IONDRIVE LIMITED — Capital/Financing Update 2007

Sep 2, 2007

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3[rd] September 2007

Southern Gold secures gold tenure in Cambodia

Southern Gold has increased its security of tenure to explore for gold in Cambodia after converting two of its 100%-owned Memorandum Of Understanding (MOU) tenements to granted Exploration and Exploitation Licences (EEL). EELs are valid for six years but must be renewed every two years during the term of the EEL.

The two EELs are O’Khtung and Preak Khlong, and are located within Southern Gold’s total of 1,842 square kilometres of tenure in Cambodia’s eastern provinces and held as granted EELs, MOUs or MOU applications (Figure 2).

“The successful process leading to the initial granting of our first EELs reflects the growing stability and reliability of Cambodia’s mining system,” Southern Gold’s Managing Director, Mr Stephen Biggins, said today.

“As result, Southern Gold is now seeking to convert three other MOUs to EELs. These include our 80%-owned Snoul and Romdul MOUs and our wholly owned P.Knach acreage.”

O’ Kthung EEL and Preak Khlong EEL

O’Khtung (272.5km²) and Preak Khlong (275km²) EEL’s are situated side-by-side 50km east of the regional town of Snoul in the Mondul-Kiri province of Cambodia.

Oxiana and BHP Billiton are currently actively exploring in Mondul-Kiri. Oxiana’s drilling has intersected significant gold mineralisation on its Okkvau Project immediately adjacent to the north of Southern Gold’s newly granted EEL’s.

The subject area of the two granted EELs was selected to cover a pair of granitoid intrusives and their hornfels halo as well as a NE trending structural zone (Figure 1). These intrusives are the most fractionated member of the igneous suite observed to date and consequently a good potential source for mineralising fluid. Several smaller hornfels halos around the large pair indicate that there are some small plugs in the vicinity that are not yet exposed. The intrusives, hornfels halos and the proximal fold axes represent attractive exploration targets for epithermal intrusive related gold (IRG) deposits.

Although the area of the two tenements is large, each visit by Southern Gold’s exploration teams has resulted in the discovery of new and potentially important Au mineralisation. An unnamed prospect of gossan veins was located during a regional soil sampling program in this licence as well as mineralised quartz veins (Table 1).

Sample No.	Prospect	Description / Comment	Au **ppm **	Ag ppm	Cu **ppm **	Pb ppm	Zn **ppm **	As **ppm **
KHT1	O’Khtung	qtz vein at Lacquer village	0.888	22.6	52	10,600	200	>10,000
SAU21	O’Khtung	qtz vein + Pb	0.740	130	122	14,700	196	6,445

Southern Gold Limited 58 North Terrace PO Box 750 email: info@southerngold.com.au telephone 08 8132 0044 ABN 30 107 424 519 Kent Town Kent Town www:southerngold.com.au facsimilie 08 8132 0199 South Australia 5067 South Australia 5071

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SAU22	O’Khtung	qtz vs	1.25	32.5	246	5,039	73	>10,000
P125	Pk. Khlong	Gossan	3.08	0.66	881	38	134	85

Table 1. Significant assays from samples collected during reconnaissance mapping at O'Kthung and P. Khlong.

A good example of the mineralised set occurs at 689000mE, 1382500mN (Figure 1). In this area, numerous subcropping gossan veins appear to form a stockwork or breccia in the margin of a small microdiorite plug. Visible gold was reported after crushing and panning a sample of this material (P125 assay in Table 1). Initial mapping suggest the distribution of veins on this prospect could form a deposit suitable for open pit mining.

Planned Exploration on O’ Kthung EEL and Preak Khlong EEL

Detailed mapping and geochemical surveys are planned by Southern Gold over identified areas of gold mineralisation and artisinal mining, with a focus on refining these prospects for drilling early in 2008.

Ongoing regional exploration on the EELs includes regional geological mapping and surficial rock-chip, stream sediment and soil sampling.

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 website at www.southerngold.com.au

The information in this report has been compiled by Stephen Biggins (BSc(Hons)Geol, MBA) as an employee of Southern Gold and who is a member of the Australasian Institute of Mining and Metallurgy and is bound by and follows the Institute’s codes and recommended practices. As a Competent Person, he has a minimum of 5 years relevant experience in the style of mineralisation and types of activities being reported and has given written consent to the above report in the form and context in which it appears.

Southern Gold Limited 58 North Terrace PO Box 750 ABN 30 107 424 519 Kent Town Kent Town South Australia 5067 South Australia 5071

email: info@southerngold.com.au telephone 08 8132 0044 www:southerngold.com.au facsimilie 08 8132 0199

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Tertiary basalt
1390000 mN 1390000 mN
Hornfels
Granitoid
Mafic intrusive
1385000 mN 1385000 mN
Sediments
Un-named gossan veinsUn-named gossan veinsUn-named gossan veinsUn-named gossan veins
Bedding trend
Fault
4WD Track
Bitumen Road
1380000 mN 1380000 mN
1375000 mN 1375000 mN
P. Khlong O’ Kthung
1370000 mN 1370000 mN
665000 mE 670000 mE 675000 mE 680000 mE 685000 mE 690000 mE 695000 mE 700000 mE
665000 mE 670000 mE 675000 mE 680000 mE 685000 mE 690000 mE 695000 mE 700000 mE
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Figure 1. Interpreted Geology : Phreak Klong and O’Kthung EELs, Mondulkiri Province Cambodia.

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Figure 2. Southern Gold 1842km[2] of tenure in north east Cambodia.

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Southern Gold Limited 58 North Terrace PO Box 750 email: info@southerngold.com.au telephone 08 8132 0044
ABN 30 107 424 519 Kent Town Kent Town www:southerngold.com.au facsimilie 08 8132 0199
South Australia 5067 South Australia 5071
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