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GEOPACIFIC RESOURCES LTD Capital/Financing Update 2017

Jan 30, 2017

65008_rns_2017-01-30_8cb8ee69-8aa8-49fa-9fcb-372ed26559a7.pdf

Capital/Financing Update

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ASX Code: KGD 31 January 2017

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ASX Announcement & Media Release

Woodlark Gold Project Drilling Update - diamond drill hole intersects a combined 48m of gold mineralisation

Highlights:

  • Assay results received from the first two diamond holes of the current drilling program at the Busai Deposit within the development-ready Woodlark Island Gold Project, PNG

  • Numerous gold intercepts in first hole (BS16DD001) including:

  • 2.9m @ 8.87g/t Au from 1.1m;

  • 7m @ 3.32 g/t Au from 38m;

  • 19m @ 0.89 g/t Au from 73m;

  • 3m @ 8.51 g/t Au from 138m; and

  • 16m @ 1.16 g/t Au from 160m.

  • Numerous gold intercepts in second hole (BS16DD002) including:

  • 3m @ 6.37 g/t Au from 5m;

  • 5m @ 1.40 g/t Au from 27m;

  • 4m @ 2.55g/t Au from 44m; and

  • 8.4m @ 1.28 g/t Au from 50m.

  • Kula Gold is currently a 95% shareholder of the Woodlark Island Gold Project (“WIGP”) and is free carried for the next $8m of expenditure - Geopacific Resources Limited funding to earn up to 51%

  • A drilling program, totalling 15,000m, is underway within the WIGP. One diamond drill rig is drilling at Busai while one diamond drill rig and one RC drill rig are drilling at Kulumadau.

  • Kula Gold Limited and Geopacific Resources Limited Execute JV Agreements in Woodlark Island Gold Project

Kula Gold Limited (ASX: KGD) (“ Kula ” or “ the Company ”) is pleased to advise that it has received assay results from the initial two diamond holes at the Busai Deposit on its Woodlark Island Gold Project in PNG from its Joint Venture partner Geopacific Resources Limited (“ Geopacific ”). Figure 1 shows a geological cross section with the first hole, BS16DD001, in relation to the current Busai pit design. The location of BS16DD004 is also shown in Figure 1 with the intervals of geological interest shown. Assays for BS16DD004 are pending.

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Figure 2, below, is a plan of the current designed pit and the location of BS16DD001 and BS16DD002 in relation to the current structural interpretation.

Mineral Resource estimates for Kulumadau West, Kulumadau East, Kulumadau Adelaide, and Busai Gold Deposits on Woodlark Island, PNG were carried out by Continental Resource Management Pty Ltd (CRM). The estimates have been reported previously by CRM in accordance with the 2004 Edition of the JORC Code. They are now reported in accordance with the 2012 Edition of the JORC Code.

The estimates incorporated drill results to hand as at the end of June 2012. The estimates were carried out by John Doepel, Principal Geologist of CRM. The estimates employed Inverse Distance Squared (IDS) modelling to produce ore block models (OBMs) of the mineralisation within the deposits. The volcanic hosted mineralisation within the Busai Deposit was modelled using an ordinary kriging (OK) technique.

The resource inventory for the Busai and Kulumadau Deposits is detailed in Table 3 of Appendix A. Resource estimates for the Munasi and Woodlark King deposits (also tabulated in table 3 of Appendix A) remain reported in accordance with JORC 2004.

Reverse circulation and diamond drilling is progressing with three drill rigs currently on site with an initial 15,000m drilling program planned. This drilling aims to upgrade the Inferred Resources to either Indicated or Measured along with infill and extensional drilling around the known resource areas. Additional assay results will be reported as they are received.

In addition to the drilling activities, Kula and GPR are advancing and optimising the development-ready Woodlark Island Gold Project. Under the Joint Venture agreement GPR is funding the next $8 million of expenditure (ASX Release 11 July 2016) with the target of increasing Ore Reserves at WIGP to >1.2 million ounces of gold.

