P.P., 1993. Tarcoola-Tallaringa bedrock drilling 1991. South Australia. Department of Primary Industry and Resources. Report book 93/4.

• Robinson, P., 2001. Igy EL 2077, Second annual report for the period 3 April 1996 to 2 April 1997. South Australia. Department of Primary Industry and Resources. Open file envelope 9774 (unpublished).

• Robinson, P., and Coats, R., 2001. Partial surrender report for the period to 21st February 2001. South Australia. Department of Primary Industry and Resources. Open file envelope 9774 (unpublished).

• Stewart, W.A., 2000. EL 1932, Garford. Partial relinquishment report, March 1995. South Australia. Department of Primary Industry and Resources. Open file envelope 8932 funnalished)
• Stockdale Prospecting Ltd, 1985. EL 994, Lake Anthony and EL 995, Lamont. Progress and relinquishment reports from 11/8/82. to 11/4/85. South Australia. Department of Primary Industry and Resources. Open file envelope 4736 (unpublished).
• Warne, S.B., 1990. EE 1371, Sandstone. Progress reports for the period 18/12/86 to 18/9/90. South Australia. Department of Primary Industry and Resources. Open file envelope 6809 (unpublished).
• Weber, G.B., 1981, EL 413, Wilkinson Lakes. Progress and technical reports for the period 30/6/78 to 6/1/81. South Australia. Department of Primary industry and Resources. Open file envelope 3339 (unpublished).
• Weber, G.B., 1981. EE 514, Lake Anthony. Progress and technical reports for the period 21/8/79 to 20/8/81. South Australia. Department of Primary Industry and Resources. Open file envelope 3570 (unpublished).
• Weber, G.B., 1981. EL 514, Lake Anthony and EL 744, Wilkinson Lakes. Progress and technical reports for the period 6/10/80 to 6/4/81. South Australia. Department of Primary Industry and Resources. Open file envelope 4105 (unpublished).
• Wood, M., and Robinson, P., 1996. Igy EL 2077 South Australia, first annual report for the period 3 April 1995 to 2 April 1996. South Australia. Department of Primary Industry and Resources. Open file envelope 9774 (unpublished).

43 Southern Gawler Arc Project

• Aquila Resources Limited, 2003. Annuai report to shareholders. Aquila Resources Limited, Perth.
• Aquila Resources Limited, 2004. Gold profects. Wilcherry Hill, Aquila Resources Limited Website, http://www.aquilaresources. com au
• Curran, C.A., and Drown, C.G., 1996. Exploration Licence 1855 "Mt Miccollo", annual report on exploration for the twelve months ended 8th August 1994. South Australia. Department of Primary Industry and Resources. Open file envelope 8818 (umuddished)
• Drown, C.G., and Anderson, J.A., 1994. Exploration Licence 1568 "Peterlumbo", annual report on exploration for the twelve months ended 14th February1994. South Australia. Department of Primary Industry and Resources. Open file envelope 8560 (umuddished)
• Drown, C.G., and Curran, C.A., 2002. Exploration Licence 1841 "Mt Ive Gate", summary of exploration for the twelve months ended 11th July 1994. South Australia. Department of Primary Industry and Resources. Open file envelope 8811 (unpublished).
• Ferris, G.M., and Daly, S.J., 2002. Gawler Craton 2002: State of Play, South Australia. Department of Primary Industry and Resources. Report book 2002/028.
• Fodina Minerals Pty Ltd, 1995. Annual technical report on Exploration Licence EL 1852 Buckleboo, Éyre Penínsuía, South Australia. South Australia. Department of Primary Industry and Resources. Open file envelope 8865 (unpublished).
• Garsed, I.R., 2003, EL 2894 "Mt Ive Gate" annual report for the year ending 20th February. 2003. South Australia. Department of Primary Industry and Resources. Open file envelope 9910. (unpublished).

للمستنبي

Gerakiteys, C., 2002. EL 1841 "Mt Ive Gate", annual report for the year ending 12th July 1996. South Australia. Department of Primary Industry and Resources. Open file envelope 8811 (unpublished).

Higgins, M.L., Berg, R.C., and Hellsten, K.J., 1990. Menninnie Dam lead-zinc-silver prospect, Evre Peninsula. In: F.E. Hughes (Ed.) Geology of the Mineral Deposits of Australia and Papua New Guinea. The Australasian Institute of Mining and Metallurgy, Melbourne: 1055 $-1058$

• Law, S.R., 2003. EL 2894 "Mt ive Gate" relinquishment report June 2003. South Australia. Department of Primary Industry and Resources. Open file emelope 9910 (uppublished).
• Mackay, C.R., 2002. Exploration Licence 1841 "Mt IveGate", annual report on exploration. for the period 12th July 1997 to 11th July. 1998. South Australia. Department of Primary Industry and Resources. Open file envelope 8811 (unpublished).
• Marinelli, J.F., MacKee, G.L., and Sugden, S.P., 1990. Charba Hill, Peltabinna Hilli and Unafla Hill, Progress and final reports for the period 22/12/89 to 14/11/90. South Australia. Department of Primary Industry and Resources. Open file envelope 8293 (unpublished).
• Standish, T.R., 2002. Exploration Licence 2551 "Mt IveGate", annual report on exploration for the period 23/9/98 to 22/9/99. South Australia. Department of Primary Industry and Resources. Open file envelope 8811 (unpublished).

Yarlbrinda Project $4.4$

Drown, C.G., 2003. The Barns Gold project - discovery in an emerging district. South Australia. Department of Primary Industry and Resources, Adelaide, MESA Journal Vol.28,

1999 - Andrea Maria (Andrea Maria Andrea Maria Andrea Maria Andrea Maria Andrea Maria Andrea Maria Andrea Ma

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▒▒▒

• Parker, A.J., and van der Stelt, B.J., 1997. "Nuckulla Hill" Exploration Licence EL2035 western Gawler Craton South Australia. annual technical report 6th December 1995 - Sth December 1996, South Australia. Department of Primary Industry and Resources. Open file emielope 9020 (unpublished).
• Parker, A.J., Emslie, J., and Knaak, M., 1998. "Nuckulla Hill" Exploration Licence EL2035 western Gawler Craton South Australia annual technical report 6th December 1996 - Sth December 1997, South Australia. Department of Primary Industry and Resources. Open file envelope 9020 (unpublished).
• van der Stelt, B.J., and Parker, A.J., 1996. "Nuckulla Hill" Exploration Licence EL2035 western Gawler Craton South Australia, annual technical report 6th December 1994 - Sth December 1995, South Australia. Department of Primary Industry and Resources. Open file emrelope 9020 (unpublished).

4.5 Harris Greenstone Project

• Amoco Minerals Australia Company. 1983. Progress and final reports for the period 26/8/80 to 14/6/83. South Australia. Department of Primary Industry and Resources. Open file envelope 3961 (unpublished).
• Davies, M.B., 2003. Harris Greenstone Domain bedrock driffing program, South Australia. Department of Primary Industry and Resources. MESA Journal Vol. 29.
• Davies, M.B., 2003. Harris Greenstone Domain bedrock driffing May - August 2001, South Australia. Department of Primary Industry and Resources. Report book 2002/11.

Davies, M.B., 2003. Harris Greenstone Domain bedrock drilling phase 2: June --- August 2002, South Australia. Department of Primary Industry and Resources. Report book 2002/29.

• Placer Exploration Pty Ltd., 1998. EL 2068 Annual and final reports for the period. 13/5/95 to 12/5/98, South Australia. Department of Primary Industry and Resources. Open file envelope 9056 (umpublished).
• SADME, 1991. Tarcoofa-Tallaringa bedrock drilling. South Australia Department of Mines and Energy, Mineral Industry Quarterly No. 64.
• Youles, I.P., Review of mineral exploration Tarcoola region. South Australia. Department of Mines and Energy. Report Book, 91/105.

4.6 Bulong South Project

• Belcher, R.L., 2000. Acacia Resources Elmited, Stumpy Dam project £25/94, P25/1331, final report for the period 7th January 1999 to 6th January 2000, Western Australia, Department of Industry and Resources. Open file report, item 11067 - A60076 (unpublished).
• Briggs, E., 1994. Annual report for Curtin prospect, year ended 10/8/94, Exploration Licence 25/94, Prospecting Licence 25/1331, East Coolgardie mineral field - Western Australia. Western Australia. Department of Industry and Resources. Open file report, Item-11067 - A42150 (unpublished).
• Cottrill, D.A., 1998. Acacia Resources Limited, Stumpy Dam project E25/94, P25/1331, final report for the period 7th January 1997 to 6th January 1998. Western Australia. Department of industry and Resources. Open file report, item 11067 - A53818 (unpublished).
• Cowden, A., and Roberts, D.E., 1990. Komatlite hosted nickel sulphide deposits, Kambalda. In: Geology of the Mineral Deposits of Australia and Papua New Guinea (ed. F.E. Hughes). AusiMM. Melbourne : 567-581.

.......................................

1999 - Johann John Barn, mars ann an Amhair ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbhail ann an Dùbh

Cyprus Gold Australia Corporation, 1996. Annual report £25/94, P25/1331 Stumpy Dam, January 7, 1995 to January 6, 1996. Western Australia. Department of Industry and Resources. Open file report, item 11067 - A47513 (unpublished).

a katika katika mwaka wa mshindi wa 1999 hadi wa 1999 hadi wa 1999 hadi wa 1999 hadi wa 1999 hadi wa 1999 hadi

• Geological Survey of Western Australia, 2003. Combined east Yildam geoscience database, 1:100 000 digital deological data package. Western Australia. Department of Industry and Resources. June 2003 update C.D. (prefiminary edition).
• Groenewald, P.B., Painter, M.G.M., Roberts, F.L., McCabe, M., and Fox, A., 2000. East Yilgarn geosclence database, 1:100 000 geology Menzies to Norseman --- an explanatory note. Western Australia. Geological Survey, Report 78.
• Jorgensen, G.C., 2002. Stumpy Dam project, P25/1680 & P25/1681, Bulong area, W.A., 2001 annual report for the period 8th February. 2001 to 7th February, 2002. Western Australia. Department of Industry and Resources. Confidential file report (unpublished).
• Jorgensen, G.C., 2003. Stumpy Dam project, P25/1680 & P25/1681, Bulong area, W.A., 2002 annual report for the period 8th February. 2002 to 7th February, 2003. Western Australia. Department of Industry and Resources. Confidential file report (unpublished).
• Jorgensen, G.C., 2004. Stumpy Dam project, Bulong area, W.A. Information document: review of previous exploration and assessment of remaining exploration targets. Confidential consultant's report No. GCJ005 (unpublished).
• Steuart, P.J., 1999. Acada Resources Limited. Stumpy Dam project £25/94, P25/1331, final report for the period 7th January 1998 to 6th January 1999, Western Australia. Department of Industry and Resources. Open file report, item 11067 - A57378 (unpublished).

4.7 Grenfell Goldfield Project

• Alkane Exploration NL, 1981. Progress exploration report on EL 1295 to June 1981. New South Wales. Department of Mineral Resources. Open file report, GS1981/561 (unpublished).
• Biggins, S.R., 2004. Geochemical and geological reconnaissance July-August 2004, 'Lawson's Line' target zone, EL 6122, Grenfell, NSW, Southern Gold Limited company report-(unoublished).
• Bowman, H.N., 1974. Forbes anticlinorial zone. In: Markham, N.L., and Basden, H. (Eds) The Mineral Deposits of New South Wales. Geological Survey of New South Wales, Sydney: 197 - 214.
• Central Pacific Minerals NL, 1973. Annual exploration report EE 566 Grenfell area. New South Wales. Department of Mineral Resources. Open file report, GS1973/365 (unpublished).
• Devex Limited, 1987. Exploration Licence 2393 Grenfell, report for the period 20/4/86 to 19/10/86. New South Wales. Department of Mineral Resources. Open file report, GS 1986/108 (unpublished).
• Helix Resources NL, 1994. Annual exploration report, EL 4465, Grenfell area. New South Wales. Department of Mineral Resources. Openfile report, GS1994/175 (unpublished).
• Helix Resources NL, 1995. Second annual exploration report, £L 4465 and £L 4466, Grenfell area for period Dec 1993 - Dec 1994. New South Wales. Department of Mineral Resources. Open file report, GS1995/300. (unpublished).

• Lyons, P., Raymond, O.L., and Duggan, M.B., 2000. Forbes 1:250 000 geological sheet explanatory notes, 2nd edition. Australian Geological Survey Organisation, Canberra. Record 2000/20.

• Lyons, P., and Wallace, D., 1999. Geology and metallogenesis of the Parkes-Grenfeli-Wyalong-Condoblin region, New South Wales, florbes 1:250.000 geological sheet and conference quide 11 - 16 April 1999. Australian Geological Survey Organisation, Canberra, Record 1999/20.

