IONDRIVE LIMITED — Capital/Financing Update 2012

Mar 6, 2012

7 MARCH 2012

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ASX ANNOUNCEMENT

FULLY UNDERWRITTEN NON‐RENOUNCEABLE RIGHTS ISSUE TO RAISE UP TO A$3.31 MILLION

Today Southern Gold Limited (“Southern Gold” or the “Company”) is pleased to formally announce the second stage of its $4.66 million capital raising ‐ a fully underwritten non‐ renounceable rights issue to raise up to approximately A$3.31 million before costs (“Rights Issue”).

The first part of the raising was a placement to Southern Gold’s Kalgoorlie (WA) neighbour, Integra Mining Ltd (“Integra”), announced on 31 January 2012. The Placement was completed on 2 February 2012 and raised approximately A$1.35 million. The Board welcomes Integra as a supportive cornerstone investor.

Supported by Integra, who has committed to take up in full its 10% entitlement under the Rights Issue, the majority of investment funds raised from the Rights Issue will be directed towards advancing evaluation studies into mining Southern Gold’s wholly owned Cannon Gold Resource[1] and continued exploration of the near resource and regional gold targets at the Bulong Gold project.

The Board of Southern Gold invites eligible shareholders who are registered (with a registered address in Australia or New Zealand) at 5.00pm AEST on Friday 16 March 2012 (“Shareholders” at the “Record Date”) to participate in the Rights Issue. Shares commence trading without the entitlement to participate in the Rights Issue from Friday 9 March 2012 (the “Ex Date ” for the Rights Issue, being 4 business days prior to the Record Date).

The Rights Issue is fully underwritten by BBY Limited.

The Board considers that Southern Gold has a positive future and that the Rights Issue presents an opportunity for shareholders to further participate in Southern Gold’s future growth. All Board members intend to take up their respective entitlements under the Rights Issue in full.

A summary of the key details of the Rights Issue is provided below.

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]

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Rights Issue

Under the Rights Issue, eligible shareholders may apply for two (2) new fully paid ordinary shares in the Company (“New Shares”) for every seven (7) ordinary shares held on the Record Date, at an issue price of 4.3 cents per New Share.

The issue price represents a 14% discount to the Company’s 5 trading day volume weighted average share price to 2 March 2012 (being the last trading day prior to this announcement of the Rights Issue).

Pursuant to the Rights Issue the Company will issue up to approximately 77,050,411 shares (based on the undiluted share capital of the Company on 2 March 2012 and without taking into account the impact of rounding).

The Rights Issue will be offered to shareholders with registered addresses in Australia and New Zealand as at the Record Date.

Eligible shareholders may also apply for additional New Shares in excess of their entitlement at the same issue price of 4.3 cents per New Share. Allocation of additional New Shares applied for will be at the discretion of Southern Gold in consultation with the Underwriter.

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	Wednesday, 7 March 2012
	Ex date –the date on which Shares commence trading without the entitlementto participate in the Rights Issue	Friday, 9 March 2012
	Record date –the date for determining entitlements of Shareholders to participate in the Rights Issue	Friday, 16 March 2012
	Offer memorandum sent to Shareholders –despatch of Offer Memorandum and Entitlement and Acceptance Forms, and lodgement of cleansing notice – Rights Issue opens for acceptances	Thursday, 22 March 2012
	Closing date –the last day for receipt of acceptance forms (5.00pm AEST)	Thursday, 5 April 2012
	Shortfall notification date	No later than Thursday,12 April 2012

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Despatch date –Allotment of New Shares	No later than noon Tuesday,17 April 2012
Expected commencement of normal trading in New Shares on ASX	Wednesday, 18 April 2012
Despatch of holding statements to Shareholders who accepted the Offer	Thursday, 19 April 2012

Southern Gold reserves the right to amend this timetable subject to the Listing Rules and the terms of the underwriting agreement.

Use of Funds

The proceeds from the Rights Issue, together with the A$1.35 million raised from the recent Share placement to Integra, will be primarily directed to the economic evaluation of the Cannon Gold resource and development of exploration targets at the Bulong project, Western Australia.

Offer Document

Full details of the Rights Issue can be found in the Offer Memorandum and Appendix 3B lodged with ASX today. The Company anticipates that the Offer Memorandum and accompanying Entitlement and Acceptance Form will be dispatched to eligible shareholders on 22 March 2012.

Holders of existing options for Southern Gold shares have been given notice of their right to exercise their options in order to be eligible to participate in the Rights Issue in respect of the shares underlying their options.

Shareholders with queries concerning the Rights Issue should contact their stockbroker or other professional adviser or the Company’s Share Registry, Computershare Investor Services Pty Ltd, on 1300 556 161 (within Australia) or +61 3 9415 4000 (outside of Australia.

For and on behalf of

Southern Gold Ltd

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Nanette Anderson Managing Director