IONDRIVE LIMITED — Capital/Financing Update 2012

Apr 12, 2012

ASX ANNOUNCEMENT 13 April 2012

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Southern Gold earns 60% in Bulong East JV as results of first pass drilling highlight potential of

the Turnpike Prospect

Southern Gold Limited (“Southern Gold”) (ASX:SAU) is pleased to announce that it has met its Stage 1 Expenditure Commitment to earn 60% of the Bulong East tenement package (“Bulong East”), under the Heads of Agreement for Farm‐In and Joint Venture Agreement (“Agreement”) entered into on 29 March 2011 with Heron Resources Limited (“Heron”).

Following a successful geochemical auger sampling programme over the Bulong East, Southern Gold completed its expenditure commitment of $500,000 by conducting a 22 hole, reverse circulation (“RC”) drilling programme over three target areas named Turnpike, Hammersmith and Perivale prospects (Figure 1).

Announced in the December quarterly report, preliminary 4m composite assay results of the RC drilling identified encouraging gold mineralised zones, with better results including 4m @ 6.8g/t gold (“Au”) from 24m downhole and 4m @ 4.5g/t Au from 76m downhole (from the same drillhole, BERC21) plus several results up to 0.5g/t Au for intervals of up to 20m down hole width.

Recently received assay results of 1m sub‐sampling has highlighted the prospectivity of Turnpike, returning encouraging results including narrow high grade gold intervals from 26m depth of 7m @ 8.31g/t Au (including 1m @ 55.12 g/t Au) and 15m @ 0.59g/t Au (including 1m @ 6.23g/t Au) from 67m in the same hole (Table 1).

All 10 holes drilled at Turnpike over an area of approximately 600m x 100m intersected gold mineralisation, however the southern zone of the prospect appears the more highly mineralised, as seen in holes BERC19 to BERC22 (Table 1). First pass drilling was conducted on widely spaced lines with approximately 50m spacing (Figure 2). Due to the size of the soil geochemical anomaly and the encouraging drill results, the Company believes that further test work evaluating the extent and continuity of the high grade intersectionsis warranted.

The drilling at Hammersmith and Perivale (Figure 3) has identified zones of low grade mineralisation between 3m to 9m wide which will be evaluated to determine if follow up test work is required. In addition to these three targets a further nine anomalies are yet to be tested.

Southern Gold has been able to leverage off its discovery experience in this area and apply this knowledge to the Bulong East tenement holding. Securing 60% of the Bulong East tenement, which is contiguous with the Company’s Bulong South and Clinker Hill tenements (all three collectively referred to as the Bulong Project), Southern Gold regards this as a logical step in the development of its project portfolio and the growth of its gold business in this region.

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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Pursuant to the Agreement, following Southern Gold earning 60%, Heron has the option to elect to commence contributing to the joint venture. Should Heron elect not to contribute, Southern Gold has the option to sole fund exploration under the terms of the Stage 2 Commitment on the Tenements to earn a further 20% interest.

In recent times, the Bulong area has been the focus of nickel laterite exploration, and has therefore been underexplored for gold (Heron retains the nickel rights over the Bulong East tenements). The discovery of Southern Gold’s nearby Cannon gold resource[1] and continued positive results from regional geochemical surveys and focused drill programmes highlights the significant gold potential of the project.

Table 1. Assay Results from Regional RC drilling on Bulong East tenements

Prospect	Drillhole ID	Depth (m)	From (m)	To (m)	Interval (m)	Grade (g/t Au)
Turnpike	BERC015	76	25	28	3	1.31
Turnpike	BERC019	130	58	64	6	0.67
Turnpike	BERC020	88	70	80	7	0.41
Turnpike	BERC020		83	87	4	0.70
Turnpike	BERC021	82	26	33	7	8.31
Turnpike		incl.	26	27	1	55.12*
Turnpike	BERC021	82	67	82	15	0.59
Turnpike		incl.	73	74	1	6.23
Turnpike	BERC022	82	39	42	3	1.55
Turnpike		incl.	39	40	1	4.13
Hammersmith	BERC001	94	70	73	3	0.60
Hammersmith	BERC004	88	52	61	9	0.31
Perivale	BERC010	88	40	44	4	0.57
Perivale	BERC012	124	34	37	3	0.79

1m riffle splits. Analysis by 50gm fire assay with detection by Atomic Absorption, Genalysis, Perth (FA50/AA). 0.1g/t cutoff, 2m maximum width for dilution No top grade cut off. The downhole intersections comprise length weighted average and may not be ‘true thicknesses’.

• 1m riffle splits. Analysis by screen fire assay, Genalysis, Perth. 0.1g/t cutoff, 2m maximum width for dilution

•  1m riffle splits. Analysis by screen fire assay and FA50/AA, Genalysis, Perth. 0.1g/t cutoff, 2m maximum width for dilution.

Competent Person Statement

The information in this report has been compiled by Ian Blucher (BSc) as an employee of Southern Gold and who is a member of the AusIMM and is bound by and follows the Institute’s codes and recommended practices. As a Competent Person, as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ He has a minimum of 5 years relevant experience in the style of mineralisation and types of activities being reported and has given prior written consent to the above report in the form and context in which it appears.

1 [ For ‘Resource Statement and Parameters’ and other details of the Cannon Gold Resource as estimated by Runge Limited, see Southern Gold’s ASX Announcement dated 22 June 2011

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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TURNPIKE
PERIVALE
HAMMERSMITH
CANNON
GOLD
RESOURCE
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Figure 1: RC drilling targeted 3 of 12 gold auger anomalies = Turnpike, Hammersmith and Perivale Prospects. Infill auger sampling was completed on the remaining high priority auger anomalies. Preliminary results are encouraging and warrant further test work. Background map: GSWA 1:500000 scale Regional Geological Map.

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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Figure 2: RC drill hole locations at Turnpike prospect. Background map: auger sampling programme showing anomalous gold zones.

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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Figure 3: RC drill hole locations at Hammersmith and Perivale prospect areas. Background map: auger sampling programme showing anomalous gold zones.

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071