IONDRIVE LIMITED — Capital/Financing Update 2006

Oct 17, 2006

18^th October 2006

SHARE PLACEMENT

Southern Gold Limited (ASX Code SAU) is pleased to announce a share placement of 4,500,000 ordinary fully paid shares at \$0.22 per share to raise \$990,000 before expenses.

The placement was managed by Taylor Collison Limited and introduces an Australian Fund Manager as a shareholder.

The funds raised will be applied to exploration of the Torrens South project (adjacent to the recent Punt Hill discovery), and drilling targets in Bulong (WA), and Eurow (NSW).

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

Class of Securities:	Fully paid ordinary shares
Number to be Issued:	4,500,000
Principal Terms of Securities:	The shares will carry standard rights applicable to quoted ordinary shares in the Company and will, from the date of issue, rank equally with fully paid quoted ordinary shares currently on issue.
Issue Price:	\$0.22 per share
Purpose of Issue:	To raise working capital for exploration
Shareholder Approval:	The Company will not seek shareholder approval prior to the issue of 4,500,000 placement shares, as approval for this issue is not required by the Listing Rules. The Company intends to subsequently seek approval of this issue at a general meeting pursuant to Listing Rule 7.4 (subsequent approval of issue of securities).
Issue to Class: holders.	The issue is not being made to a class of security

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