KULA Gold has raised about A$3.56 million in a successful oversubscribed placement.

The company completed an equity placement to institutions and sophisticated investors in October of about 59.33 million fully paid ordinary shares.

Foster Stockbroking acted as sole lead manager to the placement.

The placement, to be completed in two separate tranches, has a A6c issue price under both tranches.

The funds raised by the placement, net of offer costs, is about A$3.3 million with the funds to be used for further exploration of the targets successfully delineated at its flagship Woodlark Island gold project by a recent helimag geophysics survey and structural interpretation, and for working capital.

Kula Gold chief executive Stuart Pether said the share placement raising was a great outcome.

“The company will be re-positioned debt free and with available funds,” he said.

“This will allow us to apply funds to further test our new exploration model on Woodlark Island with a view to developing targets, ready for resource definition drilling and growing the resource inventory.”

The raising came in the wake of the company announcing exploration success at the Watou prospect which is postulated to be an extension of the Woodlark King deposit.

The Watou prospect has been identified as a possible extension of the Woodlark King Deposit by the new exploration model which has been developed from the analysis of the recently acquired Helimag data and previous geological knowledge.

A total of 552 metres of reconnaissance trenches were completed within the Watou target area with 143 metres of the trenches being sampled based on the presence of visual alteration. Significant assay results include 10 metres at 1.6 grams per tonne gold; 15m grading 1.6gpt gold; 10m at 3.4gpt gold; 2m at 25.3gpt gold and 4m at 3.1gpt gold.

Mr Pether said the return of ore grade gold mineralisation in the series of trenches at the Watou prospect continued to demonstrate the new exploration model as an effective on-ground targeting tool.

“We are encouraged that the further discovery of ore grade mineralisation along the Woodlark King Illawarra Fault Zone confirms the area as highly prospective and supports the recent investment in high quality magnetics data to drive the goal of doubling the Woodlark Island resource,” he said.

“We are very pleased with the continued success of the 2014 exploration program and continue to be confident that the program will result in an increase in the size and quality of Kula’s current 2.1 million ounce gold mineral resource at Woodlark.”