Southern Gold : Quarterly Activities / Appendix 5B Cash Flow report to 30 June 2022

ASX Release

28 July 2022

ASX Code: SAU

Quarterly Activities Report

Quarter Ended 30 June 2022

Southern Gold Limited (ASX: Southern Gold) (Southern Gold or the Company) is pleased to release its Quarterly Activities Report and Appendix 5B Quarterly Cashflow report for the quarter ended 30 June 2022 (the Quarter).

Key highlights

• Southern Gold Exploration Manager Robert Smillie appointed Managing Director and CEO, based in South Korea
• Project Generation fieldwork results in 29 new licence applications, increasing exploration licences under application to 138 covering an area of 382km2
• Generative exploration continued in the Haenam Basin, where first-pass exploration is almost complete and generative work commenced on the Jinan Basin
• Southern Gold collected 850 rock chip samples for analysis, with results being collated and reviewed ahead of an update to the market on generative work to date in August 2022
• Mapping work on Geoje Island applications provided new insight into the geology and mineral potential of the area
• Consultant and epithermal expert Jeff Hedenquist visited South Korea for training and project review and offered key insights that will assist in project evaluation
• Southern Gold received £0.25M cash (A$0.44M) for the sale of 50 million Bluebird Merchant Ventures (LSE: BMV) Shares, with the remaining £0.25M due by 13 September 2022
• Southern Gold's remaining 150 million BMV Shares have a mark-to-market valuation of £3.1M (approximately A$5.3M)
• Total cash of A$4.6M at 30 June 2022.

Progress with Project Generation fieldwork

During the Quarter, Southern Gold continued Project Generation exploration with the aim of substantially growing its South Korean exploration portfolio for future drill testing. Project-scale exploration also commenced at the Geoje Island project.

Field work during the Quarter generated 29 new licence applications as Southern Gold seeks to gain holdings of key districts and large alteration zones that have high potential for developing drill targets through systematic follow-up fieldwork.

Targeting is two-fold, with:

1. Brownfields targeting around historical mines, including clay mines and/or expanding current

project holdings around existing projects; and

1. Greenfields targeting whereby regional reconnaissance fieldwork is highlighting potential new areas for possible application and subsequent detailed exploration.

Southern Gold Limited	10 George Street	PO Box 255	[e-mail]	telephone [phone]
ABN 30 107 424 519	Stepney SA 5069	Kent Town SA 5071	web southerngold.com.au	facsimile 08 8363 0697

This process also includes active "turning over" of licence applications should further exploration work or assay results warrant focussing activity in other areas.

Southern Gold lodged licence extensions for key projects at Dokcheon (Haenam Bain) and Deokon (Jinan Basin) as a result of fieldwork identifying exploration opportunities that extend the current holdings over additional targets and builds ground around these key projects.

Southern Gold's technical capability continued to increase through improved understanding of the geology and prospectivity of key regions, enhancing exploration effectiveness. Geology consultant Craig Panther, who has extensive South Korean experience, was able to get on the ground and assist with fieldwork, following the loosening of border restrictions during the Quarter. Key expatriate staff are now fully embedded with the local team, who are taking a strong lead in the generative work programs.

A summary of the exploration results will be released to the market in the coming three weeks outlining the key results, including anomalous rock chip sampling assays from the recent Project Generation fieldwork.

Haenam Basin

First-pass reconnaissance exploration has largely been completed in the Haenam Basin and now will transition to more detailed sampling and follow up reconnaissance on application areas to further assess the prospectivity and to determine work programs, project ranking and priority drill targets going forward into FY Q1-Q2.

Jinan Basin

Project generation work commenced in the Jinan Basin north of Haenam Basin, including key existing projects at Deokon and Geum Mar. Recent work was able to identify highly prospective quartz vein float to the east of Deokon and licence application extensions to the east of this project were lodged during the Quarter.

Gyeongsang Basin

One licence application was added the Gampo prospect, in the Gyeongsang Basin, a brownfields area prospective for breccia pipes and intrusion-hosted targets. More detailed targeting and field work will start in this prospective district during the next quarter.

Detailed mapping and rock sampling work was carried out around the Geoje mine and on areas covered by our licence applications surrounding this historical epithermal Cu-Ag-Au mine. The mapping highlighted a thick basal conglomerate unit that contained colloform banded vein clasts that are cut by a vein 300m to the west. This is a target not previously tested, highlighting the multi-phase potential of the district. Sampling results are expected to be released in August.

Training & Development

Consultant and epithermal expert Jeffery Hedenquist visited South Korea for training and project reviews and offered key insights that will assist in project evaluation, targeting and assessment.

Southern Gold upgraded its core shed, including a small office space and a more suitable base of operations. TerraSpec NIR mineral identification equipment was purchased to supplement the Company's pXRF analysis of samples and Southern Gold will look to further upgrade our in-house technical capabilities.

Future Activity

Field activity next quarter will continue at a reduced level compared to the previous quarter due to the arrival of the wet season and prolific vegetation growth, however road-side geologic traversing and sampling by field teams will continue.

Results from the Haenam Basin project generation work, together with the Jinan Basin work when completed, will be fully collated, interpreted and ranked for subsequent detailed follow-up fieldwork in Autumn / FYQ2 after the burn-off of the summer vegetation when field activity can be increased.

