IONDRIVE LIMITED — Capital/Financing Update 2007

May 13, 2007

14th May 2007

Accelerated activity starts this week on Nickel Sulphide discovery at Bulong South, WA

Ultra-detailed airborne magnetic surveys commence this week to cover Southern Gold's expanded 100% holding in the Blair/Bulong region. The surveys are to be conducted by UTS at 25-50m line spacing.

Targeted ground electromagnetic (EM) surveys will then be used to map prospective sulphide horizons delineated by Southern Gold's previous drilling information and the new detailed magnetics to be acquired. Down hole EM surveys identified conductors associated with the nickel sulphide mineralisation during the previous phase of drilling.

Comprehensive reverse circulation (RC) drilling is then scheduled for July. The drilling is focussed on extending the nickel sulphide intersections in the previous program and complemented by the aforementioned geophysics. The initial drill plan is likely to be increased to include targets generated by the upcoming geophysical program on Southern Gold's expanded tenure.

RC Drilling Program

The RC Drill program includes follow-up of:

The nickel intersection of BSRC004 (2m $@$ 2.1% Ni within 6m $@$ 1.4% Ni) from near the base of a komatiite layer informally named the Central komatiite. The Central komatiite layer consistently contains over 1500 ppm nickel (and commonly over 2500ppm Ni) and forms a 50 m thick tabular body and a strike length of over 900m, trending in a northeasterly direction (Figure 1).

Additional significant nickel intersections in this zone include 10m at 1.2% nickel and gold intersections 14m at 2.41g/t (Including 2m at 12.1g/t).

The lower 110 m of the diamond tail of BSRC009 (Figure 2) intersected nickel rich Eastern komatiite with cumulate textures containing rich intervals with 0.8%Ni (245-247m), 0.5% (247-249m), 0.58%Ni (323-325m) and 0.51% (327-329.3m, end of hole). The up-dip projection of this unit brings it to the surface approximately 300 m southeast of the hole's collar in an area where historical auger sampling had also found elevated nickel.

The Directors of Southern Gold believe this shallow nickel sulphide discovery provides a highly profitable scenario for possible development given its proximity to nearby Kambalda nickel smelter. Southern Gold is therefore committed to fast tracking advanced exploration and expanding potential development of the Bulong South project to increase exposure to the strong nickel price.

Southern Gold Limited ABN 30 107 424 519

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 www:southerngold.com.au facsimilie 08 8132 0199

ASX RELEASE

Reasot drilling $\bullet$ $\overline{a}$ RAB drilling 2222 Granite, feisic voicaries, (with minor matics and sediments)

Komatike and ultramatics (with minor matics and sediments)

(((((()) Ni rich korsatiste (>1100 ppm Ni)

Figure 2 Cross-section and significant nickel intersections

Southern Gold Limited ABN 30 107 424 519

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 www:southerngold.com.au

facsimilie 08 8132 0199

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 a full-time 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.

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

facsimilie 08 8132 0199