IONDRIVE LIMITED — Capital/Financing Update 2017

Jan 17, 2017

Southern Gold joins Kalgoorlie prospectors at extended high grade WA gold project

• Option to purchase 4 prospecting licenses over the Transfind Extended project from two Kalgoorlie based prospectors.

• High grade surface rock chips have been returned by the prospectors (up to 78.7g/t Au) and Southern Gold (up to 50.4g/t Au).

• Mineralisation interpreted to be the south-westerly extension of the small historic Transfind open pit.

• Project is proximal to nearby haul road system with relatively easy access to 2 mills (Jubilee and Randalls).

Shares Issued: 46.4m

Directors

Greg Boulton AM (Chairman) Simon Mitchell (MD) Michael Billing David Turvey

Head Office

Southern Gold Ltd Level 1, 8 Beulah Rd Norwood SA 5067 Telephone: (08) 8368 8888 Facsimile: (08) 8363 0697 info@southerngold.com.au www.southerngold.com.au ABN: 30 107 424 519

Postal Address

Southern Gold Ltd PO Box 255 Kent Town SA 5071

Very High Grade Gold in Sampling

Southern Gold has executed a binding term sheet with two Kalgoorlie based prospectors over four prospecting licenses ( Table 2 ) approximately 70km east of Kalgoorlie ( Figure 1 and Figure 2 ) at the Transfind Extended project.

The prospectors have been working on the project area around the historic Transfind open pit mine, returning high grade gold in surface samples (up to 78.7g/t Au), finding very coarse gold in quartz as mineral specimens suitable for sale and recovering coarse gold through panning or trommeling ( Photos 1, 2 and 3) .

Photos 1 & 2: Gold recovered by prospectors at Transfind Extended

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Preliminary due diligence field work by Southern Gold has also returned high grade gold in surface samples (up to 50.4g/t Au, Table 1 ) with some samples displaying small (1mm) pieces of visible gold in oxidized quartz vein material. Work by previous explorers, including shallow drilling and soil sampling, indicates several mineralised trends south of the Transfind open pit ( Figure 3 ). Transfind was a small open pit where 31kt of ore @ 4.9g/t Au (~5koz Au) was mined during early 2000.

Southern Gold Ltd’s Managing Director, Mr Simon Mitchell: “ The Transfind Extended project ticks a lot of boxes – high grade gold indications, ‘nearology’ to an old open pit and proximity to infrastructure, including 2 mills. We have structured the deal to keep upfront costs to a minimum while putting dollars into the ground in the form of drilling and the ultimate acquisition cost is only triggered should we see a project development scenario with cash flow at the back end. It’s an exciting project where the prospectors have done some good ground work worthy of follow up. ”

Figure 1: Transfind Extended location in the Kalgoorlie area between the Bulong and Cowarna gold projects

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Table 1: Recent Southern Gold rock chip results at Transfind Extended

Sample ID	Easting	Northing	Au(g/t)
TFRK001	407552	6581825	8.06
TFRK002	407552	6581825	0.61
TFRK003	407295	6581726	16.17
TFRK004	407295	6581726	0.40
TFRK005	407282	6581751	3.55
TFRK006	407282	6581751	0.10
TFRK007	407282	6581751	10.59
TFRK008	407422	6581972	50.42
TFRK009	407422	6581972	1.95
TFRK0010	407422	6581972	1.67
TFRK0011	407422	6581972	2.22
TFRK0012	407374	6581938	2.99
TFRK0013	407374	6581938	1.79
TFRK0014	407349	6581962	4.31
TFRK0015	407328	6581984	11.48
TFRK0016	407375	6582060	0.97
TFRK0017	404446	6585672	0.08

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Figure 2: Map showing distribution of rock chip results south west of the Transfind open pit

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Figure 3: Soil sampling results, interpreted mineralised trends and historic haul road at Transfind Extended

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Commercial Terms

On execution of the binding term sheet, Southern Gold paid $50,000 cash to the two prospectors ($25,000 each) to secure a two year option to purchase the prospecting licenses listed below ( Table 2 ). The two year exploration period commences on 1 February 2017 and ends on 31 January 2019 during which time Southern Gold must conduct a minimum of 2,000m of RC or diamond drilling and keep the prospecting licenses in good standing ( Table 2 ) in order to exercise the purchase option.

Should Southern Gold elect to exercise its purchase option it must:

• Pay $200,000 to the prospectors ($100,000 each); and

• Execute a royalty agreement with the prospectors whereby they are entitled to a $1.80/t of ore royalty for all production from the tenements.

The consideration above is to be paid within 20 business days of the transfer of the tenements to Southern Gold’s name and Ministerial approval of the transfer.

