Kula Gold (ASX: KGD) has snared a 51 per cent interest in the historic Mt Palmer gold mine in Western Australia’s Goldfields region following a deal with ASX-listed Aurumin (ASX: AUN) that will partly be funded through a $1.21 million placement.
In production for a decade until 1944, Mt Palmer delivered more than 150,000 gold ounces at a respectable 15.9 grams per tonne until it was closed due to labour shortage with the continuation of the second World War.
The acquisition immediately piqued the interest of the ASX market this morning, with Kula’s share price jumping 70 per cent from a previous close of 1c to hit a high of 1.7c – and on the company’s biggest trading volumes since February.
Historic gold production at Mt Palmer was from a shallow open pit and underground workings that were developed on two shoots – the Main Lode and East Lode – in addition to the smaller West Lode and New Lode that are positioned to the west of the main shaft. Management says gold mineralisation at the operation is hosted by quartz veins in folded and sheared tholeiitic basalt.
The mine is within shouting distance of Kula’s Marvel Loch project, situated between the 600,000-ounce Nevoria mine and the 2.4 million-ounce Marvel Loch mine where the company is exploring several gold prospects, including its Boomerang target that is based around a magnetic low feature.
This acquisition is in alignment with the Company’s strategy to add assets near to existing operations to fast track any discovery to monetary success. This historical rich ‘half ounce’ gold mine has huge potential high-grade gold and is a priority drilling target for Kula.
Kula Gold managing director Ric Dawson
The company recently kicked off drilling at Marvel Loch with a focus on Boomerang, in addition to testing its recently-discovered Stingray prospect and its Crayfish, Nevoria North and G-Star targets.
It previously drilled a series of reverse-circulation (RC) holes at Boomerang on a 200m-by-200m grid in the search for kaolin, with one returning a 1m gold hit at 2.6g/t from 54m. A kaolin mineral resource at Boomerang was defined at 93.3 million tonnes.
The gold anomaly at the prospect is situated along a north-west orientation, which management says is the optimal configuration as most of the gold deposits in the Southern Cross area strike in the same direction.
While historical exploration programs at Mt Palmer were focused on gold mineralisation, management says the drilling database notes several parallel pegmatite intersections of up to 50m thickness. Previous fieldwork has thrown up lithium results of up to 146 parts per million and historical tantalum results of up to 391ppm that have never been assayed for lithium.
Management also believes the geology associated with Mt Palmer is analogous to Wesfarmers’ and Chilean lithium giant Sociedad Química y Minera’s Mt Holland lithium deposit that sits 65km to the south.
Back in 2022, Aurumin completed a 12-hole RC program at the site, with up to 370ppm lithium detected across several samples. The campaign drilled 1212m into the Vickers Find South prospect and intersected pegmatites ranging in thickness from 1m to 40m in 11 of the 12 holes – with a typical width of 20m.
According to the terms of the new deal with Aurumin, Kula will acquire the 51 per cent interest in the site, including four tenements and additional mining information for a $250,000 payment in cash or shares. It can then earn a further 29 per cent by spending $1 million in exploration expenditure for a period up to three years.
Once the three years are completed, the two companies will contribute on a pro rata basis. Aurumin’s equity position will convert to a 1 per cent net smelter royalty if its equity position dilutes to less than 10 per cent.
Kula intends to use the funding from its $1.21 million placement towards the acquisition, in addition to a planned drill program at Mt Palmer and to bolster further working capital.
With today’s Australian gold price still sitting at about $3540 an ounce, there is little wonder companies such as Kula are positioning to get a bigger fistful of the precious yellow metal.
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