exciting project upside indicated by watou drainage ... · 03/08/2015 · watou drainage...

ASX Code: KGD 3 August 2015

ASX Announcement & Media Release

1 | P a g e www.kulagold.com.au

Exciting Project Upside Indicated by Watou Drainage Anomalies.

Pan concentrate results indicate continuity of Watou surface gold

mineralisation

Watou drainage anomalies, defined by high levels of detrital gold in

pan concentrates, correspond closely to areas of colonial sluicing

Watou Prospect continues to demonstrate the potential for

Woodlark to deliver additional ounces to improve Project

economics

Regional pan concentrate program to cover 30 square kilometres of

sub cropping prospective volcanics; additional results expected

The Company continues to look for Corporate and or Project level

Joint Venture opportunities to advance the Project

Kula Gold Limited (ASX: KGD) (“Kula” or “the Company”) is pleased to announce the results of the first

phase of a regional pan concentrate drainage sampling program to identify exploration and potential

resource targets by the collection of drainage pan concentrate samples from a 30 square kilometre

area of sub-cropping prospective Okiduse Volcanics within trucking distance of the plant site selected

in the feasibility study for the Woodlark Island Gold Project. (see Figure 3). The initial phase of the

program was focused on the immediate area surrounding the Watou Prospect where previous

trenching has intersected vein and breccia hosted mineralisation with gold tenor currently averaging

higher grades than the current global resources for the Project. (Refer to ASX announcement

4/02/2015). The Watou Prospect is postulated to be an extension of the Woodlark King Deposit,

offset by a NE/SW regional structure and a continuation of the prospective 2.5 kilometre long

Woodlark King Illawarra Fault Zone. (see Figure 1).

Kula Gold CEO, Stuart Pether, commented “The regional drainage sampling program has immediately

delivered results and demonstrated the increased potential of the Watou Prospect to deliver

additional resources for the Project. The area of the anomalous zones is at least twice the area of the

current Watou mineralisation, defined by close space trenching. The shape of the anomalies confirms

our understanding of the regional NW and NE structural controls on mineralisation.”

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Figure 1. Location of Watou Prospect (red dot) in relationship to

the Woodlark Island Gold Project Ore Reserves (red stars). The

figure shows the postulated NE / SW offset of the prospective

Woodlark King Illawarra Fault.

The low cost regional drainage sampling program entails the collection of pan concentrate samples

from selected sites to test drainage basins over a 30 square kilometre area of sub-cropping

prospective Okiduse Volcanics. The selected sample points and drainage basins are defined by high

quality LiDar data. A standard 44 kilogram sample is secured from active drainage sediments and the

sample is panned to a produce a concentrate. The pan concentrate is grain counted using a binocular

microscope for detrital gold at three screen fraction sizes to denote fine, medium and coarse grained

gold particles and associated base metal sulphides and quartz-gold composites are also logged. The

anomalies are rated not only on total gold particle counts but also on the proportion of coarse and

fine gold particles. The anomalous drainage basins are defined on the basis of pan concentrate

samples containing a total gold particle count in excess of 100 colours, with attendant coarse

particles.

The program’s objective is to identify and priority rank regional pan concentrate anomalies as a

prelude to trenching and to demonstrate the potential for a significant increase in the Project

resources. Previous work by the Company has identified benefits of increased reserves to the

economics of the Project.

To date pan concentrates have been generated from 157 sample sites covering an area of 4 square

kilometres of the Okiduse Range primarily centred around the Watou Prospect. (see Figure 2).

Kulumadau

Woodlark King

Busai

Watou Prospect

Woodlark King

Illawarra Fault

Postulate

NE/SW Fault

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The Watou pan concentrate anomalies demonstrate:

The area of the anomalies is at least two orders of magnitude larger than the Watou Prospect

mineralisation, defined by the previous trenching programs

The overall shape of the anomalies confirms the current understanding of regional NW and

NE structural controls on mineralisation

Current limits of the Watou mineralisation are highly likely to be expanded by further

trenching within the limits of the defined anomalies

The potential for the mineralised zone to significantly increase in size and add to the resources

at the Project

Several of the drainages within the anomalies have been extensively sluiced during the

colonial period attesting to the high levels of detrital gold within the active drainages. There

are no exposures of basal conglomerates or other sediments within the anomalous area that

would contribute to the gold within the active drainages other than from gold mineralisation

within the volcanics.

