Southern Gold Ltd (ASX:SAU) has completed the binding sale and purchase agreement previously announced with Aurenne Group Holdings Pty Ltd, selling its Australian exploration assets to Sydney-based private gold mining company for $2.5 million cash.
Assets sold to Aurenne include the Bulong South, Glandore and Cowarna gold projects, as well as the Cannon Gold Mine within Bulong South which is currently on care and maintenance.
The sale process was managed by PCF Capital Group and involved several stages of bidder selection due diligence and commercial negotiation.
Aurenne is a fully funded gold mining group which purchased 50% of the Kalpini Gold Project in 2018 and successfully completed mining at the Eastern Goldfields project in May 2019.
Southern Gold managing director Simon Mitchell said the company had successfully concluded a transaction to turn its Australian asserts into cash.
Aurenne agreed to pay $2.5 million in cash for the assets, paying a 10% deposit which is refundable if conditions are not satisfied or waived.
These conditions include Southern Gold shareholder approval and ministerial consent for the transfer of the tenements.
Southern Gold was advised on the transaction by PCF Capital and obtained legal advice from HopgoodGanim.
Mitchell said: “The $2.5 million is the equivalent of approximately 3 cents per Southern Gold share and takes our pro-forma cash balance after the recent $2.3-million rights issue to over $5 million post-completion.
“This frees up the company to concentrate on the South Korean story and our epithermal high-grade gold-silver discoveries that have bee made over the last 12 months.
“We are uncovering some exceptional targets, including the recently announced ultra-high grade Bonanza and Thorn zones at the Deokon project, and with this repositioning and cash injection we are now able to get the drill rigs turning.”
READ: Southern Gold receives more than 28.6 million new share applications in oversubscribed rights issue
Gold explorer Southern Gold owns a substantial portfolio of high-grade gold projects in South Korea that are largely greenfields epithermal gold-silver targets in the southwest of the country.
The company aims to find world-class epithermal gold-silver deposits in a jurisdiction that has seen very little modern exploration.
A small-scale mine in South Korea will be commissioned within the next 12 months, with development partner London-listed Bluebird Merchant Ventures (LON:BMV) at either the Kochang or Gubong project where Southern Gold retains a 50% equity interest.
Southern Gold recently raised $2.3 million in a 1-for-3 non-renounceable rights issue and responded to excess demand with a $440,000 post-rights issue placement to four major shareholders.
This step was taken after accounting for the strong support received from several major shareholders over the last 12 months.
The non-brokered and free-of-commission placement was for 4 million shares at 11 cents each, adding a further $440,000 in funding.
Funds from the placement will augment working capital to ensure drilling operations in South Korea continue uninterrupted until the start of the winter season in December.