Table 2: Tenure Details at Transfind Extended

Prospecting Licenses	Grant Date	Expiry Date	Rent	Minimum Commitment
P25/2152	28/02/2011	27/02/2019	$25	$2000
P25/2197	06/07/2011	05/07/2019	$80	$2000
P25/2314	11/02/2016	10/02/2020	$25	$2000
P25/2315	11/02/2016	10/02/2020	$25	$2000

Photo 3 : Coarse gold in quartz and ferruginous sediments, Transfind Extended, WA

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Southern Gold Limited: Company Profile

Southern Gold Ltd is a successful gold explorer and producer listed on the Australian Securities Exchange (under ASX ticker “SAU”). The Company’s main focus is its Bulong Gold Project located 30 km east of the world renowned gold district of Kalgoorlie (WA) with the flagship Cannon Gold Mine projected to produce around 50koz gold.

Mining at Cannon is now well advanced with Westgold Resources Ltd (a gold spin-out from Metals X Ltd) financing and developing the deposit under a 50/50 profit share arrangement. Westgold Resources is responsible for all mining, haulage and processing activities (ASX announcement 11/11/2014) with this mandate recently expanded to incorporate the commercial terms of a larger open pit development (ASX announcement 3/11/2015).

In addition to its cornerstone position in Kalgoorlie, Southern Gold has recently acquired a portfolio of high grade gold projects in South Korea. These projects are a mix of decommissioned gold mines with orogenic gold mineralisation and greenfield epithermal gold targets such as Weolyu South. The aim is to move one or more of the orogenic gold mines into production in the medium term as well as test for world-class epithermal gold deposits.

Competent Person’s Statements

The information in this report that relates to Exploration Results has been compiled under the supervision of Dr. Justin Gum (MAIG). Dr Gum, who is an employee of Southern Gold Limited and a Member of the Australian Institute of Geoscience, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Dr Gum consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Cannon Mineral Resources is based on information compiled by Mr Ian Blucher (MAusIMM). Mr Blucher is an employee of Southern Gold Limited and has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC, 2012). Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

Forward-looking statements

Some statements in this release regarding estimates or future events are forward looking statements. These may include, without limitation:

• Estimates of future cash flows, the sensitivity of cash flows to metal prices and foreign exchange rate movements;

• Estimates of future metal production; and

• Estimates of the resource base and statements regarding future exploration results.

Such forward looking statements are based on a number of estimates and assumptions made by the Company and its consultants in light of experience, current conditions and expectations of future developments which the Company believes are appropriate in the current circumstances. Such statements are expressed in good faith and believed to have a reasonable basis. However the estimates are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from estimated results.

All reasonable efforts have been made to provide accurate information, but the Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of this presentation, except as may be required under applicable laws. Recipients should make their own enquiries in relation to any investment decisions from a licensed investment advisor.

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary	Commentary
Sampling	 Nature and quality of sampling (e.g. cut channels,		Rockchip samples were random
techniques	random chips, or specific specialised industry standard measurement tools appropriate to the		chips taken from exposed surface workings.
	minerals under investigation, such as down hole		Historic vacuum drill samples
	gamma sondes, or handheld XRF instruments, etc.).		were collected from pedogenic
	These examples should not be taken as limiting the		carbonate samples at
	broad meaning of sampling.		approximately 1m depth.
	 Include reference to measures taken to ensure		The rockchip samples are not
	sample representivity and the appropriate calibration		considered as being highly
	of any measurement tools or systems used.		representative. The recorded data
	 Aspects of the determination of mineralisation that are		for the historic vacuum samples
	Material to the Public Report.		indicates they are likely to be
	 In cases where ‘industry standard’ work has been		representative.
	done this would be relatively simple (e.g. ‘reverse		The rockchip samples were
	circulation drilling was used to obtain 1 m samples		collected for reconnaissance
	from which 3 kg was pulverised to produce a 30 g		evaluation. The vacuum samples
	charge for fire assay’). In other cases, more		were collected for preliminary
	explanation may be required, such as where there is		exploration purposes.
	coarse gold that has inherent sampling problems.		There has been insufficient
	Unusual commodities or mineralisation types (e.g.		exploration to define a Mineral
	submarine nodules) may warrant disclosure of		Resource and it is uncertain if
	detailed information.		further exploration will result in
			the determination of a Mineral
			Resource.
Drilling	 Drill type (e.g. core, reverse circulation, open-hole		The historic vacuum drill samples
techniques	hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g. core diameter, triple or standard tube,		were collected for Titan Resources Ltd by G&B drilling in
	depth of diamond tails, face-sampling bit or other type,		1996.
	whether core is oriented and if so, by what method,
	etc.).
Drill sample	 Method of recording and assessing core and chip		Details were not reported for the
recovery	sample recoveries and results assessed.		historic vacuum drilling.
	 Measures taken to maximise sample recovery and
	ensure representative nature of the samples.
	 Whether a relationship exists between sample
	recovery and grade and whether sample bias may
	have occurred due to preferential loss/gain of
	fine/coarse material.
Logging	 Whether core and chip samples have been		Details were not reported for the
	geologically and geotechnically logged to a level of		historic vacuum drilling.
	detail to support appropriate Mineral Resource
	estimation, mining studies and metallurgical studies.
	 Whether logging is qualitative or quantitative in nature.
	Core (or costean, channel, etc.) photography.
	 The total length and percentage of the relevant
	intersections logged.
Sub-sampling	 If core, whether cut or sawn and whether quarter, half		No sample preparation was
techniques	or all core taken.  If non-core, whether riffled, tube sampled, rotary split,		completed on rockchip samples collected in the field.
	_etc. and whether sampled wet or dry. _