Optimisation work is underway in order to reduce the operating and capital costs for the project. Several of the costs used in the 2012 Feasibility Study are higher than the current costs, due to the 2012 study being completed at the height of the mining cost cycle. Potential savings have been identified in both operating costs and capital costs, along with potential process efficiencies also expected to contribute to improved project economics. Additional information will be made available as the optimisation studies progress.

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Figure 1: Cross section of the Busai Deposit showing assay results from BD16DD001 below the existing DFS pit outline. These assays may support deepening of the pit.

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Figure 2: Drill hole location plan and structural interception of the Busai Gold Deposit with the drill hole locations relative to the current optimised pit design.

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Execution of earn-in agreements with Geopacific

The Company is also pleased to announce completion of the agreements for the earn-in to the WIGP with Geopacific Resources Limited.

Kula retain a 95% share in WIGP following Geopacific’s entitlement to a 5% share on the election to proceed to the second tranche of the agreement and the execution of the formal agreements. The agreements have been executed in accordance with and the replace the Binding Term Sheet entered into on 7 July 2016.

Under the agreement, Geopacific has committed to the second trance and will sole fund by spending $8 million or achieving the target of 1.2 million ounces of gold Ore Reserves, in a two-year period from their election to proceed in October 2016, in return for an earn-in up to 51% in WIGP. Should Geopacific proceed to the third farm-in period they will sole fund WIGP by spending a further $10 million, over a further two-year period, to progress Woodlark to bankable stage and in so doing earn up to 75% of WIGP.

The agreement provides for Geopacific to fund Kula through to production.

- END -

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Background on the Woodlark Island Gold Project, PNG

Kula Gold Limited has advanced its Woodlark Island Gold Project to the point where it is permitted and ready to progress to the next stage. The Project is located 600 kilometres east of Port Moresby in the Milne Bay Province, Papua New Guinea.

Kula’s Joint Venture Partner Geopacific Resources Limited is funding the next $8 million expenditure to advance the gold reserves to a target of 1.2 million ounces of gold to earn additional equity in the Project.

The Project has excellent upside potential through the conversion of Inferred Resources and numerous nearby exploration targets within a short distance of the proposed process plant location.

The Resource Estimates for the Kulumadau and Busai Deposits are re reported in this release in accordance with JORC 2012. The estimates for Munasi and Woodlark King have not been re reported in accordance with JORC 2012, as there has been no additional work within these deposits since the previous estimate.

Kula Gold’s Feasibility Study, based on a JORC 2004 Ore Reserve of 766,000 ounces and a gold price of US$1200/ounce, defined a Project with a mine life of nine years, three open pit mining areas and a 1.8Mtpa gravity and carbon in leach plant (KGD ASX release 27 September 2012).

The Company’s 95% owned subsidiary, Woodlark Mining Limited, has been granted the Environment Permit and the Mining Lease for the Project.

Directors and Management

David Frecker Chairman Louis Rozman Non-executive director Mark Stowell Non-executive director Garry Perotti Chief Financial Officer

Registered office 20 Howard Street Perth, WA 6000, Australia T: + 61 8 6144 0588 F: + 61 8 6144 0589 E: [email protected] W: www.kulagold.com.au Tw: twitter.com/kulagold

Auditor

Ernst & Young 11 Mounts Bay Road, Perth, WA 6000, Australia Office: +61 8 9249 2222

Share registry Link Market Services Limited Level 12, 680 George Street Sydney, NSW 2000, Australia T: 1300 554 474 or +61 2 8280 7111

Investor relations Six Degrees 18 Howard Street Perth, WA 6000, Australia T: +61 (0) 400 164 067

For further information, contact:

