IONDRIVE LIMITED — Capital/Financing Update 2007

Feb 18, 2007

19th February 2007

High - Grade Gold and Base Metals Encountered on Cambodian Tenements

HIGHLIGHTS

• Southern Gold Limited (SAU) has signed a Letter of Agreement with Cambodian $\bullet$ Company, Greystoke Limited, to joint venture on their Memorandum of Understanding (MOU's) at Snuol and Mount Romdul.
• Preliminary sampling on the Snuol MOU area returned gold values from 3.69 g/t up $\bullet$ to 71.2 g/t and copper up to 0.94% from artisinal mine workings.
• Preliminary soil sample results from the Romdul MOU indicate a strongly anomalous zone of gold mineralisation in calcareous host rocks around the margin of a fine-grained diorite intrusive with evidence of epithermal mineralisation.
• On the Okvau (P. Khlong) MOU held 100% by SAU a new discovery of gossan and ۰ quartz vein sets produced gold values between 0.74g/t and 1.29 g/t with highly elevated levels of lead (0.94%) and silver (130g/t)
• SAU has commenced negotiations with the Ministery of Industry Mines and Energy $\bullet$ for the conversion of its MOU's to Exploration Licences

Southern Gold has identified a number of high-grade gold and base metal targets from its recently completed preliminary geological mapping and geochemical sampling program of tenements held in Cambodia. The indicated potential of the geology of this region has encouraged Southern Gold to expand its interest into 5 tenements in eastern Cambodia covering 1155 km². Exceptionaly encouraging exploration results are being recorded from all these tenements as a better understanding of the mineralisation models is achieved.

Southern Gold also notes Oxiana's reporting in their recent Quarterly Report of several high-grade gold drilling results from Oxiana's Shin-Ha Joint Venture project, which is adjacent to Southern Gold's O'Khtong project in eastern Cambodia.

Mineralisation is dominated by sulphide rich, fine comb quartz veins. These styles are typical of shallow plutonic environments with dioritic intrusives. The veins are very similar in character to those at Ravenswood, North Queensland, Australia. The Ravenswood camp has a range of mineralisation styles including large vein, stock work and breccia pipe and produced close to 3 M oz of gold.

The company has assessed a number of artisinal mining areas and has defined high priority targets for immediate detailed geochemical sampling and geological mapping, (Figure 1) leading to drilling mid 2007.

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

EXPLORATION TENURE EXPANDS

In 2006 SAU expanded into Cambodia's minerals exploration sector and established a permanent exploration and administration office in Phnom Penh and appointed Senior Geologist, Nicholas Steel, to coordinate Cambodian exploration activities. SAU has established direct links and a good working relationship with the Ministry of Industry Mining and Energy (MIME) in Phnom Penh.

SAU signed three Memoranda of Understanding (MOU's) with MIME in mid 2006 acquiring 100% equity in the rights to evaluate and explore 780km² of highly prospective ground in eastern Cambodia.

On 24 January 2007, SAU signed a Letter of Agreement with Cambodian company, Greystoke Ltd, whereby the two companies will enter into a joint venture on two additional MOU areas totalling 375km². The IV will give SAU an 80% equity interest in the tenements.

The total area currently held by SAU as granted MOU's is 1155km² and the location of the tenements is shown on Figure 1 below. SAU has indicated to MIME it is applying for Exploration Licenses on all of its tenements in Cambodia.

Figure 1. Cambodian Projects and summary of exploration results, eastern Cambodia.

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.southern2old.com.au

facsimilie 08 8132 0199

SNUOL PROJECT

The Snuol mine workings consist of a single line of trenches and shafts striking NNW for a distance of approximately 140m. All these mine workings are included in Southern Gold's tenement. Maximum depth of the workings is currently about 15m. Samples SN04 and SN04A are pods of gossan from 15m depth over a 1m interval and from 8m depth over 1m interval (Table 1, Figure 3). Most of the ore mined is oxidised gossan. Sulphides are present in the deepest workings.

Numerous similar veins have been noted in the vicinity.

The quartz texture, high sulphide content and host rock are similar to the Ravenswood IRG system in Queensland. Veins of this type usually have the best mineralisation in shoots where the host structure changes strike or dip.

$i$ able to bridge the sample $\Delta$ ssars
Sample No	Gold	Silver	Copper	Lead	Zinc	Arsenic
	ppm	ppm	ppm	ppm	ppm	ppm
SNO 2	3.69	3.8	37	170	137	336
SNO 3	7.60	4.2	206	121	53	341
SNO 4	71.20	33.6	0.94%	141	309	1155
SNO 4 A	66.60	37.2	6009	54	064	1105

Table 1 Snuol Mine Sample Assays

Fig 2. Snuol Location Plan (yellow box indicates size of gold value)

Fig 3. Snuol Mine Significant Au Assays (yellow box indicates size of gold value)

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 facsimilie 08 8132 0199 www:southerngold.com.au

OKVAU (P. KHLONG) PROJECT

Wide spaced soil and rockchip sampling to date indicates gold mineralisation previously unidentified on this tenement. An Iron stained quartz sample (SAU22) was collected along 130m outcrop of a quartz vein set. Galena is also visible in some specimens (SAU21).

Numerous subcropping gossan veins also occur in this area and appear to form a stockwork or breccia in the margin of a small microdiorite plug.

Sample No	Gold	Silver	Copper	Lead	Zinc	Arsenic
	ppm	ppm	ppm	ppm	ppm	ppm
SAU 21	0.74	30	22	.47%	196	6445
SAU 22	.25	32.5	246	5039	フつ	10000

Table 2. Significant Assays From Okvau (P Khlong) Project

UPCOMING ACTIVITY

Exploration on identified high priority targets will include a range of detailed geochemical sampling methods and geological mapping at a prospect scale during the first quarter 2007. Regional exploration activity and assessment will continue in parralel with the focussed exploration.

Southern Gold intends to start drilling a number of these high priority targets mid 2007.

These exciting new results confirm the Directors belief in the significant exploration potential of this region. As a result Southern Gold will continue to assess the value of expanding its exploration and mining interests in Cambodia

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.

Southern Gold Limited ABN 30 107 424 519

58 North Terrace Kent Town South Australia 5067 South Australia 5071

PO Box 750 Kent Town

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

facsimilie 08 8132 0199

Fig 4. Location Plan of the Southern Gold Limited tenements in Cambodia

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