COMPLETION of a $2.2 million institutional equity placement has been reported by Kula Gold, with the company also advising of an office move and major cuts to corporate overheads.

Kula Gold completed an equity placement of approximately 55.5 million fully paid ordinary shares, the company reported in early June.

Supported by major existing shareholder Pacific Road Resources Funds and Franklin Templeton Investments and other existing shareholders, the placement will be completed in two tranches with 8.5 million shares being issues under Australian Securities Exchange listing rule 7.1.

Kula said of the balance of the shares, 37.75 million are to be issued to a related party and are therefore subject to shareholder approval at an extraordinary general meeting, to be convened on 13 July or as soon as possible thereafter.

The issue of the remaining 9.25 million shares are conditional upon shareholder approval of the shares to the related party.

Kula said the issue price for the shares under tranche one and tranche two shares is 4 cents.

Funds raised by the placement will be used to continue exploration activities, maintain infrastructure and community programs on Woodlark Island and provide working capital to advance corporate opportunities and/or a project level joint venture, the company said.

Kula’s Sydney corporate office will be closed and the relocation of a small executive team to a shared office in Perth was announced by the company as part of cost cutting measures.

Kula is also terminating corporate services from a number of external consultants and service providers and implementing the 50 per cent reduction of director’s fees and the chief executive officer’s salary.

Kula said the company’s cuts to corporate overheads have reduced the estimated corporate overhead for the next 12 months by over 60% compared to the previous 12 month period.

Kula Gold chief executive Stuart Pether said “The share placement has been supported by the major shareholders in difficult times for Kula Gold and demonstrates an understanding of the underlying value in the Woodlark Island gold project.”

“The company remains focused on advancing exploration and corporate opportunities and maintaining the significant infrastructure and excellent community relationship at the project,” Mr Pether added.