Southern Gold (ASX:SAU) and Silver Lake Resources (ASX:SLR) have...

Southern Gold (ASX:SAU) and Silver Lake Resources (ASX:SLR) have agreed to extend the pre-emptive right held by SLR over the Cannon Gold Project near Kalgoorlie, Western Australia, to 29 August 2014.

This allows SLR to complete a thorough review before making a decision to exercise its right to match or match better any third party offer to purchase, treat or sell ore or dore.

The pre-emptive right was trigged after SAU signed a non-binding term sheet with Metals X Limited (ASX:MLX) to finance, mine and process ore from the Cannon deposit.   

This will see Metals X manage all services required for mining, haulage and treatment of ore in accordance with approved budgets and programs.

Operating activities will be charged on an at-cost, open-book basis for the duration of open pit mining and/or underground mining.

SLR can elect to enter into an agreement with SAU on the same terms or provide a set of alternative terms and conditions which are of the same kind of transaction and on equivalent terms as proposed under the Metals X term sheet.

If it elects to waive its pre-emptive right, then Metals X and Southern Gold will finalise a binding Mine Finance and Profit Sharing Agreement to fully document the proposed transaction, based on the agreed terms set out in the term sheet.

Metals X will also provide SAU with a loan facility for $500,000 to fund pre-development costs.

Pre-Feasibility Studies had estimated that Cannon could produce 68,200 ounces of gold over a mine life of 36 months.

The project is located 30 kilometres east of Kalgoorlie and includes 30 priority anomalies identified from regional geochemical auger program conducted over the eastern area of the Bulong Gold Project. Six of these have been prioritised.