Southern Gold receives second profit share from Cannon

JOHANNESBURG (miningweekly.com) – ASX-listed Southern Gold has received its second profit share distribution from the Cannon gold mine, near Kalgoorlie in Western Australia, following the mine’s operations committee’s resolution to pay $1.5-million to each of Westgold Resources and Southern Gold.

Westgold is managing operations at Cannon and is processing the ore at the South Kalgoorlie operations’ Jubilee plant, 35 km to the south-west of Cannon, under a 50:50 profit sharing arrangement with Southern Gold.

Southern Gold has applied $1.2-million of the latest $1.5-million distribution to the repayment of the working capital debt facility provided by Westgold, which is now fully repaid. The remainder of this second distribution will be received as cash.

Meanwhile, the company noted that it would receive further cash distributions over the next four to six months, owing to the seventh processing campaign of Cannon ore, which started on January 7 and will continue to February 23.

Owing to delays caused by geotechnical issues and inclement weather, mining at Cannon will continue until the end of February or March. Final mine designs for the last phase of the operation are being completed, including the potential for a ‘goodbye cut’.

Southern Gold said that this created some variability in the exact timing and quantum of future profit share distributions, but added that the macro picture remained one of significant cash flow over the course of the first half of this year.

“Having fully paid off the Westgold debt facility from the proceeds of just our first two profit share payments, Southern Gold is now seeing the direct benefits of being a true gold producer: significant cash flow over the next few months. This puts the company into a unique class in the junior gold space and one with a very compelling economic return for its shareholders,” said MD Simon Mitchell.