Initiating Coverage - Sovereign Gold Company Limited

SOVEREIGN GOLD COMPANY LIMITED
(ASX: SOC)
INITIAL DRILLING AT MT ADRAH GOLD PROJECT REVEALS
EXCITING POTENTIAL FOR THIS WELL FUNDED NSW EXPLORER
NSW

15 July 2013
20 Sep
2012
SOVEREIGN GOLD LIMITED (SOC)
MT ADRAH DRILLING SHOWS GOLD MINERALISATION
Recommendation:
CAPITAL STRUCTURE:
Net Asset Valuation:
na
ASX Code:
SOC
Share price: $0.20
12 Month High: $0.295
12 Month Low: $0.165
12 Month Volume: 9.8m
Market Cap: 30.2m
Listed Shares: 143.5m
Unlisted Shares:
0m
Listed Options: 7.25m
Unlisted Options:
0m
Cash (May 13):
$1.5m
Debt:
$0.16m
Speculative Buy
TOP SHAREHOLDERS
Hudson Resources 28.3%
Raffles Capital 26.2%
Code Nominees Pty Ltd 8.18%
Top 20 92.3%
DIRECTORS:
Mr John Dawkins AO
Mr Michael Leu
Mr Peter Meers
Mr Jacob Rebek
PRICE CHART:
Source: ASX
Analyst: Rod Buckton
+61 2 8224 9650
rbuckton@focusresearch.com.au
Chairman
Managing Director
Non-exec. Director
Non-exec. Director
This research report is
commissioned research for which
Focus Research has received a fee
from Sovereign Gold Company
Limited. Please see disclaimers for
additional information.
TO 1000M DEPTH
INVESTMENT PERSPECTIVE:
Gold explorer Sovereign Gold Company Limited (ASX:SOC) listed in December 2010 with a
focus on exploration in New South Wales. Critically, it has exploration funding of up to
$21m through a JV while only diluting its interests to 70% on two key projects.
This Company has judicially expanded its asset base through the takeover of Gossan Hill
Gold Limited (SOC now at 93.91%) which is providing current drilling targets and a JORC
Inferred resource of 239,000oz at the Hobbs Deposit at Mt Adrah. At Hobbs, a 313m
vertical hole returned continuous gold at 1.42g/t Au with the hole ending in gold and grade
improving with depth. Deep drilling to 1030m is testing systems at depth where continous
visible gold mineralisation has been observed to 886m and intermittent sulphides to
1030m. Assay results are imminent but this is an outstanding intercept.
Sovereign Gold’s intention to expedite drilling of deep holes to establish the vertical extent
could significantly upgrade the Hobbs resource where the Company see potential for
2Moz+. The Hobbs Deposit and adjacent targets should enable Sovereign Gold to rapidly
deliver resource growth and leverage off its experience exploring for Intrusion Related Gold
Systems (IRGS) elsewhere in New South Wales.
This expertise in IRGS has lead to a reinterpretation of their exploration tenements covering
in the Rocky River-Uralla Goldfields of New South Wales. These fields historically produced
from deep lead and some hard rock operations from 1858, but have not had any
subsequent modern exploration or drilling. The IRGS model was only formulated in 1999,
based on systems in Alaska such as Pogo (5.7Moz). In Australia, IRGS systems include
Kidston in Queensland (4.5Moz) and Timbarra in NSW (0.7Moz).
Importantly, and increasingly rare in the junior gold sector, the Company has exploration
funding of up to $21m through a farm-out to SUGEC, to proceed with drilling on multiple
targets focusing on IRGS systems within ten licences.
We recommend the Company as a SPECULATIVE BUY, offering high potential at Mt Adrah
for rapid expansion of gold resources to progress through to an initial mining operation,
and the potential for further IRGS discoveries based on known magnetic and geochemical
anomalies. The Company has significant expertise in IRGS and the exploration team have a
strong record of success. The Board is experienced and bring a clear strategy to the table to
fast-track exploration and development.
KEY POINTS
» Total gold resource of 239,000oz @ 1.13g/t at the Hobbs Deposit purchased for
$2.93/ounce through Gossan Hill. Initial exploration target 0.5-2.0Moz.
» Fully funded $11m drilling program over two years on multiple prospects to deliver
constant news flow and targeting rapid JORC resource base expansion.
» Drilling underway at Hobbs has reached a final depth of 1030m. Continuous gold
mineralisation observed to 886m. Further drillholes will commence immediately.
» The Rocky River-Uralla Goldfields provides outstanding targets for IRGS systems with
positive exploration to date and a 2500m drilling program underway.
Focus Research Investment Notes | 2

15 July 2013
VALUATION
Sovereign is an exploration company with an initial JORC resource and a fully funded exploration
program through a farm-in by SUGEC. This farm-in can potentially provide up to $21m in exploration
funding.
SOC is not at a stage where a financial model can be developed and as such, we rate SOC as a
SPECULATIVE BUY.
Sovereign has $1.5m in
cash, a farm-in agreement
worth $21m in exploration
expenditure and a
239,000oz gold resourceat
Mt Adrah Project
NEWS FLOW 2013
Flagship Projects - Current Exploration
Mt Adrah
Deep Diamond Drilling to 1030m was completed on 10 th July 2013 with further deep holes
to follow. Assays to a depth of 886m will be available in July/August 2013.
A continuing drilling program to deliver constant news flow and targeting rapid JORC
resource base expansion.
In order to preserve existing funds, Sovereign Gold has made arrangements to place up to
$500,000 worth of shares it currently holds in Precious Metal Resources Limited (ASX:
PMR) (SOC: 81.26%) to professional and sophisticated investors to fund the next planned
1000m hole at the Hobbs Pipe 1 deposit.
Rocky River-Uralla
Update SOC drilling program Rocky River-Uralla IRGS –2500m program underway on EL
7491, fully funded by JV Partner SUGEC. Deep drilling to assess full potential of 1.55km
identified gold-bearing structure.
Grant of EL8012 Nundle Goldfield.
Shared key diagnostic IRGS characteristics - Donlin Creek and Rocky River-Uralla Goldfield.
Assay results from over 2,700 soil, stream and rock samples collected by Jiangsu in ELs
7491 and EL7768. Geophysical targets, large IP and magnetic anomalies, new copper
deposit EL7768.
Further historical mines to be drilled within EL6483.
EL7770, twin hole at Fishers Copper Mine where shallow holes intersected up to 5.45%
copper.
Drilling at IRGS deposits in EL7766 (Tilbuster Goldfield) and EL7769.
Shortlist drill targets for 36 geophysical anomalies.
Focus Research Investment Notes | 3