Garry Perotti Chief Financial Officer Kula Gold Limited

T: + 61 8 6144 0588 F: + 61 8 6144 0589

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The information in this report that relates to geology and exploration is based on information compiled by Mr Paul Dunbar, a Competent Person who is a member of the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr. Dunbar is employed by Dunbar Resource Management, a Geology and Exploration Management consultancy, who has been engaged by Kula Gold. Mr. Dunbar has sufficient experience, which is relevant to the style of mineralisation, geology and type of deposit under consideration and to the activity being undertaken to qualify as a competent person under the 2012 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the 2012 JORC Code). Mr. Dunbar consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to the Mineral Resource estimates, is based on information compiled by Mr. John Doepel, Principal Geologist for Continental Resource Management Pty Limited (Resource Report, Busai and Kulumadau Gold Deposits Woodlark Island Papua New Guinea). 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 2012 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.

Appendix A: Table 1. Significant Intersections

HOLE ID FROM
(m)		 INTERVAL
(m)		 Au
(ppm)
BS16DD001 1.1 2.9 8.87
12 2 0.79
24 4 0.89
38 7 3.32
Including 44 1 15.51
50 5 1.36
57 13 0.85
73 19 0.89
117 2 0.59
125 3 0.82
138 3 8.51
160 16 1.16
BS16DD002 5 3 6.37
27 5 1.40
44 4 2.55
50 8.4 1.28
61 1 2.09
70 2 1.37

Notes

  • All material diamond drill core

  • Samples collected as half core, cut by diamond saw

  • Sample preparation undertaken by ITS Laboratories on Woodlark Island (refer Appendix B for details)

  • Gold analysis by Fire Assay 50gm charge by Inertek Genalysis Laboratories, Townsville, Australia

  • Mineralised intercepts calculated as a weighted average, using a 0.5g/t Au lower cut, maximum of two metres of internal waste.

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Appendix A: Table 2. Drillhole Collar Table

HOLE EAST NORTH RL AZI DIP Final
Depth
BS16DD001
8992820		 473205 73.00 270 -60 180.00
BS16DD002
8992900		 473146 72.00 270 -72 108.30

  • Collar coordinates in PNG94 Geodetic System

  • Azimuths true bearing

Appendix A: Table 3. Woodlark Island 2012 Resource Table

Reported as per JORC 2012
As of July 2012 at 0.5g/t Au lower cutoff		 Reported as per JORC 2012
As of July 2012 at 0.5g/t Au lower cutoff		 Reported as per JORC 2012
As of July 2012 at 0.5g/t Au lower cutoff
Deposit Category Resource Grade – cut Gold – cut
(Oz)
(Mt) (g/t gold)
Kulumadau Measured 5 1.78 285,000
Indicated 4.4 1.75 250,000
Inferred 8.6 1.4 380,000
Totals 18 1.6 910,000
Busai Measured 3.9 1.54 190,000
Indicated 10.4 1.4 470,000
Inferred 4.9 1.6 250,000
Totals 19 1.5 910,000
All Measured 8.9 1.66 475,000
Indicated 14.8 1.5 720,000
Inferred 13.5 1.5 630,000
Totals All 37.2 1.5 1,820,000

Notes

  • 1: Totals may appear incorrect due to rounding.

  • 2: The Busai Indicated Resource includes 0.4Mt @ 1.4/t Au for 20,000oz from overlying alluvial mineralisation.

  • 3: The Busai Inferred Resources includes 0.4Mt @ 1.2/Au for 14,000oz from overlying alluvial mineralisation.

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Appendix A: Table 4. Woodlark Island 2004 Resource Table

Reported as per JORC 2004
As of July 2012 at 0.5g/t Au lower cutoff		 Reported as per JORC 2004
As of July 2012 at 0.5g/t Au lower cutoff		 Reported as per JORC 2004
As of July 2012 at 0.5g/t Au lower cutoff
Deposit Category Resource Grade – cut Gold – cut
(Oz)
(Mt) (g/t gold)
Munasi Inferred 3.9 0.9 110,000
Total 3.9 0.9 110,000
Woodlark King Indicated 3 1.2 115,000
Inferred2 1 1.8 60,000
Total 4 1.4 175,000
Total All 7.9 1.1 285,000

  • 1: Totals may appear incorrect due to rounding.

