Appendix 5B Mining Exploration Entity Quarterly Report
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ASX Announcement 27 April 2012 For the period ending 31 March 2012 Project Highlights • Global Mineral Resources reach 2 million ozs with successful drilling at Kulumadau East • Ore Reserves at the Woodlark Island Gold Project (reported in accordance with the JORC code) estimated at 10.39Mt at 2.1g/t for 700,000 ounces of gold an increase of 116,000 ounces over previous estimates • Community Compensation and Relocation Agreements completed with local communities • Feasibility study nearing completion • Mining Lease boundaries surveyed, in preparation for registration • Capital and Operating costs being finalised ASX Code: KGD 112.6 million • PNG Government highly supportive ordinary shares 5.2 million unlisted options • Drilling to re-commence shortly, with clear potential to expand the project’s current resources and reserves For personal use only 1 Project Resources During the Quarter an RC drillhole program confirmed an Inferred Resource for the Kulumadau East zone, refer Figure 1 for location. The infill drilling program was completed in December 2011 and resources announced during the first quarter of 2012. Continental Resource Management Pty Ltd has estimated a JORC compliant Mineral Resource of 5.2 million tonnes at 1.2g/t gold for 200,000 ounces, increasing to 240,000 ounces using no topcuts. The majority of the resource is contained within the Inferred Category, refer Table 1 below for details. Table1 Kulumadau East Inferred Resource Lower Resource Grade Au Grade Au (cut) block cut- (uncut) (cut*) (Mt) (uncut) (Oz) (g/t Au) (g/t Au) off grade (Oz) 0.5 5.2 1.4 240,000 1.2 200,000 0.8 2.7 2.2 190,000 1.7 150,000 1.0 1.9 2.7 170,000 2.1 130,000 Au assays cut to 30g/t for high grade domain and 15g/t for low grade domain The mineralization at Kulumadau is now interpreted to be located peripheral to a circular diatreme breccia which has undergone a tectonic overprint and has not yet been fully explored either at depth or around the perimeter. The Global Mineral Resource for the Project using a 0.5g/t lower cut-off and appropriate top cuts now stands at 42.4 million tonnes at 1.5g/t gold for 2 million ounces and 2.15 million ounces using no top cuts utilizing ISD methodology, refer Table 2 for details. For personal use only 2 Table 2 Woodlark Resource Summary – February 2012 WML Woodlark Resource Summary at 0.5g/t Au lower cut-off grade Deposit Category Resource Grade Grade Au Au (Mt) (Uncut) (Cut) (Uncut) (Cut) (g/t Au) (g/t (Oz) (Oz) Au) Kulumadau Measured 5.1 1.8 1.75 300,000 290,000 Kulumadau Indicated 2.8 1.7 1.5 150,000 140,000 Kulumadau Inferred 9.6 1.7 1.4 510,000 440,000 Kulumadau Totals 17.6 1.7 1.5 970,000 870,000 Busai Measured 3.6 1.5 1.5 175,000 170,000 Busai Indicated 7.1 1.6 1.5 370,000 350,000 Busai Inferred 10 1.5 1.4 470,000 450,000 Busai Total 20.8 1.5 1.5 1,000,000 970,000 Boniavat Indicated 3.0 1.3 1.2 125,000 115,000 Boniavat Inferred 1.0 1.9 1.8 60,000 60,000 Boniavat Total 4.0 1.4 1.4 185,000 175,000 All Measured 8.8 1.7 1.6 470,000 460,000 All Indicated 12.9 1.6 1.5 650,000 600,000 All Inferred 20.8 1.6 1.4 1,000,000 950,000 Totals* 42.4 1.6 1.5 2,150,000 2,000,000 * Totals may appear incorrect due to rounding Note 1: The Busai Inferred Resource includes 3.9 Mt @ 0.9g/t for 110,000oz Au from Munasi (2km southeast of Busai). Note 2: The Boniavat Inferred Resource includes 0.3Mt @ 3.0g/t for 30,000oz Au from Watou (1.5km south of Woodlark King). For personal use only 3 Location of Current Resources Woodlark Island For personal use only Figure 1. Kulumadau East mineralization in relation to sub Kiriwina geology proposed open pit collar at Kulumadau West. Drilling has not yet been undertaken in the south of the diatreme. 4 Project Reserves During the Quarter Kula Gold Limited announced an upgrade to its JORC compliant Ore Reserve Estimates to 10.39 million tonnes at 2.1 g/t for 700,000 contained gold ounces in the Proven and Probable category. This latest Reserve estimate represents an increase of 20 per cent on the previous estimate undertaken in June 2010. The Reserve upgrade was a result of intensive geotechnical and metallurgical studies undertaken in 2011 as part of the Feasibility Study. The breakdown of the Reserve is as follows: Table 3 – Project Reserves, Feb 2012 Proved Probable Total Area Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Busai Pit 3,283,000 2.2 233,000 2,811,000 1.9 175,000 6,094,000 2.1 408,000 Kulumadau 3,144,000 2.2 223,000 