ASX Release

Thursday 4 June 2015

ASX Code: SAU

Issued Shares: 527.6M ABN: 30 107 424 519

Directors

Greg Boulton AM Simon Mitchell (MD) Michael Billing

David Turvey

Top Shareholders

Silver Lake Resources Ltd 8.20% G B Branch 4.45%

PS Super Nominee 3.79%

JP Morgan Nominees 3.44% G Boulton 2.07%

Head Office

Level 1, 8 Beulah Rd

Norwood SA 5067

Telephone: (08) 8368 8888

Facsimile: (08) 8431 5619 [email protected] www.southerngold.com.au

Cambodia Exploration Venture Restructured

Subsidiary sold to Mekong Minerals Ltd

 Southern Gold Ltd has executed a Sale, Purchase and Joint Venture

Agreement with Mekong Minerals Ltd

 The agreement results in the transfer of a subsidiary, SG Asia, to Mekong in exchange for a 15% free carried interest and 2% gross sales royalty

The Directors of Southern Gold Ltd ("Southern Gold", ASX Code "SAU") wish to advise that Southern Gold's exploration interests in Cambodia have been restructured.
Southern Gold has been in joint venture with unlisted public company Mekong Minerals Ltd ("Mekong") under the Shareholders Agreement of July 2012 that was subsequently amended in October 2013. Mekong was earning an interest in a Southern Gold subsidiary, Southern Gold (Asia) Pty Ltd ("SG Asia"), which
in turn was the 100% holder of Cambodian subsidiary, Mekong Minerals
(Cambodia) Ltd ("MM Cambodia").
Southern Gold and Mekong have executed a Sale, Purchase and Joint Venture Agreement ("SPJVA") which enables the transfer of SG Asia to Mekong in exchange for a free carried interest and royalty. Mekong has made tenement re-applications with respect to the Kratie South, Kratie North and Memot Project areas (see Figure 1, next page). Japan Oil, Gas and Metals National Corporation ("JOGMEC") holds a 47.09% interest in the Kratie South project under a separate joint venture agreement.
In executing the SPJVA the following occurs:

 100% of the shares in SG Asia will be transferred to Mekong who will assume all obligations and responsibilities of SG Asia and MM Cambodia;

 Southern Gold will hold a 15% free carried interest in an unincorporated Joint Venture with SG Asia (based on the re-issued tenements) until completion of a positive definitive feasibility study;

 Southern Gold will also hold a 2% gross sales royalty (calculated after government royalties) on any income earned by MM Cambodia until such time as a cumulative US$11 million is paid to Southern Gold at which

point the gross sales royalty reverts to 1%; and

 Mekong will conduct exploration on the re-issued tenements to the minimum value of $500,000 for each project area within 2 years.

The agreement has a number of conditions, including Ministerial consent, the re-issuance of the exploration licenses, any other government approvals that may be required and a waiver of JOGMEC's first right of refusal.

Southern Gold Managing Director, Mr Simon Mitchell, commented: "the restructure of the Cambodian exploration joint venture enables Southern Gold to focus on the development of the Cannon Gold Resource and its broader Bulong Project. The new structure will see virtually zero cash requirements in the near term and significant exposure to upside should Mekong make a discovery in Cambodia on the re-issued tenements. We certainly wish them well in this regard."
Mekong Minerals Ltd is an unlisted public company with offices in Sydney, Brisbane, Phnom Penh
(Cambodia) and Hanoi (Vietnam) and exploration interests in Indochina.

Figure 1: Map of Re-Applied Tenement Locations in the Kingdom of Cambodia

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