IONDRIVE LIMITED — Interim / Quarterly Report 2013

Oct 30, 2012

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ASX Code – SAU
September Quarter 2012
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QUARTERLY ACTIVITIES REPORT SEPTEMBER 2012

HIGHLIGHTS

Cannon Gold Resource[1] (Bulong Gold Project, WA)

• All final assay results were received during the quarter from the latest RC and diamond drill programme at the Cannon Gold resource (Table 1).

• The drill programme tested the broad high grade zones of the resource and for additional near surface gold mineralisation in the southern zone of the resource.

• Intersections of wide high grade gold mineralisation suggest continuity of the targeted zones and potential for down dip extension. High grade gold intersections include:‐

BSRCD192	0.9m @ 30.26 g/t Au (from 71.2m)
	4.1m @ 53.44 g/t Au (from 89m)
	5.7m @ 10.60 g/t Au (from 120.7m)
BSRCD194	15.5m @ 5.18 g/t Au (from 86.5m)
BSRCD197	4.0m @ 12.98g/t Au (from 49m)
BSRCD199	13.9m @ 6.19 g/t Au (from 81.7m)
	8.25m @ 8.69 g/t Au (from 100.1m)
BSRCD 200	7.6m @ 19.25 g/t Au (from 130.7m)
	1.2m @ 10.72 g/t Au (from 140.6m)
BSRCD 201	2.8m @ 14.96 g/t Au (from 130m)
	9.6m @ 16.08 g/t Au (from 137.6m)
BSRCD 204	7.5m @ 11.51 g/t Au (from 183m)
BSRC211	6.0m @ 12.09 g/t Au (from 20m)
	11.0m @ 7.9 g/t Au (from 38m)
BSRC220	15m @ 6.14 g/t Au (from 5m)

Regional Exploration (Bulong Gold Project, WA)

• Anomalous gold and multi element results from regional test work highlight new anomalies at Amersham and Imperial as areas with similar geochemical signatures to that of the Cannon Gold resource.

Corporate

• Completion of the sale of Southern Gold’s Challenger Project to Trafford Resources (“Trafford”) and receipt of $500,000 cash and 3,000,000 Trafford shares.

1 [ For ‘Resource Statement and Parameters’ and other details of the Cannon Gold Resource as estimated by Runge Limited, see Southern Gold’s Annual report lodged 29 October 2012 ]

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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OVERVIEW

Activities completed in the September Quarter have included the receipt and analyses of all assay results from both the reverse cycle (“RC”) and diamond drilling of the Cannon Gold resource and the regional aircore (“AC”) drilling programme completed within the Company’s flagship Bulong Gold project (Figure 1).

Evaluation of the Cannon Gold resource (“Cannon”) over the past six months has provided insights into the nature and style of gold mineralisation present in this project area. This has enabled Southern Gold’s exploration team to develop exploration strategies for evaluating the tenement package as a whole and the identification of areas that appear to have similar prospectivity to Cannon. The implementation of these strategies proved successful with the definition of a number of gold‐in‐soil anomalies. Drill testing using both RC and AC drill methods at seven of these defined targets resulted in four returning significant results.

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Figure 1 . Bulong Gold project: showing Heron JV packages and the proximity to cornerstone shareholder Integra Mining Ltd’s tenement package and nearby gold processing facilities.

In addition to the drill testing of the Cannon Trend and regional auger sampling, substantial evaluation work. This has involved progressing the evaluation of various development scenarios for mining and gold production from the Cannon Gold resource including possible open pit mining and/or underground mining options. Work was largely completed on all studies that are required for permitting of a mining operation (i.e. environmental, metallurgical and geotechnical), should on‐ going evaluation work in the coming year determine that mining the Cannon Gold resource is economically viable.

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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TECHNICAL

Bulong Gold Project, Western Australia

Cannon Gold Resource Evaluation

Assay results, from the resource evaluation work, were received at the beginning of the quarter, with all results received by September 2012. The drill programme was designed to test the broad high grade zones of the resource to provide a greater level of detail of the geological host rock and controlling structures. The RC holes drilled in the southern zones of the resource targeted the potential for additional near surface gold mineralisation (Figure 2).

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Figure 2 . Plan view of the Cannon Gold resource outline (projected to surface) Hole Collar locations: red = stand‐out and significant results), blue = low grade or no gold intersections

These results demonstrate this drilling programme (summarised in Table 1) was successful in achieving the objectives by providing a greater level in confidence of the continuity of wide high gold grade zones within the resource, plus identifying additional near surface gold mineralisation.