  • 2: The Woodlark King Inferred Resource includes 0.3Mt @ 3.0g/t for 30,000oz Au from Watou (1.5km south of Woodlark King)

  • 3: These Resources are reported under JORC 2004 and have not been updated.

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Appendix B: JORC Code, 2012 Edition – Table 1 – Recent Drilling

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

CRITERIA JORC CODE EXPLANATION COMMENTARY
Sampling
techniques		 Nature and quality of sampling (e.g. cut channels,
random chips, or specific specialised industry
standard measurement tools appropriate to the
minerals under investigation, such as down hole
gamma sondes, or handheld XRF instruments, etc.).
These examples should not be taken as limiting the
broad meaning of sampling.
Include reference to measures taken to ensure
sample representivity and the appropriate
calibration of any measurement tools or systems
used.		 Sampling was conducted using diamond drilling
(DD).
Sampling of the diamond drilling comprised half
core samples taken based on lithological,
alteration, and mineralisation breaks observed in
geological logging.
Samples were sent for fire assay gold and four-acid
multi-element analysis by ICPMS method. Blank,
duplicate, and standard samples were inserted in
at various intervals based on Geopacific’s QAQC
procedure (nominal 1 in 20) to ensure sample
representivity and repeatability of the sampling
results.
Aspects of the determination of mineralisation that
are Material to the Public Report.
In cases where ‘industry standard’ work has been
done this would be relatively simple (e.g. ‘reverse
circulation drilling was used to obtain 1 m samples
from which 3 kg was pulverised to produce a 30 g
charge for fire assay’). In other cases more
explanation may be required, such as where there
is coarse gold that has inherent sampling problems.
Unusual commodities or mineralisation types (e.g.
submarine nodules) may warrant disclosure of
detailed information.		 Core was cut in half using a core saw. Where core
competency was low, whole core was wrapped in
plastic clingfilm to help maintain integrity of the
sampled interval while being cut. Samples were
prepared on the on-site sample prep laboratory
operated by ITS Pty Ltd PNG (Intertek Services Ltd).
Standard preparation of samples is to crush ~2kg
through a jaw crushed, with a blank bottle wash
between each sample. Crushed sample is then
transferred to a LM-2 pulveriser for reduction to
pulp. A 150gm pulp sample is split from the master
sample and submitted for analysis. Coarse reject
material and pulps are bagged and stored on site
for future reference.
Samples were sent for fire assay gold analysis using
a 50g charge, as well as multi-element analysis
using multi-acid digest with ICP finish at Intertek’s
Townsville laboratory.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Drilling
Techniques		 Drill type (e.g. core, reverse circulation, open-hole
hammer, rotary air blast, auger, Bangka, sonic,
etc.) and details (e.g. core diameter, triple or
standard tube, depth of diamond tails, face-
sampling bit or other type, whether core is oriented
and if so, by what method, etc.).		 Diamond drilling was undertaken using triple tube
methodology in a variety of core sizes including PQ
and HQ and NQ depending on the ground
conditions and depth of investigation.
Drill Sample
Recovery		 Method of recording and assessing core and chip
sample recoveries and results assessed.		 Core recovery is recorded by measuring the core
recovered from the drillhole against the actual
drilled metres.
Measures taken to maximise sample recovery and
ensure representative nature of the samples.		 The use of triple tube drilling as well as shorter
runs in zones of broken ground were used to
maximise the sample recovery.
