Kula probes deeper into historic Mt Palmer gold mine

Kula Gold has cranked up a diamond drilling program at its Mt Palmer gold mine near Marvel Loch in Western Australia’s Southern Cross goldfield to test below the shallow limits of previous gold production that was interrupted by World War II.

The company has designed three HQ3 diamond drillholes for a total of 320m of core, neatly exploiting three existing reverse-circulation (RC) drillholes as pre-collars to depths between 102m and 156m. The holes will test the down-plunge, along-strike extensions to the site’s historically-known gold orebody.

HQ3 diamond coring uses a third barrel referred to as an inner tube-liner or split tube, which is typically employed to maximise core recovery when drilling coal, clay or clay-bearing, or highly-fractured formations to deliver maximum core recovery and also to maintain core integrity.

The coring operation at Mt Palmer will be undertaken by contractor Terra Drilling, which has agreed to provide drilling services in return for equity related to any further metreage within the current target framework beyond the initial three holes.

Historic data reviewed by Kula shows solid targets for high-grade gold mineralisation extending below 160m, the past mining level, shallow by today’s modern operating practices. With the current gold price over $US2500/ounce ($A3800), this is an opportune time for Kula to be exploring and advancing a previously-producing high-grade gold mine.

The historic Mt Palmer gold mine was last commercially mined in 1944, only as deep as the 6 Level (about 160m deep). It produced about 158,000 ounces of gold at 15.9 grams per tonne between 1934 and 1944.

The mine closed primarily due to the prolonged duration of WWII, which brought about a mass exodus of miners and a shortage of materials. It subsequently became flooded and never reopened.

The operation lies 40km south-east of the WA Wheatbelt town of Southern Cross, 21km north-east of the historic Nevoria gold mine that produced more than 600,000 ounces of gold, and about 34km east/north-east of the Marvel Loch gold mine believed to have produced between some 2.4 million and 3 million ounces of gold.

In early July, Aurumin entered into an agreement with Kula to divest up to 80 per cent of its Mt Palmer gold project, with the aim of freeing it from some of its diverse commitments, eliminating debt and enabling it to focus more fully on its key gold interests at Sandstone.

Kula issued Aurumin with 2.5 million of its shares, valued at $250,000, to acquire its current 51 per cent interest in Mt Palmer. It can also earn a further 29 per cent interest in three years by spending a further $1 million.

If Kula decides not to proceed with the second stage of its earn-in or does not satisfy the agreement’s conditions within three years, Aurumin would be able to take back a 2 per cent joint venture (JV) share in the Mt Palmer tenure for just $1.

The Mt Palmer acquisition adds significantly to Kula’s Marvel Loch project that already has multiple gold prospects and provides it with a powerful opportunity to discover additional high-grade gold mineralisation. Sitting just 15km from the Marvel Loch gold processing plant and infrastructure, the acquisition is in line with Kula’s strategy of exploring “in the shadow of the head-frame” close to existing operations.

Management says it is also continuing to assess other prospects along the 10km of the greenstone belt that hosts the Mt Palmer gold mine.

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