• Mulholland, C. St J., 1935. Geofogical survey of the Grenfell goldfield, Geological Survey of New South Wales, Report GS 1935/002 (unpublished).
• Raymond O.L., and Kilgour B. (Eds), 2000. Forbes (SISS-7) Geology - GIS Data Package. Australian Geological Survey Organisation, Canberra, Record 1999/45.
• Schwebel, P.A., 1981. Report on exploration of EL 1295 Grenfell NSW for period January 16 - July 15 1981. New South Wales. Department of Mineral Resources. Open file report, GS1980/191(unpublished).
• Schwebel, P.A., 1982. Report on exploration of EL 1295 Grenfell NSW, New South Wales. Department of Mineral Resources, Onen file report, GS1981/605 (unpublished).
• Statace Pty Ltd, 1999. Annual report for EL 4910 and EL 5135 Grenfell and final report. New South Wales. Department of Mineral Resources. Open file report, GS2000/319 (unpublished).
• Young Mining Company Pty Ltd, 1987. Exploration Licence 2393 Grenfell, report for the period 20/4/85 to 19/10/85. New South Wales, Department of Mineral Resources. Openfile report, GS 1986/108 (unpublished).

5 GLOSSARY OF TECHNICAL TERMS

acid rock	Igneous rock in which high-silica minerals dominate (also "felsic").
acid	Igneous rocks with over 66% silica (quartz).
aeolian	Deposited by wind action.
aeromagnetic survey	A survey made from the air for the purpose of recording magnetic survey data on rocks.
aeromagnetic	A survey of the Barth's magnetic field conducted by an aircraft.
AGSO	Australian Geological Survey Organisation, formerly the Bureau of Mineral Resources, now Geosclence Australia.
alluvium	An unconsolidated sediment deposited by water.
amphibolite	A metamorphic rock consisting of amphibole and plaglociase, formed from basic igneous rocks such as dolerites or basalts.
andesite/andesitic	A volcanic rock intermediate in composition between basalt and rhyolite.
anomaly	An area where exploration has revealed results higher (or sometimes lower) than the local background level.
Archaean	The oldest rocks of the Precambrian era, older than 2,500 million years.
As	The chemical symbol for the element arsenic.
arsenopyrite	Arsenical pyrites.
Au	The chemical symbol for the element gold.
auger drilling	A drilling method where the sample rises up the outside of spiral drill rods.
auriferous	Gold-bearing.
banded iron formation	A sedimentary rock composed largely of iron minerals and chert and showing distinct banding.
basalt	A dark and fine grained basic volcanic igneous rock.
base metal	A metal inferior in value to precious metals; e.g. copper, lead, zinc, nickel.
basement	A much older harder rock surface underlying more recent deposits.
basic rocks/volcanics	Igneous rocks containing between 45 and 52% silica, distinct from acid or intermediate rocks.
basic	An igneous rock which is low in silica, generally less than 55%, eg basalt.
batholith	A very large mass of intrusive plutonic igneous rock, often granitic.
Bi	The chemical symbol for the element bismuth.
BIF	Banded Iron formation
biotite BLEG	A dark mica mineral.
breccia	Bulk leach extractable gold analysis; an analytical method for accurately determining low levels of gold. A coarse grained rock of angular broken rock fragments cemented together.
bulk sample	A large, representative sample.
Cainozoic	Latest of the four eras of geological time; dating from 65 million years to the present.
calcite	A common mineral, calcium carbonate.
calcrete	A calcareous desert solf, or in soll precipitate, formed from crystallisation of calcite and associated carbonates by evaporation of upward moving solution.
caldera	A large, basin-shaped, volcanic depression within which smaller vents may be present.
carbonaceous	Containing fine particles of carbon distributed through the rock.
chalcopyrite	A copper-iron sulphide mineral, an important ore of copper CulleS2.
chlorite	A platy mica mineral rich in iron & magnesium, often formed by alteration.
colluvium	A loose, heterogeneous and incoherent mass of soil and regolith deposited by down-slope processes.
co-magmatic	Igneous rocks derived from the same parent magma.

Communication of the communication

Allan Allan Allan Allan Allan Allan Allan Al

Mataman Cedar Prop

A sedimentary rock composed predominantly of rounded pebbles, cobbles or boulders deposited by the action of water.
A trench cut in order to collect a sample across a mineral prospect.
applied to rocks or a sequence of rocks that overlie older rocks, usually basement.
A large, stable and generally old part of the Earth's crust.
the outermost part of the earth adj. Crustal.
The chemical symbol for the element copper.
An extrusive intermediate volcanic rock composed mainly of plagfoclase, quartz, pyroxene or/or homblende.
A time period from approximately 400 to 345 million years ago.
Orilling method where a diamond impregnated bit cuts a cylindrical hole to recover a continuous rock core sample.
The angle at which a layer or bed is inclined from the horizontal.
A medium grained basic intrusive rock composed mostly of the minerals pyroxene and sodium-calcium feldspar.
A means of recovering gold from soll via the use of wind to winnow and concentrate denser material.
A peridotite consisting essentially of olivine and chromite.
A takular hadu af intruciva impanye sack, amerayiting the bast steats.

costean A trench cut in order to collect a sample across a mineral ( cover applied to rocks or a sequence of rocks that overlie older rcraton A large, stable and generally old part of the Earth's crust. crust/crustal the outermost part of the earth adj. Crustal. The chemical symbol for the element copper. Cu dacite An extrusive intermediate volcanic rock composed mainly Devonian A time period from approximately 400 to 345 million years diamond drilling Orilling method where a diamond impregnated bit cuts a The angle at which a layer or bed is inclined from the horiz din dolerite A medium grained basic intrusive rock composed mostly dry-blowing A means of recovering gold from soll via the use of wind to dunite A peridotite consisting essentially of olivine and chromite. dyke A tabular body of intrusive igneous rock, crosscutting the host strata. EL. Exploration Licence. FLA Exploration Licence Application. eluvial A term for loose sediments on a slope close to their area of origin. epidote A vellow-green hydrated iron, aluminium, calcium sliicate often a product of metamorphism or hydrothermal alteration. epithermal Hydrothermal activity within one kilometre of the earths surface in a temperature range 50 to 200 degrees Celsius, usually forming veins. Volcanic rocks that have burst through other rocks in a molten state. eruptive extrusive An igneous rock that has been erupted on to the earth's surface. facing Applied to the original direction of a layer. fault Practure in a rock sequence where one side has moved relative to the other. feldspar One of the commonest minerals, consisting of alkali aluminium silicates. felsic Descriptive term for a light coloured igneous rock rich in silica. ferricrete Surficial layer more or fess cemented with fron oxide. ferruginous Containing iron. fluorite A mineral formed of calcium and fluorine which forms cubic crystals. fluviatile Refers to the results of river action. foliated showing planar mineral alignment, usually as a result of metamorphic processes. fuchsite Bright green chromium-rich variety of muscovite. $q/t$ An abbreviation for grams per tonne, a standard unit for reporting the concentration of precious metals in a rock, equivalent to parts per million (ppm). A coarse grained intrusive rock that is low in silica and has relatively high levels of iron and magnesium minerals. gabbro calena Fead sulpbide. PhS The non-metalliferous or non-valuable components of ore. gangue A commonly red to brown euhedral mineral found in metamorphic rocks. carnet geochemical survey A systematic study of the variation of chemical elements in rocks or soils. geomorphology Study of the form and origin of natural land surface features. geophysics Study of the earth by quantitative physical methods,

Martin Samuar (1999) yang berasal berasal dalam bahasa dalam bahasa dalam bahasa dalam bahasa dalam bahasa da

conglomerate

gneiss gossan granite granitoid granulite facies gravity survey greenschist facies

greenstone

high-Mg basalt hornfels hydrotherma igneous indicator minerals Inferred Resource

intrusive iP survey

kimberlite komatiite lacustrine lag sample lamprophyre Landsat laterite lava leucogranite lignite lineament Ma

mafic magnetic survey magnetometer

gneiss	A metamorphic rock with compositional banding.
gossan	A ferruginous deposit remaining after the oxidation of the original sufphide minerals in a vein or ore zone.
granite	A plutonic felsic igneous rock composed of quartz, feldspar and mica.
qranitoid	A general term to describe course grained felsic intrusive igneous rocks, resembling granite.
ulite facies	Metamorphic conditions of high temperature and/or pressure.
vity survey	A geophysical survey technique using a gravimeter to measure the force of gravity at locations within an area.
chist facies	Metamorphic conditions of moderate temperature and pressure, characterised by the presence of the minerals chlorite, amphibole and sodium plagioclase.
rreenstone	Term commonly applied to low metamorphic grade rocks of basic composition and comprised largely of the minerals albite, chlorite and amphibole. Commonly applied to Archaean rock sequences dominated by these rock types.
haematite	A mineral composed of ferric fron oxide. The principal component of fron ore.
haematite	Iron oxide mineral, Pe203.
-Mg basalt	A basalt with a higher proportion of magnesium than tholelitic basalts, but less than that usually attributed to komatilific basaíts.
hornfels	A fine grained metamorphic rock recrystallised by the heat of an intrusion.
trothermal	A process when hot water-rich solutions transfer materials or alter rocks.
igneous	Rocks formed by crystallisation from molten material.
or minerals	In connection with kimberlite exploration, indicator minerals include: pyrope garnet, picrolimenite, chrome-diopside, kimberlitic zircon, chromite and diamond.
d Resource	The least assured category of mineral resource.
intrusive	A body of igneous rock that was intruded whilst molten in to the earth's crust.

un manufactural communication de la propriété de la propriété de la propriété de la propriété de la propriété

A A A A A A A A A A A A A A A A A A A

Induced Polarisation survey, an electrical geophysical method used to detect burled deposits formed by disseminated sulphide minerais.

K-feldspar A potassium rich variety of feldspar.

A type of ultramafic rock and the major primary source of diamonds.

Magnesium-rich mafic to ultramafic extrusive rock.

Produced by or belonging to fakes.

Sample of coarser or heavier residual material which accumulates by deflation on the ground surface.

• A mafic igneous rock containing a high percentage of biotite, hombiende and pyroxene as phenocrysts and a fine-grained groundmass including feldspars.
• An unmanned satellite designed to provide multi-spectral imagery of the earth's surface.
• A cemented residuum of weathering, generally leached in silica with a high alumina and/or iron content.

Igneous rock that was extruded onto the Earth's surface before solidifying.

Light coloured granite, lacking mafic minerals.

A soft brown coal intermediate between peat and sub-bituminous coal.

• A naturally occurring major linear feature in the earth's crust often associated with mineral deposits.
• Millions of years before present.
• lode A separate, tabular part of an orebody with well defined walls.
• Dark coloured igneous rocks composed dominantly of magnesian and iron rock-forming silicates.
• A survey of the Earth's magnetic field either from the ground or the air.
• An instrument used for measuring the intensity of the earth's magnetic field.
• manganiferous Containing abundant manganese

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matrix	The rock or earthy material containing a mineral or metallic ore.
MESA	Mines and Energy South Australia.
Mesoproterozoic	A period of geological time from 1600 to 1000 Ma.
Mesozoic	A time period from approximately 225 to 65 million years ago.
meta	A prefix meaning that the rock type has undergone metamorphism.
metamorphic	A rock that has modified texture, mineralogy and composition due to the effects of pressure, heat and fluids within the crust.
micaceous	Contains micas, a common hydrated silicate with a platy structure.
milligal	A unit of acceleration used with gravity measurements.
mineralisation	An anomalous concentration of metals of economic interest.
MIMDAS	An induced polarisation electrical geophysical survey technique developed by Mount Isa Mines Limited.
MM1	Mobile Metal lon: A sensitive analytical technique for detecting lons that have moved some distance from oxidising mineralisation.
Mn	The chemical symbol for the element manganese.
Mo	The chemical symbol for the element molybdenum.
monzogranite	A granular plutonic rock containing approximately equal amounts of orthoclase and plagfoclase feldspar, but usually with a fow quartz content.
mylonite	deformation of a rock by pressure applied in a definite direction without chemical changes to the materials.
Neoproterozoic	A period of geological time from 1000 to 545 Ma.
nickel laterite	Nickef ore hosted within the laterite profile, usually derived from the weathering of olivine-rich ultramafic rocks.
olivine	An olive green magnesium-iron silicate (Mg, Fe)2SiO4, common in mafic and ultramafic igneous rocks.
open file	A category of reports at a Mines Department Library which are available for public perusal after a title has been relinquished; contrast with closed file.
Ordovician	A time period from 500 to 440 million years ago.
orogen/orogenic	A linear or arcuate region that has been subjected to folding and other deformation.
outcrop	The surface expression of a rock layer, verb to crop out.
0Z	Abbreviation for Troy ounce (31.103477 grams), an imperial unit of weight used widely in the gold mining industry.
palaeochannel	An ancient preserved stream or river.
Palaeoproterozoic	A period of geological time from 2500 to 1600 Ma.
Palaeozoic	A time period from approximately 590 to 248 million years ago.
PЬ	The chemical symbol for the element lead.
pedogenic	Pertaining to soil formation.
pegmatite	A very course grained igneous rock formed at a late stage of magmatic differentiation.
percussion drilling	Rock drilling carried out by the hammering action of a pneumatically driven drill bit.
peridotite	A coarse grained igneous rock composed essentially of ofivine, with or without other mafic minerals, and little or no feldspar.
Permian	A time period from approximately 280 to 225 million years ago.
petrology	The study of rocks in the fulfest sense, adj. Petrographic.
phyllite	A metamorphic rock with abundant mica and a strong fabric.
PIRSA	Department of Primary Industry and Resources South Australia.
Playa	A dry or ephemeral fake or salina.
pluton/plutonic	An igneous rock that has solidified slowly at depth in the Earth's crust.
nornhvrv	A felsic intrusive or subvoicanic rock with iarger covstals set in a fine croundmass.

