Southern Gold has commenced mining operations at its Cannon Gold Resource project located 30 km east of Kalgoorlie, Western Australia.
The company said it contracted Metals X to conduct all mining, haulage and processing operations on site, with profits to be shared equally between the two companies.
According to Southern Gold’s statement to the ASX, operations have commenced on the Stage 1 Open Pit, with the company contemplating the launch of a Stage 2 Open Pit mining program at a project near Kalgoorlie in WA, as well as an underground campaign.
“It is anticipated that the current Stage 1 Open Pit will be superseded by a new larger pit development plan but Southern Gold is committed to maintaining momentum on the current Cannon Mine construction phase and the completion of the Stage 1 Open Pit to ensure near term cash flow,” the company stated.
“The possibility of an underground development after open pit operations under the “Big Pit” scenario is subject to further extension of the deposit by drilling below the current limits of the JORC Resource as the Cannon deposit remains open at depth.”
The company also announced the start of an 800m reverse circulation drilling programme at Arsenal, one of several satellite drill targets.
“Previous drilling at Arsenal revealed alteration that was similar to that seen at the Cannon project but this early programme was restricted to a single drill hole,” reads the announcement.
“The current drilling programme is designed to follow up on that early positive indication and hopefully identify additional mineralisation outside the Cannon Gold Resource. Results from this round of drilling are expected in the next few weeks.”
Southern Gold Managing Director Simon Mitchell said the announcement was the culmination of several years’ work on the part of the Southern team.
“It is great to see ‘big yellow’ mining equipment deployed to site and the first unearthing of ore geology in the pit. In addition we have a huge opportunity when it comes to the possibility of a larger open pit operation as well as the longer term underground potential,” Mr Mitchell said.
“Not only do investors get exposure to one of the few new open pit mines in the Kalgoorlie district but also Southern Gold’s exploration efforts continue with the drill testing of nearby satellite targets. The Arsenal project has been a favourite of our geologists for some time and it is great to get back in there with a drill rig.”