Whether a relationship exists between sample
recovery and grade and whether sample bias may
have occurred due to preferential loss/gain of
fine/coarse material.		 Sample recovery was good throughout the
drillholes, consistently above 90%, and as such
there is no sample bias introduced because of
sample recovery.
Logging Whether core and chip samples have been
geologically and geotechnically logged to a level of
detail to support appropriate Mineral Resource
estimation, mining studies and metallurgical
studies.		 All drill core was geologically logged by Geopacific
geologists using Geopacific’s logging procedure.
Geotechnical logging of Rock Quality Designation
(RQD), hardness, degree of fracturing and
weathering is undertaken by Geopacific staff using
Geopacific’s logging procedure.
Whether logging is qualitative or quantitative in
nature. Core (or costean, channel, etc.)
photography.		 Drill core was logged both qualitatively (e.g.
lithology, alteration, structure, etc.) and
quantitatively (e.g. veining and mineralisation
percentage, structural orientation angles, etc.).
Drill core is photographed both dry and wet and is
stored in plastic core trays in our exploration core
yard.
The total length and percentage of the relevant
intersections logged.		 All holes are logged their entire length.
Sub-sampling
techniques
and sample
preparation		 If core, whether cut or sawn and whether quarter,
half or all core taken.		 Core is halved, with one half sent for sample
preparation and analysis. The remaining core is
stored in the core trays on site.
If non-core, whether riffled, tube sampled, rotary
split, etc. and whether sampled wet or dry.		 Only samples from diamond drilling (core) is
discussed in this release.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
For all sample types, the nature, quality and
appropriateness of the sample preparation
technique.		 Samples are crushed to a nominal 2mm by a jaw
crusher, with the whole sample pulverised and
then split; one 150gm sample for submission with
residue stored on site.
Quality control procedures adopted for all sub-
sampling stages to maximise representivity of
samples.		 Field blank, duplicate, and standard samples are
introduced to maximise the representivity of the
samples.
Measures taken to ensure that the sampling is
representative of the in-situ material collected,
including for instance results for field
duplicate/second-half sampling.		 Field duplicates are inserted in accordance with
Geopacific’s QAQC procedure.
Whether sample sizes are appropriate to the grain
size of the material being sampled.		 Sample sizes are appropriate to the grain size of
the material being sampled.
Quality of
assay data
and
laboratory
tests		 The nature, quality and appropriateness of the
assaying and laboratory procedures used and
whether the technique is considered partial or
total.		 Fire assay Au and four-acid digest ICP analysis are
thought to be appropriate for determination of
gold and base metals in fresh rock, and are
considered to represent a total analysis.
For geophysical tools, spectrometers, handheld XRF
instruments, etc., the parameters used in
determining the analysis including instrument
make and model, reading times, calibrations
factors applied and their derivation, etc.		 No results from geophysical tools, spectrometers,
or handheld XRF instruments are reported in this
release.
Nature of quality control procedures adopted (e.g.
standards, blanks, duplicates, external laboratory
checks) and whether acceptable levels of accuracy
(i.e. lack of bias) and precision have been
established.		 Field and lab blank, duplicate, and standard
samples were used in the drilling. Results from
these QAQC samples were within the acceptable
ranges.
Verification of
sampling and