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Criteria	JORC Code explanation	Commentary	Commentary
and sample	 For all sample types, the nature, quality and		Rockchip sample size presented
preparation	appropriateness of the sample preparation technique.  Quality control procedures adopted for all sub-		for analysis was approximately 2kg. Historic vacuum sample
	sampling stages to maximise representivity of		size was reported as
	samples.		approximately 1kg.
	 Measures taken to ensure that the sampling is		Preparation and analysis of
	representative of the in situ material collected,		rockchip samples was
	including for instance results for field		undertaken by Minanalytical
	duplicate/second-half sampling.		Laboratory Services Australia Pty
	 Whether sample sizes are appropriate to the grain		Ltd at their Perth laboratory.
	size of the material being sampled.		Historic vacuum samples were
			analysed at Australian
			Laboratory Services (ALS) Perth
			laboratory.
			Rockchip samples were
			pulverised to 85% passing 75
			micron. Preparation of historic
			vacuum samples was not
			reported.
			The rockchip samples size is
			considered appropriate for
			reconnaissance sampling.
Quality of	 The nature, quality and appropriateness of the		For the rockchip samples, gold
assay data and laboratory tests	assaying and laboratory procedures used and whether the technique is considered partial or total.  For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model,		was analysed using Minanalytical method FA50AAS, consisting of a 50g charge fire assay followed by atomic absorption spectroscopy at a detection limit
	reading times, calibrations factors applied and their		of 0.005ppm Au (gold). No strong
	derivation, etc.		nugget effect was observed in
	 Nature of quality control procedures adopted (e.g.		repeated assays and screening
	standards, blanks, duplicates, external laboratory		of samples prior to fire assay
	checks) and whether acceptable levels of accuracy		was not considered necessary. A
	(i.e. lack of bias) and precision have been established.		four acid digest was used to
			produce a solution which was
			then analysed for a multi-element
			suite with detection by mass
			spectrometer (MA40MS) or
			optical emission spectral
			(MA40OES) methods.
			Historic vacuum samples were
			analysed using the PM205
			method with a 1ppb detection
			limit.
			No data from geophysical tools
			were used to determine
			analytical results.
			A review of the analytical
			performance of the Minanalytical
			standards and blanks by Southern
			Gold staff indicated that the
			results were within acceptable
			error ranges.
Verification	 The verification of significant intersections by either		Not Applicable – no drilling
of sampling	independent or alternative company personnel.		results reported.
and assaying	 The use of twinned holes.  Documentation ofprimary data, data entry

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Criteria	JORC Code explanation	Commentary	Commentary
	procedures, data verification, data storage (physical		All sampling data was recorded
	and electronic) protocols.		directly onto computer
	 Discuss any adjustment to assay data.		spreadsheets and re-checked
			before submission to the lab.
			This data is then entered into
			and stored on the Company
			database after validation.
			Original logging files are stored
			in the Company’s Head Office in
			Adelaide.
			The assay database is stored
			securely on the Company’s
			server which is backed up
			routinely both on and offsite.
			No adjustments were made to
			the assay data after review of
			QAQC measures as stated
			above.
Location of	 Accuracy and quality of surveys used to locate drill		Rockchip sample locations were
data points	holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral		recorded by hand held GPS (+/- 3m accuracy).
	Resource estimation.		Historic vacuum samples
	 Specification of the grid system used.		locations were measured of a
	 Quality and adequacy of topographic control.		local grid established by
			Spectrum Surveys.
			The grid system used for locating
			rockchip sample positions is the
			Geocentric Datum of Australia
			(GDA94), Zone 51 (MGA
			Projection).
Data spacing	 Data spacing for reporting of Exploration Results.		Rockchip sample points were
and	 Whether the data spacing and distribution is sufficient		collected for reconnaissance
distribution	to establish the degree of geological and grade continuity appropriate for the Mineral Resource and		purposes to confirm previous sampling.
	Ore Reserve estimation procedure(s) and		Historic vacuum sampling was
	classifications applied.		collected at 200m by 50m
	 Whether sample compositing has been applied.		spacing which is suitable to
			define anomalous bedrock
			geochemistry.
			No Mineral Resource has been
			calculated.
			Sample compositing was not
			applied.
Orientation of	 Whether the orientation of sampling achieves		Rockchip sample points were
data in	unbiased sampling of possible structures and the		collected for reconnaissance
relation to geological structure	extent to which this is known, considering the deposit type.  If the relationship between the drilling orientation and the orientation of key mineralised structures is		purposes to confirm previous sampling and it is not known how representative these samples are of the overall area.
	considered to have introduced a sampling bias, this		Orientation of the historic vacuum
	should be assessed and reported if material.		sampling was oriented to obtain
			an unbiased representation of
			bedrockgeochemistry.
Sample	 The measures taken to ensure sample security.		Rockchip samples are placed
security			into pre-numbered calico bags directly in the field by the
			geologist.

