Southern Gold focuses on intensive exploration to generate new drill targets at Korean projects

Having wrapped up the sale of its Gubong and Kochang joint venture interests in South Korea during the June quarter, Southern Gold (ASX: SAU) has turned its attention to intensive fieldwork activities across five project areas in the nation’s Yeongdong Basin with a view to generating future drill targets.

Drilling, surface and soil sampling is being conducted at the Deokon, Geum Mar, Daeam, Dokcheon and Yeongdong District areas as part of a strategy focusing on near-project areas and new zones in prospective basins not previously explored by the company.

Deokon drilling

A high level of field activity was conducted at the Deokon project following the discovery earlier this year of the Thistle and Nettle mineralised zones.

Initial soil sampling over the Golden Surprise trend revealed a gold-silver-arsenic anomaly at Nettle, which was followed up by an extensional soil sampling program and detailed structural mapping to confirm the prospectivity of a drill zone near the Nettle outcrop.

That outcrop returned an earlier peak rock chip assay of 8.56 grams per tonne gold and 8,940g/t silver.

Drill testing at Nettle is targeting an interpreted intersecting structural position of the north-northwest Golden Surprise trend.

Two diamond holes for 251.2m were drilled during the quarter, and a third is being planned.

“Our field mapping has confirmed the presence of multiple intersecting structures at Nettle [and] combined with the soil anomaly location, represents a compelling structural position and drill target,” the company said.

Geum Mar one-hole program

Assays were received from a one-hole maiden scout drilling program at Geum Mar’s Golden Horse Quarry target during the quarter.

Drilling was designed to intersect beneath sub-vertical structures observed in the quarry, as well as the extension of a northwest-southeast orientated rhyolite dyke which passes through the quarry, and to gain lithological information.

While no significant gold results were received, the assays showed elevated silver-bismuth-copper-lead-zinc occurrences with a peak result of 0.12m at 58.1g/t silver, 117 parts per million bismuth, 0.28% copper, 0.35% lead and 0.46% Zn from 126.78m in a narrow (5cm wide) pyrite and base metal sulphide vein.

Other elevated silver and base metal assays were returned in the vicinity of these results in narrow-sheeted sulphide quartz veins with pyrite within a weakly illite-altered volcanogenic sandstone.

Follow-up reconnaissance sampling and mapping has been planned to assess the broader potential of the Geum Mar project.

Daeam soil sampling

A soil sampling program at Daeam involved the collection of 419 samples over approximately 2km of strike, trending north-northeast.

Southern Gold said the results revealed clear anomalous gold zones and trends across the project and it plans to traverse the area again once thick vegetation recedes to identify more information before drill testing.

Additionally, 88 rock samples were taken during the program and 13 returned assays greater than 0.5g/t gold, with five above 2g/t gold.

Dokcheon silver assays

Traversing and reconnaissance sampling between the Dokcheon project and the Eunjeok/Sangeun historic silver mines to the north-northwest was completed during the June quarter and 32 samples collected.

The area is known more for its silver prospectivity than gold with samples returning a peak assay of 42.7g/t silver in float.

As at Daeam, follow-up work will be carried out once vegetation recedes.

Joint venture sale

Negotiations relating to the $13 million sale of Southern Gold’s 50% interest in the Gubong and Kochang joint venture projects to its Asia-focused partner Bluebird Merchant Ventures were finalised in late June.

Under the terms of the deal, Bluebird issued 200 million shares at $0.068 each to a wholly-owned subsidiary of Southern Gold.

The first 50 million shares were received after the close of the quarter end and the 150 million will be issued on approval of a Bluebird prospectus in the next six months.

“[We have] effectively agreed to a share swap deal where we will exchange our subsidiary’s 50% interest in the two joint ventures for an approximate 30% interest in [Bluebird] once all shares are issued,” Southern Gold said.

“[It] will be a very valuable equity interest which we expect will significantly increase in value as Bluebird advances Kochang and Gubong towards gold and silver production.”