As announced in September, results from holes drilled in the southern portion of the resource (Figure 3) have confirmed the presence of several near surface gold zones with intersections from as shallow as 5m including BSRC220 15m @ 6.14g/t Au (from 5m) BSRC213 9m @ 3.81g/t Au (from 9m) BSRC291 1m @ 6.49g/t Au (from 8m), BSRC222 3m @ 3.3g/t Au (from 17m) and BSRC211 6m @ 12.1g/t Au (from 20m). From an economic view point, these near surface intersections are important in a potential mining operation as they could reduce strip ratios between ore material and overburden.

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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Figure 3. Schematic Cross Sections 030mN and 110mN, showing wide high grade zones and near surface mineralisation.

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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In addition to the resource drill programme, test work for potential development scenarios and associated permitting is well underway with reports received from independent consultants. A summary of results from the metallurgical and geotechnical testwork was provided in the previous quarter.

Following metallurgical testwork conducted in the previous quarter, a petrological examination of a number of mineralised intervals was undertaken during this quarter. Results of these studies showed that gold present was in the form of free particles and grains, in close association with pyrite or in some cases enclosed by pyrite. As predicted by the metallurgical testwork, this indicates that refining grinding parameters to Cannon ore when milled, could improve the already standard recoveries, adding further value to the project.

Results of these preliminary economic evaluation studies are considered to be sufficiently encouraging to warrant more detailed evaluation on open pit mining and toll treating scenarios.

Work will continue over the next quarter, progressing the Cannon resource towards providing the Company a clear view of the preferred decision for developing the resource that will maximise return to shareholders. The preparation of draft permitting documents in anticipation of a positive economic assessment outcome will also continue.

Specific activities to be undertaken will include incorporating the data obtained from the recent drilling into the current resource model and then commencing detailed economic evaluation of open and/or underground mining scenarios. In addition to this detailed evaluation, results obtained from the nearby Pinner and Monument prospects will be assessed to determine whether opportunities exist in these locations for establishing resources.

Table 1 . Summary of Significant Assay Results from Cannon Resource Reverse Circulation and Diamond Core Drilling.

Drill Hole ID	From (m)	Interval (m)	Grade (g/t Au)*
BSRCD190	44.5	1.3	4.43
BSRCD191	22	2	4.58
BSRCD192	71.2	0.9	30.26
BSRCD192	89	4.1	53.43
including	92	1.1	192.31
BSRCD192	107	8.5	4.12
BSRCD192	120.7	5.7	10.60
BSRCD193	31	6	2.38
BSRCD193	64	7	1.95
BSRCD193	88.4	4.7	5.72
BSRCD194	50	2	3.1
BSRCD194	57	2	2.57
BSRCD194	65.8	9.4	1.63
BSRCD194	86.5	15.5	5.18
BSRCD194	114	1	5.95

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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Table 1 continued.

BSRCD195	63	3.7	4.8
BSRCD185	87	1	3.27
BSRCD195	96.1	18	3.43
BSRCD196	202.5	3.1	3.21
BSRCD197	49	4	12.98
BSRCD198	80	5	3.68
BSRCD199	81.7	13.9	6.09
BSRCD199	100.1	8.25	8.65
BSRCD200	130.7	7.6	19.04
including	131.5	4.5	30.15
BSRCD200	140.6	1.2	10.27
BSRCD201	130	2.8	14.97
BSRCD201	137.6	9.6	16.07
BSRCD201	152.25	1.75	2.83
BSRCD201	158.8	1	3.68
BSRCD203	118	2	3.56
BSRCD204	183	7.5	11.51
BSRCD204	195.5	3.2	1.87
BSRC206	55	8	1.34
BSRC209	27	8	2.75
BSRC211	20	6	12.1
BSRC211	38	11	7.9
BSRC213	9	9	3.81
BSRC215	33	5	4.22
BSRC215	51	2	5.63
BSRC219	8	1	5.59
BSRC219	18	6	1.68
BSRC220	5	15	6.14
BSRC222	17	3	3.3

• The down hole intersections comprise length weighted averages generated in Micromine, Analysis by fire assay, 25g charge with detection by Atomic Absorption (Genalysis, Perth: FA25/AA). 1.0g/t cut‐off, 2m maximum width for dilution. No top grade cut off. QA/QC comprised external standards and blanks routinely inserted. Intervals are down hole intervals and may not be ‘true thicknesses’.

Regional Exploration

Southern Gold continues its gold exploration programmes at the Bulong East tenements, following its successful regional soil‐geochemical auger programme. Having identified 30 gold in soil anomalies, Southern Gold has commenced the systematic testing of each of the anomalies to identify whether they have a similar geochemical “signatures” to that of the Company’s nearby Cannon Gold resource.

Results from a 61 hole RC drill programme (for 2545m) were received during the quarter, testing four anomalies identified in the southern portion of the tenement package. Following positive hits from the first pass testing of three northern anomalies earlier in the year (including 4m @6.8g/t gold and 4m @ 4.5g/t gold and a number of sub 0.5 g/t gold intervals at Turnpike), this programme has also returned positive results with three targets returning anomalous gold values (Figure 4) with the best intersection of 4m @ 1.5g/t.

