Kula set to hammer new gold targets east of historic WA mine

Kula Gold it is hot on the trail of what it says is an unexplored greenstone belt that lies to the east of its recently-acquired historic Mt Palmer gold mine site in Western Australia’s Southern Cross region – and it is preparing a drill assault to test its theory.

The company plans to target the potential greenstone belt that appears to run for more than 8km to the east of the historic mine and is aptly dubbed Mt Palmer East.

Management says it has unearthed the potential eastern zone from coincident geophysical surveys and previous air-core (AC) drill programs conducted across the site. It defined the highly-prospective north-to-south magnetic high from the survey.

The original AC drill program on the eastern ground was completed in 1993 and targeted bedrock mineralisation for a single east-to-west, 3.5km line traverse, with varying gold grades discovered between 86m and 89m.

Management says the 1m hits ranged from 0.56 grams per tonne gold up to 102g/t and that no significant basement drilling has been completed since then. It added a modest follow-up AC program was completed in 2012, however, it failed to once again properly target the fresh basement rock.

The company believes there has been no reverse-circulation (RC) or diamond drilling into the underlying bedrock and it now plans to home in on the eastern area and hammer the basement rock with a significant program to explore the full potential of the promising site.

The historic Mt Palmer operation produced more than 150,000 ounces of gold grading 15.9g/t before it was shuttered in 1944 due to labour and materials shortages resulting from the ongoing World War II battle.

The company agreed to acquire the project in a $250,000 joint venture (JV) agreement with ASX-listed vendor Aurumin, taking an initial 51 per cent stake and with an option to earn up to 80 per cent by plunging a further $1 million into exploration during the next three years.

Management undertook a capital raising in May, bolstering its finances to the tune of about $1.2 million, to acquire the project, fund the upcoming drill program and use the balance for working capital purposes.

Upon reaching an 80 per cent interest in the project, further spending will be pro-rata, or Aurumin can dilute its holding and convert to a 1 per cent gross royalty if its stake falls below 10 per cent.

Mt Palmer sits about 15km from Kula’s Marvel Loch gold plant infrastructure and aligns with its strategy to explore prospective ground near its existing operations.

This prospect was dismissed and subsequently overlooked due to perceived paleochannel geometry. More recent exploration also replicated the previous theory and did not explore significantly into the basement rocks for a primary source of the gold mineralisation obtained in the air-core drilling. The magnetic signature that is coincident with these gold assays warrants future drilling.

The JV controls a significant portion of the eastern greenstone limb around the Ghooli Dome within the Southern Cross goldfields belt.

Mt Palmer sits about 40km south-east of Southern Cross, an old WA town that is 370km east of Perth and was founded in 1888 after a couple of gold prospectors discovered the precious yellow metal there late in 1887. It also lies north of the Nevoria gold mine that produced 600,000 ounces of gold and east of the 2.4 million-ounce Marvel Loch gold mine.

Limited exploration has occurred at the Mt Palmer project site since the closure in 1944, except for several attempts to extract open-pit material from surface to a depth of 100m.

With the price of gold hitting all-time highs in recent weeks and maintaining a heady standard of more than AU$3921 today, Kula’s decision to target an area close to an historical mineralised source could well kick some big modern-day goals.

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