1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999

a ka mara ka ka mara mara mara a mara a mara a mara a mara a mara a mara a mara a mara a mara a mara a mara a

ستشبث

ppb	Parts per billion; a measure of low level concentration.
ppm	Parts per million; quantitative equivalent of g/t.
Precambrian	Era of geological time before the Cambrian, from about 4600 to 545 Ma.
Proterozoic	The second eon of the Precambrian, spanning the period from 2,500 to 545 million years before the present.
pseudomorph	A mineral whose outward crystal form is that of another mineral species, which it has replaced.
Pt	The chemical symbol for the element platinum.
pyrite	An iron sulphide mineral, PeS2.
pyroclastic	Clastic rocks that result from explosive volcanic activity.
quartz	The mineral silicon dioxide, the commonest mineral in the Earth's crust.
quartzite	A rock composed predominantly of quartz.
Quaternary	A time period from 1.8 million years ago to the present.
RAB	Rotary Air Blast, a rotary drilling technique that uses compressed air to clear the drill bit of cuttings and return them to the surface.
radiometric survey	A geophysical survey technique whereby measurements are made of ambient radiation that may be indicative of different rocks, ores, etc.
RC	Reverse Circulation, a rotary percussion drilling technique in which the samples are returned to the surface inside the drill rods minimising contamination.
Recent	Geological age from about 20,000 years ago to the present.
regolith	The layer of weathered and transported material overlying fresh rock.
resource	That part of a mineral occurrence that is estimated to be of potential economic merit.
retrograđe	Process of adjustment of mineral assemblage to lower grade metamorphism.
rhyodacite	Igneous rocks intermediate between rhyolite and dacite.
rhyolite	A fine grained acid volcanic rock having a similar chemical composition to granite.
roof pendant	A downward projection of country rock into an igneous intrusion.
rotary percussion	A drilling technique involving simultaneous hammering and rotation action by a bit.
SADME	South Australian Department of Mines and Energy.
SAEI	South Australian Exploration Initiative.
saprock	Zone of partially weathered towards the base of the weathered profile, in which the original textures have been preserved.
saprolite	Disintegrated, in-situ rock, partially decomposed by the chemical and physical processes of oxidation and weathering.
Sb.	The chemical symbol for the element antimony.
schist	A micaceous metamorphic rock with parallel orientation of its minerals.
sediment	A rock formed of particles which were deposited from suspension in water, wind or lce.
sedimentary uranium	A type of uranium deposit found in sedimentary rocks of palaeodrainage channels.
sedimentary	A term describing a rock formed by the accumulation of biogenic or chemically formed minerals, and/or transported rock or mineral particles.
sericite	A fibrous form of muscovite, often resulting from the alteration of feldspar.
shale	A laminated sediment in which most particles are clay grade (<0.0039mm).
shear (zone)	A zone in which sheating has occurred on a large scale so that the rock is crushed and brecciated.
silcrete	A surficial fayer more or less cemented with sifica.
silicified	Partially replaced by silica.
sill	A tabular intrusive body of igneous rock that is conformable with the layers it intrudes.
Sílurían.	A time nesiod from 440 to 400 million vears aco.

Communication of the communication

............

William

SOUTHERN COLD LIMITED PROSPECTUS

Sírotem	An electromagnetic geophysical exploration system developed by CSIRO.
skarn	A type of mineralisation occurring in the contact zone of an intrusion.
slate	A finely follated metamorphic rock that results from the metamorphism of rocks such as shale under stress.
spinifex texture	interpenetrating lacy elongate olivine crystals in komatlite, commonly thought to have formed by quenching.
splay	A small secondary fault diverging from a major fault at a low angle.
stockwork	A three-dimensional network of veinlets.
stratigraphy	The succession or superimposition of rock strata.
stratabound	A mineral deposit confined to a single stratigraphic unit.
stratiform	A type of stratabound deposit in which the ore minerals appear to have been deposited at the same time as the enclosing sediments.
strike	The direction or trend of bedding, deavage or a fault on a horizontal plane.
structural corridor	Large scale linear zone or belt recognised by geological feature alignment.
structural lineament	A linear structural feature of regional extent.
sub crop	The near surface presence of a concealed rock fayer.
subduction zone	A long narrow belt where one tectonic plate is descends beneath another.
sub-economic	Describing a resource that is not economic under the prevailing economic conditions.
supergene enrichment	Solution of metal by oxidised surface waters from the upper part of an ore deposit and its precipitation below, usually in response to reduction, creating a zone of enrichment.
supergene	Process of ore enrichment or depletion by descending oxidising solutions.
surficial	Pertaining to the surface of the earth.
syncline	A fold in rocks in which the strata dip inward from both sides towards the axis.
syntectonic	An event occurring during tectonic activity, or a rock or feature so formed.
talus	Loose rock transported downhill by gravity.
targets	Exploration targets consist of a location that can be tested by drilling. They generally represent an anomaly from a survey or a geological concept.
tectonic	The forces involved in major structural processes forming faults and folds in the earth's crust.
tenement	Exploration or mining land title allowing various actions, eg an EL.
Tertiary	The geological period prior to the Quaternary from 1.8 to 65 Ma.
thematic mapper	A type of Landsat imagery with resolution of around 30 metres.
tholeiitic basalt	A variety of basalt containing little or no olivine and in which the proportion of silica at a particular magnesium content is high.
tremolite	Calcium magnesium amphibole.
tuff	Volcanic ash strata.
turbidite	A sediment deposited by a turbidity current.
ultramafic	Mafic rock type composed of minerals rich in magnesium and iron silicates.
unconformity	A position in a sedimentary sequence where there is a lack of continuity in adjacent rock strata caused by a time break in sedìmentation.
vein	A tabuíar or sheet like mineral-filled fracture.
VLF-EM	Very low frequency electromagnetic; a geophysical prospecting technique.
volcanic	Formed or derived from a volcano.
weathering	A process of change to rocks brought about by their exposure to oxygen and water.
Zn	The chemical symbol for the efement zinc,

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ستشبث

Independent Accountant's Report

Chartered Accountants and Business Advisers

Grant Thornton ®

1999 - Andrea Maria (1999), american provincia (

.
SJG/AH/ABP
Greekering cellers for an an or Opried:

STRICTLY PRIVATE AND CONFIDENTIAL

The Directors Southern Gold Ltd 262 Picie Street ADELAIDE SA 5000

28 January 2005

Dear Sirs

INDEPENDENT ACCOUNTANT'S REPORT ON REVIEWED HISTORICAL FINANCIAL INFORMATION

Introduction

We have prepared this Independent Accountant's Report (report) on the historical information of Southern Gold Ltd (the Company) for inclusion in a Prospectus dated on or about 27 January 2005 relating to the following proposed transactions:

Pursuant to this prospectus the Company offers for subscription 20,000,000 Ordinary Shares at an issue price of \$0.20 per share payable in full on application to raise \$4,000,000.00, together with one attaching Option for every two Shares issued.

Subject to the satisfactory completion of the above, the Company:

• Is required to compensate the joint holders of EL6122 ("Grenfell") for the grant of the "Option and Access" agreement dated 12 May 2004 (as amended by a deed of variation dated 22 November 2004). Consideration for grant of the option is \$17,000.00 in respect of past tenement holding and exploration costs and, subject to successful capital raising on or before 31 March 2005, issue of 750,000 Ordinary Shares and 150,000 Options (exercisable within 36 months of their issue date).
• Intends to exercise its option under the "Option and Access" agreement set out above, to acquire Grenfell for the consideration of 1,500,000 Ordinary Shares and 300,000 Options (exercisable within 36 months of their issue date).
• Is required to issue 1,500,000 options to Axis Financial Group Australia Ltd under an agreement to act as the financial advisor and broker to the issue. The options are exercisable within 36 months of their issue date.

Expressions referred to in the Prospectus have the same meaning in this report.

Background

Level 1 57
Greenhill Road
Wayville SA 5034 GPO Box 1278 Adelaide SA 5901 DX 275 Adelaide T (08) 8372 6666 F (08) 8372 6677 r (66) sonz conv
El info@gtsa.com.au W www.granthornton.com.au

The Company was incorporated in South Australia on 2 January 2004 as an unlisted public company limited by shares. Since its incorporation the objective of the company has been to undertake the acquisition, exploration and development of quality gold, copper and nickel mineral resource projects in Southern Australia.

Grant Thomlon Gervices (GA) Pfy Ltd
ACN 080 740 067 A Member of Grant Thornton Association Inc.

The Australian Member of Grant Thoraton International

Grant Thornton

Scope

You have requested Grant Thornton prepare a report covering our review of the pro-forma Statement of Financial Position of the company for the half year ended 31 December 2004 adjusted to reflect the successful capital raising and acquisition of the Grenfell tenement. The adjusted Statement of Financial Position assumes completion of the contemplated transactions as detailed in Appendix L

Review of Historical Financial Information

The historical financial information set out in Appendix I to this report has been extracted from the half year financial statements of the Company and were subject to a review.

In respect to the historical financial information, the Directors of the Company are responsible for the preparation of historical financial information including determination of the adjustments.

We have conducted our review of the historical financial information in accordance with Australian Auditing and Assurance Standard AUS 902 "Review of Financial Reports". We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

• a review of work papers, accounting records and other documents;
• a review of the assumptions used to compile the pro-forma Statement of Financial Position:
• a review of the adjustments made to the pro forma historical financial information;
• a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia and the accounting policies adopted by the Company, and
• enquiry of Directors, management and others.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Conclusion

Review Statement on Historical Financial Information

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that:

• the pro-forma statement of financial position has not been properly prepared on the basis of the contemplated transactions;
• the historical financial information as set out in Appendix I to this report does not present fairly:
• the historical financial performance of the Company for the half year ended $(a)$ 31 December 2004; and
• the historical statement of financial position of the Company as at 31 $(b)$ December 2004,

Grant Thornton ®

in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements, and accounting policies adopted by the Company.

Subsequent Events

On 5 January 2005 the Company elected to exercise its option to acquire PL25/1680 and PL25/1681 ("Bulong Tenements") for a consideration of \$30,000. This transaction has been reflected in Adjustment 1 in the attached Proforma Statement of Financial Position.

In addition to the above, transactions from 31 December 2004 to the date of this report relate to Initial Public Offer costs associated with the preparation of the Prospectus and costs of managing or developing the company's assets.

Apart from the matters discussed above, and having regard to the scope of our report, to the best of our knowledge and belief, no material transactions or events outside the ordinary business of the Company have come to our attention that require comment on or adjustment to the information referred to in our report or that would cause such information to be misleading or deceptive.

Effect of the Adoption of Australian Equivalents of International Financial Reporting Standarde

For reporting periods beginning on or after 1 lanuary 2005 the company must comply with the Australian Equivalent of International Reporting Standards (AIFRS) as issued by the Australian Accounting Standards Board.

Financial information in this report has been prepared in accordance with Australian Accounting Standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and AIFRS identified by management to date as potentially having a significant effect on the financial position of the company are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and AIFRS.

No attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions or events are presented.

Impairment of Assets

Under AASB 136: "Impairment of Assets" the company's assets will be required to be tested for impairment on a discounted cash-flow basis for each cash generating unit. This may lead to write downs in the carrying value of the group's assets more often than would be required under the existing policy.

Share Based Payments

The company has and intends to issue options to Directors as an incentive in relation to performance of their duties.

AASB 2 "Share Based Payments" required that shares and share options issued as part of employee remuneration packages and also payments made to other counterparties in return for

1999 yılı Alexandr Ara

Grant Thornton &

goods and services shall be measured at the more readily determinable fair value of the good / service or the fair values of the equity instrument. This amount will be expensed in the Statement of Financial Performance.

Where the grant date and the vesting date are different the total expenditure calculated will be allocated between the two dates taking into account the terms and conditions attached to the instruments and the counterparties as well as management's assumptions about probabilities of payments and compliance with and attainment of the set out terms and conditions.

Exploration for and Evaluation of Mineral Resources

The major changes under AASB 6 "Exploration for and Evaluation of Mineral Resources" to the current Accounting Standard will be:

• the application of area of interest accounting for its exploration and $\circ$ evaluation expenditure.
• Performance of impairment testing on those assets when the facts and $\Diamond$ circumstances suggest the carrying amount of the assets exceed the recoverable amount.

