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Southern Gold pockets second profit share from Cannon gold mine

Southern Gold (ASX:SAU) has received its $1.5 million share of the second profit-share distribution from the Cannon gold mine operations in Western Australia.
Southern Gold pockets second profit share from Cannon gold mine
Southern Gold pockets second profit share from Cannon gold mine

The company’s shares were last trading 10% higher intra-day, at $0.33.

Southern Gold owns the Bulong Gold Project located 30 kilometres east of Kalgoorlie, which hosts the Cannon Gold Mine, projected to produce around 50,000 ounces of gold.

Westgold Resources (ASX:WGX) is financing and developing the deposit under a 50/50 profit share arrangement with Southern Gold.

Westgold is managing operations at the Cannon gold mine; and processing the ore at the South Kalgoorlie Operations Jubilee plant, 35 kilometres to the southwest of Cannon.

The Cannon gold mine operations committee paid $3 million in distributions, or $1.5 million to each of Westgold Resources and Southern Gold.

Southern Gold has applied $1.2 million of the $1.5 million distribution to the repayment of the working capital facility provided by Westgold, which is now fully repaid.

Cash flow from the Cannon gold mine has been many years in the making, with the company now in the most rewarding phase of the operation.

Last month, Southern Gold had received its $2 million share of the first profit-share distribution.

It is expected that further significant cash distributions as per previous guidance will be paid by the Cannon operation to Southern Gold over the next 4-6 months.

Due to delays caused by geotechnical issues and inclement weather, mining at Cannon will continue until the end of February or March.

Final mine designs for the last phase of the operation are being completed, including the potential for a ‘goodbye cut’.

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