15 July 2013
COMPANY PROFILE
Sovereign Gold Company Limited (ASX: SOC) (Sovereign) was admitted to the ASX on 3 December
2010 having raised $4m through the public issue of 20m shares. The offer was 15% over-subscribed.
Sovereign Gold’s exploration objective is to locate hard rock gold sources, in particular the large
Intrusion Related Gold Systems (see page 10 for explanation) at various locations in New South Wales.
Sovereign is exploring It also has interest in gold areas of Malaysia. The Company has accumulated
assets and an initial a JORC resource through takeover, and is funding exploration through a joint
venture with Jiangsu to allow a 30% interest in exchange for $11m in exploration funding. The
following graphic illustrates the current asset base of Sovereign Gold (Figure 1) and Company strategy
(Figure 2).
FIGURE 1: SOVEREIGN – COMPANY STRUCTURE
SOC: 100%
EL 6483
EL 7767
EL 8012
EL 8056
ELA 4760
Source: Sovereign
JV with Jiangsu
EL 7491
EL 7768
EL 7766
EL 7769
EL 7700
EL 7701
EL 7770
Jiangsu to spend A$11
million to earn a 30%
interest in each EL
Sovereign Gold
Company Limited
ASX: SOC
Gossan Hill
239 k oz JORC
EL 6372
EL 7844
EL 7861
EL 6648
EL 7863
EL 7862
EL 7725
EL 7726
81%
Precious Metal
Resources Limited
ASX: PMR
EL 7679
EL 4474
EL 5339
Jiangsu to spend
A$10 million to earn
a 30% interest
COMPANY STRATEGY
FIGURE.2: SOVEREIGN - BUSINESS MODEL
Source: Sovereign
Focus Research Investment Notes | 4

15 July 2013
TENEMENTS
TABLE. 1: SOVEREIGN GOLD COMPANY - SUMMARY TENEMENT HOLDINGS
Tenements Prospect Location Area Holder SOC Int Metals Goldfield JV
Exploration
Budget
km2 %
EL 4474 Halls Peak Halls Peak 12 PMR 81.62% Au Jiangsu JV $4.0m
ELA 4577 Nundle Tamworth 300 SOC 100% Au Rocky River-Uralla
ELA 4587 Guyra Guyra 300 SOC 100% Au
ELA 4619 Broken Hill NW Broken Hill PMR 81.62% Au
ELA 4645 Weabonga Tamworth 300 Sovereign 100% Au Rocky River-Uralla
ELA 4648 Tamworth 300 Sovereign 100% Au Rocky River-Uralla
EL 4760 Bingara Sovereign 100% Au Bingara
EL 5339 Halls Peak Halls Peak 15 PMR 81.62% Au Jiangsu JV $4.0m
EL 6372 Mt Adrah Mt Adrah 390 Gossan Hill 93.91% Au
EL 6483 Martins Shaft Uralla 300 Sovereign 100% Au Rocky River-Uralla
EL 6648 Peel Fault Peel Fault 474 Gossan Hill 93.91% Au
EL 7491 Uralla Uralla 300 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $2.0m
EL 7679 Uralla Uralla 96 PMR 81.62% Au Jiangsu JV $2.0m
EL 7700 Reedy Creek Uralla 300 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $1.0m
EL 7701 Armidale Uralla 300 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $1.0m
EL 7725 Peel Fault Peel Fault Gossan Hill 93.91% Au
EL 7726 Peel Fault Peel Fault Gossan Hill 93.91% Au
EL 7766 Tilbuster Uralla 294 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $1.5m
EL 7767 Murrumbateman Murrumbateman 300 Sovereign 100% Au
EL 7768 Uralla Uralla 300 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $2.0m
EL 7769 Halls Peak Halls Peak 246 Sovereign 100% Au Rocky River-Uralla Jiangsu JV $1.5m
EL 7770 Fishers Copper Mine Tamworth 300 Sovereign 100% Cu, Au Rocky River-Uralla Jiangsu JV $2.0m
EL 7844 Mt Adrah Murrembateman Gossan Hill 93.91% Au
EL 7861 Bauloora Cootemundra 90 Gossan Hill 93.91% Au
EL 7862 Peel Fault Armidale Gossan Hill 93.91% Au
EL 7863 Peel Fault Armidale Gossan Hill 93.91% Au
EL 7998 Broken Hill SSW Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 7999 Broken Hill SW Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8000 Broken Hill SE Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8012 Nundle Tamworth 300 Sovereign 100% Ag, Pb, Zn, Au Nundle
EL 8015 Broken Hill E Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8018 Thackaringa Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8023 East Broken Hill Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8024 Broken Hill SSW Broken Hill PMR 81.62% Ag, Pb, Zn, Au
EL 8056 Sovereign 100%
* Jiangsu Geology and Engineering Company are currently undertaking exploration on EL 7768 and EL7491. Jiangsu may earn up to 30% of the exploration
licenses, provided they achieve exploration funding targets of $4 million before March 2014.
+ SUGEC agrees to contribute $7 million towards fast track IRGS exploration on EL 7700, EL 7701, EL 7766, EL 7769 and EL 7770 and provide a dedicated team of
geologists, geochemists and geophysicists to work with Sovereign Gold on the projects to earn up to 30% interest in each tenement
Source: Sovereign
Focus Research Investment Notes | 5

15 July 2013
RECENT EXPLORATION SUMMARY
15 July 2013 - Mt Adrah Hobbs gold deposit – Drilling Report
A 2,500m multiple hole diamond drilling program is underway on the 1.55km long goldbearing
structure, discovered with Sovereign Gold’s co-operation partner SUGEC, in EL 7491
(ASX: 29 April 2013). This newly discovered mineralisation is part of the large Rocky River-
Uralla Intrusion-Related Gold System and has confirmed the repetition of Martins Shaft style
mineralisation.
Geochemical sampling (soil and rock chips) and mapping programs have now located
additional parallel mineralised structures several hundred metres long.
11 July 2013 - Mt Adrah Hobbs gold deposit – Drilling Report
• The next planned drill hole (GHD004) is a sub-vertical, angular hole to test the width of the
Hobbs Pipe 1 deposit. Expected cost is in the order of $300,000.
26 June 2013 - Mt Adrah Hobbs gold deposit – Drilling Report
Deep diamond drilling commenced on Friday 21 June 2013 at the Hobbs Deposit Pipe 1
target
Drilling is down to a depth of 1,030m. (Planned depth 1000m)
Gold mineralisation (sulphide-sericite alteration) present throughout drilling at the Mount
Adrah Hobbs Deposit Pipe 1 target is progressing well and is down 285 metres.
Core is being split and logged and will be sent to ALS for assay. Turnaround time for assay
results is approximately 2 weeks from receipt.
13 June 2013 - Conceptual Exploration Target at Hobbs Gold Pipe 1 Deposit of 3-4 Moz to 1,000m
depth
• All regulatory approvals in place.
• Supported by existing Inferred JORC Compliant Resource of 239,000oz of gold and
completed deeper drilling.
• Proximal to and in the same geological and structural environment as other world class
deposits, Cadia / Ridgeway (60Moz gold equiv.), Endeavour (8 Moz gold equiv.) and Cowal
(2.8 Moz gold equiv.)
22 April 2013 - Drilling Underway on EL7491 – Martins Shaft-style gold mineralisation. Drilling is
underway on the 730m long fault/shear zone where previous shallow diamond drilling by Sovereign
proved the existence of both high grade (up to 12.35g/t Au) and wide (12m downhole) gold
mineralisation at shallow depth.
The first drill hole of this present campaign is beneath an earlier shallow diamond drill hole SGRDD039
that returned 1.07g/t over 12m from 3-15m downhole including 4.93g/t over 0.6m. Other previous
shallow holes such as SGRDD036, returned 2.75g/t Au over 4.85m from 7-11.85m downhole including
7.8g/t Au over 1m and 12.35g/t Au over 0.5m.
This current drilling program includes deep diamond holes >200m to test the grade, width and vertical
extent of this long gold-bearing structure with the aim of establishing a JORC resource. Newly
discovered, nearby mineralised long structures have a similar potential and have been targeted for
deep drilling.
8 April 2013 – Gossan Hill Due Diligence completed – 93.91% of shareholders accept offer –
settlement before 22 April 2013 (1,878,125 shares = $187,812.50). The acquisition price for Gossan
Hill was $700,000, comprising $200,000 in cash and $500,000 in scrip (2m ordinary shares at $0.25 per
share).
4 April 2013 – Diamond Rig arrives on Site in EL7491 (Rocky-River-Uralla Goldfield) to Commence
Deep Drilling (to 800m) commencing 11 April 2013. Five priority drill targets identified including largescale
repetitions of Martin Shaft gold mineralisation.
Drilling at Mt Adrah Hobbs
pipe 1 has shown gold
mineralisation over a
1000m vertical depth
Focus Research Investment Notes | 6

