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
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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) (uncut) (cut*) block 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.
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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).
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Location of Current Resources Woodlark Island
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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.
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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 studyonly use personal For due to known mining industry pressures. Several other studies required for PNG Mining Lease approval are also underway and nearing completion.
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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.
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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.
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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 use personal For
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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’. Mr. Spencer consents to the inclusion in the report of these matters based on information in the form and context in which it appears.
The information in this announcement that relates to the Mineral Resource estimates for Kulumadau, Busai and Boniavat is based on information compiled by Mr. John Doepel, Principal Geologist for Continental Resource Management Pty Limited (Resource Report, Woodlark Island). CRM has acted as independent consulting geologist to WML since 2005 and has undertaken several visits to the island and to the sample preparation facilities. Mr. Doepel 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’. Mr. Doepel consents to the inclusion in this announcement of these matters based on information in the form and context in which it appears.
The information in this announcement that relates to Ore Reserves is based on information compiled by Mr. Linton Putland, Principal of LJ Putland & Associates and a consultant to Woodlark Mining Limited. Mr. Putland is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity for 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’. Mr. Putland consents to the inclusion in this announcement of these matters based on information in the form and context in which it appears.
Forward Looking Statement
All statements other than statements of historical fact included in this announcement including, without limitation, statements regarding future plans and objectives of Kula Gold Limited (Kula Gold) are forward-looking statements. When used in this announcement, forward-looking statements can be identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or ‘intends’ and other similar words that involve risks and uncertainties.
These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this announcement, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the company, its directors and management of Kula Gold, that could cause Kula Gold’s actual results to differ materially from the results expressed or anticipated in these statements.
The company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. Kula Gold does not undertake to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this announcement, except where required by applicable law and stock exchange listing requirements. only use personal For
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Appendix 5B Mining exploration entity quarterly report
Rule 5.3 Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.
Name of entity KULA GOLD LIMITED
ABN Quarter ended (“current quarter”) 83 126 741 259 31 March 2012 2011 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities $A’000 (3 months) $A’000
1.1 Receipts from product sales and related - - debtors
1.2 Payments for (a) exploration & evaluation (5,814) (5,814) (b) development - - (c) production - - (d) administration (639) (639)
1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 313 313 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (provide details if material) - -
Net Operating Cash Flows (6,140) (6,140)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments - - (c) other fixed assets (93) (93)
1.9 Proceeds from sale of: (a) prospects (b) equity investments - - (c) other fixed assets - - 1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) - -
For personal use only use personal For Net investing cash flows (93) (93) 1.13 Total operating and investing cash flows (carried forward) (6,233) (6,233)
+ See chapter 19 for defined terms.
30/9/2001 Appendix 5B Page 1
Appendix 5B Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward) (6,233) (6,233)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - - - - Net financing cash flows
Net increase (decrease) in cash held
1.20 Cash at beginning of quarter/year to date 20,219 20,219 1.21 Exchange rate adjustments to item 1.20 (120) (120) 13,866 13,866 1.22 Cash at end of quarter Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 212
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Remuneration of executive and non-executive directors
Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
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Financing facilities available Add notes as necessary for an understanding of the position.
+ See chapter 19 for defined terms.
Appendix 5B Page 2 30/9/2001 Appendix 5B Mining exploration entity quarterly report
Amount available Amount used $A’000 $A’000 3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 5,100
4.2 Development
4.3 Production
4.4 Administration 500
5,600 Total
Reconciliation of cash Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter shown in the consolidated statement of cash flows) $A’000 $A’000 to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 905 1,813
5.2 Deposits at call 12,961 18,406
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 13,866 20,219
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at reference (note (2)) beginning end of of quarter quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed
6.2 Interests in mining
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+ See chapter 19 for defined terms.
30/9/2001 Appendix 5B Page 3
Appendix 5B Mining exploration entity quarterly report
Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per Amount paid up security (see per security (see note 3) (cents) note 3) (cents) 7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions 7.3 +Ordinary 112,615,523 92,200,707 Fully Paid securities
7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs 7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,
converted For personal use only use personal For
+ See chapter 19 for defined terms.
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7.7 Options Exercise price Expiry date (description and conversion 1,689,233 Nil $1.80 1 December 2015 factor) KGDOPT1 (vest 16 Nov 2012) 300,000 Nil $1.80 1 December 2015 KGDOPT2 (vest from date of commercial production from Woodlark Island
Gold Project)
120,000 Nil $1.80 16 March 2016
KGDOPT3 (vest 16 Nov 2012)
16 March 2016 100,000 Nil $1.80 KGDOPT4 (Vest 16 Nov 2012)
Nil $2.00 3,000,000 1.5million vested 16 December 2016 KGDOPT5 16 Dec 2011 1.5million vest 16 Nov 2012 7.8 Issued during Nil Nil quarter 7.9 Exercised Nil Nil during quarter 7.10 Expired during Nil Nil quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only)
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
27 April 2012 Sign here: ...... Date: ...... (Director/CFO) For personal use only use personal For Print name: JOHN DAVID WATKINS
+ See chapter 19 for defined terms.
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Appendix 5B Mining exploration entity quarterly report
Notes
1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address
a topic, the Australian standard on that topic (if any) must be complied with. For personal use only use personal For
+ See chapter 19 for defined terms.
Appendix 5B Page 6 30/9/2001