Regional project generation activities will also continue next quarter at Geoje Island and around the Gyeongsang Basin, and also move to an increased level post-summer into Autumn / Q2. The identification of targets for detailed follow-up exploration in this region will take place towards the end of Q2 before the start of the winter period.

These work streams during FYQ1 and Q2 are aimed at generating a pipeline of prospective drill targets across new projects for diamond drill testing after the winter months planned for FYQ3. This deliberate investment in focussed field activity prior to re-commencing drilling in South Korea greatly enhances the opportunities for exploration success going forward.

Tenure

The Company has increased its exploration licences under application to 138, covering an area of 382km2 (prior quarter: 109 applications, covering an area of 305.4km2).

There were no changes in exploration licences held during the Quarter. The following tenements were 100%-owned by the Company as at 30 June 2022.

		Tenement Info			Register Info
Project Name
Korean	English	Block	No.	Type	Date of Granting
			ID
Hampyeong	나주	Naju	136	200970	Exploration	11/01/2018
Aphae	무안	Muan	99	201136	Exploration	26/03/2019
Beopseongpo	법성포	Beopseongpo *	29	201028	Exploration	11/07/2018
법성포	Beopseongpo *	30	20102	Exploration	11/07/2018
				9
	전주	Jeonju	70	201041	Exploration	31/07/2018
Deokon
전주	Jeonju	80	201040	Exploration	31/07/2018
	전주	Jeonju	60	201218	Exploration	17/12/2019
Dokcheon	영암	Yeongam	116	201143	Exploration	12/04/2019
Janghwal	해남	Haenam	139	201302	Exploration	20/08/2021
Neungju	능주	Neungju *	33	201042	Exploration	31/07/2018

• These exploration licences are due to expire on 31 August 2022. The exploration team are currently reviewing the merit of retaining these licences, in view of the results currently being collated for the Project Generation activities undertaken to date. These exploration licences represent $1.7M in deferred costs on the Company's balance sheet which will be written off should these licences expire.

Covid-19

All Southern Gold staff are double-vaccinated, the majority with boosters. Some staff have contracted Covid, however health impacts on the individuals concerned have been minimal due to vaccinations.

Towards the end of the Quarter, South Korea case numbers stabilised at ~10,000 cases per day.

Corporate

At the beginning of the Quarter, Southern Gold held 200 million shares in London Stock Exchange-listed Bluebird Merchant Ventures Ltd (BMV). On 12 and 19 April 2022, BMV provided announcements to the London Stock Exchange (refer Southern Gold ASX announcement 19 April 2022), relating to a funding package to accelerate the move to gold production. To assist in negotiating the funding package, Southern Gold agreed to sell 50 million BMV shares at a discounted price of £0.01 per share, for total consideration of £0.5M, receivable in two equal tranches.

During the Quarter, Southern Gold received the first tranche of £0.25M (A$0.44M), with the second tranche of £0.25M due by 13 September 2022.

The remaining 150 million BMV shares held by Southern Gold are subject to a standstill clause which expires 11 April 2023. This holding represents 23.5% of BMV's issued capital and has a mark-to-market valuation of £3.1M (approximately A$5.3M), based on the closing price of BMV shares on the LSE of £0.0205 on 27 July 2022.

Southern Gold remains in a strong position as at 30 June 2022 with cash of A$4.6M, together with the second tranche of $0.44M due from the sale of the 50 million BMV shares and a mark to market valuation of $5.3M for the remaining 150 million BMV shares.

Quarterly Cashflows

For the Quarter, the Company had:

• Net cash outflows from Operating and Investing activities of $0.66M, which included outflows of $0.51M related directly to exploration activities and an inflow of $0.44M for the first tranche of proceeds received from the sale of 50 million BMV Shares;
• Net cash outflows from Financing activities of $0.02M, comprising leasing costs;
• Providing total net cash outflows of $0.68M, and an ending cash balance of $4.6M.

Cash flows for the Quarter include related party payments of $209,000, comprising Directors fees and remuneration for Executive Directors. In the current Quarter this includes a payment of $61,000, relating to accrued leave and other entitlements under South Korean law, paid to Mr Beejay Kim who retired as an Executive at the end of April 2022. Mr Kim remains as a Non-Executive Director.

	Authorised for release by the Board of Southern Gold Limited.
	Further Information:
	Robert Smillie	Investor and Media Relations
	08 8368 8888	Maude Lacasse
	[e-mail]	[e-mail]
		[phone]	856

Southern Gold Limited: Company Profile

Southern Gold Ltd is a successful gold explorer listed on the Australian Securities Exchange (under ASX ticker "Southern Gold"). Southern Gold owns 100% of a substantial portfolio of high-grade gold projects in South Korea that are largelygreenfield epithermal gold-silver targets in the south-west of the country. Backed by a first-class technical team, Southern Gold's aim is to find world-class epithermal gold-silver deposits in a jurisdiction that has seen very little modern exploration.

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 tohave a reasonable basis. However, the estimates are subject to known and unknown risks and uncertainties thatcould 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 or ASX release, except as maybe required under applicable laws. Recipients should make their own enquiries in relation to any investment decisions from a licensed investment advisor.