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Southern Gold Limited (ASX:SAU) Bulong Exploration Update

Drilling Commences Along the Cannon Trend Near Kalgoorlie
Bulong South Gold Project
 
Southern Gold Limited (“Southern Gold” or “the Company”) (ASX: SAU) is pleased to provide this update on the Company’s previous and upcoming work programmes.
 
2011 Year to Date Highlights
 
- High grade gold mineralisation intersected outside of the current Cannon Gold Resource envelope. Best RC intersections include 22m @ 10.05g/t Au (from 105m depth) and 11m @ 9.75 g/t Au (from 166m depth);
 
- Results show a consistent and broader extent to the high grade zone of the existing Cannon Gold Resource than originally estimated;
 
- RAB drilling identified 5 high priority targets in Cannon Trend, all within 1km of the current Canon Gold Resource; and
 
- Secured opportunity for the Company to increase its contiguous tenement holding at Bulong through a Heads of Agreement with Heron Resources Ltd.
 
In summary, work completed over 2011 has provided encouragement that the Cannon Gold Resource has the potential to increase in size. In addition, Southern Gold believes potential exists to discover similar Cannon Gold Resource style deposits along the Cannon trend at each of the 5 high priority targets, all within a 1km extent. In order to continue to discover and delineate further gold mineralisation, the Company has an aggressive exploration budget for the coming months.
 
Significant upcoming activities scheduled for the next 3 months
 
- RC drill programme of 3,500m: follow up RC drilling targeting further extensions of the Cannon Gold Resource and follow up drilling of 5 high priority targets along the Cannon Trend (drilling commenced 28 March 2011);
 
- Auger sampling programme, similar to that which highlighted the Cannon Trend, over new tenement holdings;
 
- On receipt of auger sampling results a RAB/RC drill programme will be developed to test regional targets identified by the auger programme and previous RAB drilling; and
 
- Commence geotechnical and metallurgical test work on diamond core holes from Cannon gold deposit.
 
Bulong South Gold Project, Western Australia
 
Earlier this year Southern Gold announced results that the RC drill programme at the Cannon Gold Deposit has successfully identified a westerly dip extension of high grade gold mineralisation and has also provided positive infill data to increase and improve resource definition. Located within its 100% Bulong South Gold Project the proximity of the Cannon Deposit to Kalgoorlie (35km) and nearby infrastructure and processing facilities combined with the strong price of gold has added to increase Southern Gold’s enthusiasm about the developing story at the Bulong South Project.
 
In addition the RC drill programme, the completion of a regional RAB drilling programme gave first pass drill coverage to several gold in soil anomalies. This resulted in the identification of five new gold targets along the Cannon trend which form the key focus of the April RC drill campaign (Figure 1 of the ASX announcement).
 
Approximately 3500m of RC drilling has been planned for the first programme to target the Cannon Extension, Pinner, Homerton and Monument anomalies. Outside of the Cannon Resource drill programme this programme will be the largest RC drill programme conducted by Southern Gold at Bulong.
 
Geological data collected from drilling at Pinner shows similar lithological and alteration assemblages to that identified at Cannon. Drill targets at Homerton are based on RAB drill results, surface geochemistry and geophysical interpretations of ground and aeromagnetic data. Monument holes are also targeted on positive RAB drill results and structural interpretations from geophysical data.
 
The Cannon Deposit is the first of several gold occurrences in the central mining lease (M25/333) and the greater Bulong South Project to be drill tested in detail. The discovery of broad high grade gold zones at the Cannon Resource raises the importance of the previously announced RAB gold intersections that identified 5 high priority targets within the Cannon Gold trend.
 
The positive results at the Cannon Prospect reinforce Southern Gold’s conviction that the Bulong terrain has been under explored for gold and that further regional exploration programmes will discover and delineate further gold mineralisation. This view has been reaffirmed by the expansion of Southern Gold’s tenement holding through the recent Heads of Agreement (“HOA”) with Heron Resources Ltd and the addition of the Clinker Hill tenements, all contiguous with the Bulong South project area (Figure 2 of the ASX announcement).
 
With recent exploration success on the Bulong South Gold Project, Southern Gold’s main commodity target within this new tenement package is primarily gold mineralisation. In addition to gold, testing for nickel sulphide and other base metal mineralisation will be conducted.
 
The initial work programme planned for the regional Bulong targets and the Clinker Hill project areas will include regional auger/soil sampling programme, similar to the programme that highlighted the Cannon gold resource (JORC ~80,000oz gold) and the highly prospective Cannon trend.
 
The package is located near historical gold occurrences. Along strike to the north and immediately bounding the package are the historical gold mining centres of Queen Margaret, Green Harp and Taurus and to the south on similar structures are the workings of the Wombola gold field.
 
In addition Southern Gold will test RAB anomalies identified on the Bulong South project and the broader mineralising system by completing auger sampling on the Bulong and Clinker Hill tenement areas.
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