Kula launches drilling at high-grade Mt Palmer gold mine

Kula Gold has unleashed the reverse-circulation (RC) drill bit at Western Australia’s historic Mt Palmer gold mine to explore for extensions at its 51 per cent-acquired ground, 15km east of Marvel Loch in the Eastern Goldfields.

The company’s tenement interests are ringed by a myriad of gold mines, deposits and prospects that include the old Marvel Loch and Nevoria mines and the more recent Yilgarn Star mine – all owned by Barto Mining. Management sealed the deal for the ground in May by agreeing to issue 2.5 million of its shares to owner Aurumin and can earn a further 29 per cent of the operation by spending $1 million in exploration expenditure in a period of up to three years.

The deal was part of Aurumin’s divestment plans so it could focus more squarely on its Sandstone gold project. If Kula satisfies the requirements to claim the extra 29 per cent, expenditure will be decided on a pro-rata basis for the two companies, or Aurumin will take a 1 per cent gross royalty if its hold dilutes to below 10 per cent.

The renowned Mt Palmer gold mine and related project ground is contiguous with the north-eastern part of Kula’s 100 per cent-held tenure.

This historically rich ‘half-ounce’ gold mine has had ~200 workhours of analysis by Kula’s technical team and shows solid targets for high-grade gold mineralisation extending down-plunge. This acquisition aligns with the Company’s strategy to explore near, existing operations to fast-track any discovery to monetary success.

The Mt Palmer mine, formerly known as the Yellowdine mine, has a history of high-grade gold production down to the No. 6 level at the site – which is about 160m deep – giving up some 150,000 ounces of gold at grades said to be going at 15.9 grams per tonne, before commercial operations ceased in 1944. The mine closed largely due to ongoing World War 2 restrictions that affected labour and materials supply.

Following the closure, the mine became flooded and never reopened. More recent limited exploration has avoided the problem of dewatering the underground workings, with a focus instead on small open-pittable resources above 100m depth.

Kula’s RC program is designed to test steep, southerly down-plunge and along-strike extensions to the historically-known gold mineralisation where high-grade shoots developed in stratabound veins on fold limbs and closures were exploited over strike distances of up to 200m and to widths of about 10m, down to the No. 6 level.

The Main lode is interpreted to potentially tie in with the previously and partially-mined East lode, which could extend to depth below the No. 6 level. Both Main and East lodes have been subject to small open pit exploitation.

A shallow West lode and a new lode even further to the west – also partly mined by open small pits – will also be tested. Management says the surrounding area retains “excellent exploration potential, given the limited systematic exploration to date”.

Both Kula’s 100 per cent-owned land and its Mt Palmer earn-in ground enclose about 25km of strike along the greenstone-granite sequence that contains many of the area’s historic and current gold resources and deposits. The company has already identified three other targets in its own Marvel Loch project ground – Stingray, G-Star and Nevoria North – which extend inside its ground for about 7km north along strike from the old Nevoria mine that produced more than 600,000 ounces of gold.

In October 1936, the Coolgardie Miner reported that the Yellowdine mine had treated ore valued at £38,063 in just one month. The Reserve Bank of Australia estimates that figure would be worth about $4.34 million in today’s money.

So, combing the two old exploration adages about the merits of “exploring in the shadow of the headframe” and “where there is smoke there is often a raging inferno,” it seems that Kula could not find itself in a better place to kick off its latest campaign.

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