SXG Research / Summary

ASX:SXG "Southern Cross Gold"

SP: 44.5c

MC: $70M

Quick Summary here before we go into detail:

Sunday Creek is the flagship project. A historic epizonal field that extended over 10km and only a small portion of that was drilled during the 1800's and only in the top 50m looking for oxide gold.

"We've now drilled over 1km down to 400m depth and the best drill holes were the deepest holes* (*you'll see why this is important below).

We've seen extremely good mineralisation. This is probably the best discovery, outside the mines, that's been made in Victoria in literally the last 100 years".

Newmont - (who is a shareholder of Mawsons) stated that any 3 holes that go 100gram / meters (so multiplying the grams and meters) and anything that has more than 100g/metres is a pretty good hit.

You've got width or you've got grade or you've got both. Newmont considers that 3 of those 100g/meter Intersections in any one body as a genuine bonified discovery. Newmont is the world's largest gold company. Thats a rule of thumb.

We've already got 12 of those 100g/meter hits in 10km of drilling at Sunday Creek

Note: the above commentary was made on the 25th of May, before the "spectacular " assay result was released on the 30th May.

That assay result can be seen here: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02526261-3A594508?access_token=83ff96335c2d45a094df02a206a39ff4

HIGHLIGHTS

• 119.2 m @ 3.2 g/t Au and 0.4% Sb (3.9 g/t AuEq) from 106.8 m in hole SDDSC033 (0.1 g/t AuEq over 3 m lower cut), including:

o 64.0 m @ 2.7 g/t Au and 0.2% Sb (3.0 g/t AuEq) from 110.7 m

o 39.0 m @ 5.2 g/t Au and 1.0% Sb (6.8 g/t AuEq) from 179.0 m

• Higher grade zones included

o 5.1 m @ 17.7 g/t Au and 1.6% Sb (20.3 g/t AuEq) from 160.5 m

o 2.3 m @ 26.2 g/t Au and 3.7% Sb (32.0 g/t AuEq) from 184.0 m

o 5.2 m @ 14.7 g/t Au and 4.8% Sb (22.3 g/t AuEq) from 189.9 m

Southern Cross Gold’s Managing Director, Michael Hudson says, “This result is unprecedented in terms of width of high-grade mineralisation rarely, if ever, seen in the Victorian goldfields. A result of 119.2m @ 3.9 g/t AuEq places the Sunday Creek project into a new realm, and builds on what was already a remarkably successful drill program. Continuity, with great width and grades, is now evident down to 335 m vertical depth in the Apollo Shoot that remains open to depth, while multiple adjacent shoots remain to be drilled out. With the freehold land secured, industry-leading drill results, strong local relationships, a team of ore discoverers in place and the drill rig continuing to target extensions to mineralisation found in SDDSC033, we highly anticipate further results.”

(I may repeat myself on some notes because I've written this out over a few days and just jotting down the notes as they come).

Before we start, something of interest:

ABC News youtube video about "the riches flowing from Victoria's 'new gold rush': https://youtu.be/TfU66PPIAyk

This was published 2 weeks ago.

A new generation of gold miners are looking for riches in Victoria. To sum it up, the old timers overlooked the potential of many of the historic mines. Since 2 years ago, many people have acquired historic gold mines (ill explain why below) in Vic to dig deeper and better using new technology and also a new understanding of geology. With modern drilling techniques, they can go much deeper and search thoroughly. In an example in the YouTube video, they show how the old timers dug to the left and found nothing. But had they dug to the right, they would have dug their pick into a gold bearing ore. "Modern technology removes the guess work, and can drill 1km into the ground."

New Geological mapping links some of these historical mines (including SXG's mine) to Fosterville. Fosterville is the world's highest grade and lowest cost gold mine, and it's located in Victoria. It has produced more than half a million ounces from underground in the past 2 years. This is what has caused a new frenzy of acquiring and exploring historic Victorian mines that have the same geology as Fosterville.

