Discounted Placement Risks Short-Term Pressure but Fuels Mt Palmer Exploration
Kula Gold has raised $750,000 through a share placement to fund diamond drilling at its Mt Palmer Gold Mine, following a series of promising high-grade gold results from recent exploration.
- Placement of 115 million shares at 0.65 cents each
- Funds to advance diamond drilling and exploration at Mt Palmer
- Recent shallow drilling returned multiple high-grade gold intercepts
- Placement completed under existing ASX capacity without shareholder approval
- Settlement expected mid-August 2025 with a 6% capital raising fee
Capital Raising to Propel Exploration
Kula Gold Limited (ASX – KGD) has announced a $750,000 capital raise via a placement of shares priced at 0.65 cents each. The funds are earmarked to support a diamond drilling program at the Mt Palmer Gold Mine, a project that has recently delivered encouraging high-grade gold results from shallow reverse circulation (RC) drilling.
The placement involves issuing approximately 115 million fully paid ordinary shares under the company’s existing ASX Listing Rule 7.1 capacity, meaning no shareholder approval was required. Settlement and allotment are scheduled for mid-August 2025, with a 6% fee payable to the lead manager, Euroz Hartleys Group Limited.
Building on Strong Drilling Results
Mt Palmer has been the focus of recent exploration success, with several shallow drill holes returning impressive gold grades. Highlights include intercepts such as 3 meters at 29.7 grams per tonne (g/t) gold and 3 meters at 35.9 g/t gold, including a standout 1 meter at 83.6 g/t. These results have helped Kula Gold develop a clearer understanding of the mineralisation system.
The next phase involves diamond drilling to twin some of these high-grade RC holes and explore newly interpreted zones. This approach aims to better define the structural controls on gold mineralisation, which is critical for advancing the project towards resource definition and eventual development.
Strategic Implications and Market Context
The placement price represents an 18.75% discount to the last closing price and the 30-day volume weighted average price, a common feature in capital raises designed to attract professional and sophisticated investors quickly. While this discount may exert short-term pressure on the share price, the injection of funds is vital for maintaining exploration momentum at Mt Palmer.
Kula Gold’s strategy to rapidly follow up on promising drilling results with diamond drilling is a logical step to unlock the project’s potential. If successful, it could significantly enhance the company’s resource base and market valuation, positioning Mt Palmer as a compelling gold exploration story in the ASX mining sector.
Bottom Line?
Kula Gold’s latest capital raise sets the stage for a critical drilling phase that could redefine Mt Palmer’s gold potential and investor sentiment.
Questions in the middle?
- Will the upcoming diamond drilling confirm and expand the high-grade zones identified by RC drilling?
- How will the market react to the placement discount and subsequent share dilution?
- What timeline does Kula Gold envision for moving from exploration to resource definition at Mt Palmer?