448,000 2.1 30,000 3,592,000 2.2 253,000 Pit Woodlark 704,000 1.7 39,000 704,000 1.7 39,000 King Pit Total 6,426,000 2.2 456,000 3,964,000 1.9 244,000 10,390,000 2.1 700,000 The reserve has been estimated by LJ Putland & Associates based on feasibility related studies completed on the Kulumadau, Busai and Woodlark King deposits. These studies included: • Pit optimisation and designs based on geotechnical and hydrological studies. • Mining costs developed from first principles based on an owner-operator mining fleet. • Application of appropriate mining recoveries and mining dilution for each of the pits. • Process and metallurgical parameters based on metallurgical test work and process studies for the project. Feasibility Study The Feasibility Study, which contemplates a 100,000 ounce per year project with an initial 7 year mine life is well advanced and nearing completion. There have been some minor delays in the course of the studyFor personal use only due to known mining industry pressures. Several other studies required for PNG Mining Lease approval are also underway and nearing completion. 5 Surveying and installation of permanent monuments for the proposed Mining Lease covering 59 square kilometres has now been completed in preparation for registration with the PNG Government. The company continues to update the PNG Government on the progress of the project through scheduled meetings in Port Moresby. The PNG Government has been highly supportive of the project. Community Agreements The company has also completed during the quarter the Compensation and Relocation Agreements with the Woodlark Island Communities who will be affected by the project. The completion of these agreements is a major milestone for the project and demonstrates the excellent relationship the company enjoys with the local communities. These agreements are integral to PNG Government Project Approval for a Mining Lease. Figure 2 Compensation Agreement Signing Ceremony held at Woodlark Island during the Quarter Environmental Impact Study Concurrent with the Definitive Feasibility Study, the Environmental Impact Study (EIS) for the project progressed during the quarter. The EIS for the project is being managed by Coffey Environmental Systems, who have extensive experience in similar studies and project approvals in PNG. For personal use only 6 Exploration Given the pending completion of the feasibility study the company will recommence its drilling program during April. Infill drilling at the Kulumadau East Zone will first be initiated with the objective of expanding the current reserve as a basis for future plant expansion. Currently the Kulumadau East Zone consists of 5.2mt @1.2g/t Au for 200,000 ounces of gold, open in a number of directions associated with circular diatreme breccias and which is not included in the current reserve estimates. In addition, a significant amount of Measured and Indicated Resources are currently located beneath the $1,200 optimised Ore Reserve at Kulumadau West. There is considerable scope to also convert these resources into reserves if current drilling at the adjacent Kulumadau East Zone can demonstrate lateral continuity. Overview Kula Gold Limited (ASX: KGD). Kula Gold’s major asset is the Woodlark Island Gold Project, located on Woodlark Island in Milne Bay Province of Papua New Guinea. Kula Gold is nearing completion of a Feasibility Study for the development of a 100,000 oz per annum gold mine on Woodlark Island with first production scheduled for 2014. To date, resources and reserves have been established at the historical mining centres of Kulumadau, Busai and Woodlark King with numerous other targets remaining to be drilled . The project is 100% owned by Kula Gold and is covered by contiguous exploration licenses covering more than 450km2 of the historical, 1895 gazetted Murua Goldfield. The project has access to key infrastructure including a deep-water harbor, airstrip, network of roads and an 85 man camp. For personal use only 7 For further information, contact: Lee Spencer John Watkins Chief Executive Officer Chief Financial Officer Kula Gold Limited Kula Gold Limited [email protected] [email protected] P. 02 9262 5651 P. 02 9262 5651 For personal use only 8 Competent Persons Statement The information in this report that relates to Exploration Results is based on information compiled by Lee Spencer. Lee Spencer is the CEO of Kula Gold Limited. Mr. Spencer is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ’Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.