15 July 2013
PEER COMPARISON
Sovereign has an EV/resource ratio of $115/oz and while this is much higher than the average for this
group of Australian focussed junior gold companies, we expect a significant resource upgrade in 2013
based on the current drilling at Mt Adrah (Table 2).
The current resource of 239,000oz of gold to 120m is expected to increase significantly as the
mineralised zone extends beyond 1000m based on current drilling. Assays available to 313m show
increasing grade with continuous gold @1.42g/t.
TABLE. 2: PEER COMPARISON – SELECTED PRODUCERS, DEVELOPERS & EXPLORERS
Company ASX Price
Mkt Cap
(A$m)
No.
Shares
(m)
No.
Options
(m)
Avg. Daily
6M T'over
Cash
(A$m)
Debt
(A$m)
EV (A$m)
EV /
Reserve
EV /
Resource
JORC
Reserve
(moz)
JORC
Resource
(moz)
ABM Resources ABU 0.029 $95.2 3,282.9 218.3 0.18% $10.8 $0.0 $84.4 - $23 0.00 3.60
Atlantic Gold ATV 0.022 $16.4 743.4 0.0 0.02% $3.1 $1.0 $14.2 $31 $26 0.45 0.55
Bullabulling Gold BAB 0.026 $8.9 341.7 15.4 0.05% $2.3 $0.0 $6.6 - $2 0.00 3.72
Blackham Resources BLK 0.185 $14.1 76.4 13.8 0.18% $1.2 $0.0 $12.9 - $9 0.00 1.48
Covergent Mineral CVG 0.016 $4.3 270.5 31.5 0.13% $1.6 $0.0 $2.8 - $2 0.00 1.17
Dampier Gold DAU 0.025 $1.7 66.7 7.6 0.09% $1.8 $0.0 -$0.2 - $0 0.00 0.68
Doray Resources DRM 0.500 $70.9 141.9 10.1 0.18% $31.8 $35.0 $74.1 $370 $209 0.20 0.36
Gascoyne Resources GCY 0.160 $25.3 158.3 2.8 0.05% $3.4 $0.0 $21.9 - $16 0.00 1.38
Gold Road Resources GOR 0.047 $21.4 455.0 12.6 0.17% $9.3 $0.0 $12.1 - $10 0.00 1.26
Hill End Gold HEG 0.008 $5.5 685.8 57.1 0.08% $1.3 $0.0 $4.1 - $7 0.00 0.58
Kalnorth Gold Mines KGM 0.045 $7.6 169.9 5.0 0.04% $3.4 $4.2 $8.5 $31 $7 0.27 1.17
Mount Magnet South MUM 0.015 $8.1 538.0 78.1 0.07% $1.6 $1.5 $8.0 $26 $15 0.31 0.55
Mutiny Gold MYG 0.026 $12.8 492.7 183.1 0.16% $2.8 $16.8 $26.9 $65 $49 0.42 0.55
Southern Gold SAU 0.015 $5.2 346.7 2.6 0.09% $1.6 $0.0 $3.6 - $31 0.00 0.12
Sovereign Gold SOC 0.200 $28.7 143.5 7.3 0.04% $1.5 $0.2 $27.4 - $115 0.00 0.24
Source: Focus Research, Bloomberg
0.10% $5.2 $3.9 $20.5 $104.7 $34.6
Focus Research Investment Notes | 7

15 July 2013
INTRUSION RELATED GOLD SYSTEMS (IRGS)
The IRGS model was only developed in 1999. Today it is recognized that the Rocky River-Uralla Gold
Field has the hallmarks of what is now known as an Intrusion Related Gold System.
In broad terms intrusive-related gold deposits rely on gold existing in the fluids associated with the
magma and the discharge of these hydrothermal fluids into the wall-rocks at the contact zones.
In an IRGS model, gold mineralization can occur in multiple parallel veins and stock-works that have a
high likelihood of continuing at depth. (Figure 3)In the project area there are old gold workings at or
near the surface and which are untested at depth. Under the IRGS model, drilling is likely to intersect
gold mineralization at depth below these prospects.
General characteristics of the model include:
A metal assemblage variably combining Au with Bi, Te, W, Mo, As, Sb and an ore mineral
assemblage typically comprising arsenopyrite, pyrrhotite and pyrite and lacking magnetite or
hematite.
Metal zoning centred on a central mineralising intrusion.
Diagnostic IRGS geological, metallogenic, structural and tectonic characteristics include:
back-arc basin tectonic setting,
metallogenic (gold, arsenopyrite, stibnite plus silver and minor base metals -lead, zinc, and
chalcopyrite),
alteration (frequently phyllic, quartz-sericite-pyrite),
locations adjacent to potential ‘gold-bringing’ granite plutons and extensive evidence of past
mining of alluvial gold.
Deposit size ranges from small (veins) and disseminated, e.g. Timbarra 700,000oz Au averaging 1g/t
Au, to larger systems such as Kidston that produced 140t gold. Many systems overseas typically
contain greater than 3Moz Au. High-grade examples include Pogo (9.98Mt at 17.8g/t Au) in Alaska.
As noted with the Rocky River-Uralla Goldfield, many of the prospects have mineralisation that
includes sulphides and included arsenopyrite and antimony ores in the mineral suite.
FIGURE. 3: SOVEREIGN GOLD COMPANY - IRGS SYSTEMS DESCRIPTION – PLAN & SECTION
Sovereign’s IRGS focus is a
relatively new model for
exploration of historic
goldfields
Source: Sovereign
Focus Research Investment Notes | 8

15 July 2013
MT ADRAH – HOBBS DEPOSIT PROJECT
Mt Adrah - EL6372, EL7844
This is the flagship project for the Company. The Mt Adrah area was part of the Gossan Hill purchase
and includes the Hobbs Deposit. The Mt Adrah prospect is located 50km south-east of Wagga Wagga
in NSW. (Figure 4)
FIGURE. 4: MT ADRAH LOCATION PLAN
Sovereign’s Mt Adrah
exploration is focussed on the
Hobbs Deposit where drilling
to 1030m has shown almost
continuous gold
minieralisation.
Source: Sovereign
The Hobbs Gold Deposit is located at a major dilational site along the Gilmore Suture. Several world
scale porphyry gold mines are associated with splay structures off the Gilmore Suture such as the
multi-Moz North Parkes, Cadia and Ridgeway gold mines. The potential lies in several deep pipe-like
intrusives. Sovereign geologists believe these are geologically analogous to the Goonumbla Porphyry
Copper Deposits mined by Rio Tinto at Northparkes Mine.
The Company sees great potential in the Mt Adrah prospect and has announced an initial exploration
target of 1.5–2.5Mozs gold at the Hobbs Deposit. The geophysical and geochemical anomalies and
structures identified lying in close proximity (

