Aurumin Ltd (ASX:AUN) welcomes the start of reverse circulation (RC) drilling by its new partner Kula Gold Ltd (ASX:KGD) at the historic Mt Palmer Gold Mine joint venture near Marvel Loch in the Southern Cross Goldfields of Western Australia.
After finalising the divestment of 51% of the Mt Palmer Project late last week, Kula Gold has moved quickly to start the drilling program, which will test the down plunge, along strike extensions to the historically known orebody.
READ: Aurumin finalises divestment of 51% stake in Mt Palmer to focus on Sandstone
Kula believes the mine lease and surrounding areas have excellent exploration potential for the discovery of additional deposits, given limited systematic exploration to date.
Historical production
Mt Palmer mine, formerly Yellowdine Mine, produced more than 150,000 ounces of gold at 15.9 g/t from 1934 to 1944 and is north of the Nevoria Gold Mine (+600,000 ounces of gold) and east of the circa 2.4-million-ounce Marvel Loch Gold Mine.
Individual lodes were mined over a strike length extending up to 200 metres and to depths of 155 metres below surface. The shoots are up to 10 metres wide and 30 to 70 metres long and were best developed in the Main and East Lodes.
The mine closed in part due to the continuation of WWII severely restricting access to labour and materials and subsequently the mine flooded and was never reopened.
Limited exploration since that time has been carried out, largely targeting open pit (less than 100 metres from surface) opportunities.
Kula’s managing director Ric Dawson said: “This historically rich ‘half ounce’ gold mine has had ~200 work hours of analysis by Kula’s technical team and shows solid targets for high-grade gold mineralisation extending down plunge.
"This acquisition aligns with the company’s strategy to explore near to existing operations to fast track any discovery to monetary success”.
The project is 15 kilometres from the Marvel Loch gold processing plant and infrastructure, and 90 kilometres from the Edna May gold plant.
Terms of agreement
Aurumin has received 2.5 million Kula shares, valued at $250,000, and Kula has acquired a 51% interest in the tenements and mining information.
By spending $1 million over three years Kula will earn a further 29% interest and thereafter spending will be pro-rata or Aurumin will dilute.
Aurumin's managing director Brad Valiukas said: “This is the last of our planned divestments in the Southern Cross area.
"We are pleased to see Kula now positioned with 51% of the Mt Palmer Project and we look forward to them increasing their stake to 80%.
“Subject to successful completions and ongoing earn in spend by JV partners, Aurumin will be positioned with a 20% interest in the Mt Palmer JV, a royalty on the Mt Dimer mining tenements for gold and silver with Beacon Minerals and the potential future royalty on the Mt Dimer exploration tenements with MinRes,” Valiukas said.
“There still remains significant potential at Mt Palmer and we look forward to our continuing participation as Kula gives the project the attention it deserves.
"Aurumin’s focus is at now firmly on Sandstone and generating the critical mass required for future production.”