assaying		 The verification of significant intersections by either
independent or alternative company personnel.		 Significant intersections were inspected by senior
geological staff.
The use of twinned holes. No holes reported in this announcement are twins
of previous drilling.
Documentation of primary data, data entry
procedures, data verification, data storage
(physical and electronic) protocols.		 Primary assay data is sent electronically from the
lab to our database administrator and then
entered into Geopacific’s database and validated
by the database administrator and senior staff.
Discuss any adjustment to assay data. No adjustments were made or required to be
made to the assay data.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Location of
data points		 Accuracy and quality of surveys used to locate drill
holes (collar and down-hole surveys), trenches,
mine workings and other locations used in Mineral
Resource estimation.		 Drillhole collars were located using a total station
surveying instrument.
Downhole surveys are conducted on all diamond
drillholes with readings recorded every 5 metres
downhole using a Reflex MEMS gyro.
Specification of the grid system used. Coordinates are recorded in PNG94 geodetic
system
Quality and adequacy of topographic control. LiDAR survey data obtained over the licence area,
tied in to total station collar readings provide sub-
metre accuracy.
Data spacing
and
distribution		 Data spacing for reporting of Exploration Results. Drilling reported in this release relates to infill
drilling within the Busai deposit. Existing drilling
within the defined deposit area is nominally spaced
25m x 25m, closer in some areas.
Whether the data spacing and distribution is
sufficient to establish the degree of geological and
grade continuity appropriate for the Mineral
Resource and Ore Reserve estimation procedure(s)
and classifications applied.		 Drilling results released in this announcement
confirm mineralisation delineated in previous
drilling and confirm both grade and geological
continuity. As these holes compliment drilling
informing a previously reported JORC Resource
(see Appendix A, Table 3), spacing is considered
sufficient.
Whether sample compositing has been applied. Results released in this announcement refer to
diamond drilling where no compositing was
undertaken.
Orientation of
data in
relation to
geological
structure		 Whether the orientation of sampling achieves
unbiased sampling of possible structures and the
extent to which this is known, considering the
deposit type.		 Current interpretations of the mineralised zones in
all areas indicate that the orientation of the
drillholes has achieved unbiased sampling of the
structures.
If the relationship between the drilling orientation
and the orientation of key mineralised structures is
considered to have introduced a sampling bias, this
should be assessed and reported if material.		 An interpretation of the mineralisation has
indicated that no sampling bias has been
introduced to the diamond drillholes reported
herein.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Sample
security		 The measures taken to ensure sample security. All samples are collected by GPR staff and put into
numbered plastic bags, along with a corresponding
sample ticket, which are immediately sealed and
placed in order on a pallet with other samples in an
area directly adjacent to the onsite sample
preparation laboratory. and the pallet containing
the sealed samples is then delivered directly into
the onsite sample prep lab, where chain of custody
hands over to ITS Ltd.
Audits or
reviews		 The results of any audits or reviews of sampling
techniques and data.		 No audits have been completed, but QAQC data is
monitored on a batch-by-batch basis.

