IONDRIVE LIMITED — Capital/Financing Update 2012

Mar 7, 2012

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ASX ANNOUNCEMENT

8 MARCH 2012

FULLY UNDERWRITTEN NON‐RENOUNCEABLE RIGHTS ISSUE

LETTERS TO SHAREHOLDERS

Please find attached copies of the following two letters which have been sent today in relation to the rights issue announced by Southern Gold Limited ( Company ) on 7 March 2012 ( Rights Issue ):

• (1) Letter to shareholders of the Company who have registered addresses in Australia and New Zealand and, provided this remains the case as at the record date on 16 March 2012, will be entitled to participate in the Rights Issue; and

• (2) Letter to shareholders who currently have a registered address outside Australia or New Zealand and, provided this remains the case as at the record date on 16 March 2012, will not be entitled to participate in the Rights Issue.

For further information on the Rights Issue, please contact the Company’s Share Registry, Computershare Investor Services Pty Ltd, on 1300 556 161 (within Australia) or +61 3 9415 4000 (outside of Australia).

Southern Gold Ltd

Nick Harding Company Secretary

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071

8 March 2012

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Dear Shareholder,

RE: NON‐RENOUNCEABLE RIGHTS ISSUE

The Board of Southern Gold Ltd (“Southern Gold” or “the Company”) is pleased to invite you to participate in the fully underwritten pro‐rata non‐renounceable rights issue to raise up to approximately A$3.31m before costs, announced by Southern Gold on 7 March 2012 (“ Rights Issue ”).

The rights issue is part of a funding package announced on 31 January 2012, which included a A$1.35 million placement of Shares to Integra Mining Ltd (Integra Mining) at A$0.05 per Share, representing a 19% premium to the Companies’ 5 day trading VWAP of A$0.042 per Share at close of trade on 30 January 2012 (being the last trading day prior to announcement of that Share placement). As a neighbour to Southern Gold’s Bulong Gold project, and having an operating gold treatment plant within 30km of the Cannon Gold resource[1] , Integra Mining is a natural fit as a cornerstone investor.

The funding premium paid by Integra Mining highlights the value placed by our industry peer on the high quality and potential of the Cannon Gold resource. As a further indication of Integra Mining’s support for Southern Gold, Integra Mining has undertaken to subscribe in full for its Entitlement under the rights issue.

Your Directors consider that Southern Gold has a positive future and that this Offer provides an opportunity to further participate in Southern Gold’s future growth. All Board members intend to take up their respective Entitlements in full.

Full details of the Rights Issue are set out in the Offer Memorandum and Appendix 3B lodged with ASX on 7 March 2012. A copy of the Offer Memorandum is available to download from both the ASX website (at www.asx.com.au) and Southern Gold’s website (at www.southerngold.com.au). Eligible shareholders will receive on or around 23 March 2012 a copy of the Offer Memorandum including a personalised Entitlement and Acceptance Form which will provide detailed instructions on how to participate in the Rights Issue.

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

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071

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Timetable

The anticipated timetable for the Rights Issue is as follows:

EVENT	DATE
Announcement of the Non‐Renounceable Rights Issue –announcement of Rights Issue, Offer Memorandum and ASX Appendix 3B lodged with ASX	7 March 2012 (Wed)
Ex date –the date on which Shares commence trading without the entitlement to participate in the Rights Issue	9 March 2012 (Fri)
Record date –the date for determining entitlements of Shareholders toparticipate in the Rights Issue	16 March 2012 (Fri)
Offer memorandum sent to Shareholders –despatch of Offer Memorandum and Entitlement and Acceptance Forms, and lodgement of cleansing notice – Rights Issue opens for acceptances	22 March 2012 (Thu)
Closing date –the last day for receipt of acceptance forms(5.00pm AEST)	5 April 2012 (Thu)
Shortfall notification date	No later than 12 April 2012(Thu)
Despatch date –Allotment of New Shares	No later than noon (AEST) 17 April 2012 (Thu)
Expected commencement of normal trading in New Shares on ASX	18 April 2012 (Wed)
Despatch of holding statements to Shareholders who accepted the Offer	19 April 2012 (Thu)

SAU reserves the right to amend this timetable subject to the Listing Rules and the terms of the Underwriting Agreement.