Independence and Disclosure of Interest

Grant Thornton does not have any interest in the outcome of this issue other than the preparation of this report and for acting as auditors of the Company for which normal professional fees will be received.

Yours faithfully GRANT THORNTON

STGRAY Partner

Grant Thornton ®

APPENDIX1

Southern Gold Limited Consolidated Proforma Statement of Financial Position

	Reviewed Statement of Financial Position
	as at 31 December 2004	Adjustments Note 1	Adjustments Note 2	Adjustments Note 3	Proforma Subscription
	Ś	T	Ŝ.		\$
Current assets
Cash assets	199,165	(30,000)	3,488,705	(17,000)	3,640,870
Receivables	10,913				10,913
Other assets	320,201		(278,705)		41,496
Total current assets	530,279	(30,000)	3,210,000	(17,000)	3,693,279
Non-current assets
Tenement properties	259,971	30,000		467,000	756,971
Plant & Equipment	6,195				6,195
Total non current assets	266,166	30,000	£.	467,000	763,166
Total assets	796,445		3,210,000	450,000	4,456,445
Current liabilities
Pavables	34,523				34,523
Total current liabilities	34,523	z.	×.	£.	34,523
Total liabilities	34,523				34,523
Net assets	761,922	$\overline{\phantom{a}}$	3,210,000	450,000	4,421,922
Equity
Contributed equity	844,530		3,210,000	450,000	4,504,530
Retained losses	(82,608)	×.		$\cdot$	(82,608)
Total equity	761,922	£.	3,210,000	450,000	4,421,922

Proforma adjustments

Note 1 - Subsequent Event - Bulong Project

The acquisition of the Bulong Tenements though the exercise of an option agreement for a consideration of \$30,000.

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11 - bmn

Aliam Markathan

Grant Thornton &

Note 2 - ASX Float

The Public Issue of 20,000,000 New Shares at an issue price of \$0.20 to raise \$4,000,000. The proceeds of the Public Issue is reduced by the payment and write off against contributed equity of the capital raising costs of \$790,000. The Company has reserved the right to accept oversubscriptions of 5,000,000 shares which, if fully taken up would raise an additional \$1,000,000 in capital.

At 31 December 2004 the company had incurred \$278,705 in IPO costs which have been recognised as Other assets.

Summary of Options on issue

Existing Options on issue	8,146,700
Grenfell Option Agreement	150,000
Grenfell Acquisition	300,000
Advisor and Brokerage fee - Axis	1,500,000
Minimum subscription of Public Offer	30.000,000
Total Options on issue after Public Offer	20,096,700

Note 3 - Future Tenement Acquisition - Grenfell Project

The acquisition of an option to buy EL6122 ("Grenfell") for a consideration of 750,000 fully paid ordinary shares (\$150,000), 150,000 Options to acquire ordinary shares in the Company (exercisable within 36 months of date of issue) and payment of \$17,000 in reimbursement of past tenement and exploration costs.

The Company intends to exercise its option to acquire Grenfell for a consideration of 1,500,000 fully paid ordinary shares (\$300,000) and 300,000 Options to acquire ordinary shares in the Company (exercisable within 36 months of date of issue).

Statement of Financial Performance of Southern Gold Limited for the half year ended 31 December 2004

Revenue from ordinary activities	5.562
Expenses from ordinary activities	(49,730)
Interest paid
Operating profit / (loss) from ordinary activities	(44,168)
income tax expense attributable to operating profit / (loss) from ordinary activities
Net Profit / (Loss)	(44, 168)

Notes to Statement of Financial Performance

The above information has been extracted from the reviewed financial statements of Southern Gold Limited for the period ended 31 December 2004.

Solicitor's Report

......................................

Our Ref:

22 January 2004

EPO/8842957/fr

A Maria Antonio Alemania (Antonio Alemania (Antonio Alemania (Antonio Alemania (Antonio Alemania (Antonio Ale

The Directors Southern Gold Ltd c/- McDonald Steed McGrath 262-266 Pirie Street ADELAIDE SA 5000

Dear Sirs

Solicitor's Report - Southern Gold Ltd

This report has been prepared for inclusion in a Prospectus to be dated on or about 28 January 2005 ("Prospectus") for issue by Southern Gold Ltd (ABN 30 107 424 519) ("Company") offering for subscription 20,000,000 shares at an issue price of 20 cents per share to raise \$4,000,000.00 together with 1 Attaching Option for every 2 shares issued exercisable at any time on or before 31 March 2007.

The scope of the report relates to:-

• The registered and unregistered interests of the Company in the mining tenements set out in the Tenement Schedule to this report.
• A review of the material contracts summarised in the section, Summary of Material Contracts, in this Prospectus.
• The application of native title to the tenements.

Tenements $\mathbf{1}$

• 1.1. The Tenement Schedule to this report sets out details of the registered and unregistered interests of the Company in the mining tenements referred to in the Tenement Schedule. The Tenement Schedule is based on the results of search enquiries of registers established under the mining laws of the State in which the respective mining tenement is located ("applicable Mining Act") and the relevant governmental departments in each of those States responsible for the administration of the applicable Mining Act. Those searches were supplemented by other information obtained from the relevant department during the preparation of this Report.
• 1.2. Details of the terms and conditions of each of the mining tenements listed in the Tenement Schedule, and a copy of the mining tenement and register searches in respect to each of the mining tenements is available from the relevant State government department. Other than as may be set out in the Tenement Schedule and this Report, none of the mining tenements are subject to unusual or special conditions.

$\overline{2}$ . Native Title - General

$2.1.$ The High Court of Australia delivered judgement in Mabov Queensland in 1992 and for the first time recognised the continuing existence at common law of aboriginal native title to land following the colonisation of Australia by European settlement.

ABN 46 229 015 970

12th Floor, 26 Flinders Street, Adelaide SA 5000, Australia · Telephone (61-8) 8414 3333 · Facsimile (61-8) 8211 7362 GPO Box 439, Adelaide SA 5001 · DX 661 Adelaide · www.hunthunt.com.au

Sydney . Brisbane . Adelaide . Auckland . Melbourne . Perth . Darwin . Newcastle . Canberra . Hobart . Shanghai . Interlaw member

2.2. Enacted in 1993, the Commonwealth Native Title Act ("NTA") recognised and protected common faw native title in Australia. The NTA recognised native title rights, validated otherwise invalid acts of the Commonwealth which took place before the introduction of the NTA ("past acts") and certain invalid acts of the Commonwealth during the period following the introduction of the NTA until 23 December 1996 (the "intermediate period") and allowed States and Territories to pass laws to validate past acts and intermediate period acts attributable to the relevant State or Territory. The NTA also provided for a future act regime in which native title rights were to be protected from future acts affecting native title land, and further provided a process by which claims. for native title and compensation may be determined.

the contract of the contract of the contract of the contract of the contract of

• $2.3 -$ In relation to certain kinds of future acts (including future acts which confer a mining or exploration right) which might affect native title after the introduction of the NTA, registered native title bodies' corporate and registered native title claimants are afforded a special statutory procedural right to negotiate. If the right to negotiate ("RTN") applies in relation to a future act but is not complied with, the act will be invalid to the extent that it affects native title. States may make alternative provisions to the RTN established under the NTA provided the alternative provisions are consistent with the provisions of the Commonwealth NTA. South Australia, for example, introduced Part 9B into the Mining Act (SA) (1971) ("Mining Act (SA)") and now provides an alternative right to negotiate procedure in respect to the grant of tenements under the Mining Act (SA) in substitution for the RTN established under the NTA.
• 2.4. The validation of acts of the Commonwealth Government during the intermediate period was introduced by amendment to the NTA in 1998 to take account of the decision of the High Court in Wik People v Queensland. The amendments to the NTA contained in Division 2A address the situation where an act which would otherwise have been a future act had taken place in respect to land which previously had been the subject of a freehold grant or lease (other than a mining lease) or the subject of a "public work". Under the original NTA, if in the intermediate period there was an act of government such as the grant of a mining tenement over any such lands and the act was a "future act" under the legislation, assuming the right to negotiate procedure had not been invoked, the act would have been invalid. Such acts attributable to the Commonwealth are validated by the 1998 amendments to the NTA, which provided further that States and Territories could pass laws validating such intermediate period act attributable to the State or Territory concerned.

$\overline{3}$ South Australia - Native Title

• Searches conducted at the Register of Native Title Claims and the National Native Title Register in relation to native title claims. $3.1$ disclose that the South Australian licenses referred to in the Tenement Schedule (Exploration Licence ("EL") 3080, EL 3097, EL 3158, EL 3217, EL 3284 and Exploration Licence Application ("ELA") 2004/00654 are affected by native title claims. The results of the searches are summarised in the Tenement Schedule. The following summarises the legal principles that have been adopted in preparing this report and the Tenement Schedule in relation to the South Australian tenements.
• 3.2. As earlier outlined, the conferral of a mining or exploration right is a future act which engages the right to negotiate ("RTN") under the NTA. If the act does not comply with the provisions of the NTA in relation to the RTN, the act will be invalid to the extent that it affects native title. States may make afternative provisions to the RTN established under the NTA. The alternative provisions must be consistent with the Commonwealth RTN. In South Australia, mining tenements granted on or after 17 June 1996 engage the right to negotiate provisions set out in Part 9B of the Mining Act (SA) ("State RTN"). In South Australia an exploration authority will not carry with it a right to conduct mining operations unless those operations do not affect native title or a declaration has been made under State or Commonwealth law that the land is not subject to native title. The holder of an exploration authority may acquire the right to carry out mining operations on native title land by entering into an agreement with the native title parties. with an interest in the area, or, by a determination of the South Australian Environment Resources and Development Court authorising those operations to be carried out under Part 9B of the Mining Act (SA).
• 3.3. A native title mining agreement (i.e. an agreement authorising mining operations on native title land) ("NTMA") may be negotiated between a proponent seeking an NTMA and the relevant native title parties. The relevant native title parties are those persons.

who, at the end of a two month notification period following the initiation of negotiations by the proponent, are registered under Commonwealth or State Law as holders, of or claimants to, native title in respect to the relevant land.

3.4. Negotiations are initiated under Section 63M of the Mining Act (SA) by the giving of a notice under that section. A "conjunctive" authority extending any agreement reached following negotiation to exploration and future production activity over the same area of land is not permitted under the Mining Act (SA).

3.5. The Company has initiated negotiations by the giving of notice as Section 63M of the Mining Act (SA) requires in respect to EL 3080, EL 3097, EL 3158, EL 3217 and EL 3284. The Company has negotiated and entered into a NTMA with the applicants for the Antakarinja native title claim group in respect to EL 3080 and EL 3097. The agreement authorises the Company to enter onto the land comprising EL 3080 and EL 3097 to carry out exploratory mining operations. The agreement sets out an agreed protocol to carry out a clearance survey of the land upon which mining exploratory operations may be carried out, to avoid interference or disturbance to or of significant Aboriginal sites. The agreement has been entered on the Register against EL 3080 and EL 3097 pursuant to the provisions of the Mining Act (SA). Clearance surveys have been carried out by and on behalf of the native title claimants in respect to proposed exploration work by the Company in respect to specific drill targets and drilling in these areas is authorised for the purposes of the Mining Act (SA).

4. Western Australia - Native Title

• Searches conducted at the Register of Native Title Claims, the National Native Title Register and the Western Australian Mining $\&1$ Tenement Register in relation to native title claims disclose that the Western Australian licenses referred to in the Tenement Schedule (Prospecting Licence ("PL") 25/1680, Prospecting Licence 25/1681 and Prospecting Licence Application ("PLA") 25/1729) are affected by native title claims. The results of searches are summarised in the Tenement Schedule. The following summarises the legal principles that have been adopted in preparing this report and the Tenement Schedule in relation to the Western Australian tenements.
• 4.2. PLs 25/1680 and 25/1681 were granted and commenced on 8 February 2001. Unless native title had previously been extinguished in respect to the land upon which the prospecting licences were granted, the prospecting licenses would necessarily attract the operation of the Future Act provisions of the NTA and engage the right to negotiate ("RTN") procedures of the NTA to the extent that the grant of those prospecting licenses might affect native title.
• 4.3. We are advised by officers of the Western Australian Department of industry and Resources ("WA Department") that PEs 25/1680 and 25/1681 were granted by the Mining Registrar pursuant to the provisions of the Mining Act 1978 (WA) without engaging the RTN provisions of the NTA. The grant of those licenses proceeded on the basis that native title had been extinguished upon land over which the prospecting licenses had been granted.
• The then prevailing State Government policy in relation to the grant of mining tenements enabled the granting of mining 春春 tenements without reference to the NTA processes where it could be demonstrated that native title had been extinquished based upon the reasoning of the Full Court of the Federal Court in the Miriuwung Gagerrong ("Ward") case. Mining tenement applications would be considered by the WA Department for grant without reference to the NTA where it could be demonstrated, inter alia, that the application for grant was wholly within an area of a pastoral lease which had been enclosed and improved if granted prior to 1933, or enclosed or improved if granted after 1934.
• 4.5. The evidence provided by the applicant in support of the applications for the grant of PL 25/1680 and PL 25/1681 in accordance with the policy referred to above sufficiently satisfied the WA Department and the Mining Registrar that native title had been extinguished in respect to the land upon which application was made for the grant of these licenses.
• 4.6. It should be noted that:
• 4.6.1. The decision of the Full Court of the Federal Court in Ward was the subject of appeal to the High Court.