15 July 2013
geological setting and within structures associated with the regional Gilmore Suture. At North Parkes,
drill testing has demonstrated continuity of mineralisation to depths exceeding 1,000m.
The drilling underway has now reached a final depth of 1030m.
FIGURE. 5A: MT ADRAH CONCEPTUAL CROSS SECTION (LEFT) AND SECTION CURRENT DRILLING (RIGHT)
Source: Sovereign
FIGURE. 5B: MT ADRAH - HOBBS PIPE 1
Source: Sovereign
Focus Research Investment Notes | 10

15 July 2013
PROJECT OVERVIEW BY ASSET
Sovereign has four gold projects located in the New England and Lachlan Fold Belts of New South
Wales. Sovereign’s exploration projects consists of 35 granted exploration licences (EL) and
applications (ELA) covering an area of 2,940km 2 over the Rocky River-Uralla Goldfields (see Figure 4)
and additional tenements over goldfields at Murrumbateman, Tamworth, Guyra and in the Broken Hill
district.
An initial inferred resource of 239,000oz of gold at the Hobbs Deposit at Murrumbatemen shows the
strong potential away from the Rocky River-Uralla Goldfields.
Sovereign Gold Limited (ASX: SOC)
The Company holds five exploration licences over the Rocky River-Uralla Goldfield (SOC 100%) located
in the New England Gold Belt of New South Wales. SOC’s tenements cover 2,940km 2 . The project is
located around the township of Uralla, 21km southwest of Armidale, New South Wales.
The Rocky River-Uralla Goldfield produced around 167,000oz of gold. Most of the gold was produced
from Tertiary deep leads between 1858 and 1967 with little exploration of the source of the gold. Gold
mined from hard rock mines was assumed to represent a series of small isolated Orogenic Gold
Deposits, rather than an inter-related system, now thought by Sovereign geologist’s to be an Intrusion
Related Gold System.
The possibility of an IRGS is important, meaning potentially a much larger gold deposit than that
indicated by exposure of mineralisation in old workings. Many of the mines plot on or are near a major
magnetic linear feature that coincides with the Old Bonanza Dyke. This feature is continuous over
several kilometres and strikes northeast.
ELA 4577 – Nundle Goldfield (SOC 100%)
The northern portion of the ELA is prospective for Volcanic-associated Massive Sulphide (VMS)
deposits of the copper-rich Cyprus-type (ancient sea floor, volcanic exhalative). It contains the historic
Mt. Pleasant Copper Mine. The eastern portion (Barry area) of the ELA contains a cluster of copper
and/or copper/molybdenum prospects.
ELA 4557 – Tamworth (SOC 100%)
ELA 4587 – Guyra (SOC 100%)
The northern portion of ELA 4587 hosts several small historic gold mines including Bear Hill and
Butchers Reef. Many of these gold lodes are associated with granites, especially highly fractionated
monzogranites and may have an IRGS origin. ELA 4587 is also host to several small antimony and
copper & silver mines that have not been evaluated by modern exploration techniques.
EL 4645 – Swamp Oak Goldfield, Weabonga, NSW (SOC 100%)
Adjacent to EL 7770 Fishers (SOC 100%). ELA 4645 and ELA 4648 contain significant areas with the
same geological setting as that containing the copper and gold deposits within EL 7770, i.e. they are
prospective for VMS mineralisation and exhalative gold mineralisation, as well as epigenetic
structurally controlled gold mineralisation related to regional deformation and granite intrusions.
Swamp Oak Goldfield comprising 30 mines and prospects including the Highland Mary Mine and
Rainbow Reefs.
EL 4648 (SOC 100%) - Adjacent to EL 7770 Fishers (SOC 100%). Similar geological setting to ELA
4645.
EL 6483 – Martin’s Shaft (SOC 100%) (Contiguous with EL 7491 SUGEC JV)
RC drilling campaign (54 RC holes for 4,401m) by SOC commenced March 2011 with 1200m diamond
drilling completed July 2011. IRGS System confirmed as source of alluvial gold. Historical workings
Focus Research Investment Notes | 11

