Kula Gold (ASX:KGD) has completed an equity placement to institutions and sophisticated investors of 59.33 million shares at $0.06 to raise $3.56 million.
The placement was heavily oversubscribed, with the level of interest from local and overseas investors demonstrating confidence in the company's prospects and strategy.
As part of the placement, Kula is also offering one free option for every two shares, exercisable within two years at a strike price of $0.125.
Funds will be used for further drilling of gold targets delineated by recent helimag geophysics survey on Woodlark Island, Papua New Guinea.
In addition, Kula will be debt free after repaying its $3 million working capital facility provided by major shareholders, RMB Resources and the Pacific Road Resources Funds.
Repayment is via conversion to Kula shares with free options on the same terms as the placement.
Last month, Kula returned ore grade results from trenching at the Mackenzie prospect at Woodlark.
Assays measured 4 metres at 4.8 g/t gold, 13 metres at 2g/t gold, and 4 metres at 1.9 g/t gold.
Grab samples of the breccia returned assays up to 28.9 g/t gold, and a chip sample from a 0.3 metre wide silicified structure in Zone 2 returned 11.6 g/t gold within a 1 metre zone assaying 4.5 g/t.
Further trenching is in progress to determine the potential strike length and continuity of the new zone, with the goal of identifying a resource definition drilling target.
Trenching will also be conducted at another target area located 600 metres to the south-east along the same structure.
The Feasibility Study for Woodlark, completed in September 2012, defined a 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 fully permitted, and is based around three open pit mining areas and a 1.8Mtpa gravity and carbon-in-leach plant.
