Kula Gold (ASX:KGD) announced the start of a reverse-circulation drill program at its recently acquired Mount Palmer gold mine asset in the Southern Cross Goldfields last Wednesday (July 17).

“The historic Mt Palmer Gold Mine (formerly known as the Yellowdine Mine) was last commercially mined in 1944 down to the 6th Level (160 meters) at 15.9 grams per tonne,” the company shared in a press release.

The site historically produced approximately 158,000 ounces of gold at 15.9 grams per tonne prior to its closure in 1944. The onset of the Second World War and subsequent mine flooding left the site closed.

Since then, only limited exploration targeting open-pit opportunities has been completed.

Managing Director Ric Dawson said that 200 work hours of analysis were performed by Kula's technical team. He also shared that the mine shows “solid targets for high-grade gold mineralization” 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,” Dawson added. The Mount Palmer site is located 15 kilometres away from the Marvel Loch gold-processing plant and infrastructure, and 90 kilometres from the Edna May gold plant.

Kula holds a 51 percent stake in Mount Palmer, with exploration company Aurumin (ASX:AUN) owning the remaining 49 percent. Kula will be able to earn up to an 80 percent take by spending AU$1 million over three years.

Aurumin completed the sale to Kula on July 11, with Aurumin Managing Director Brad Valiukas saying that it would be the last of the company’s planned divestments in the Southern Cross area.

“We are pleased to see Kula now positioned with 51 percent of the Mt Palmer Project and we look forward to them increasing their stake to 80 percent,” he said in a press release at the time.

Kula believes that the mine lease and surrounding areas “have excellent exploration potential for the discovery of additional deposits, given limited systematic exploration to date.” The company's other current gold prospects in the area are the Marvel Loch project, the Stingray prospect, the Nevoria North prospect and the G-Star prospect.

Prospects along the 10 kilometre greenstone belt that hosts Mount Palmer are also being assessed.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.