15 July 2013
include Martins Shaft (1930’s), Gracie, Melvaines, Diggers Shaft, Fraser’s Find, Vickers Prospect and
Goldsworth Mines.
The Martin’s Shaft gold-bearing ore body was discovered in the 1930s and explored with grades
ranged from 3 g/t to 10 g/t. The orebody has been traced for at least 30m along strike and down dip
and remains open in both directions.
The gold mineralisation at Martins Shaft is very significant as this style of mineralisation was predicted
from the application of Sovereign’s IRGS Model. The mineralisation comprises sheeted veins and
disseminated gold mineralisation within a felsic dyke and confirms the potential of the large IRGS to
host several primary hard rock gold deposits.
Sovereign Exploration
Sovereign Gold already completed a detailed 5,008km Geophysical Survey covering a large part of
EL6483 and parts of EL7491 and EL7700.
Sovereign Gold subsequently commenced a drilling program at Martins Shaft, Gracie, Little Gracie,
Wilsons’s Creek, Frasers Find and Melvaines prospects (all within EL6483) aimed at infill drilling the
prospects and to provide samples for metallurgical test work.
Martins Shaft Drilling results:
In March 2011, a 4,400m drilling program was carried out primarily targeting the Martins Shaft
prospect. Sulphide-bearing mineralisation was encountered from surface to a vertical depth of 112m.
Drilling has also demonstrated the body of mineralisation is widening with depth to the southwest.
Drill Hole SGRRC003–19m @ 1.58 g/t Au including3m @ 4.3 g/t Au from 43m.
Drill Hole SGRRC004–16m @ 2.38 g/t Au including 1m @11.05 g/t Au from 14m.
Drill Hole SGRRC017–25m @ 1.24 g/t Au including 1m @ 3.93 g/t Au from 86m.
Drill Hole SGRRC030–119m @ 1.10 g/t Au including 5m @ 10.3 g/t Au from 76m.
Drill Hole SGRRDDH4–18m @ 3.51 g/t Au from 52m, including 10m @ 6.06 g/t Au from 27m.
Frasers Find Drilling results:
This prospect is close to Uralla and the known mineralised structure at Frasers Find is at least 250m
long and assayed up to 2.47oz of gold, 57.5oz of silver and 5.95% lead per tonne. The workings
extended to 20m depth and again water ingress severely hampered the operations.
13 diamond holes have been drilled. Drilling has traced a main narrow vein structure along 256m of
strike (still open). All holes were shallow and ranged from downhole depths of 13.4m to 55.80m. The
following assays were obtained from five holes in the main mineralised narrow vein lode:
SGRDD033: This hole had the highest drill intersection – 25.1 g/t Au over 0.11m within a total
intercept of 19.2 g/t Au over 0.16m downhole from 23.84 -24m;
SGRDD023: 19.1 g/t Au (14.25 g/t Au duplicate), 141 g/t Ag and 0.75% Pb over 0.6m (~40% length
recovery from 11.1 -11.7m downhole);
SGRDD029: 5.45 g/t Au over 0.25m including a narrow high grade sulphide portion of 10 g/t
Au(8.78 g/t Au duplicate), 316 g/t Ag, 1.98% Pb and 0.35% Zn over 0.13m (from 27 –27.25m
downhole);
SGRDD030: 1.17 g/t Au over 0.82m including a narrow high grade sulphide portion of 5.64 g/t Au
(4.08 g/t Au duplicate) over 0.08m (from 38.26 –39.08m downhole); and
SGRDD031: encountered 0.61 g/t over 0.86m (from 42.04 –42.9m downhole).
This preliminary shallow drilling program has provided precision targeting for the planned deep drilling
program in 2013.
In February 2013 Sovereign commenced diamond drilling at Melvaines Mine.
EL 7767 Murrumbateman (SOC 100%)
EL 8012 – Nundle Goldfield, NSW (SOC 100%)
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15 July 2013
EL 8056 (SOC 100%)
ELA 4760 (SOC 100%)
ELA 4760 is located 4-12km southeast of the town of Bingara in Northern NSW, about 130km north of
Tamworth. Gold was first discovered in the area in 1852. Old gold diggings consisting of small shaft
mining stretch over 2km. Modern geological models have now been developed for testing gold
mineralisation. Drilling commenced in the early 1980s with Freeport Australia Incorporated. Table 1
lists some of the significant drill intersections.
Most drill holes were shallow, under 30m, however deep holes proved gold persists to at least 149m.
Remodelling (Bingara Gold Summary Information Memorandum, 2010) suggests depth potential
remains untested.
Freeport (early 1980’s) discovered gold mineralisation and alteration in a zone 200m wide and 2km
long. Recent (2008) rock chip sampling up to 4.8 g/t Gold and geochemical surveys have extended
mineralisation north into zones untested by drilling.
The Californian Mother Lode model has been developed in the last 10 years but has not been
systematically explored for in the New England area of New South Wales. EL4670 has significant
Mother Lode Gold characteristics. The Mother Lode Gold Veins Model was developed in California and
Canada to describe gold - bearing quartz veins and veinlets with minor sulphides localized along major
regional faults and related splays within a carbonate alteration area. The tectonic/orogenic setting of
the Peel Fault is analogous to the Malones Fault Zone in California that hosts the Mother Lode Deposit
(3,800 tonnes Au). Quartz carbonate altered rock (listwanite) and sulphide alteration minerals are
associated with gold in both the Californian Mother Lode Gold deposits and the gold deposits within
ELA4760.
Precious Metal Resources Limited (ASX: PMR)
Sovereign currently owns 81.26% of PMR. PMR have 20 ELs or ELAs granted or under application in
New South Wales. Many tenements are close to SOC’s projects and PMR’s Hall Peak Project (EL4474,
EL5339 and EL7679) is part of the New England tenement package. A funding agreement exists and
SUGEX will provide $8m of toward exploration on EL4474 and EL5339 and a further $2m on EL7679 for
the right to earn up to 30%.
PMR was incorporated on 8 July 2010 and on 14 July 2010 PMR incorporated a wholly owned
subsidiary – PMR1 Pty Ltd. PMR has issued 10,000,000 Shares at $0.20 per share raising $2m to
expand and accelerate development through exploration on the PMR Tenements.
Halls Peak
Located 80km southeast of Armidale, Halls Peak is prospective for small, high grade VMS deposit, and
has identified a large anomaly believed to represent a major stratiform Zn-Pb-Ag deposit, generally
classified as a sedimentary exhalative (SEDEX) deposit. Located 80km from Armidale (Fig. 6)
EL 4474 - Halls Peak (SOC 81.26%)
(SUGEC Exploration Commitment $4m to earn 30% interest)
EL 5339 - Halls Peak (SOC 81.26%)
(SUGEC Exploration Commitment $4m to earn 30% interest)
EL 7769 - Halls Peak (SOC 81.26%)
(SUGEC Exploration Commitment $1.5m to earn 30% interest)
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15 July 2013
FIGURE 6: HALLS PEAK TENEMENTS
Source: Sovereign
Broken Hill
PMR has 7 Exploration Licences and one application near Broken Hill. (Fig.7)
ELA 4619 Broken Hill NW (SOC 81.26%)
The Broken Hill Mine is located about 30 kilometres to the south. The Company will assess the area for
copper deposits associate with Broken Hill style mineralisation. Copper deposits similar to those at
Mount Isa have not yet been located at Broken Hill, but extensive small scale copper mining
operations have been carried out. These smaller operations will be evaluated as a guide to larger
deposits possibly associated with the Broken Hill mineralisation.
The area is underlain in some parts by up to 100 metres of Cainozoic and earlier sediments over the
Willyama Block. It is hoped that modern survey methods, including VTEM surveying, will throw more
light on the rocks obscured beneath cover.
EL 7998 Broken Hill SSW (SOC 81.26%)
Several “Sisters Type” iron, copper and cobalt occurrences are present in sedimentary iron formations
within the exploration licence application, and will be the initial target of exploration.
EL 7999 Broken Hill SW (SOC 81.26%)
The area is 40km south of Broken Hill and is underlain by the Willyama Block, which hosts the
mineralisation in the Broken Hill area. Pasminco took over this area from CRA Exploration and North
Broken Hill Peko in the 1990s after they identified the West Enmore Prospect within the EL. Two deep
drill holes to depths of 222 and 235 metres were completed looking for Broken Hill style
mineralisation.
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15 July 2013
EL 8000 Broken Hill SE (SOC 81.26%)
This area will add to the area and prospectivity of the adjacent Panama Hat Goldfield. SOC hope that
modern survey methods, including VTEM surveying, will throw more light on the rocks obscured
beneath cover, and, in the northern area, on extensions to the Little Broken Hill base metal mining
field.
FIGURE 7: SOVEREIGN – PRECIOUS METALS RESOURCES ASSETS
Source: Precious Metals Resources Limited
EL 8015 Broken Hill East (SOC 81.26%)
The EL covers the eastward extension of two prominent magnetic linear features, on which the Little
Broken Hill lodes, and the lodes of the Rockwell area are localised. It is hoped that modern survey
methods, including VTEM surveying, will throw more light on the nature of these linear fractures, and
locate conductive horizons which may represent Broken Hill style mineralisation within rocks obscured
beneath thin cover.
EL 8018 Thackaringa (SOC 81.26%)
Chevron Exploration Corporation identified the Cockburn Prospect within the EL. Extensive previous
work had been carried out prior to Chevron’s work, providing a good base for further exploration.
Work planned will further evaluate the 16km of IP survey previously completed by Chevron,
particularly the relationship between IP and magnetic survey highs.
These magnetic anomalies occur in proximity to the highly mineralised Thackaringa Field. This style of
smaller scale base metal mineralisation may have formed either beneath a larger scale Broken Hill ore
Focus Research Investment Notes | 15