Figure 2. Location of Watou Prospect with significant gold assays from previous trenching

(red dots), anomalous drainage basins defined by pan concentrates and grain counting of

discrete gold particles (pale red shapes), individual anomalous drainages (blue lines) and

targeted sample locations (yellow dots). The postulated mineralisation trends show the

NW and NE regional mineralisation controls (dashed black lines).

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Figure 3. Location of Project Ore Reserves and the Watou Prospect (yellow stars) on a

reduced to pole magnetic data. The regional pan concentrate sampling program area

corresponding to the approximate outcrop of Okiduse Volcanics is shown by the black

shaded area. First phase sampling was initiated around the Watou Prospect.

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Background on Woodlark Island Gold Project, PNG

Kula Gold Limited is developing the 100% owned, Woodlark

Island Gold Project, located 600 kilometres east of Port

Moresby in the Milne Bay Province, Papua New Guinea.

The Feasibility Study, completed in September 2012,

defined a 2004 JORC Resource of 2.1 million ounces and an

Ore Reserve of 766,000 ounces based on a gold price of

US$1,200 per ounce. The 9 year Project is based around

three open pit mining areas and a 1.8Mtpa gravity and

carbon in leach plant.

The Company has been granted the Environment Permit

and the Mining Lease for the Project. The Company is now

in a position to seek Project funding which will lead to the

commencement of the Project construction.

The Project has excellent upside potential through the

conversion of Inferred Resources and numerous nearby

exploration targets within a short distance of the proposed

process plant location.

For further information, contact:

Stuart Pether

Chief Executive Officer

Kula Gold Limited

Tel +61 2 9262 5651

Directors

David Frecker Chairman

Lee Spencer Non-executive director

Louis Rozman Non-executive director

Mark Stowell Non-executive director

Arnold Vogel Non-executive director

Garry Perotti Company secretary

Registered office

Suite 2, 20 Howard Street

Perth, WA 2000, Australia

T: + 61 2 9262 5651

F: + 61 2 9262 5680

E: [email protected]

W: www.kulagold.com.au

Auditor

Ernst & Young

Ernst & Young Centre,

680 George Street,

Sydney, NSW 2000, Australia

Office: +61 2 9248 5555

Share registry

Link Market Services Limited

Level 12, 680 George Street

Sydney, NSW 2000, Australia

T: 1300 554 474 or +61 2 8280 7111

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Competent Person Statements

The information in this report that relates to Exploration Results are based on information compiled by Mr. Lee Spencer. Mr Spencer was the CEO of Kula Gold Limited until 1 July 2013 and remains on the Kula Gold Board as a Non-executive director. Mr. Spencer is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Spencer consents to the inclusion in the report of these matters based on information in the form and context in which it appears.

The information in this announcement that relates to the Mineral Resource estimates for Kulumadau, Busai and Woodlark King is based on information compiled by Mr. John Doepel, Principal Geologist for Continental Resource Management Pty Limited (Resource Report, Woodlark Island). CRM has acted as independent consulting geologist to WML since 2005 and has undertaken several visits to the island and to the sample preparation facilities. Mr. Doepel is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ’Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Doepel consents to the inclusion in this announcement of these matters based on information in the form and context in which it appears.

The information in this announcement that relates to Ore Reserves is based on information compiled by Mr.Linton Putland, Principal of LJ Putland & Associates and a consultant to Kula Gold’s 100% subsidiary, Woodlark Mining Limited. Mr. Putland is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Putland consents to the inclusion in this announcement of these matters based on information in the form and context in which it appears.

Forward Looking Statements

All statements other than statements of historical fact included in this announcement including, without limitation, statements regarding future plans and objectives of Kula Gold Limited (Kula Gold) are forward-looking statements. When used in this announcement, forward-looking statements can be identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or ‘intends’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this announcement, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the company, its directors and management of Kula Gold that could cause Kula Gold’s actual results to differ materially from the results expressed or anticipated in these statements.

Kula Gold cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. Kula Gold does not undertake to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this announcement, except where required by applicable law and stock exchange listing requirements.

The information in the three tables above was prepared and first disclosed

under the JORC Code 2004. It has not been updated since to comply with

the JORC Code 2012 on the basis that the information has not materially

changed since it was last reported.

