Strategic agreement executed over Cannon Gold Mine

10 December 2018

New strategic agreement over the Cannon Gold Mine executed with Northern Star


  • The 5 year right-to-mine held by Northern Star at Cannon Gold Mine is terminated.
  • Northern Star’s Mining Lease M25/357 (covering the northern portion of the open pit) is to be transferred to Southern Gold.
  • Southern Gold assumes all environmental rehabilitation liabilities associated with the tenements. Southern Gold now has tenure covering the strike extension of the Cannon shear zone and will fast track development in 2019.


Australian gold company Southern Gold Ltd (“Southern Gold”, “the Company”, ASX: SAU) is pleased to advise that an agreement has been executed with Northern Star (HBJ) Pty Ltd (HBJ), a subsidiary of Northern Star Resources Limited (“Northern Star”, ASX: NST) with respect to the Cannon Gold Mine.

Northern Star acquired HBJ and control of the South Kalgoorlie Operations from Westgold Resources Limited in March 2018, which includes a 5 year right-to-mine agreement between HBJ and Southern Gold, designed to enable the underground development phase at Cannon. For various operational and strategic reasons HBJ has determined not to exercise the right-to-mine and has agreed to restructure the arrangement with Southern Gold.

The new arrangements entail:

  • The termination of all legal agreements between the parties, including the right-to-mine agreement and previous legal agreements executed during the open pit phase of the operation;
  • The transfer by HBJ of mining lease M25/357, covering the Georges Reward deposit immediately to the north of Cannon where approximately the northern third of the Cannon open pit is, and miscellaneous license L25/48 covering a portion of the Cannon haul road to the Golden Ridge rail crossing (Figure 1); and
  • Southern Gold assumes HBJ’s half share of the rehabilitation liability for the open pit, currently estimated by a third-party consultant to be approximately $77,500 (or $155,000 in total in today’s dollars) and excludes the cost of rehabilitating the haul road on L25/48 which is to remain in use.

The agreement completion is subject to Ministerial consent under section 82(1)(d) of the Mining Act and regulation 41(c) of the Mining Regulations 1981 and a third party consent to the assignment of an access agreement affecting L25/48.

The transfer of the tenements come with all associated technical data. There is no purchase price payable by Southern Gold for the tenements.

To read the complete announcement please download the pdf below:

Strategic agreement executed over Cannon Gold Mine