15 July 2013
body as vent zones for the mineralisation, or as mineralisation above a buried massive Broken Hill ore
body, remobilised by later geological activity. Both concepts will be investigated.
It is hoped that modern survey methods, perhaps including VTEM surveying, will throw more light on
the economic potential of rocks at depth beneath these deposits.
EL 8023 East Broken Hill (SOC 81.26%)
The extreme eastern margin of the Willyama Block is an area generally concealed by thin surficial
cover, making location of the contact with the overlying sediments uncertain. Inspection of the
regional aeromagnetics, together with sparse drilling in the past, demonstrates the presence of the
older Broken Hill rocks beneath the area applied for.
Several previously drilled base metal prospects are present on the linear within the EL, including CRA
Exploration Pty Ltd’s Matong and Yancowinna Prospects, and Newmont Pty Ltd’s Yalcowinna - North
Euriowie Inlier Project. These will be followed up initially by geophysics and soil geochemistry.
Surficial deposits throughout the area have obscured many bedrock features. It is considered there is
potential elsewhere within the EL for large but unrecognised sub cropping base metal deposits to be
present, but obscured.
EL 8024 - Area 1, Broken Hill SSW (SOC 81.26%)
This EL hosts the Panama Hat Gold field, comprising many previously worked gold deposits, and
extending for six kilometres.
EL 8024 - Area 2, Broken Hill SSW (SOC 81.26%)
This EL covers a linear fracture parallel to that at Broken Hill Mine, which forms the southern edge of
the Broken Hill Block. Although under cover, this fracture will be examined by geophysics to determine
whether a Broken Hill scale conductive base metal deposit is concealed at depth.
Focus Research Investment Notes | 16

15 July 2013
Gossan Hill Gold Limited (SOC 93.91%)
Sovereign obtained a controlling interest in Gossan Hill Gold Limited, owner of the Hobbs deposit, in
March 2013 (Figure 8). This is an exceptional deal where Sovereign obtained a shallow JORC Resource
of 239,000oz of gold open at depth with the potential for a much larger resource with moderate
drilling. Sovereign paid around $700,000 for Gossan Hill or $2.93/ounce, an exceptionally low
acquisition price. This Project is expected to provide the basis of an initial project.
FIGURE. 8: SOVEREIGN - EXPLORATION AREAS
Source: Sovereign
Gossan Hill prospects (see Figure 8)
Mt Adrah – (EL6372, EL7844) two licences covering 390km 2 . Lies on the Gilmore Suture,
north west of the historical mining centre of Adelong and believed to belong to the IRGS deposit
category. Mt Adrah contains the Hobbs Deposit with a 239,000oz resource. Current focus of
exploration with high potential for a large gold resource.
Peel Fault Group (EL 6648, EL 7863, EL 7862, EL 7725, EL 7726)
Five exploration licences covering 474km 2 , East of Barraba in the New England district. Targetting
orogenic, intrusion-related and Carlin type gold prospects.
Bauloora (EL7861)
One exploration licence covering 90km 2 . Potential large, untested low sulphidation epithermal gold
mineralised system near Cootamundra.
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15 July 2013
The SUGEC Joint Venture
On 28 March 2012, Chinese State Owned Enterprise Jiangsu Geology and Engineering Co Ltd of
Nanjing China (SUGEC) entered into a cooperation and investment agreement to earn 30% in the PMR
properties 81% owned by Sovereign Gold. The funding agreement will mean SUGEX will provide $8m
for exploration on EL4474 (Mt Adrah) and EL5339 (Halls Peak) and a further $2m on EL7679, for the
right to earn up to 30%. (see top-most inset in Figure 9).
This funding is coincident with the Rocky River-Uralla Project funding of up to $11m to earn a 30%
interest, with exploration on seven licences underway underway.
FIGURE. 9: SOVEREIGN - GOSSAN HILL AND SUGEC JV EXPLORATION AREAS
Source: Sovereign
Focus Research Investment Notes | 18

15 July 2013
SUGEC will commit a dedicated team of up to 14 geologists, geochemists and geophysicists to work
with Sovereign Gold on the projects. SUGEC will be entitled to a 30% interest in each respective
tenement upon meeting the associated expenditure commitment for that tenement.
Proposed Exploration
As a guide, the following exploration work will be undertaken:
Compilation and correlation of all available data from previous companies' exploration.
Detail mapping of old workings;
Soil and rock chip geochemical surveys will be undertaken;
A BLEG soil geochemical survey to define the lode, and extensions along strike;
A low level detail magnetic survey to map structures to correlating with the contact zones
between the granite and metasediments;
From these surveys, costeans will be trenched across the line of mineralisation to undertake
detailed sampling; and from these trenches it will be possible to locate prospective sites for
drilling;
Reverse Circulation (RC) drilling followed by diamond core in-fill drilling will be conducted to
provide JORC Code standard data.
Drilling will be undertaken on gold-bearing hard rock vein/dykes with the intention of
establishing Inferred and Indicated Mineral Resources by the end of 2014.
EL 7491 (SOC 100%)
(SUGEC Exploration Commitment $2m to earn 30% interest)
Contains an extension of the newly discovered IRGS in EL6483. Several areas, within EL 7491, of newly
discovered gold mineralisation in the dyke hosting Martins Shaft. The Company believes the most
recent drilling confirms that the closest analogue to this mineralisation is the 32Moz Donlin Creek
Gold Deposit in Alaska. Diamond drilling commenced on 26th November 2012 on a gold-bearing
structure 2.7km northwest of Martins Shaft. Four shallow holes drilled along a 0.73km gold-bearing
structure confirm the discovery of Martins Shaft style gold mineralisation. The gold mineralisation
occurs within the same large felsic dyke system hosting Martins Shaft.
Best results:
SGRDD037 - 5m @ 2.72 g/t Au from 7m, including 1m @ 7.8 g/t Au and 0.5m @ 12.35 g/t
Au.
SGRDD039 - 5m @ 1.07 g/t Au from 3m, including 0.6m @ 4.93 g/t Au.
SGRDD039 – 0.72M @ 129.6 g/t Ag (silver) from 13.60m, including 0.2m @ 453 g/t Ag.
SUGEC is supplying a diamond drill rig capable of depths of 600m to continue on from the successful
shallow scouting drilling program to confirm discovery of a large scale Martins Shaft style gold
mineralisation.
EL 7679 (SOC 81.26%)
(SUGEC Exploration Commitment $2m to earn 30% interest)
EL 7700 – Reedy Creek (SOC 100%) (contiguous to EL 6483, Martin’s Shaft)
(SUGEC Exploration Commitment $1m to earn 30% interest)
Significant potential for gold (Au), molybdenum (Mo), tin (Sn), antimony (Sb), copper (Cu), lead (Pb)
and zinc (Zn). Major Mineralised Structures - Host to Potential IRGS Large Gostwyck gold-bearing
alteration structure over 1km long that comprises disseminated gold in granite and associated shear
Focus Research Investment Notes | 19

