Gold Exploration

Based on SXG's three-pronged exploration strategy, the Company's gold exploration program comprises:

1. Increase Resource/Reserve base at existing deposits

View Southern Cross Goldfields' current JORC-compliant resources.

An extensive drilling program is planned for 2011 to in-fill the existing resource models and target resource extensions. The Python, Goldstream and Dolly Pot deposits all remain open at depth, and SXG believes significant potential exists to expand these resources through further drilling.

2. Establish initial resource estimates for key exploration targets

SXG has a large number of exploration targets that have delivered promising past drilling results or seen historic mining, however many of these targets have not been closely assessed.

The Company's goal is to conduct further exploration over these areas to establish maiden resource estimates, with the potential to add additional tonnes to a future mining operation.

Key initial targets include:

Andromeda deposit

SXG identified gold mineralisation over a strike length of 200m at Andromeda in 2008, including results of up to 16m @ 3.10g/t Au from 88m, and in May 2010 completed a RAB drilling program to the north and west of Andromeda to test along strike of the previously identified mineralisation.

The program comprised 39 holes for 1,901m of drilling, and successfully extended the mineralisation to the north by between 80m and 160m, with two adjacent holes returning intercepts of 8m @ 0.74g/t Au from 52m (ADRB007) and 8m @ 1.04g/t Au from 52m (ADRB008). It appears that a repeat may be starting on the northernmost line drilled, with ADRB030 returning 4m @ 0.23g/t Au from 52m. In addition, an indication of a sub-parallel zone to the west has been identified.

The Company's next aim is to trace the auriferous structure along strike to the north and south to identify targets on that prospective trend.

Blue Peter deposit

Significant gold mineralisation has been intersected historically at the Blue Peter prospect, located adjacent to the Evanston Mine within the Marda Project area. Two RC holes which were drilled to confirm the continuity of existing mineralisation at the prospect provided encouraging results. Weak to intense silicification and sericite alteration is seen within the host BIF unit together with abundant iron oxide and minor patchy pyrite. The following intersections were returned:

Drill Results from Blue Peter
Hole Id	MGA East	MGA North	Depth m	Azimuth mag	From (m)	To (m)	Interval (m)	Grade g/t Au
BPRC001	739634	6706631	72	140	29	36	7.0	3.75
BPRC002	739653	6706668	83	140	36	42.0	6.0	2.36

Evanston Mine

Previous mining at the Evanston Mine was conducted in two phases. The first by Western Mining Corporation and Evanston Gold NL between 1929 and 1951, when a total of 61,000oz of gold was produced at an average grade of about 16g/t Au. The second was by Herbert Mining during the late 1990s and early 2000s. Records of this mining are scanty but it is believed around 0.2-0.3Mt grading 3-4g/t Au (20,000 to 40,000 ounces) was mined.

A considerable pre mining (non JORC) resource existed in the late 1990s and potential for a significant remaining deposit can be interpreted.

Work will target the Evanston Shear Trend where gold mineralisation occurs in a variety of geological settings. The trend is masked by thick soil cover over much of its strike making earlier prospecting and exploration ineffective. RAB drilling is planned to test this area beneath cover in 2011.

3. Greenfields exploration program

Working in a highly prospective established mining province, the Company believes there is significant potential for the discovery of a major new +1Moz gold deposit. The Company is utilising modern exploration techniques to target new discoveries.

The Company's extensive tenement holdings of nearly 4,000km² in the region offer excellent potential for the discovery of significantly larger deposits in soil covered areas along strike from known gold mineralisation. The trend is masked by thick soil cover over much of its strike making earlier geochemical prospecting and exploration ineffective. In mid 2011 a detailed review and targeting exercise over the Marda Gold Project was completed and returned very positive results. Part of that review included target generation along the prospective Evanston Shear Zone for greenfields gold targets.

The Company is conducting an active gold exploration programme, initially auger sampling targets on the Evanston Shear Zone along strike to the north and south of the Red Boomerang prospect, followed by RAB drill testing. Porphyry-hosted mineralisation has been previously identified at Red Boomerang and demonstrates the potential for large mineralised systems along that trend by analogy with other porphyry-hosted systems in the Yilgarn Craton such as Kanowna Belle. To the northeast of Red Boomerang potential for significant gold mineralisation exists along 30km of prospective shear strike which has only been partially explored. Along strike to the south a further 20km of strike remains to be effectively tested. SXG has had recent success close to Red Boomerang where strong auger gold results have been located and are untested by drilling.