Southern Gold Limited (ASX:SAU) has executed an agreement with Australian mining advisory firm PCF Capital Group to run a formal sale process to dispose or restructure the company’s gold assets east of Kalgoorlie in WA.
The decision was a result of a company-wide strategic review which concluded that there would be significant benefits to shareholders from a sale and sole focus on its quality assets in South Korea.
This process is also expected to release funding to the company and support its capital requirements for the 2019-20 financial year and potentially beyond.
Southern Gold's WA assets.
Southern Gold managing director Simon Mitchell said: “Given the market capitalisation of Southern Gold and the amount of capital that can be deployed each year to advance the assets in Australia and South Korea, we were finding it hard to do justice to both at the same time.
“With this strategic realignment, we can release value from the Australian assets while concentrating on the South Korean assets, a jurisdiction where we see incredible growth over the coming years.
“We know there is value in the Kalgoorlie-based portfolio, including the Cannon underground potential, however, development costs for this project would be highly dilutive to our shareholders and to a certain extent distract us from our task of finding a globally significant precious metal deposit in South Korea.”
PCF Capital Group has been engaged to run a formal sale process and will shortly invite expressions of interest and conduct a multi-phase asset disposal process of WA assets to the east of Kalgoorlie including:
- The Cannon gold mine as part of the Bulong South tenement package about 30 kilometres to the east of Kalgoorlie;
- The Glandore Gold Project in which Southern Gold holds a 75% interest that is close to the earn-in level and about 40 kilometres east of Kalgoorlie; and
- The Cowarna Gold Project adjacent to the operations of Silver Lake Resources about 75 kilometres to the east of Kalgoorlie.
Southern Gold has also engaged an independent consultant who is finalising a JORC ore reserve at Cannon based on the indicated JORC resource of 22,180 ounces and assuming a small-scale underground mine development.