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Criteria	JORC Code explanation	Commentary	Commentary
			The geologist places the calicos
			bags containing the samples into
			polyweave bags and transports
			them to the sample preparation
			laboratory where a sample
			submission form is completed.
			The details entered onto the
			sample submission form are the
			means by which the samples are
			tracked through the laboratory.
			Samples are transported by
			internal courier from the
			preparation facility to the
			analytical laboratory.
			The laboratory provides the
			Company with a reconciliation of
			samples submitted compared to
			samples received.
			No procedure was recorded or
			the historic vacuum sampling.
Audits or	 The results of any audits or reviews of sampling		No audits or reviews have been
reviews	techniques and data.		undertaken.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary	Commentary
Mineral	 Type, reference name/number, location and ownership		The Transfind Extended
tenement and	including agreements or material issues with third parties		Prospect is secured by the
land tenure status	such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.		tenements P25/2152, P25/2197, P25/2314, and P25/2315, located ca.
	 The security of the tenure held at the time of reporting along		70km E of Kalgoorlie, WA.
	with any known impediments to obtaining a license to		The tenements are subject
	operate in the area.		to a binding term
			agreement with two
			prospectors.
			There are no known
			impediments to obtaining a
			license to operate.
Exploration	 Acknowledgment and appraisal of exploration by other		Historical drilling is limited to
done by other parties	parties.		wide spaced RAB and minimal subsequent RC drilling which intersected
			anomalous Au mineralisation
			in several holes.
Geology	 Deposit type, geological setting and style of mineralisation.		Exploration is targeting lode-
			style gold mineralisation in
			the greenstone and
			associated units of the area.
Drill hole	 A summary of all information material to the understanding		Not Applicable – no
Information	of the exploration results including a tabulation of the following information for all Material drill holes:		historic drilling results are material to the exploration

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Criteria	JORC Code explanation	Commentary	Commentary
	o easting and northing of the drill hole collar		results presented due to
	o elevation or RL (Reduced Level – elevation above sea		the lack of information
	level in meters) of the drill hole collar		recorded in historic
	o dip and azimuth of the hole		reports.
	o down hole length and interception depth
	o hole length.
	 If the exclusion of this information is justified on the basis
	that the information is not Material and this exclusion does
	not detract from the understanding of the report, the
	Competent Person should clearly explain why this is the
	case.
Data	 In reporting Exploration Results, weighting averaging		Not Applicable – no drilling
aggregation methods	techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.		results reported.
	 Where aggregate intercepts incorporate short lengths of
	high grade results and longer lengths of low grade results,
	the procedure used for such aggregation should be stated
	and some typical examples of such aggregations should be
	shown in detail.
	 The assumptions used for any reporting of metal equivalent
	values should be clearly stated.
Relationship	 These relationships are particularly important in the		Not Applicable – no drilling
between	reporting of Exploration Results.		results reported.
mineralisation	 If the geometry of the mineralisation with respect to the drill
widths and intercept lengths	hole angle is known, its nature should be reported.  If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).
Diagrams	 Appropriate maps and sections (with scales) and		Appropriate tables and
	tabulations of intercepts should be included for any		diagrams have been
	significant discovery being reported These should include,		included.
	but not be limited to a plan view of drill hole collar locations
	and appropriate sectional views.
Balanced	 Where comprehensive reporting of all Exploration Results is		Results from all recent
reporting	not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid		exploration samples have been reported.
	misleading reporting of Exploration Results.
Other	 Other exploration data, if meaningful and material, should		All relevant observations
substantive	be reported including (but not limited to): geological		have been noted in the
exploration data	observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density,		release.
	groundwater, geotechnical and rock characteristics;
	potential deleterious or contaminating substances.

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