KULA Gold has raised Aus$6.4 million in two equity fundraisings which will enable the company to add value to the Woodlark Island Gold Project. The funds mean that the company is now debt free.

At an extraordinary general meeting in Sydney the company received an overwhelming vote in favour of the closure of an Aus$3 million working capital facility and the completion for a second tranche of placement shares.

The lenders of the working capital facility, RMB Australia Holdings Ltd and the Pacific Road Resources Funds, had entered an agreement to convert the facility into equity. The vote in favour of the agreement was passed at the meeting on November 26.

The agreement was made under the same terms and conditions as the recent Aus$3.65 million equity placement to institutions and sophisticated investors.

Kula Gold’s CEO Stuart Pether says, “The working capital facility provided the necessary funds for the majority of the 2014 year and enabled the company to significantly de-risk the project during this period. The issue of the Environment Permit, the grant of the Mining Lease and the notification of the decision on the PNG Government State equity position have all occurred during this period, and was the purpose of the facility.

“The conversion of the debt facility to equity and the completion of the placement demonstrate the confidence that major shareholders and new institutions and sophisticated investors have in the company and the Woodlark Island project. The company is now debt free, well-funded and fully permitted to advance Woodlark Island. The current exploration programs to find more gold and the engagement of project funding advisors will position the company to react swiftly to changes in the market.”

The company is continuing its exploration activities on a cost restrained basis with the aim of increasing higher grade resources. It has also commenced project development funding plans in readiness for faster project development.

In 2014 the company developed a new exploration model after detailed analysis of newly acquired helimag survey data in conjunction with geological knowledge gained from the discovery of the existing project resources. This process has significantly improved the understanding of gold mineralizing controls within the resources. It has identified that the magnetic lows associated with the resources are fault bounded by NE and NW trending structures.

The exploration model has been demonstrated to be an effective on-ground targeting tool. A program of diamond drilling and trenching of high priority targets identified by the model has returned significant ore grade mineralization. The high quality of the magnetics data enables effective on-ground location of structures and magnetic lows under the limestone cover.