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Appendix B: JORC Code, 2012 Edition – Table 1

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

CRITERIA JORC CODE EXPLANATION COMMENTARY
Mineral
tenement and
land tenure
status		 Type, reference name/number, location and
ownership including agreements or material issues
with third parties such as joint ventures,
partnerships, overriding royalties, native title
interests, historical sites, wilderness or national
park and environmental settings.
The security of the tenure held at the time of
reporting along with any known impediments to
obtaining a licence to operate in the area.		 Geopacific executed a Joint Venture agreement
with Kula Gold Ltd (ASX:KGD) to acquire a 75%
interest by spending AUD$18.65m over three
tranches. Tranche 1 was $0.65m to conduct due
diligence and earned GPR 5%, under Tranche 2,
GPR must spend AUD$8m within the first two
years to earn an additional 35% interest in
operating company WML. Should GPR delineate a
Reserve of >1.2M Oz Au within the two-year period
it will be deemed to hold a 51% interest in WML.
Geopacific can increase its ownership to 60% of
WML by completing the earn-in expenditure
(Tranche 3) without delineating the Reserve target
of 1.2M Oz Au. Should that target be met as part
of Tranche 3 expenditure, Geopacific will be
deemed to have earned a 75% interest in WML.
Exploration
done by other
parties		 Acknowledgment and appraisal of exploration by
other parties.		 This announcement is based on work done by Kula
Gold Ltd and Geopacific Resources Limited.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Geology Deposit type, geological setting and style of
mineralisation.		 Most of Woodlark Island is covered by a veneer of
Plio-Pleistocene limestones (coronus) of variable
thickness with associated marine clays and basal
conglomerates. A central elevated portion of the
island (horst structure) contains Miocene volcanic
rocks intruded by late stage, high K porphyritic
intrusives and contains the known historical mines.
Gold mineralisation within the Woodlark Island
Gold Project is principally hosted by andesites and
their sub-volcanic equivalents within the Miocene
age stratigraphic unit known as the Okiduse
Volcanics. The mineralisation is variously
associated with lodes, quartz veins, stockwork
zones and breccias developed within proximal
phyllic and marginal propylitic alteration envelopes
regionally associated with intrusive breccia
complexes. Gold mineralisation is consistent with
low sulphidation, base metal carbonate,
epithermal systems typical of the south-west
Pacific.
Drill hole
Information		 A summary of all information material to the
understanding of the exploration results including a
tabulation of the following information for all
Material drill holes:
o easting and northing of the drill hole collar
o elevation or RL (Reduced Level – elevation
above sea level in metres) of the drill hole
collar
o dip and azimuth of the hole
o down hole length and interception depth
o hole length
If the exclusion of this information is justified on
the basis that the information is not Material and
this exclusion does not detract from the
understanding of the report, the Competent Person
should clearly explain why this is the case.		 See Appendix A, Tables 1 and 2
Data
aggregation
methods		 In reporting Exploration Results, weighting
averaging techniques, maximum and/or minimum
grade truncations (e.g. cutting of high grades) and
cut-off grades are usually Material and should be
stated.		 No top-cuts were used in the reporting of these
significant intercept. The interval selected using a
cut off value 0.5ppm Au and were calculated using
weighted averaging.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Where aggregate intercepts incorporate short
lengths of high grade results and longer lengths of
low grade results, the procedure used for such
aggregation should be stated and some typical
examples of such aggregations should be shown in
detail.		 Shorter intercepts of higher grade within larger
reported intercepts are subsequently highlighted
within the summary drilling table.
The assumptions used for any reporting of metal
equivalent values should be clearly stated.		 N/A
Relationship
between
mineralisation
widths and
intercept
lengths		 These relationships are particularly important in
the reporting of Exploration Results.
If the geometry of the mineralisation with respect
to the drill hole angle is known, its nature should be
reported.
If it is not known and only the down hole lengths
are reported, there should be a clear statement to
this effect (e.g. ‘down hole length, true width not
known’).		 Information from other drilling in the area as well
as geological mapping indicate that the downhole
intervals may be close to the true width, but more
structural information is needed to determine the
exact orientation of the mineralised zones.
Diagrams Appropriate maps and sections (with scales) and
tabulations of intercepts should be included for any
significant discovery being reported These should
include, but not be limited to a plan view of drill
hole collar locations and appropriate sectional
views.		 Diagrams relevant to the report content are
included in the body of the report.
Balanced
reporting		 Where comprehensive reporting of all Exploration
Results is not practicable, representative reporting
of both low and high grades and/or widths should
be practiced to avoid misleading reporting of
Exploration Results.		 Refer to Appendix A, tables 1 and 2
Other
substantive
exploration
data		 Other exploration data, if meaningful and material,
should be reported including (but not limited to):
geological observations; geophysical survey results;
geochemical survey results; bulk samples – size and
method of treatment; metallurgical test results;
bulk density, groundwater, geotechnical and rock
characteristics; potential deleterious or
contaminating substances.		 Refer to text.

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CRITERIA JORC CODE EXPLANATION COMMENTARY
Further work The nature and scale of planned further work (e.g.
tests for lateral extensions or depth extensions or
large-scale step-out drilling).
Diagrams clearly highlighting the areas of possible
extensions, including the main geological
interpretations and future drilling areas, provided
this information is not commercially sensitive.		 Refer to text.

