KULA GOLD completed drilling of the first two holes at its Kulumadau North prospect on Woodlark Island in September, with the mineralisation style found to be identical to the 900,000 ounce find at nearby Kulumadau.

The first was found to contain 11 metres of ore-grade mineralisation near the surface, while the second contained no significant gold assays but showed 36 metres of argillic alteration and base metals to confirm a significant hydrothermal system.

Chief executive Stuart Pether said the identification of mineralisation at the first hole confirmed assertions that there was significant potential to expand the existing Woodlark Island gold project.

“Particularly encouraging is that new mineralisation has been encountered 1,000 metres from the 900,000 ounce gold mineral resource at the Kulumadau deposit,” he said.

The company also reported successes in exploration trenches at the Little Mackenzie prospect and the Watou prospect, with both delivering ore-grade assay results.

“The return of ore grade gold mineralisation in the series of trenches at the Watou prospect continues to demonstrate that the new exploration model is an effective on-ground targeting tool,” Mr Pether said.

Mr Pether was referring to the recent application of helimag data to the company’s exploration arsenal.

The helimag data, covering the most prospective part of Woodlark Island, has been integrated with previous structural and geological interpretations to produce a significantly improved understanding of gold mineralising controls.

“This new understanding has led to an improved targeting process and will result in the more efficient exploration of targets located under the thin sediment cover,” the company said.

“The recently flown helimag survey program was flown by helicopter utilising modern GPS control on a 50 metre line spacing and flown normal to the geomagnetic field, yielding excellent quality data which allowed the processing to better highlight structure and associated magnetic lows.”

Kula said it now had a greater understanding of the relationship between host rocks, alteration, bounding structures and the economic mineralisation at the known deposits, allowing it to enter a lower-cost regional exploration phase.

“Additional resource discovery will add to the profitability and mine life of the 1.8 million tonnes per annum (mtpa) project and potentially enable an upgrade of capacity in a stage 2 expansion to 4 mtpa,” the company said.

“Analysis work on the helimag data and historic work is continuing, with the aim of identifying further potential gold mineralised targets to add to the 10 targets already identified.”

Mr Pether said the interpretation of multiple, large scale hydrothermal systems under shallow cover was exciting.

“[It] has confirmed the company’s view that it can add significant gold resources to the project’s current resource base and profitability with more focused exploration drilling,“ he said.

The company also announced in September that the PNG government had purchased a five per cent interest in the Woodlark Island project.

The purchase was made under conditions stipulated by the Mining Act where the government has the option to acquire up to 30% of a lease by payment of a proportion of sunk costs and construction capital costs.

“The state equity commitment is further indication of the robust support we are receiving from not only the PNG government, but the local communities for the continued development of the project,” Mr Pether said.

Kula reported in late October that it had appointed Foster Stockbroking and Cormack Securities as strategic advisors in Australia and North America respectively to assist with the development of Woodlark Island.