4.6.2. The policy of the Western Australian Department in respect to the grant of mining tenements has altered and a new policy adopted in respect to the treatment of native title with application from October 2003.

a ka ka ka ka ka ka ka ka ka ka ka ka ka

Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria M

a katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog kata

• 4.6.3. It is the view of the Western Australian government that mining renements granted in the manner described in paragraphs 4.4 and 4.5 above are valid and all operations and activities carried out pursuant to them lawful and that would remain the position unless and until a determination or ruling of a court determined otherwise. There has been no challenge or ciaim made by a native title claimant or party or other person in respect to the grant of the Western Australian Prospecting Licenses.
• 4.7. As at the date of this Prospectus, the Western Australian government's current policy in respect to the assessment of applications for the grant of exploration licenses and prospecting licenses engages the operation of the NTA and the RTN procedures of the NTA where the grant of such tenements may affect native title. The Western Australian Department in accordance with the new policy presently is processing PLA 25/1729. Under the present guidelines, the applicant for the grant of a tenement may evidence to the WA Department, in the manner required by the quidelines, that it has executed a standard form heritage agreement (SHA) or an alternative heritage agreement is in place with a native title representative body (NTRB) or with native title parties not represented by the NTRB, in those circumstances, the Western Australian government, in giving the notification that is required under Section 29 of the NTA of the application for the grant of a prospecting or exploration licence, will apply the expedited procedures set out in Section 32 of the NTA. Provided that objection is not lodged by an interested native title claimant or party, and provided that a heritage agreement of the type above referred is executed by the NTRB and/or relevant native title claimants. or parties, the application may proceed to grant without further consideration of native title issues. If an executed heritage agreement is not signed by the parties, the RTN procedures of the NTA will be engaged and the applicant for the licence will need. to negotiate in good faith together with the government party and the native title party to progress the application to grant.

$\overline{5}$ . New South Wales - Native Title

• Searches have been conducted at the Register of Native Title Claims and the National Native Title Register to determine whether $51.$ the NSW exploration licence referred to in the Tenement Schedule, Exploration Licence 6122 ("EL 6122") is affected by native title. The searches do not disclose any entries in either the Register of Native Title Claims or the National Native Title Register that affect the area of EL 6122.
• 5.2. EL 6122 is subject to a condition that the licence holder must not prospect on any land or waters on which native title exists. without the prior consent of the Minister. It is the practice of the New South Wales government to issue exploration licences in New South Wales with such a condition. If the licence holder intends to carry out exploratory mining operations pursuant to the terms of an exploration licence on or over land or waters where native title exists, the consent of the Minister is required and in those circumstances the right to negotiate provisions of the Commonwealth NTA will be engaged.
• 5.3. EL 6122 encompasses the township of Grenfell in New South Wales and surrounding areas. Much of the landholding including and surrounding the township of Grenfell are held in freehold or perpetual leasehold ownership, dealings which in any event would have extinguished native title at the time of initial grant.

Aboriginal Heritage 6.

• $6.1.$ Both Commonwealth and State legislation protect and provide for the preservation of places, areas and objects of significance to Aboriginal people in accordance with Aboriginal traditions. The Commonwealth Aboriginal and Torres Strait Islander Heritage Protection Act 1984 provides the Commonwealth Minister with power to make declarations for the protection and preservation of an area or an object that is of Aboriginal significance.
• 6.2. In South Australia, the Aboriginal Heritage Act 1988 provides for the protection and preservation of Aboriginal Heritage and extends this protection to Aboriginal sites, Aboriginal objects and Aboriginal remains. It is an offence to damage, disturb or interfere with an Aboriginal site, object or remains. A Register of Aboriginal sites and objects is established and maintained. The Register does not

purport to be a comprehensive record of all Aboriginal sites, objects and remains in South Australia. Nevertheless, the Aboriginal Heritage Act protects all Aboriginal sites, objects and remains, whether entered on the Register or not.

an an an an an an an an an an an an an a

The results of the Register searches in respect to the South Australian exploration licences and licence applications disclose that there are entries for Aboriginal sites within the area of EL 3217. The sites are described as archaeological, mythofogical / ceremonial and painting / engraving sites. In South Australia, it is common practice to clear areas of land upon which exploration or mining activity is proposed to take place for Aboriginal heritage purposes. Clearance, of itself, will not relieve a mining operator of its obligations under South Australian heritage legislation.

• 6.3. In Western Australia, the Aboriginal Heritage Act 1972 protects all Aboriginal sites whether or not that site has been entered on the Register of Aboriginal Sites established by that Act. The returned results of a search of the Register of Aboriginal Sites in respect to the Western Australian Bulong prospecting licenses (PL 25/1680, PL 25/1681 and PLA 25/1729) do not disclose any Aboriginal sites entered on the Register in respect to the areas of those licenses and licence application.
• 1. In New South Wales all Aboriginal places and Aboriginal objects are protected under the National Parks and Wildlife Act 1974. It is an offence to destroy, damage or deface any Aboriginal place or object without the prior consent of the Director General, New South Wafes, National Parks and Wildlife Service. An Aboriginal object is considered to be known if it is registered on the Aboriginal Heritage Information Management System (AHIMS) maintained by the New South Wales National Parks and Wildlife Service, or if it is known to the Aboriginal community, or, it is located during an investigation of the area conducted for a development application. No Aboriginal objects and Aboriginal places are recorded in or near the location of New South Wales Exploration Licence 6122 in the AHIMS. It should be noted that the AHIMS only includes information on Aboriginal objects and Aboriginal pfaces that have been provided to the National Parks and Wildlife Service. Large areas of New South Wales have not been the subject of systematic survey or recording of Aboriginal history.

$\overline{7}$ . Mining Tenements

7.1. Challenger West (South Australia) Exploration Licence ("EL") 3080 and EL 3097 and Exploration Licence Application 2004/00654

Challenger West Holdings Pty Etd and CMH Resources Pty Ltd, wholly owned subsidiaries of the Company, are the joint holders of EL 3080 and EL 3097.

The terms and conditions of EL 3080 and EL 3097 authorise exploration for all minerals except extractive minerals or precious stones within the licence areas. The licences confer no rights on the holder to carry out operations on native title land other than in accordance with Part 9B of the Mining Act (SA). The Company has entered into a native title mining agreement ("NTMA") in respect to EL 3080 and EL 3097 authorising the Company to carry out exploration operations on these tenements. The NTMA is entered in the Mining Register and registered against EL 3080 and EL 3097. An aboriginal heritage clearance survey has been undertaken in respect to specific drill targets and pursuant to the NTMA drilling in these areas is authorised for the purposes of the Mining Act (SA).

The term of EL 3080 has been renewed and extended to 29 April 2005. The expenditure commitment for the term of licence is \$160,000.00. The expenditure commitments for EL 3080 have been met to date.

EL 3097 was granted for a term of one year commencing 12 June 2003. The term of this licence has been extended for 12 months. and now expires on 11 June 2005.

The areas of EL 3080 and EL 3097 fie within the Woomera Prohibited Area. The Company must enter into an access agreement to carry out mineral exploration within the Woomera Prohibited Area with the Commonwealth of Australia.

The Minister has offered to grant an exploration licence to the Company in respect to ELA 2004/00654. The Company has accepted a grant of this exploration licence in the terms offered. Subject to completion of the statutory period for advertising and public comment, it is anticipated by the Company that the licence will be granted prior to the end of February 2005 for an initial term of one year.

7.2. Southern Gawler Arc (South Australia) EL 3158

a ka ka ka ka ka ka ka ka ka ka ka ka ka

a ka wakazi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi a katika katika katika katika katika katika katika katika katika katika katika katika katika katika katika ka

1999 - Johann Harry Stein, mars ann an Cathair ann an t-Èireann an t-Èireann an t-Èireann an t-Èireann an t-Èi

Gawler Arc Holdings Pty Ltd, a wholly owned subsidiary of the Company, is the holder of EL 3158.

The terms and conditions of EL 3158 authorise exploration for all minerals except extractive minerals or precious stones within the licence area. The licence confers no rights on the holder to carry out operations on native title land other than in accordance with Part 9B of the Mining Act (SA).

EL 3158 was granted for a term of one year commencing 20 January 2004. The expenditure commitment for the term of licence is \$85,000.00. The licence is subject to a condition that if the expenditure commitment is not met, then unless the Minister otherwise determines, the licence area shall be reduced by at least 50% by the end of the first year of tenure. The holder of EL 3158 has applied for a renewal of this exploration licence for a further term of 12 months.

7.3. Yarlbrinda (South Australia) EL 3217

The Company is the holder of EL 3217

EL 3217 is granted for a term of one year commencing 12 July 2004 with an exploration expenditure commitment of \$65,000.00.

The terms and conditions of EL 3217 authorise exploration for all minerals except extractive minerals or precious stones within the licence area

The licence confers no right to carry out operations on native title land other than in accordance with Part 9B of the Mining Act (SA). A native title mining agreement will be required with any registered native title claimants with an interest in the area of the exploration ficence to enable exploration operations to proceed on the licence area if the land is native title land. The licence is subject to a further condition that a declaration of environmental factors will be required to be lodged by the Company ("DEF") before commencing exploration activity involving the intensive use of vehicles, the use of declared equipment or drilling equipment within 100 metres of Lake Gairdner National Park. The DEF will be required to describe the proposed operations and their location, identify sites of environmental sensitivity within the proposed work area and formulate a process for environmental management to ensure that field procedures avoid or minimise the impact of proposed field activities on the environment.

7.4. Harris Greenstone (South Australia) (EL 3284)

Challenger West Holdings Pty Ltd, a wholly owned subsidiary of the Company, is the holder of EL 3284 (Harris Greenstone).

EL 3284 is granted for a term of one year commencing 2 December 2004 with an expenditure commitment of \$60,000.00.

EL 3284 is focated within the Yellabinna Regional Reserve. It is a term of the exploration licence that before entering Yellabinna Regional Reserve to carry out exploration operations, approval be obtained from the Director of Mines who will consult with the Minister for Environment and Conservation. An application supported by a DEF will be required.

7.5. Bulong South Project (Western Australia) (Prospecting Licences 25/1680, 25/1681 and Prospecting Licence Application 25/1729)

The Company has acquired Prospecting Licences 25/1680 and 25/1681 and has an option to acquire the Prospecting Licence Application ("PLA"). The Company's right to acquire the PLA arises by way of a deed of assignment of rights under an option agreement entered into with the present holder of the PLA and a subsequent variation agreement ("Deed of Assignment and Option Agreement"). The terms and conditions of the Deed of Assignment and Option Agreement are summarised in the Summary of Material Contracts section of the Prospectus. The Company acquired PLs 25/1680 and 25/1681 by the exercise of option rights under the Deed of Assignment and Option Agreement to which it is party.

Prospecting Licenses 25/1680 and 25/1681 were granted with effect from 8 February 2001. The term of each prospecting licence is four years. There is no provision in the Mining Act (WA) 1978 ("Mining Act (WA)") or in the prospecting licences to extend the term of a prospecting licence. Searches of the Western Australian Mining Tenement Register in respect to these prospecting licences

confirm that expenditure commitments have been met, that all annual rentals have been paid and security bonds lodged with the Western Australian Department of Industry and Resources.

manamana manamana manamana m

The Mining Act (WA) authorises the holder of a prospecting licence to enter and re-enter land which is the subject of the licence for the purpose of prospecting for minerals in or under the land. The holder of a prospecting licence has a priority right to apply for and have granted to it a mining lease or mining leases in respect to any part or parts of the land the subject of a prospecting licence. Provided that an application for a mining lease is made by the holder of a prospecting licence prior to the expiration of the term of the prospecting ficence, the prospecting licence continues in force until the application for mining lease is determined. The Company has lodged applications for Mining Leases in respect of Prospecting Licences 25/1680 and 25/1681.

In addition to any conditions that may be prescribed or imposed with respect to a prospecting ficence, every prospecting licence is deemed to be granted subject to conditions that the holder of the ficence will prospect for minerals, that all minerals of economic interest discovered will be promptly reported to the Minister and that all holes, pits, trenches and other disturbances to the surface of the land made while prospecting will be filled in or otherwise made safe to the satisfaction of the State mining engineer. Endorsed on each of the licences are conditions in relation to rehabilitation upon completion of surface disturbance.

