News: Kula Gold edges closer to production with mining lease award

Kula Gold's (ASX:KGD) shares are expected to firm after receiving the Mining Lease documentation for its Woodlark Island Gold Project on Woodlark Island in Papua New Guinea.

Woodlark Island is located 600 kilometres east of Port Moresby, and receipt of the Mining Lease secures the company’s title over the Woodlark Island Gold Project for 20 years with the ability to extend for a further 10 years.

This is a significant milestone for Kula, and confirms the PNG Government is committed and supportive of a 1.8mtpa gold processing plant on Woodlark.

The Mining Lease was issued following a comprehensive review of Kula’s Definitive Feasibility Study by the PNG Mineral Resources Authority, confirming the Project delivers favourable returns at the current gold price.

Environmental Impact Statement and other community aspects have also been reviewed by the PNG Department of Environment and Conservation resulting in the grant of the Environment Permit in February 2014.

With the receipt of the Mining Lease Kula Gold now has achieved all regulatory approvals necessary to commence the development phase of the Woodlark Island Gold Project.

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 an optimised 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.

There is also upside potential through the conversion of inferred resources and numerous nearby exploration targets within a short distance of the proposed process plant location.

Kula is presently valued at a seemingly light $13 million.