15 July 2013
hosted mineralisation in the granite’s roofing rocks. Several small gold prospects are associated with
this mineralisation. Sovereign Gold geologists believe that the Mount Butler area contains newly
discovered structurally controlled sulphide alteration that is potentially the distal portion of a large
epithermal system.
Exploration commenced by SOC in October 2011 with rock chip sampling along a 2km long dyke
anomalous in bismuth and arsenic. Selected in-situ rock chip samples returned up to 7.58g/t Au.
EL 7701 (SOC 100%)
(SUGEC Exploration Commitment $1m to earn 30% interest )
Significant potential for gold, molybdenum, tin, antimony, copper, lead and zinc. Sovereign Gold
geologists believe that the Mount Butler area contains newly discovered structurally controlled
sulphide alteration that is potentially the distal portion of a large epithermal system.
EL 7701 contains the northern and western extension of the Parlour Mountain mineralisation. There
are several small tin, molybdenum, copper, lead, zinc, silver and bismuth deposits along margin of
granite.
This hosts the Boorolong Molybdenite Mine that contains several small lodes grading 0.15% Mo and
0.07% Bi.
EL 7766 Tilbuster (SOC 100%)
(SUGEC Exploration Commitment $1.5m to earn 30% interest)
Sovereign has identified two potential Intrusion-Related Gold Systems within EL 7766 north-east of
Armidale, NSW. These comprise the Tilbuster and Puddledock hard rock gold deposits. The gold lodes
of the Tilbuster gold area have received virtually no exploration for 100 years and have never been
drilled.
The Tilbuster hard rock gold deposits consist of a series of historic gold mines that extend northeasterly
for 1,850m; these structurally controlled gold lodes occur over a maximum known width of
150m.
Both these new IRGSs host repetitions of the geological setting of the Rocky River-Uralla Goldfield.
Best results:
Grab sample assays from dumps at the Great Britain (Tilbuster) Mine returned grades up to
79.3g/t Gold and 96.4 g/t Silver.
EL 7768 Uralla (SOC 100%)
(SUGEC Exploration Commitment $2m to earn 30% interest)
Considered prospective for IRGS, copper/base metals, antimony, molybdenum and tin. Mineralisation
includes Baxters Antimony Mine - drill intersections of antimony (Sb) up to 3.5m wide with grades up
to 10.1% antimony (Sb).
Successful exploration completed to date in EL 7491 and EL 7768: Over 2,600 soil and stream sediment
samples have been collected within EL 7491 and EL 7768 together with a detailed ground magnetic
survey over both ELs. This work has resulted in the discovery of several geochemical and geophysical
anomalies.
EL 7770 Fishers (SOC 100%)
(SUGEC Exploration Commitment $2m to earn 30% interest)
Host to VMS polymetallic (especially copper) mineralisation and exhalative gold mineralisation, as well
as epigenetic structurally controlled gold mineralisation related to regional deformation and granite
intrusions. EL7770 contains over 22 gold prospects including 12 in the Limbri area that could
potentially be indicative of larger, stratabound exhalative gold deposits.
These include deposits such as Trough Gully and Fishers Copper Mine from which 2,572 tonnes and
2,643 tonnes of copper ore were produced respectively. The copper-rich lenses can extend for over
Focus Research Investment Notes | 20

15 July 2013
150m along strike, are up to 4m wide and can extend 60m down dip. Grades were generally between
2% and 4.5% copper with some ore from Fishers Copper Mine averaging more than 15% copper.
The last exploration was in 1970-71 where a percussion drill hole intersected an interval of about 1.5m
averaging 5.45% copper in an interval of around 4.5m downhole at 2.45% copper. Assays of
mineralisation from Fishers Copper Mine showed the mineralisation contained about 30 g/t silver and
1.5-3.0 g/t gold.
Drilling has been carried out at only one prospect (Fishers) and potentially economic mineralisation in
one hole (PDH6) was not followed up. The likely source of the mineralisation, and therefore
potentially larger (mineralisation) bodies, is down dip to the east and a programme of detailed,
geophysics and drilling is warranted to evaluate the potential for economic mineral deposits down dip
from the known deposits.
Ibam Hill Gold Project
On 17 June 2012 Sovereign Gold announced that it had entered into a 50% joint venture in the
advanced Ibam Hill (Malaysia) gold exploration project. Sovereign Gold’s interests in the joint venture
are held by MAS Gold Pty Ltd, a 100% owned subsidiary of Sovereign Gold.
MAS Gold will fund development of the project up to AU$1.5m, and also provide expertise for the
project.
This 50% Joint Venture is situated in Eastern Gold Belt 3, Pahang State, Malaysia. The prospect is
located in the Bukit Ibam State Forest Reserves which are accessible via the Kuantan-Segamat
Highway. Block B is located 91.50km and 38.90km south respectively by road from the city of Kuantan
and the town of Chini. Bukit Ibam is about 145km from Kuala Lumpur.
The geology of Ibam Hill is not dissimilar to the Selinsing Gold Deposit in the Central Gold Belt. The
Eastern Gold Belt is an under-explored part of the world with excellent exploration potential for gold,
tin, iron ore and other commodities. Ibam Hill Project has potential for early production of a modest
nature from bulk sampling campaigns.
The Ibam Hill Gold Project is located in the Eastern Gold Belt in the Malaysian state of Pahang in the
Bukit Ibam State Forest Reserve; which is 152km ENE of Kuala Lumpur.
The geology of Ibam Hill is not dissimilar to the Selinsing Gold Deposit in the Central Gold Belt. The
Eastern Gold Belt is an under-explored part of the world with excellent exploration potential for gold,
tin, iron ore and other commodities.
Mineralisation at Ibam Hill is hosted within a major shear zone, a zone marked by intense alteration
and silicification. During a recent site visit, visible gold was observed in some samples of vein quartz.
Construction of an exploration camp and site office is finished. Earthworks have created access for up
to a 2,000-metre RC drilling program with hole depths potentially up to 150 metres. The Ibam Hill Gold
Project is an important step forward because it offers an opportunity for early development of a
modest cash flow within 18 months.
Focus Research Investment Notes | 21

15 July 2013
RISK ANALYSIS
Topic Risk Comment
Deposit Growth Low Focus Research does not consider this to be high risk. Recent drill results suggest
significant exploration upside and SOC has outlined significant exploration targets.
Financing Risk Medium New projects can only be developed if sufficient capital can be sourced to fund the
assessment and construction of the capital items. The current global economic
environment has reduced the availability of both debt and equity for mining
projects, especially small-to-mid cap resource companies. SOC has an advantage in
that the partnership with SOGEC will providing $21m in funding. Some facilities and
infrastructure are in place from prior mining operations.
Development Risk Low SOC is an early stage exploration company is not at a stage for this to have a
material effect.
Commodity Price Risk Low SOC is an early stage exploration company is not at a stage for this to have a
material effect.
Currency Risk Low SOC is an early stage exploration company is not at a stage for this to have a
material effect.
Sovereign Risk Low The Australian Constitution recognises the ownership of minerals is mostly held by
the Crown and administered by the State governments. The Constitution preserves
the right of the State to tax production through royalty mechanisms but not tax
profits. The Minerals Resource Rent Tax (‘MRRT’) came into effect on 1 July 2012.
While the MRRT currently only covers iron ore and coal, certain political parties
within Australia are continuing to push for gold and other minerals to be included.
Environmental Risk Low An increased focus on mining operations by environmental groups may result in
additional restrictions on operations. However, this risk is mitigated by experienced
executive and management teams who are aware of the rights and obligations set
out in the granting of an Exploration License or Mining Lease.
Ore Body Risk Med Uncertainties in ore reserve estimation, mine planning and project evaluation.
FINANCIAL POSITION
Funding Agreement
SOC has currently $1.5m cash as at end of May 2013 with $0.16m of a $0.5m credit facility drawn
down. The balance of a secured loan is $1.18m and if called would increase available cash to $1.37m.
SOC has a funded exploration program with SUGEC worth $21m, of which $10m is attributable to
three tenements owned by Precious Metal Resources Limited (ASX: PMR) in which SOC has an 81.26%
holding.
In order to preserve existing funds, Sovereign Gold has made arrangements to place up to $500,000
worth of shares it currently holds in Precious Metal Resources Limited (ASX: PMR) (SOC: 81.26%) to
professional and sophisticated investors to fund the next planned 1000m hole at the Hobbs Pipe 1
deposit.
We do not believe the current cash balance is enough to cover exploration programs and ongoing
costs on SOC’s 100% owned tenements going forward and a capital raising will be required in the
short-term.
Focus Research Investment Notes | 22