7.6. Grenfell (New South Wales) (Exploration Licence 6122 ("EL 6122"))

and the company of the company

The Company's right to acquire this exploration licence arises by way of contractual rights under an option and tenement access. agreement with the present exploration ficence holders ("Option and Access Agreement"). The Option and Access Agreement is subject to conditions including registration of the agreement in the Register of Interests maintained under the provisions of the Mining Act (NSW) 1992 ("Mining Act (NSW)"). The terms and conditions of the Option and Access Agreement are summarised in the Summary of Material Contracts section of the Prospectus.

The terms and conditions of EL 6122 authorise exploration for minerals prescribed as Group 1 minerals under the Regulations to the Mining Act (NSW) (metallic minerals). The licence confers no rights on the holder to explore on any land or waters on which native title may exist without the prior written consent of the Minister. Register searches at the National Native Title Tribunal do not disclose any entries in the National Native Title Register or the Register of Native Title Claims that affect the area of EL 6122.

EL 6122 was granted for a term of two years commencing 1 September 2003. The licence is current, it comprises 84 units being portions of graticular sections as defined in the Mining Act (NSW). The expenditure commitment for the term of the licence is an amount of \$62,000.00 per annum whilst the licence is in force. The licence conditions require the lodgement of a security bond in an amount of \$10,000.00. The bond has been lodged by the licence holder.

An application for the renewal of an exploration ficence may be made at least one month (but not more than two months) before the licence ceases to have effect. The Minister has a discretion to renew or refuse to renew the licence and on renewal at least one half of the number of units over which the licence is in force will be relinguished unless the Minister administering the Mining Act (NSW) is satisfied that special circumstances exist to justify the renewal of the licence over a larger number of units.

Material Contracts 8.

• We have examined the Material Contracts summarised in the section, Summary of Material Contracts in this Prospectus. The $81$ Material Contracts appear to have been duly executed and have been, or are in the course of being stamped and lodged for registration in compliance with relevant legislation where applicable.
• 8.2. It is our opinion, based upon an examination of the Material Contracts, that the description of them in this Prospectus does not contain any statement or matter that is false in a material particular or is materially misleading in the form and context in which it appears. The Company has not identified to us any other material contracts.

Assumptions 9.

in providing this report we have assumed:

• 9.1. that the results of all searches and information provided to us by the relevant government departments in each of the States in which the mining tenements are located and the National Native Title Tribunal are complete and accurate;
• 9.2. that the relevant Minister responsible for administering the applicable Mining Act in each of the States in which the mining tenements are located and each of the Minister's delegates have been validly appointed and have acted within the scope of their respective power, authority and discretion in granting, or recommending the grant of the mining tenements and registering, authorising, approving or granting any permission or consent to any dealing or proposed dealing affecting any of the mining tebements:
• 9.3. that all signatures, seals, dates and endorsements on all copies of all documents provided to us are authentic;
• 9.4. that all documents are within the capacity and powers of and have been validly authorised, executed and are binding on each party to them and comprise the entire agreement of the parties with respect to their respective subject matters; and
• 9.5. the completeness and conformity to originals, of all copies of all documents submitted to us.

a ka ka ka ka ka ka ka ka ka ka ka ka ka

a ka ka wakazi wa kutoka wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshin a katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog kata

$10.$ Oualifications

The report is subject to the following qualifications;

• 10.1. We have only made the enquiries described in this report; and
• 10.2. We have not attempted to assess the strength or otherwise of any current or future native title claim.

11. Scope of Opinion

This report relates only to the laws of the States in which the mining tenements are located and of the Commonwealth of Australia in force at the date of this report and is strictly limited to the matters dealt with in it.

12. Consent

Bunt & Hunt has given, and has not withdrawn its consent to the issue of the Prospectus with this report included, in the form and context in which it is included.

Yours faithfully

HUNT & HUNT

Dor-

EGILS OLEKALNS

Partner

Email:	legils ofekafris@huntfrunt.com.au
Enc.	As above

Tenement Schedule

the contract of the contract of the

1999 - Johann Stoff, Amerikaansk politiker

Farstrick بسيس والمستنبذ والمستنبذ والمستنبذ والمستنبذ	Kara (Iskoberg Artister III) (I Kara (Iskoberg Artister III) a a dheegaala ah ah ah ah ah ah ah ah ah ah ah ah ah	868	WEBSEL	i wspołecienie za u	Whichfall condition ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	EXAMPLE IN THE START OF THE ANTI NEXXI .
a Western Australia.
1.71.25/1680	souhern Geld Ltd	200. nectures	08/02/01 -07/02/05	\$8,000 minimum. expenditure communeat 200A	Deed of Assiminent and Onling American (Butcog) 2.5/1680 71-25/1681 and PCA 25/12/91	WC 98/27 (Widi) WC 99/29 (Centra West Goldfields Reople) WC 99/9 (Maduwooda)
2, PL 25/1681	Southern Gold Etd. -	200 hectares	08/02/01 $-07/02/05$	\$8,000 -minimum expenditure commitment 2004	Deed of Assignment and Option Agreement (Bulong) PL 25/1680, PL 25/1681 and PLA 25/1729*	WC 99/9 (Madawonga) WC 98/27 (Widji) WC 99/29 (Central West Goldfields People)
1.PL 25/11/29 (Anglication for Prospectibe Linence)	$\mathbb{C}$ D. Zappell $\mathbb{C}$	54 heclares	Not yet cranted	N/A.	Deed of Assicriment and Option Agreement (Subright 25/1680) il 25/681 and PiA 25/1.29	WC 98/27 (Wiciji) MC 9929 (Centra West Goldfields People! WC 9979 (Maduwonga)
P. Station Streetla 4. 2080 (Challenger West)	mmummummummum Challenger West Halangs Pty Ltd (Steel and CMH) Resources Pty Ltd (2096)	497 km 2	mmmmmmmm 30/04/03 - 29/04/05	\$160,000.00 (30/04/03) 29/04/08/	MANAGEMENT AND A Deed of Appointment's	SC 95/7 (Antakkinja) 2.3. 4.5
5, EL 3097 (Challenger West)	Challenger West Holdings Pty Etd (80%) and CMH Resources Pty Ltd (20%)	496 km²	12/06/03 11/06/05	\$160,000.00 (12/06/03- .11/06/05	Deed of Appointment*	SC 95/7 (Antakirinja) 2, 3, 4.5
6. (Soutborn Gawlet Arc)	Gawler Arc Holdings Pty Ltd	583 Kri	20/01/04 19/01/05 teneval decision pending for further (erm)	385.000.00	Deed of Aggeriatinent*	SC 97/7 (cawler hanges)
7, EL3284 (Harris Greenstone)	Challenger West Holdings Pty Ltd. Soutnern Gold Ltd	321 km 2 $3/2 \times m$	02/12/04 - 01/12/05 12/07/04	\$60,000,00 \$65,000,00	-. Deed of Appointment*. SC 01/1 (Far West Coast).	SC 97/7 Gawler Banges
(Yarlarında)			$-11/07/05$
9, ELA 2004/00654	Southern Gold Ltd	517 km 2	Not yet granted			SC 95/7 (Antakirinja).
ChewsouthWales
10.EL 6:22	Dorald John Perkin Minexchange Pty Uld.		01/09/03 208/05	\$62,000,00	Opton and Access Arreement Crentell EL 6122*

minimuminimuminimum

1999 - Johann Maria San Sila Barat a Shekara ta 1999 - An tsa 1999 - An tsa 1999 - An tsa 1999 - An tsa 1999

. . . . . . . . . . . . . . . . . . . .

* Refer Summary of Material Contracts section of Prospectus

188

Summary of Native Title Claims

88

SA KARA MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH
SA MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH MARAH

a katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog katalog kata

a ka ka ka matsaya a matsayin ka matsayin ka ka ka ka ka ka ka ka ka ka ka ka ka

Magaaling Mac h
NATURAL STREET	$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$	E CONTRACTOR COMPANY AND THE CONTRACTOR COMPANY OF THE CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR
WC 98/27	Widji People	Accepted 15/6/1998
WC 99/29	Central West Goldfields Reople	Accepted 4/10/1999
WC 99/9	Maduwongga People	Accepted 5/1/1999
SOUTH TELEVISION CONTINUES
NATURAL REGION	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, maanaanaanananaanaa anaanananaanaanaanaan	– Registostierskoskis,
SC 95/7	Antaksunia	Accepted 9/7/1999
SC 97,	Gawler Ranges.	Accepted 11/8/1999

Alimento de la componenta

MANA

R
S

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Notes

1 By the exercise of option rights under the Deed of Assignment and Option Agreement, the Company has acquired PL 25/1680 and PL 25/1681. The Company lodged a caveat on 20 May 2004 in respect to its interest under the Deed of Assignment and Option (Bulong) in the Mining Register against PL 25/1680 and PL 25/1681. The Company has lodged applications for mining leases in respect to the Prospecting Ficences

manamana manamana manama

2 By Deed of Appointment dated 22 April 2004, each subsidiary company appointed the Company as manager and operator of the tenement and the ELA (as the case may be) and acknowledged the Company's beneficial interest in the tenement (Refer Summary of Material Contracts section of the Prospectus).

Alban Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria

• 3 A native title mining agreement ("NTMA") is registered against EL 3080 and EL3097. The NTMA is with the registered representatives of the Antakirinja People. The NTMA authorises the carrying on of mining exploration operations on the land the subject of the Exploration i icences
• The area of the tenement lies within the Woomera Prohibited Area. The Company will be required to enter into an access agreement $\varDelta$ to carry out mineral exploration within the Woomera Prohibited Area with the Commonwealth of Australia (EL 2080, EL 3097, ELA 2004/000654}.
• 5 On the 18 May 2004 an Indigenous Land Use Agreement (ILUA) was registered on the NNTT Register of ILUAs. This ILUA is an Area Agreement with the Antakirinja providing an alternative framework to the Mining Act (SA) and RTN process in respect to negotiations between native title claimants and mineral explorers. The Company has entered a NTMA with the native title claimants authorising the Company to carry out exploration operations on these tenements in accordance with the Minng Act (SA) (Refer Note 3 above).
• 6 Gawler Arc Holdings Pty Ltd is a wholly owned subsidiary of the Company. By Deed of Appointment dated 22 April 2004, the subsidiary company appointed the Company as manager and operator of the tenement and acknowledged the Company's beneficial interest in the tenement. (Refer Summary of Material Contracts section of the Prospectus).
• The Minister responsible for the administration of the Mining Act (SA) ("the Minister") has offered to grant an exploration licence in respect -7 to ELA 2004/00654. The Company has accepted the offer of grant of exploration licence, as at the date of this report.

7.

Summary of Material Contracts

Tanzania (m. 1989)

The following is a brief summary of material contracts relating to the Company. In order to fully understand all rights and obligations contained in the material contracts it would be necessary to review them in full and the summaries below should be read in that light.

Challenger West Project

Sale and Purchase Agreement - EL3080, EL3097 and EL 3284

The Company holds all the issued shares in Challenger West Holdings Pty Ltd and CMH Resources Pty Ltd, which between them now hold 100% of EL3080. EL3097 and EL 3284.

Consideration for purchase of Challenger West Holdings Pty Ltd from Genex Resources Pty Ltd ("Genex") and of CMH Resources Pty Ltd from Hornet Resource Assessment Services Pty Ltd ("Hornet") was by way of issue of vendor Shares and ections as follows:

Genex - 1,250,000 shares and 250,000 options;

Hornet - 250,000 shares and 50,000 options

Deed of Appointment

By Deeds of Appointment dated 22 April 2004, each of Challenger West Holdings Pty Etd and CMH Resources Pty Ltd appoints the Company as manager and operator. of the Challenger West Tenements and acknowledges the Company's beneficial interest in those tenements

Southern Gawler Arc Project

Sale and Purchase Agreement - EL3158

The Company holds all the issued shares in Gawler Arc Holdings Pty Etd, which is now the beneficial holder of a 100% interest in EL3158 ("the Tenement"). Consideration for purchase of the Tenement from John. Anderson was by way of issue of 1,000,000 shares and 200,000 options.

Deed of Appointment

By Deed of Appointment dated 22 April 2004, Gawier Arc Holdings Pty Ltd has appointed the Company as manager and operator of the Challenger West Tenements and has acknowledged the Company's beneficial interest in those tenements.

Bulong Project

Option Agreement PL25/1680, PL25/1681 and PLA 25/1729

CONTINUES INTO A REPORT OF A STATE OF A REPORT OF A STATE OF A REPORT OF A STATE OF A REPORT OF A STATE OF A

Genex Resources Pty Ltd ("Genex") entered into an Option Agreement with the holder of West Australian Prospecting Licences PL25/1680, PL/1681 ("the Bulona Tenements") and PLA 25/1729 ("the PLA"). The Option Agreement was assigned to the company by a Deed of Assignment. dated 2 March 2004 for no monetary. consideration. The option to purchase the Bulong Tenements for a purchase price of \$30,000.00 was exercised on 5 January 2005. The Bulong Tenements were transferred to the Company on 21 January 2005 and a Mining Lease application lodged on that date. The terms of the Option Agreement. have been extended and varied in relation to the PLA by virtue of a Variation. Agreement executed by the PLA holder. and the Company on 5 January 2005. The Option in relation to the PLA is exercisable on or before 5 August 2005 for no further monetary consideration. Pending exercise of the Option in relation to the PLA, the Company has an obligation to keep the PLA in good standing.

