IONDRIVE LIMITED — Capital/Financing Update 2006

Oct 24, 2006

25^th October 2006

NEW SUBSTANTIAL SHAREHOLDERS TALBOT GROUP HOLDINGS AND CITIC AUSTRALIA PTY LTD ACOUIRE 15% FOR \$2.25m

The directors of Southern Gold Limited (ASX Code SAU) are pleased to announce a share placement to Talbot Group Holdings and CITIC Australia Pty Ltd of a total of 8,900,000 ordinary fully paid shares at \$0.25 per share to raise \$2,225,000 before expenses. Southern Gold directors welcome this investment which represents a 15% shareholding in the Company.

The investment represents a significant milestone in the evolution of Southern Gold Limited and will substantially enhance the capacity of the company to aggressively advance its portfolio of highly prospective projects. Talbot Group Holdings and CITIC Australia Pty Ltd have recognised the development potential of the exploration projects and the skills and expertise of the Southern Gold team.

Talbot Group Holdings is a Queensland owned and operated investment group focusing on the resource sector with an asset base is in excess of \$450 million. Its activities include minerals exploration, mine and market development and financial investments, and a substantial property and share portfolio.

CITIC Australia Pty Ltd is 100% owned by the CITIC Group, one of China's largest stateowned companies. With assets in excess of USD 100 billion, CITIC Group's activities include banking and financial businesses, industrial investments (including those in the energy and raw materials sectors) and international trade. It is headquartered in Beijing, People's Republic of China.

Besides CITIC Australia Pty Ltd, the other subsidiary of CITIC Group in Australia is CITIC Resources Australia Pty Ltd. The two CITIC subsidiaries in Australia together boast total assets and annual sales of over AUD \$1 billion. Their operations in Australia include a 22.5% interest in the Portland Aluminium Smelter Joint Venture in Victoria, an 11.62% shareholding in Macarthur Coal Limited (MCC), a 7% direct interest in the Coppabella/Moorvale Coal Joint Venture, a 78% shareholding in the ASX-listed CITIC Australia Trading Limited (CAL), and interests in a series of exploration projects.

The investment from CITIC Australia Pty Ltd is subject to approval from the Foreign Investment Review Board.

The funds raised will be applied primarily to accelerate uranium and copper/gold exploration in South Australia and to support exploration of the suite of gold and base metal projects elsewhere.

In accordance with ASX Listing Rules 3.10.3, Southern Gold provides the following details of the placement shares:

Class of Securities:	Fully paid ordinary shares
Number to be Issued:	8,900,000
Principal Terms of Securities:	The shares will carry standard rights applicable to quoted ordinary shares in the Company and will,

58 North Terrace Kent Town South Australia 5067

PO Box 750 Kent Town South Australia 5071 email: info@southerngold.com.au telephone 08 8132 0044 facsimilie 08 8132 0199 www.southerngold.com.au

SX RELEARE

from the date of issue, rank equally with fully paid quoted ordinary shares currently on issue.

Issue Price:	\$0.25 per share
Purpose of Issue:	To raise working capital for exploration
Shareholder Approval:	The Company intends to seek approval of this issue at the Annual General Meeting to be held on 28 November 2006 pursuant to ASX Listing Rule 7.1
Issue to Class:	The issue is not being made to a class of security holders.

As the issue will be to sophisticated or professional investors, it will not require disclosure under the Corporations Act.

For Further information please contact:

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

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

Southern Gold Limited ABN 30 107 424 519