15 July 2013
HISTORICAL CAPITAL RAISINGS
Date Raised Amount No. Shares Price Comment
May-11 $2,450,000 7,000,000 $0.350 Placement
Feb-13 $500,000 2,500,000 $0.200 Placement
HISTORICAL FINANCIALS
(A$m) Dec-10 Dec-11 Dec-12
Earnings Summary
Sales Revenue - - -
EBITDA -0.47 -1.23 -1.29
EBIT -0.47 -1.23 -1.19
NPAT -0.46 -1.05 -0.92
EPS Adj (cents) -2.50 -1.42 -0.87
Balance Sheet Summary
Cash 2.84 1.41 0.16
Total Current Assets 3.21 2.27 1.83
PP&E 0.17 2.00 3.60
Total Assets 3.38 4.27 19.51
S/T Debt 0.00 0.00 0.00
Total Current Liabilities 0.13 0.05 0.08
L/T Debt 0.00 0.00 0.00
Total Debt 0.00 0.00 0.00
Total Liabilities 0.13 0.05 0.09
Net Assets 3.25 4.22 19.43
Cash Flow Summary
Operating Cash Flow -0.16 -3.00 -2.48
Investment Cash Flow -0.49 -0.44 -0.85
Financing Cash Flow 3.50 2.02 2.08
Net Cash Increase 2.84 -1.43 -1.25
Focus Research Investment Notes | 23

15 July 2013
BOARD OF DIRECTORS
Michael Leu – Chief Executive Officer
Michael Leu is a geologist with over 30 years professional experience in exploration and mining across
a range of mineral commodities within Australia and some Pacific and Asian countries. He has worked
in industry (Freeport, Getty Oil, Queensland Ores), as a private consultant and for seven years on the
academic staff of Macquarie University.
He has extensive expertise in mineral exploration for epithermal and porphyry gold±Cu deposits;
Intrusion Related gold systems; metahydrothermal gold; greisen-hosted molybdenite, wolfram and
tin; volcanic-hosted massive sulphides; chromite; uranium; alluvial gold and platinum and a range of
industrial minerals.
John S Dawkins - Non-Executive Director
Mr Dawkins' earliest exposure to the mining industry was when as Minister for Trade in the Hawke
Government he was responsible for the administration of export controls on certain minerals until he
proposed the abolition of these arrangements in order to improve the operation of the market. During
his time in Government he also served in a number of other portfolios including as Treasurer. Since
leaving politics he has been an occasional adviser to the World Bank and OECD and has held a number
of board positions including Elders Rural Bank (now Rural Bank); Sealcorp Holdings (now Asgard
Wealth Solutions); while his current appointments with the listed companies include Australian
Bauxite Limited, Tiaro Coal Limited, Precious Metal Resources Limited and Integrated Legal Holdings
and the unlisted Government Relations Australia Advisory Ltd. He also chairs the Australian
Qualifications Framework Council, the National Skills Standards Council and the Board of Governors of
the Institute for International Trade at the University of Adelaide.
Peter J Meers - Non-Executive Director
Peter Meers has broad business experience across a range of industries including consumer,
commercial and investment banking, securities trading and origination, mining and exploration and
building materials. He is CEO of Tiaro Coal Limited.
Mr. Meers held senior executive positions and portfolio management roles in agribusiness, mining,
property and trade finance during a career spanning 25 years with ANZ Bank in Australia and Asia.
Past directorships include appointment on company boards in Malaysia, Indonesia and Singapore. Mr
Meers is Executive Chairman of Hudson Resources and Chairman of Australian Bauxite Limited.
Jacob Rebek - Non-Executive Director
Jacob Rebek is an Australian geologist with forty years experience in exploration. From 1970 to 2003
he worked for CRA and Rio Tinto in various parts of Australia and overseas. His roles included that of
exploration manager for Papua New Guinea in 1970’s, South Australia and Northern Territory from
1981 to 1984, Eastern Australia from 1987 to 1993 and Exploration Director for South America from
1997 to 2000.
He led teams which discovered new zinc, copper and gold deposits including Gold Ridge in Solomon
Islands and Wafi in Papua New Guinea. Since 2003 he worked for emerging companies, generating
new projects. In 2006 he started working for Hudson as Chief Geologist and led the small team, which
discovered the bauxite deposits that are now the core assets of Australian Bauxite Limited.
* Biographies are adapted from company filings.
Focus Research Investment Notes | 24

15 July 2013
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future returns may not be realised. Recipients should verify all claims and do their own homework before investing
in or trading on any recommendations in this publication. Investing in securities and derivatives, particularly
options, futures, commodities, bonds and CFD’s is extremely speculative and comes with a huge degree of risk.
Losses may be unlimited and there is credit risk. Recipients may lose untold sums of money investing or trading in
such securities or investments. We recommend you seek independent advice.
Focus Research Investment Notes | 25

15 July 2013
STOCK RECOMMENDATION
Investment ratings are a function of Focus Research’s expectation of total return (forecast price appreciation plus
dividend yield) within the next 12 months. The investment ratings are BUY (expected total return of 10% or more);
HOLD (-10% to +10% total return) and SELL (>10% negative total return). In addition, we have a SPECULATIVE BUY
rating covering higher risk stocks that may not be on investment grade due to low market capitalisation, higher
debt levels, or significant risks in the business model. The latter may include early stage exploration companies
without JORC resources, a demonstrated mineable reserve, or a completed Bankable Feasibility Study supporting
project development. Investment ratings are determined at the time of the initial coverage, or change of target
price. At other times the expected total return may fall outside of these ranges because of price
movement/volatility. Such interim deviations from specified ranges will be permitted but will become subject to
review by Research Management.
ANALYST VERIFICATION
I, Rod Buckton as the author of this report, and Research Analyst of Focus Research, hereby certify that the views
expressed in this research accurately reflect my personal views about the subject securities or issuers and no part
of analyst compensation is directly or indirectly related to the inclusion of views in this research. The analysts
principally responsible have taken reasonable care to achieve and maintain independence and unbiased objectivity
in making any recommendations.
Focus Research Investment Notes | 26

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