Kula Gold (ASX:KGD) has commenced diamond drilling at its Woodlark Island gold project in Papua New Guinea, following the processing of the newly acquired helimag data and the identification of additional large scale hydrothermal systems.
The helimag data covering the most prospective part of Woodlark Island has been integrated with previous geological interpretations, resulting in an improved understanding of gold mineralising controls within the existing deposit.
A low cost drilling program has commenced to demonstrate the improved targeting process and to discover additional gold resources.
This improved targeting process and should result in more efficient exploration of targets located under the thin sediment cover.
A significant amount of geological knowledge has been accumulated during the discovery and definition of 2.1 million ounces of gold at Woodlark.
Additional resource discovery will add to the profitability and mine life of the 1.8Mtpa project and potentially enable an upgrade of capacity in a stage 2 expansion to 4Mtpa.
Ten targets have been priority rated on the basis of proximity to current Ore Reserve, previous historic drilling, associated anomalous gold in panned concentrates, size and shape of the aeromagnetic lows and favourable structure.
The majority of these targets have not been subject to previous exploration drilling and are of similar location and dimensions to the alteration patterns observed at Kulumadau and Busai, which host the bulk of the current resource.
The first phase of drilling has been commenced at Kulumadau North, where a geophysical repetition of the 900,000 ounce Kulumadau deposit has been interpreted to occur 600 metres to the north.
Kula's feasibility Study, completed in September 2012, defined a 2004 JORC Resource of 2.1 million ounces and an Ore Reserve of 766,000 ounces.
The 9 year project is based around three open pit mining areas and a 1.8Mtpa gravity and carbon-in-leach plant, and is now fully permitted after the recent issue of the Environment Permit and Mining Lease.
The company is valued at a modest $12 million.
