Kula, Aurumin fast-track gold hunt near old Southern Cross mine

With booming gold prices offering a minted opportunity for gold juniors to turn a quick profit, Kula Gold has fast-tracked its exploration plans at its historic Mt Palmer gold mine in Western Australia’s Southern Cross goldfields.

The company owns 51 per cent of the project with joint venture partner Aurumin Limited and has the option of moving to 80 per cent by spending $1 million on exploration drilling across three years.

When Mt Palmer was active in the late 1930s and the early 1940s it produced more than 150,000 ounces of the yellow metal at a stunning grade of 15.9 grams per tonne (g/t). The mine eventually closed down in 1944 due to war conscription, never to reopen.

To get the ball rolling as quickly as possible, Kula kicked off a quick 658-metre air core drilling program last week to test for depth and distribution of mineralisation at the old mine’s tailings dam.

The company says the historic tailings could host up to 200,000 tonnes of waste material and may still be stacked with residual gold due to the poor recovery processes used by the old-timers in the 1940s.

Even if the previous miners were able to recover as much as 75 per cent of the gold, it could still leave plenty of juicy grade that would benefit from modern processing technology.

If the air core results – due in the next two weeks - show the grades stacking up, then the tailings could offer a quick and easy opportunity to cash in on the booming gold price by toll treating the material at either Barto’s Marvel Loch plant or the Ramelius Resources-owned Edna May processing facility.

A metallurgical test has been planned to follow up any positive findings.

Kula says any cash flow generated from processing the tailings could then be directed towards a more detailed exploration effort under and around the old mine.

“With gold approaching $4800 per ounce, our Mt Palmer gold project is finally getting the undivided attention to hopefully set Kula on a serious growth path to cashflow.” Kula Gold managing director Ric Dawson

Kula has already drilled two diamond-tailed reverse circulation holes below the existing workings to test for extensions of the rich veins that fed the old-timers and to get a better understanding of the orebody’s structure.

Astonishingly, only seven diamond drill holes have ever been drilled beneath the previous mine, which extend to 155 metres deep. This poses a tantalising question as to what treasure may lie beneath.

The company has also hauled in a reverse circulation rig to immediately test shallow targets close to the old gold mine.

The reverse circulation program will initially focus on the company’s Bryant prospect, which is open along strike and at depth, and is directly east of Mt Palmer. Some of the more notable hits from earlier drilling include 4m grading 3.02g/t gold from 18m and 7m running at 3g/t gold from 15m.

The rig will then move onto the El Dorado prospect, 5 kilometres north of Bryant, which previously threw up a 6m hit grading 8.3g/t gold from 28m.

With Australian gold price seemingly on an unstoppable path to $5000 per ounce, while mining costs remain relatively flat at about the $2200 per ounce mark, junior gold exploration companies have rarely seen gold mining as financially rewarding as it is right now.

Kula appears to have signalled its determination to make hay while the golden sun shines.

Should the tailing results come up trumps, the company could quickly transform into a Southern Cross gold producer with sufficient cash flow to hunt down a potentially massive company-maker under the old Mt Palmer mine.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au