Below is an abstract of a research report about Fosterville:

The path to a major discovery is far from uniform, and every discovery is different. Anecdotally it is about the seventh owner of a property who makes the big discovery, and to extend this tale, it is important not to be amongst the first six, nor waiting in line to be number eight. The siting of the so-called discovery hole is greatly over-rated in its importance, and the critical moments may have been much earlier and possibly protracted. The critical moment can even come well after drilling—there are multiple examples of a discovery having been drilled and not recognised until a new owner comes along. In this setting, the challenge of management is to engender conviction well before the big intersection is obvious and announced to the world, and this is best done using all scales of geology.

Fosterville Deeps, in the Victorian Gold Province, is a major gold-only discovery in the 21st century, and the input of three decades of external research played a significant role in understanding the opportunities at depth. Transfer of the research findings led to a change of direction of the company and a major discovery.

Now let's get back to SXG:

Was just watching the ********* interview on YT (https://youtu.be/6oWNEXso3Hc) when they first IPO'd in May 2022 and some key notes / interesting details below:

(Note: this interview was on the 25th of May, before the "spectacular " assay result was released on the 30th May)

The company just IPO'd a few months ago and is cashed up with about $8M (after expenses)

Mawson owns 60% and they're escrowed until 2024, so they can't sell any shares / tightly held structure

The directors are also invested in the company, and even the drilling contractor is invested (which is pretty weird given the possibility of insider trading etc but definitely a positive if the drillers are interested)

Plenty of newsflow in the pipeline, due to the company having drilled 10 holes already pre-IPO (some holes data already released while other holes still in the lab pending assays) and have ongoing drilling with 2 rigs now on site

The director says they don't want to waste any time as they've already made a discovery and will be quite aggressive on working on this project.

Theyll be spending the majority of the money and time on Sunday Creek.

They have 3 projects (all historical Vic mines) - Sunday Creek is the flagship project which they own outright (and the one where theyve made the recent discovery).

All 3 projects are historical mines that haven't been touched for like 100 years

He talks a lot about the geology and the opportunity now in relation to the historical drilling in Victoria etc, it's very interesting and you should watch the video. He says gold in Victoria peaked in the 1800's but died off in the 1900's. It's only in the last 5 years that interest has returned - due to the discovery of fosterville and the geology that formed that deposit "epizonal deposits" / "analogue"

It's the same style of gold as fosterville , it's "analogue" which is a geological term. This type of gold is different to Bendigo and Ballarat, and it's what they have / what they want (he says this is the type of gold you look for in Victoria).

About Sunday Creek (SXG flagship project):

This was mined in the 1800's , it extends over 10kms, but only a little portion of that had been drilled looking for oxide gold in the top 50m.

They've now drilled out about a 1km down to 400m depth and the best drill holes were the deepest holes.

The director says the discovery of gold they've made, its the same geological event and the same type of gold as Fosterville (an analogue).

Newmont - (who is a shareholder of Mawsons) stated that any 3 holes that go 100gram / meters (so multiplying the grams and meters) and anything that has more than 100g/metres is a pretty good hit. You've got width or you've got grade or you've got both. Newmont considers that 3 of those 100g/meter Intersections in any one body as a genuine bonified discovery. Newmont is the world's largest gold company. Thats a rule of thumb.

We've already got 12 of those 100g/meter hits in 10km of drilling at Sunday Creek.

(Note: again i will note that this comment was made on the 25th of May, before the "spectacular " assay result was released on the 30th May). So it sounds like this project has some very serious and genuine potential.

Upcoming news / Catalysts:

• Holes 34, 35, 36 and 37 are currently in the lab and assays are due any day now. These holes were drilled pre-ipo and pre discovery of the "spectacular" result.

• The company is currently drilling hole 38 which is around the hole of the "spectacular" result and this hole has assays expected in late July. (You can call this hole the follow up drill)

• A second rig will be arriving on site before months end to focus on extending and infilling mineralisation

Please feel free to add your commentary. I've taken a position over the past few days as a punt on some further potentially exciting drilling results