Sin Ang 27 Metatra ng Pa

Grenfell Project

Option and Access Agreement - Grenfell EL6122

a ka ka wakazi wa matsaya na matsaya na matsaya na matsaya na matsaya na matsaya na matsaya na matsaya na mats

Kanadia matsimus kanadia matsimus kanadia matsimus kanadia matsimus kanadia matsimus kanadia matsimus kanadi Kamala ya Kamala mwaka wa Tanzania ya Tanzania makuu mwaka wa Tanzania mwaka mwaka mwaka mwaka mwaka mwaka m

The Company has entered into an option agreement with the joint holders of EL6122 ("Grenfell") dated 12 May 2004 (as amended by a deed of variation dated 22 November 2004). The agreement grants the Company exclusive rights of access in order to undertake exploration and mineral assessment activities during the option period, which expires on 31 March 2005. During the option period, the Companymay elect to acquire Grenfell for the issue of 1,500,000 Shares and 300,000 options. (exercisable within 36 months of their issue date).

Consideration for grant of the option is \$17,000.00 in respect of past tenement. holding and exploration costs and, subject to successful capital raising on or before 31 March 2005, issue of 750,000 Shares and 150,000 options (exercisable within 36 months of their issue date).

The agreement is conditional on the Company listing by 31 March 2005. Pursuant to the agreement the Company has lodged a rehabilitation bond of \$10,000.00 and has incurred exploration costs of approximately \$20,000.00 to date. Unless terminated during the option period, the Company has an obligation to incur further exploration costs of \$50,000.00 by 31 March 2005.

Native Title Agreement - Antakarinja Native Title Claimants

The Company has entered into a Mining-Native Title Agreement ("MNTA") with registered Native Title claimants in respect of EL3080 and EL3097 dated 20 April 2004. The MNTA authorises the Company to carry out exploration on these tenements subject. to clearance survey results. Clearance surveys have been undertaken pursuant to the MNTA in respect of specific drill targets. and drilling in these areas are authorised for the purposes of the Native Title provisions of the Mining Act 1971 (SA).

The MNTA was entered on the Mining-Native Title Register pursuant to Part 9B of the Mining Act 1971 (SA) on 4 June 2004.

Employment Agreement - Managing Director

By an agreement dated 16 March 2004 between the Company and Mr Stephen-Biggins, the Company has procured the services of Mr Biggins as Managing Director. The agreement is on standard terms and conditions with an initial 2 year renewable. term commencing 3 days after listing. Employment will continue on an annual. renewable basis unless terminated. Either party may terminate the agreement by giving 6 months notice or, where the

Company terminates, by the payment of \$70,000.00 in lieu of notice. The total remuneration payable pursuant to the agreement is \$140,000 per annum together with statutory superanauation entitlements.

Directors and Consultant Services Agreements

Agreements have been entered into onstandard terms and conditions with each of the non-executive directors to secure their services for an initial period of up to 3 years, subject to rotation as required by the Company Constitution, commending 3 days after listing. Annual remuneration entitlements under these agreements are:

• Ric Horn (Chairman) \$50,000.00
• John Anderson \$30,000.00
• Michael Billing \$30,000.00
• Michael McDonald \$30,000.00

Agreement has also been reached on standard terms and conditions with each of:

• Hornet Resource Assessment Services (Ric Horn)
• Austrike Resources Pty Ltd (John-Anderson)
• MBB Trading Pty Ltd (Mick Billing)
• McDonald Steed McGrath Lawyers (Mike McDonald)

for the provision of consultant technical, accounting and legal services respectively. Each agreement runs for the period of appointment of the respective nonexecutive director.

and the company of the company

Deeds of Indemnity

The Company has entered, or will enter into a Deed of indemnity with each of the Directors ("the Deed"). Pursuant to the Deeds, the Company will indemnify the Directors (to the maximum extent permitted by the Corporations Act) against liability incurred by the Directors in their capacity asdirectors and officers of the Company. The Company is required to maintain insurance. policies for the benefit of each Director for the term of their respective appointments (and must allow the Directors to inspect Board papers in certain circumstance).

Axis Agreement

The Company has an agreement with Axisto act as Financial Adviser and Broker to the Issue. A financial advisory fee of \$75,000 will be paid to Axis as well as a fee of 6% of the total subscription amount. In addition,

the Company will issue to Axis 1,500,000 options, issued on the same terms and conditions as the Attaching Options as set out under the Terms of Securities section.

These fees will be paid upon successful completion of the capital raising pursuant to this Prospectus. A non-refundable retainer of \$30,000 is payable pursuant. to this Agreement rebatable against the success fees.

Superstructure Services Agreement

Southern Gold has, by exchange of letters engaged the services of Superstructure International Pty Etd ("Superstructure") to provide assistance with marketing and investor relations. Remuneration under the agreement includes:

• payment of a retainer of \$800 per week
• 0.5% cash commission on investors. funds introduced through Superstructure; and
• issue of \$0.20 Shares to the value of 1% of investors funds introduced through. Superstructure

Inspection of Documents

Copies of material contracts, the Constitution of the Company and consents referred to in the Additional Information. Section may be inspected, free of charge, at the registered office of the Company, c/- McDonald Steed McGrath Lawyers, 262-266 Pirie Street, Adelaide South Australia during normal business hours.

1999 - James Alexandri, manafarkan perang di James Alexandri, menggunakan perang di sebagai perang di sebagai

Terms of Securities

Rights Attaching to Shares and Options

For details of rights attaching to the Shares and Attaching Options investors should refer to the Company's Constitution (a copy of which is available for inspection at the Company's registered office) and to the terms of the Attaching Options set out in this section. This summary is not exhaustive and does not purport to be a definitive statement of the rights and liabilities of shareholders

Votina

Subject to any rights or restrictions. attached to any Shares, every shareholder present in person or by proxy, attorney or representative, at general meetings has one vote on a show of hands and, on a poll, has one vote for each fully paid share held.

Dividends

Before declaring a dividend, the Directors may, at the discretion of the Directors, set aside out of the profits of the Company. such sums as they think proper as reserves to be applied for any purpose for which the profits of the Company may properly be applied.

Subject to the rights of shareholders holding Shares with special rights (if any), a dividend payable on Shares will be paid according to the proportion that the amount paid on Shares (including amounts) credited) represents of the total amount. paid and payable for the Share.

Dividends may only be paid out of the profits of the Company

The Directors may authorise payment by the Company of such dividends, including interim dividends, as the Directors consider are justified by the profits of the Company. The payment of such dividends does not require the sanction of the Shareholders.

Rights on Winding Up

Subject to the Corporations Act, the Listing Rules and any rights or restrictions attached to a class of shares (if any), upon the Company being wound up, the liquidator may, with the approval of a special. resolution of the members divide any partof the assets of the Company, in specieor in kind, among contributors, including Shareholders.

Transfer of Shares

There are no restrictions on the transfer, in a proper form, effected in accordance. with the SCH Business Rules, of Shares and options, once the Company is admitted. to the Official List of the ASX. Prior to the Company being so admitted, the Company may, in the Board's discretion, refuse to register any transfer of Shares or options. After admission to the Official List, the Company may only refuse to register a transfer of Shares or options where the Listina Rules or SCH Business Rules require or permit the Company to do so.

Issue of Shares

Except as provided by contract or the Company's Constitution, the issue of Shares is under the control of the Directors. who may allot them with such rights and restrictions as to dividends, voting, returnof capital or otherwise and on such terms. and conditions as the Directors determine. Directors may also grant options to take up unissued Shares in the Company in such manner and on such terms as the Directors. see fit.

Notices

.......................................

Shareholders are entitled to receive notice. of, attend and vote (in person or by proxy, attorney or representative) at all general meetings of the Company and to receive notices and other documents required to be furnished to Shareholders in accordance. with the Constitution, the Corporations Act and the Listing Rules.

8

Attaching Options

One Attaching Option will be issued for every two shares under this Prospectus on the following terms:

Each Attaching Option entitles the holder to subscribe for one Share. upon exercise by notice in writing and payment of the Attaching Option price, during the exercise period;

The exercise price of each Attaching Options is \$0.20:

The exercise period of the Attaching Options is from the date the Company issues the Attaching Options to 5.00pm (CST) on 33 March 2007;

An Attaching Option will not confer an entitlement to receive a dividend declared or paid by the Company, or an entitlement to vote at a general meeting of the Company nor will it confer an entitlement to participate in any pro-rata or entitiement offer of securities to Shareholders;

Subject to the Company's Constitution, each Share issued pursuant to the exercise of an Attaching Option will rank equally in all respects with other issued shares:

The Company will apply to the ASX for official quotation of the Attaching Options and will apply to the ASX for official quotation of the Shares issued upon exercise of Attaching Options within the time period required by the Listing Rules;

The Attaching Options will be freely transferable:

Anv Attaching Option not exercised before the end of the exercise period will lapse at the end of the exercise period;

All Attaching Options may be exercised if a takeover bid (as defined in the Corporations Act) is made for Shares:

In the event of a reorganisation or reconstruction of the capital of the Company, the rights of the Attaching Option holder will be changed to the extent necessary to comply with the Listing Rules applying to the reorganisation or reconstruction of capital at the time of the reorganisation or reconstruction.

If the Company makes a rights issue. (other than a bonus issue), the exercise price of Attaching Options on issue will be reduced according to this formula:

$$
A~=~O~+\frac{E\left(P+(S+D)\right)}{\left(N+1\right)}
$$

Where:

the contract of the contract of the contract of

a sa salawan sa sana

• $A =$ the new exercise price of the Attaching Option:
• $O =$ the old exercise price of the Attaching Option:
• $E =$ the number of underlying shares. into which one Attaching Option is exercisable:
• $P =$ the average closing sale price per ordinary share (weighted by reference to volume) recorded on the stock market of ASX during the 5 trading days ending on the day before the ex-rights date or exentitiement date (excluding special crossings or overnight sales);
• $S =$ the subscription price for an ordinary share under the prolrata. issue:
• $D =$ the dividend due but not vet paid. on each ordinary share at the relevant time (except those to be issued under the pro rata issue); and

$N =$ the number of ordinary shares that must be held to entitle holders to receive a right to one new ordinary. share in the pro rata issue.

CONTINUES IN THE REAL PROPERTY AND INCOME.

If there is a bonus issue to the holders of ordinary shares in the capital of the Company the number of ordinary shares over which an Attaching Option. is exercisable will be increased by the number of ordinary shares which the holder of the Attaching Option would. have received if the Attaching Option. had been issued before the record date of the bonus issue.

Attaching Option holders appearing on the Company's register of Attaching Option holders at the relevant date will be entitled to receive and will be sent all. reports and accounts required to be laid. before Shareholders in general meetings. and all notices of general meetings and will have the right to attend but shall. have no right to vote at that meeting.

Axis Options

Options to be issued to Axis pursuant to the Axis Agreement as described in the Summary of Material Contracts shall be onthe same terms as the Attaching Options set out above.

Other Options

Various options have been or will be issued to vendors and promoters. Such options have an exercise price of \$0.20 and are variously exercisable within 36 months of their date of issue. The options will not be listed. Escrow provisions as determined by the ASX apply to such options. In all other respects the options are issued on the same. terms and conditions as the Attaching Options.

Additional Information

Incorporation

Southern Gold Limited was incorporated as a public company on 2 January 2004.

Interest of Director's and Promoters

Except as disclosed in this Prospectus no:

• (a) Director:
• (b) person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation and distribution of this Prospectus; or
• (c) promoter of the Company; or
• (d) financial services licensee named in this Prospectus,

(whether individually or in consequence of that person's association with any company or firm or in any material contract entered into by the Company) has now, or has had, in the 2 year period ending on the date of this Prospectus, any interest in (i) the formation or promotion of the Company; (ii) any property acquired or proposed to be acquired by the Company in connection. with its formation or promotion or in connection with the Offer; or (iii) the Offer.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, options or otherwise) have been paid or agreed to be paid to any of the above persons as an inducement

to become or to qualify as, a Director, or otherwise for services rendered by him or his company or firm in connection with the formation or promotion of the Company or the Offer.

At the date of this Prospectus:

The Company has procured the services of Mr Stephen Biggins as Managing Director for a period of 2 years at an annual cost of \$140,000.00 (plus) statutory superannuation benefits).

The Company has procured the services of Mr Cedric Horn as Chairman for a period of 3 years at an annual cost of \$50,000.00 (plus statutory superannuation benefits).

