High grade South Korean gold projects acquired under Southern Gold’s strategic overseas expansion

A suite of high grade gold assets in South Korea, most of them historic underground or artisinal gold and silver workings, some of which extend over a large footprint, are to be acquired by Australian gold producer, Southern Gold Limited (ASX: “SAU”).

Significantly, the Adelaide-based miner’s strategic international expansion will see it emerge as one of the few foreign entities with existing and much sought after government sanctioned tenure over its new holdings as the country seeks to mobilise its resource development to lessen the impact of years of mineral imports.

Among the newly acquired 17 gold project areas across 44 tenements are at least six high priority targets, four of which will be drilled over the next 18 months – the first of which will commence in just two weeks south of the capital, Seoul.

This initial drilling at Kochang, an historic and extremely high grade gold and silver mine working in narrow veins, has won the support of the government-backed Korean Resources Corporation (KORES).

The Corporation will fund at least 70% of the Kochang campaign as it and Southern Gold believe the site has optimal potential to open up the old mine to fast-track development and medium term production.

The acquired assets, valued at around A$2 million, are contained in offshore subsidiaries of unlisted public company, Asiatic Gold Ltd with completion of the transaction occurring overnight last night.

The terms of the deal cover the issuing to Asiatic of 6.29 million escrowed Southern Gold ordinary shares, a A$116,000 cash payment and the assumption by the Adelaide company of an outstanding A$70,000 debt.

Asiatic has undertaken to distribute the shares to its shareholders in an in-specie distribution to be completed over the next few months.  The 77 Asiatic shareholders would be considered sophisticated investors.

Deal attracts additional $1.2 million investment

In addition, the transaction has captured the interest of three Asiatic shareholders who have agreed a separate cornerstone placement worth A$1.2 million at $0.35 per share, a 18% premium to Southern Gold’s 20 day VWAP.

Southern Gold Managing Director, Mr Simon Mitchell, said today proceeds from the placement will be immediately applied to fast-tracking the priority gold targets.

“There is substantial potential across the assets for extensions to quartz veins in some of the older mine workings as well as highly prospective greenfields epithermal gold targets – the source of potential new discoveries,” Mr Mitchell said.

“Importantly for us, we have retained in country, the technical team that in recent times has driven a modern era assessment and development of these gold plays.

“These include internationally recognised consultant, Mr Douglas Kirwin and Exploration Manager, Dr Chris Bowden.  Chris completed his PhD on the epithermal gold veins in South Korea and is the perfect person to lead the team over there.”

WA gold mining to remain core focus

Mr Mitchell said Southern Gold had a very solid cash flow story from the Company’s regional exploration plays and current gold mining at its Cannon mine near Kalgoorlie in WA.

“The Cannon and WA mining and discovery objectives will remain our core focus,” Mr Mitchell said.

“The South Korean acquisition is, however, part of a strategic expansion strategy to provide investors in Southern Gold with heightened exposure to a new and truly world-class gold exploration play.

“These assets are located in areas of exceptional geological prospectivity, backed by a first class exploration team and multiple, very promising drill targets.

“The acquisition provides Southern Gold with the potential for additional high grade gold production sources in the medium term as well as the possibility of new greenfield discoveries in a jurisdiction that has seen very limited modern exploration.

“We believe this to be the most significant package of fully granted tenure held by a foreign company in South Korea, a jurisdiction where tenure is difficult to acquire and therefore becomes a very valuable and strategic asset for Southern Gold.”

Australia and South Korea share a free trade agreement.  The most prominent gold projects acquired, all to the south and southeast of Seoul, are as follows:

Weolyu:  Historically a silver-gold-germanium mine, recent exploration has discovered classic high level low sulphidation epithermal veining in a district yet to see a single drill hole and with rock float sampling at surface generating up to 17.6g/t Au and 820g/t Ag.  Priority drill target.

 Gubong: Historically a significant orogenic gold mining district and Korea’s second largest producer, this project has the potential to open up underground workings and fast track development.  Has potential for large gold system and significant exploration target range.

 Hampyeong: Up to 21g/t Au in rock chip samples in classic epithermal quartz veins.  New Ah Cha vein discovery points to the potential for an epithermal gold system at depth.  Priority drill target.

Kochang: Historically extremely high grade gold and silver in narrow veins were mined with old mine workings still in place.  Has potential to open up old mine to fast track development.  KORES supported drilling to commence in the next few weeks.

 Heungdeok: Extensive area of artisanal mining across several parallel quartz veins in a district that has seen no drilling.  Also potential for large tonnage Intrusive Related Gold mineralisation.

 Taechang: Historically mined very high grade gold deposit with old mine workings still in place and potentially accessible to fast track underground exploration and development.

 

 

281 0

More Asia News