Adelaide, Jan 25, 2007 (ABN Newswire) - A new nickel sulphide discovery grading as high as 2.06% has been made in Western Australia by Southern Gold Limited (ASX: SAU).

The nickel sulphide mineralisation is at shallow depth of around 40-50 metres and was confirmed in assay results from a Reverse Circulation hole drilled late last month by Southern Gold on its Bulong South project, 20 kilometres east of Kalgoorlie.

Assays in Hole BSRC004 showed two, two metre intervals that are mineralised at 2.06% nickel and 1.7% nickel from 52 metres drill depth and 56 metres drill depth respectively. It was the maiden nickel exploration program by Southern Gold, with the Company now awaiting further assay results from the program.

"The nearest known nickel sulphides are 10 kilometres south at the Blair nickel mine and nickel sulphides were not known until now to be in this area," Southern Gold's Managing Director, Mr Stephen Biggins, said today.

"The 100-metre deep discovery hole had been a gold target but as gold is often an indicator of the presence of nickel, we can now focus on the considerable additional drilling that will be required to further prove up this discovery," Mr Biggins said.

The exploration drilling program comprised 11 angled RC holes at Bulong South (P 25/1680, 1681, 1729), with the discovery hosted in the highly favourable ultramafic style rock, komatiite. It was initiated by Southern Gold after the Company detected a nickel-cobalt zone during RAB drilling of the area in June 2005 that intersected 8m at 1% Ni in deeply weather periodotite.

BSRC004.  -60* to grid East, total depth 100 m, Reverse Circulation
Interval Nickel Cobalt  Sulphur  Copper  Mg       Au
52-54    2.06%  372 ppm 2.7%     0.17%   18.0%   69 ppb
56-58    1.7%   219 ppm 2.1%     0.20%   16.8%   51 ppb