The Company's non-executive Directors will be paid directors fees by the Company, Directors agreements with each of the non-executive Directors are as summarised in the Summary. of Material Contracts section of this Prospectus.

The Company has entered into consulting agreements with companies or entities associated with each of the non-executive Directors pursuant to which technical consulting services may be provided at normal commercial rates.

At the date of this Prospectus the Company has not paid any Directors fees.

The Company purchased the shares in Challenger West Holdings Pty Ltd in order to acquire its interest in EL3080, EL3097 and EL 3284 from Genex Resources Pty Ltd ("Genex"). Mr Stephen Biggins is a director and shareholder of Genex.

The Company purchased the shares in CMH Hofding Pty Etd in order to acquire. its interest in EL3080 and EL3097 from Hornet Resource Assessment Services Pty Etd ("Hornet") for the consideration as set out in the Summary of Material Contracts section of this Prospectus, Mr. Ric Horn is a director and shareholder of Hornet

The Company purchased the shares in Gawler Arc Holdings in order to acquire its interest in EL3158 from Mr. John Anderson for the consideration as set out in the Summary of Material Contracts section of this Prospectus. Mr John Anderson is a non-executive. Director of the Company;

The Company took an assignment of anoption over the Bulong tenements from Genex for consideration as set out in the Summary of Material Contracts section of this Prospectus. Mr Stephen Biggins is a director and shareholder of Genex and Managing Director of the Company. No monetary or other consideration was paid to Genex or Mr Stephen Biggins. under the assignment deed.

.......................................

0

Axis Financial Group (Australia) Limited will be paid the fees and will be issued. the options described in the Summary of Material Contracts section of this Prospectus for managing the Offer.

the contract of the contract of the contract of

1999 - Johann Stoff, Amerikaansk konst

David Tonkin and Associates has or will be paid a fee of around \$50,200,00 for preparing the Independent Geo(og)st's Report section of this Prospectus.

Grant Thornton Accountants have or will be paid a fee of approximately \$5,000 for preparing the independent. Accountants Report section of this Prospectus.

Hunt & Hunt have or will be paid a fee of approximately \$86,000 for preparing the Solicitor's Tenement Report section of this Prospectus and for participation. in the due diligence process.

McDonald Steed McGrathLawyers have or will be paid a fee of approximately \$66,000 for overseeing the due diligence. process and work in preparation of this Prospectus, McDonald Steed McGrath Lawyers has or will receive professional. fees at their normal rates for the work in respect of agreement preparation and other legal work for the Company since its incorporation. Mike McDonald is a partner in the firm of McDonald Steed McGrath Lawyers and a Non-Executive Director of the Company.

MBB Trading Pty Etd have or will be paid a fee of approximately \$18,000 for participation in the due diligence. process and work in preparation of this Prospectus. Mick Billing is a director of MBB Trading Pty Ltd and a Non-Executive Director of the Company.

Hornet Resource Assessment Services Pty Etd have or will be paid a fee of approximately \$20,000 for participation in the due diligence process and work.

in preparation of this Prospectus. Ric Horn is a director of Hornet Resource Assessment Services Pty Ltd and a Non-Executive Director of the Company.

Austrike Resources Pty Ltd have or will be paid a fee of approximately \$13,800. for participation in the due diligence. process and work in preparation of this Prospectus, John Anderson is a director. of Austrike Resources Pty Ltd and a Non-Executive Director of the Company.

Genex Resources Pty Ltd have or will be paid a fee of approximately \$70,000. for participation in the due diligence. process and work in preparation of this Prospectus. Stephen Biggins is a director of Genex Resources Pty Ltd and a Non-Executive Director of the Company.

Superstructure International Pty Ltd has been or will be paid fees and commissions as described in the Summary of Material Contracts section of this Prospectus for providing marketing and investor relations. services

Directors may subscribe for Shares and Attaching Options under this Prospectus.

Directors shall be entitled to be reimbursed all reasonable travelling, accommodationand other expenses properly incurred by the Directors in attending Board meetings, shareholders meetings and otherwise in connection with the business of the Company

Consents

The Directors have given their consent to the lodgement of this Prospectus with ASIC and have not withdrawn their consent prior to fodgement.

The following persons have given their written consent to be named in this Prospectus and have not withdrawn.

such consent before lodgement of this Prospectus with ASIC:

David Tonkin & Associates has consented to being named as Independent. Geologist to the Company and to the inclusion of its Independent Geologist's Report in this Prospectus in the form. and context in which it is included.

a ka ka wakazi wa katika wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshin
Marejeo wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa

CONTINUES IN THE REAL PROPERTY AND INCOME.

Computershare Investor Services Pty Ltd has consented to being named as Share. Registry for the Company.

Grant Thornton has consented to being named as independent Accountants to the Company and to the inclusion of its Independent Accountant's Report in this Prospectus in the form and context. in which it appears.

Hunt & Hunt have consented to the inclusion in this Prospectus of the statements made by it in the Solicitor's Report in the form and context in which that report appears.

McDonald Steed McGrath Lawyers have consented to being named as solicitors. to the Company.

Gregory Colin Jorgensen has consented to being named in the independent. Geologist's Report in the form and context in which such information. appears.

Dominion Mining Ltd has consented to being named in this Prospectus.

Genex Resources Pty Ltd has consented to being named as a vendor.

Hornet Resource Assessment Services Pty Ltd has consented to being named. as a vendor.

John Alexander Anderson has consented to being named as a vendor.

Superstructure International Pty Ltd has consented to being named in this. Prospectus in the form and context in which such information appears.

$\ldots \ldots$

Table of Directors' Shareholdings

www.

Stephen Biggins	2,950,000	850,000
Ric Hom	1,900,000	625,000
John Anderson	593.000	46,500
Mike McDonald	1,714,320	7.160
Mick Billing	1,630,000	565,000

Axis Financial Group (Australia) Limited has given its written consent to be named in this Prospectus as Financial Advisor and Broker to the Issue in the form and context in which it is named. and has not withdrawn its consent prior. to the lodgement of this Prospectus with the ASIC. Axis has not authorised or caused the issue of this Prospectus and does not make or purport to make any statement in this Prospectus.

Expenses of the Offer

It is estimated that the expenses of the Offer, payable by the Company, including fees payable to the Financial Advisor, fees of the Independent Geologist, Independent Accountants and Solicitors, printing, ASX listing fees, share registry fees, posting, advertising and other miscellaneous expenses shall be approximately \$790,000. of which \$440,000 will be paid using proceeds of the Offer.

Details of Directors Interests

The holdings of shares and options of the Directors prior to this Offer are as set out in the above table

Notes on Option-holding

All of the options referred to above were. granted for no monetary consideration.

Restricted Securities

Shares issued to promoters, vendors and seed capitalist prior to this Offer are expected to be subject to escrow. restrictions to be imposed by the ASX on admission of the Company to the Official List. Allottees of the these shares are expected to be entitled to hold, free fromescrow restrictions, that number of shares (and a like number of options) which the subscription monies for all of the promoter, vendor and seed capitalist Shares would be able to purchase if applied by way of subscription for shares pursuant to the Offer. Any determination as to escrowwill be made by the ASX and details. thereof released to the market prior to commencement of trading in the Shares.

Legal Proceedings

The Company is not involved in any legal or arbitration proceedings. The Directors are not aware of any such proceedings pending. or threatened.

Constitution

The Constitution is incorporated into this Prospectus by reference in accordance with section 712 of the Corporations Act. A copy may be viewed at the Company's registered office.

Non-Residents

Non-Residents should consult their professional advisers as to whether any formalities need to be observed or authorities obtained in subscribing for Shares, and, if necessary should obtain such approvais as may be required in order to legally subscribe for, and be issued Shares. The return of a completed Application. Form by a Non-Resident will be taken by the Company to constitute a representation. and warranty by the Applicant that the Company may lawfully issue the Shares to the Applicant.

Privacy

The information asked for in the Application. form is used to carry out registry functions. including sending annual reports, notices of meeting, newsletters and notifications to $f$ he AT $\bigcirc$

The Company, Axis and Computershare, will normally only use the information you. provide on the Application form for these purposes. If the information requested is not provided, your Application may not be able to be processed or accepted. The Company, Axis and Computershare will not normally disclose information about Shareholders to external parties, except to parties to which the Company has outsourced functions or which provide advice to the Company such as the Company's insurers, accountants, auditors and legal advisers. The Company, Axis and Computershare might be required to disclose information about you to Government authorities such as the ATO or ASIC. You are able to access information the Company, Axis and Computershare hold about you on request, and you are entitled to correct any information which is inaccurate or out-of date by contacting the Company, Axis and or Computershare.

......................................

Definitions

AS and S Australian dellars, unless otherwise stated: Applicant a person who submits an Application; Application a valid application to subscribe for Shares and Attaching Options: Application Form the application form contained in this Prospectus or a copy of the application form contained in this Prospectus or a direct derivative of the application form which is contained in this Prospectus; Application Price \$0.20 being the amount payable in respect of each Share under the Offer; Australian Securities & Investments Commission; ASIC ASX Australian Stock Exchange Limited ACN 008 624 691; ATO Australian Taxation Office; Attaching Options an option to subscribe for a Share, the terms of which are summarised in this Prospectus Axis or "Financial Advisor and Axis Financial Group (Australia) Limited ABN 32006 711995 Broker to the Issue" the Board of Directors of Southern Gold Limited unless the context indicates otherwise; Board BPAY bill payment by way of electronic means; Business Day a day on which the trading banks are open in Adelaide; Chairman chairman of the Board: CHESS ASX Clearing House Electronic Subregistry System; Closing Date date on which the Offer closes: Company and Southern Gold Southern Gold Limited ACN 107 424 519; Computershare Computershare Investor Services Pty Ltd (ACN 078 279 277); constitution of the Company as amended from time to time; Constitution Corporations Act Corporations Act 2001; CST Central Dayling Saving Time being the time applicable in Adelaide, South Australia; directors of Southern Gold Limited, unless the context indicates otherwise; Directors Exercise Price the amount payable to the Company upon exercise of an Attaching Option being the subscription money for the Issue of a Share upon the exercise of the Attaching Option; HIN holder identification number; Initial Public Offering or IPO the first offering of shares pursuant to a prospectus; Issue or Offer the issue of Shares pursuant to this Prospectus; Issuer Sponsored securities issued by an issuer that are held in uncertificated form without the holder entering into a sponsorship agreement with a broker or without the holder being admitted as an institutional participant in CHESS; Listing Rules Listing Rufes of the ASX; MM Mobile Metal Ion geochemical analysis; Non-Resident a person domiciled outside Australia; Offer Period period commencing on the Opening Date and ending on the Closing Date; Official List Official List of the ASX; Official Quotation guotation of the Shares on the Official List; the date immediately following the expiry of the exposure period referred to in the Details of the Offer section of this Opening Date Prospectus: PACE Plan for Accelerating Exploration in South Australia; PIRSA Primary Industries and Resources South Australia; Proper SCH Transfer has the same meaning given in the Corporations Act; Prospectus this Prospectus SCH Business Rules SCH Business Rufes issued by ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532; Share an ordinary share in the capital of the Company; Shareholders holders of Shares in the Company. Year One and Year Two respectively the first and second years of exploration program following Official Quotation

. . . . . . . . . . . . . . . . . . .

Directors' Consent

In accordance with section 720 of the Corporations Act each Director has consented in writing to lodgement of the Prospectus with ASIC and has not withdrawn that consent.

Signed for and on behalf of Southern Gold Limited on 28 January 2005.

Ric Horn Chairman

SOUTHERN COLD LIMITED PROSPECTUS

Corporate Directory

Directors

ER TAGINALE COMPANY AND ALGORANTS A MENEDA NEDA ANG MA Calebon Mix Massico d'Assa Albanya da a shekara ta 1999 Martin Martin Ma ST REAL ARTHUM AC CA

W.

ormaan maasoorooma caanoonaa n.

Company Secretary Maria ang Palawayay na Tang
Amin'ny taona 2008–2014. W.

Registered Office

262-266 Prile Street Adelaide SA 5000 Postal Address: PO Box 3216 Rundle Mall SA 5000 Ph: (08) 8227 1103 Fax: (06) 8223 5290 email mailesoutherngold.com.au web www.southerngold.com.au

Financial Advisor and Broker to the Issue

Axis Financial Group (Australia) Limited Level 25, Royal Exchange Building SG Pitt Street Sydney NSW 2000

Independent Geologist

David Tonkin & Associates 25 Palmerston Road Unley SA 5061

Solicitors to the Issue Hunt & Hunt Lawyers 26 Flinders Street Adelaide SA 5000

Independent Accountants / Auditors

Grant Thornton 67 Greenhill Road Unley SA 5061

Legal Advisors to the Company McDonald Steed McGrath Lawyers 262-266 Pine Street Adelaide SA 5000

Share Registry Computershare Investor Services Pty Ltd. Level 5, 115 Grenfell Street Adelaide SA 5000