The key information in connection with the Rights Issue is set out below for your reference, and as required by the ASX Listing Rules:

• the Rights Issue is non‐renounceable and is being undertaken on the basis of two (2) new fully paid ordinary shares (“ New Shares ”) for every seven (7) ordinary shares held by eligible shareholders;

• the issue price is A$0.043 cents per New Share, which represents a 14% discount to the Company’s volume weighted average share price (“VWAP”) for the 5 trading days to 2 March 2012 (being the last trading day prior to announcement of the Rights Issue) of A$0.05 per share;

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071

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• the record date to determine entitlements for eligible shareholders is 5.00pm AEST on 16 March 2012 (“ Record Date ”). Only registered shareholders with a registered address in Australia and New Zealand as at the Record Date are eligible to participate in the Rights Issue. Shares commence trading without the entitlement to participate in the Rights Issue on 9 March 2012 (the Ex Date for the Rights Issue, being 4 business days prior to the Record Date);

• eligible shareholders will be able to apply for additional New Shares in excess of their entitlement at the same issue price of A$0.043 per New Share. Allocation of additional New Shares applied for will be subject to there being a shortfall in subscriptions under the Rights Issue and will be at the discretion of Southern Gold in consultation with the underwriter;

• each New Share will rank equally with and be issued on the same terms as those quoted fully paid ordinary shares already issued by the Company. Application for quotation of the New Shares offered under the Rights Issue was made by the Company on 7 March 2012;

• for the purposes of calculating your entitlement, fractional entitlements to New Shares will be rounded up to the nearest whole number of shares;

• the Rights Issue is fully underwritten by BBY Limited. The fee payable to the underwriter includes a 3% fee of the total amount to be raised under the rights issue, less the dollar value of shares allotted to Integra Mining pursuant to a valid application made by it, excluding shares allotted to Integra Mining in excess of its entitlement, plus an additional 2% of the dollar value of the underwritten shares allotted to the underwriter or any sub‐underwriter appointed by it;

• a broker handling fee of 1.5% will be paid on the value of broker stamped valid acceptances;

• the Rights Issue is being made in accordance with section 708AA of the Corporations Act 2001 and without a prospectus;

• the Rights Issue is non‐renounceable, accordingly rights will not be tradeable on ASX or otherwise transferrable. Shareholders who do not take up their entitlements in full will not receive any value in respect of that part of their entitlement that they do not take up. Shareholders who are not eligible to receive entitlements will not receive any value in respect of entitlements they would have received had they been eligible;

• a maximum of 77,050,411 (based on undiluted share capital of the Company as at 6 March 2012) New Shares will be issued under the Rights Issue. This number excludes any allowance for shares issued in the event any option holders exercise their right to convert their options to ordinary shares prior to the Record Date. This number is also subject to reconciliation of entitlements and rounding. Based on that number, the maximum number of listed ordinary shares on issue following the Rights Issue will be 346,726,851;

• no shareholder approval will be required for the Rights Issue;

• Southern Gold does not have a dividend policy and does not intend to declare a dividend in the near future.

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071

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• the proceeds from the Rights Issue, together with the A$1.35 million raised from a recent Share placement to Integra Mining Limited, as announced on 31 January 2012, will be primarily directed to the economic evaluation of the Cannon Gold resource and development of exploration targets at the Bulong project, Western Australia, as well as for general working capital requirements;

If you are eligible and wish to participate in the Rights Issue, it will be necessary for you to complete and return the personalised Entitlement and Acceptance Form that will accompany the Offer Memorandum expected to be sent to eligible shareholders on 22 March 2012 in accordance with the instructions on that Form.

If you have any queries about the Rights Issue, please contact either the Company’s Share Registry, Computershare Investor Services Pty Ltd, on 1300 556 161 (within Australia) or +61 3 9415 4000 (outside of Australia).

Yours sincerely,

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Nick Harding Company Secretary

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071

8 March 2012

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Dear Overseas Shareholder,

RE: NON‐RENOUNCEABLE RIGHTS ISSUE

On 7 March 2012, Southern Gold Limited ( Southern Gold ) announced a fully underwritten two (2) for seven (7) non‐renounceable rights issue at an issue price of $0.043 (4.3 cents) per new SAU share to raise up to approximately $3.31 million (before expenses) ( Rights Issue ).

The Offer Memorandum for the Rights Issue was lodged with the ASX on 7 March 2012 and is available to download from both the ASX website (at www.asx.com.au) and Southern Gold’s website (at www.southerngold.com.au).

Southern Gold has determined, pursuant to the Corporations Act 2001 (Cth) and Listing Rule 7.7.1(a) of the ASX Listing Rules, that it would be unreasonable to make offers under the Rights Issue to shareholders with a registered address outside of Australia and New Zealand.

Accordingly, in compliance with ASX Listing Rule 7.7.1(a) and the Corporations Act, Southern Gold wishes to advise that it will not be extending the Rights Issue to Shareholders with registered addresses outside of Australia and New Zealand as at the record date, being 16 March 2012 ( Record Date ). Your SAU shareholding is currently registered to an address outside of Australia and New Zealand.

If you have any queries about the Rights Issue please contact Southern Gold’s Share Registry, Computershare Investor Services Pty Ltd, on 1300 556 161 (within Australia) or +61 3 9415 4000 (outside of Australia).

Yours sincerely,

Nick Harding Company Secretary

Southern Gold Limited Ground Floor, Unit 1 PO Box 255 email info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 229 Greenhill Road Kent Town web southerngold.com.au facsimile 08 8368 8899 Dulwich SA 5065 SA 5071