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ASX Code – SAU
September Quarter 2012
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The importance of these results is the combination of the elevated gold values combined with anomalous multi‐element results which show a similar geochemical signature to that seen at Cannon.

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Figure 4. Location of AC drilling on four auger‐gold anomalies – Amersham, Brondesbury, Imperial and Snaresbrook. [Background map: GSWA 1:500000 scale Regional Geological Map].

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ASX Code – SAU
September Quarter 2012
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Field work during the quarter included field mapping and inspection of gold‐in‐soil anomalies plus interpretation and modelling work on large scale geological and structural features to develop a local context for the anomalous soil geochemical results achieved in these tenements. The results of this assessment will assist in the planning of follow up drill programmes.

Activities for the December quarter include developing follow up drill programmes to target the next ranking gold plus trace element anomalies. A review of data will be undertaken to assess if ground‐ based geophysical methods would be effective for this style of mineralisation.

CORPORATE

Trafford Resources’ Purchase of Southern Gold’s Challenger Project – South Australia

On the 7 August 2012 Southern Gold announced the sale to Trafford Resources Limited of Southern Gold’s 51% interest in the Western Gawler Craton JV with Dominion Gold Operations (a 100% owned subsidiary of Kingsgate Consolidated Limited) and its 100% owned Challenger West tenement (“Challenger Project”).

Trafford purchased the Challenger Project for A$500,000 cash and 3,000,000 Trafford shares (subject to a 12 month voluntary escrow period). Once a decision is made to conduct a feasibility study on a JORC resource of over 500,000oz gold, Trafford will issue a further A$1 million worth of Trafford shares to Southern Gold or its nominee.

Mekong Minerals and Southern Gold Asia

On the 5 July 2012 Southern Gold finalised an earn‐in and shareholders’ agreement with Mekong Minerals Limited (“Mekong”) with all Conditions Precedent in the Agreement having been satisfied or waived during the quarter. Mekong has the exclusive right to earn an interest in Southern Gold’s subsidiary, Southern Gold (Asia) Pty Ltd (“SG Asia”) and to manage the activities of SG Asia and its wholly owned subsidiary, Southern Gold Cambodia Ltd (“SG Cambodia”).

The Agreement regulates Southern Gold’s and Mekong’s obligations as shareholders of SG Asia. Under the Agreement, Mekong has the exclusive right to earn up to a 70% interest in SG Asia by sole funding US$5.7 million on expenditure of SG Asia and SG Cambodia.

On earning a 70% interest in SG Asia, Mekong will have the option to purchase Southern Gold’s remaining 30% interest in SG Asia (“Option”). The grant of the Option is conditional on compliance with ASX Listing Rule 11.4, including Southern Gold obtaining shareholder approval for the grant, if required.

Entering into this Agreement is consistent with Southern Gold’s intention to focus on exploration, evaluation and development of the Bulong Gold project, Western Australia. On finalisation of the Agreement Southern Gold is able to release value by reducing operating costs, while maintaining exposure to future upside in Cambodia.

Quarterly Report for the period ending 30 September 2012

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ASX Code – SAU
September Quarter 2012
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Competent Person’s Statement:

The information in this report concerning Australian exploration has been compiled by Mr I Blucher (MSc) 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 Reserve.’‐ he has a minimum of five 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.

BACKGROUND

Cannon Gold Mineral Resource Estimate – 1.0 Au Cut‐off

**Type **		Indicated	Indicated		Inferred			Total
	Tonnes	Au	Au	Tonnes	Au	Au	Tonnes	Au	Au
		**g/t **	Ounces		**g/t **	Ounces		**g/t **	Ounces
Oxide	8,400	3.0	800	1,000	1.4	‐	9,000	2.9	900
Transitional	113,700	3.1	11,400	25,700	1.3	1,100	139,000	2.8	12,500
Fresh	549,500	3.8	66,600	198,300	2.3	14,600	748,000	3.4	81,100
Total	672,000	3.6	78,800	225,000	2.2	15,700	896,000	3.3	94,500

Resource Table Competent Person’s Statement:

The information in this report that relates to Mineral Resources is based on information compiled by Mr Aaron Green. Mr Green who is a full time employees of Runge Limited and a Member of the of the Australian Institute of Geoscientists, 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 2004 Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Mr Green consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

CONTACT

For further information contact:

Nanette Anderson

Managing Director

PO Box 255 Ph: 08 8368 8888 Kent Town 5071 Fx: 08 8431 5619 South Australia www.southerngold.com.au

Quarterly Report for the period ending 30 September 2012

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