JOHANNESBURG (miningweekly.com) – Australian gold producer Southern Gold on Friday announced the acquisition of a suite of high-grade gold assets in South Korea, most of them historic underground or artisinal gold and silver workings.

The acquisition formed part of the Adelaide-based miner’s international expansion strategy.

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

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

Kores would fund at least 70% of the Kochang campaign as it and Southern Gold believed the site had 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, were contained in offshore subsidiaries of unlisted public company, Asiatic Gold.

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 had 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 had captured the interest of three Asiatic shareholders, which have agreed a separate cornerstone placement worth A$1.2-million at A$0.35 a share.

Southern Gold MD Simon Mitchell said proceeds from the placement would be 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 greenfield epithermal gold targets – the source of potential new discoveries,” Mitchell said.

He added that Southern Gold had a solid cash flow story from the company’s regional exploration plays and current gold mining at its Cannon mine, near Kalgoorlie, in Western Australia.

“The Cannon and Western Australia mining and discovery objectives will remain our core focus,” 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, it becomes a very valuable and strategic asset for Southern Gold.”