Southern GoldLtd. has started 800 meters of diamond drilling at its Kochang goldproject in South Korea, with 70% of the costs to be covered by government-backedKorean Resources Corp., the company said July 18.

The Kochang project is part of the company's recentacquisition ofHee Song Metals Co.Ltd., which holds 44 granted tenements across 17 project areastotaling 119 square kilometers in the East Asian country.

Southern Gold said July 8 that it entered a bindingagreement to acquire Asiatic GoldLtd.'s wholly-owned Singaporean registered company, InternationalGold Private Ltd., which owns a 100% stake in Hee Song.

The company is required to issue 6,294,942 ordinary shares,pay A$116,000, and assume A$70,000 of Hee Song's liabilities as part of thedeal.

Drilling will be focused on at least four of sixhigh-priority targets over the next 12 months, and will target the extension ofgold-bearing quartz veins that represent extensions of the Kochang gold mine.