Woodlark Island Gold Project Mineral Resources Report as per JORC2004

As of July 2012 at a 0.5g/t Au lower cutoff

Deposit Category Resource

(Mt)

Grade

(Cut)

(g/t Gold)

Gold

(Cut)

(Oz)

Kulumadau Measured 5.0 1.78 285,000

Kulumadau Indicated 4.4 1.75 245,000

Kulumadau Inferred 8.6 1.4 375,000

Kulumadau Totals 18.0 1.6 910,000

Busai Measured 3.9 1.54 190,000

Busai Indicated 10.4 1.4 480,000

Busai Inferred 8.8 1.3 370,000

Busai Total 23.1 1.4 1,040,000

Boniavat Indicated 3.0 1.2 115,000

Boniavat Inferred 1.0 1.8 60,000

Boniavat Total 4.0 1.4 175,000

All Measured 8.9 1.67 480,000

All Indicated 17.8 1.5 840,000

All Inferred 18.5 1.4 800,000

Totals* 45.1 1.5 2,120,000

Note 1: Totals may appear incorrect due to rounding

Note 2: The Busai Indicated Resource includes 0.4Mt @ 1.4/t Au for 20,000oz from

overlying alluvial mineralisation.

Note 3: The Busai Inferred Resource includes 0.4Mt @ 1.2/t Au for 15,000oz from

overlying alluvial mineralisation and 3.9Mt @ 0.9g/t Au for 110,000oz from Munasi

(2km southeast of Busai).

Note 4: The Boniavat Inferred Resource includes 0.3Mt @ 3.0g/t for 30,000oz Au

from Watou (1.5km south of Woodlark King).

Note 5: All Resources based on a 0.5g/t gold cut-off grade

Note 6: There have been no material changes to the reported Resources from

what was previously reported under the 2004 JORC code

Woodlark Island Gold Project Mineral Resources Report as per JORC2004

As of July 2012 at a1g/t Au lower cutoff

Totals may appear incorrect due to rounding

Resource Category Resource Au Au Oz

(Mt) Cut (g/t) Cut

Measured 5.1 2.34 385,000

Indicated 7.6 2.5 615,000

Inferred 7.0 2.4 545,000

Totals 19.7 2.45 1,550,000

Woodlark Island Gold Project Ore Reserves Report as per JORC2004

As of July 2012 at variable lower cutoffs

Totals may appear incorrect due to rounding

Deposit Proved Probable Total

Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces

Busai 3,283,000 2.2 233,000 2,811,000 1.9 175,000 6,094,000 2.1 408,000

Kulumadau 3,144,000 2.2 223,000 751,000 2.4 59,000 3,863,000 2.3 282,000

Woodlark King 704,000 1.7 39,000 704,000 1.7 39,000

Kulumadau East 330,000 3.7 37,000 330,000 3.7 37,000

Total 6,427,000 2.2 456,000 4,596,000 2.1 310,000 10,991,000 2.2 766,000

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Appendix 1 - JORC Code, 2012 Edition – Table 1 Report - Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation Commentary

Sampling

techniques

Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

Aspects of the determination of mineralization that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

All sampling results reported in this release are from surface sampling of active drainages.

Samples are secured from several points at each drainage site and consolidated into a 44 kilogram sample. Each sample is panned and the concentrate dried, screened and grain counted for particulate gold

Drilling

techniques

Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

Not applicable to this release.

Drill sample

recovery

Method of recording and assessing core and chip sample recoveries and results assessed.

Measures taken to maximise sample recovery and ensure representative nature of the samples.

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.


Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

The total length and percentage of the relevant intersections logged.

Each sample is logged for associated heavy mineral assemblage and outcrop geology and the nature of the drainage logged.

Sub-sampling

techniques and

sample

preparation

If core, whether cut or sawn and whether quarter, half or all core taken.

If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

For all sample types, the nature, quality and appropriateness of the sample preparation technique.

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

Whether sample sizes are appropriate to the grain size of the material being sampled.

Outlined above.

Quality of

assay data and

laboratory

tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

All samples were processed in the Woodlark Island processing facility.

Grain counts were undertaken by binocular microscope F

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Verification of

sampling and

assaying

The verification of significant intersections by either independent or alternative company personnel.

The use of twinned holes.

Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

Discuss any adjustment to assay data.

All significant sampled intervals are reviewed by senior management, prior to an announcement.

Twinned samples are not applicable to these surface exploration results.

All field data is captured in a relational database with industry standard protocols and security measures in place. Physical data are stored in secure containers & buildings. Hard copy of assay certificates are retained in secure storage.

When the site is accessible, Kula Gold Pty Ltd has a policy of permitting visits to its operational sites by interested investors or authorities with concern for quality assurance purposes.

