A suite of high grade gold assets in South Korea are being acquired by Australian gold producer Southern Gold Limited. Most of the properties are historic underground or artisanal gold and silver workings, and some extend over a large footprint.
The company’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 drilling is expected to commence by the end of July 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 with completion of the transaction occurring earlier this month.
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-based 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.
In addition, the transaction has captured the interest of three Asiatic shareholders who have agreed a separate cornerstone placement worth A$1.2 million.
Southern Gold’s managing director Simon Mitchell said proceeds from the placement would 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.
“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 Douglas Kirwin and exploration manager Chris Bowden, who completed his PhD on the epithermal gold veins in South Korea and is the perfect person to lead the team over there.”
Simon Mitchell said Southern Gold had a very solid cash flow story from its regional exploration plays and current gold mining at its Cannon mine near Kalgoorlie in Western Australia (WA). “The Cannon and WA mining and discovery objectives will remain our core focus.
“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 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.”