Location of

data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Specification of the grid system used.

Quality and adequacy of topographic control.

Sample sites are surveyed in with hand held GPS instruments.

All survey results are adjusted to the Woodlark Island Gold Project Geodetic Survey Network which was established in September 2010 by Quickclose Pty Ltd, whose principal; Mr Richard Stanaway is a Registered Surveyor in Australia, specializing in establishing geodetic datum surveys by differential GPS techniques.

Data spacing

and

distribution

Data spacing for reporting of Exploration Results.

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

Whether sample compositing has been applied.

These sampling results are exploratory in nature with samples being spaced at appropriate drainage density for the mineralization being targeted.

Orientation of

data in relation

to geological

structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.


Sample security The measures taken to ensure sample security. The sample chain of custody was maintained by WML.

All samples are taken from the point of collection to the Sample Preparation Laboratory at Bomagai Camp Woodlark Island PNG by WML personnel. The samples are checked and handed over to Prep Lab personnel who sign the submission sheet. The lab is a locked and security protected facility at Bomagai Camp.

Audits or

reviews

The results of any audits or reviews of sampling techniques and data.

No audits or reviews of the results reported in this release have been conducted.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)


Mineral tenement

and land tenure

status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

The Woodlark Island Gold Project comprises three (3) Exploration Licences (EL1172,EL1279 & EL1465)and Mining Lease ML508, are held (100%) in the name of Woodlark Mining Limited, a Papua New Guinea Registered Company that is a wholly owned subsidiary of Kula Gold Limited.

The Environment Permit for the Woodlark Island Gold Project was issued to Woodlark Mining Limited by the Department of Environment and Conservation in February 2014.

There is a royalty paid to Highlands Pacific Ltd on the first 200,000ozs of gold produced from EL1279 of $10/oz.

The Exploration Licences and the Mining Lease are in good standing and are considered to be secure.

Exploration done

by other parties

Acknowledgment and appraisal of exploration by other parties.

Historical exploration on the Woodlark Project is given by Spencer (2009., In summary: Alluvial gold discovered in 1895; Alluvial rush slows in 1898; Rich veins mined at Busai 1896-1915 including Murua United open cut; Kulumadau main lode discovered 1898; Company mining at Kulumadau 1899-1918; Mining of Woodlark King 1911-1939.

Since 1962 a number of explorers have conducted geological mapping, geophysical and geochemical exploration, and drilling at

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Busai, Kulumadau, and other prospects. The explorers listed are the Australian Bureau of Mineral Resources (BMR), BHP Minerals Exploration (BHP), Highlands Gold Resources N.L. (Highlands), Auridiam Consolidated Limited (Auridium), Misima Mines Limited (MML), and WML, which was a wholly owned subsidiary of BDI Mining Ltd (BDI) between 2004 and 2007 (since when it has been a wholly owned subsidiary of Kula Gold Pty Ltd).

WML drilled the Kulumadau Deposit between 2004 and 2006 and during 2011 and 2012; the Busai Deposit from 2008 to 2010, and

the Woodlark King Deposit during 2010 and 2011. Geology Deposit type, geological setting and style of

mineralisation. The Woodlark Project is consistent with a low sulphidation

epithermal system.

Woodlark Island is part of a Tertiary aged volcanic island arc complex, comprising part of the Woodlark Oceanic Rise, one of a succession of composite east-west trending island arcs in the eastern PNG region.

Gold mineralization within the Woodlark Project is principally hosted by andesites and their sub-volcanic equivalents within the Okiduse Volcanics. The mineralization is variously associated with lodes, quartz veins, stock-work zones, and breccias; developed within proximal phyllic and marginal propylitic alteration envelopes.

Drill hole

Information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level – elevation above

sea level in metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length.

If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

Not applicable to this release

Data aggregation

methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

The assumptions used for any reporting of metal equivalent values should be clearly stated.

Not applicable to this release

Relationship

between

mineralisation

widths and

intercept lengths

These relationships are particularly important in the reporting of Exploration Results.

If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

The geometry of the mineralization at Watou is not known with certainty. Further trenching will be required.

Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

Appropriate maps are included in the body of this report.

Balanced reporting Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

All appropriate data reported

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Other substantive

exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

All appropriate data reported

Further work The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

Ongoing Regional Drainage Sampling Program

Follow up trench sampling of anomalous area

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exciting project upside indicated by watou drainage ... · 03/08/2015 · watou drainage...

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