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Appendix C - JORC 2012 Checklist of Assessment and Reporting Criteria - Resource Estimation: Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria Explanation Commentary
Sampling
techniques		 •
Nature and quality of sampling (e.g. cut
channels, random chips, or specific specialised
industry standard measurement tools appropriate to
the minerals under investigation, such as down-hole
gamma sondes, or handheld XRF instruments, etc.).
These examples should not be taken as limiting the
broad meaning of sampling.
•
Include reference to measures taken to ensure
samples are representative and the appropriate
calibration of any measurement tools or systems
used.
•
Aspects of the determination of mineralisation
that are Material to the Public Report.In cases
where ‘industry standard’ work has been done
this would be relatively simple (e.g. ‘reverse
circulation drilling was used to obtain 1 m
samples from which 3 kg was pulverised to
produce a 30 g charge for fire assay’). In other cases
more explanation may be required, such as where
there is coarse gold that has inherent sampling
problems. Unusual commodities or mineralisation
types (e.g. submarine nodules) may warrant
disclosure of detailed information.

•
In-line with the nature of the mineralisation, the nature and quality of the RC (reverse
circulation) and DD (diamond drilling) sampling was deemed by to be representative and of
sufficient standard for use in subsequent detailed studies and ultimately resource estimation.
•
Sampling protocols were adequate and maintained throughout the drilling campaigns.
•
For RC drilling, historical sampling by BHP was over 2m or 4m intervals and by Auridium
and Woodlark Mining Limited (WML or The Client) over 1m intervals.
•
For diamond drilling by BHP, Auridium, & WML diamond core was sampled over 1m
intervals and by Highlands over 2m intervals. All companies submitted half core for
analysis.
•
Portions of the core obtained by the WML drilling were clay rich, soft, and liable to
fragmentation and sample loss during core cutting. Consequently such core was bound in
plastic tape before cutting, to preserve both the integrity of the analytical sample and of the
retained half core.

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Criteria Explanation Commentary
Drilling
techniques		 •
Drill type (e.g. core, reverse circulation, open-hole
hammer, rotary air blast, auger, Bangka, sonic, etc.)
and details (e.g. core diameter, triple or standard
tube, depth of diamond tails, face-sampling bit or
other type, whether core is oriented and if so, by
what method, etc.).
•
Across the entire Woodlark Island Project, drilling was by Reverse Circulation (RC) and
diamond (DD) drilling representing 86% and 14% of the total database respectively.
•
The WML Reverse Circulation (RC) holes were drilled using a face sampling hammer to a
maximum depth of 171m, although most were drilled to 150m
•
The Diamond Drilling (DD) technique was used to obtain varying size core (between HQ3
to NQ2 sized core) samples. DD drilling achieved a maximum depth of 350m in drill-hole
08WBSD008.
•
WML Diamond (DD) drill core samples were oriented & marked up using ORI tool marks
generated during the drilling process.
Drill sample recovery •
Method of recording and assessing core and chip
sample recoveries and results assessed.
•
Measures taken to maximise sample recovery and
ensure representative nature of the samples.
•
Whether a relationship exists between sample
recovery and grade and whether sample bias may
have occurred due to preferential loss/gain of
fine/coarse material.		 •
To assess RC sample recovery, individual samples were weighed and recorded in the field.
The data indicated some inadequacies in sample recovery were primarily due to poor ground
conditions, however consistently high recoveries were obtained by WML, which in most cases
obtained dry samples.
•
All diamond core (DD) was measured and recovery data recorded for all holes.
Predominantly satisfactory sample recovery occurred, however periodic poorer recovery was
encountered during the intersection of clay rich sheared and fractured zones at Kulumadau
West, which resulted in the likelihood of the potential loss of some sulphides and gold in clayey
shear zones during core drilling. At Kulumadau West some smearing in pre-WML RC drilling
gave potential overestimation of the width of mineralised zones. Assays from these holes were
not used for resource estimation.
•
No further apparent biases were observed.

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Criteria Explanation Commentary
Logging •
Whether core and chip samples have been
geologically and geotechnically logged to a level
of detail to support appropriate Mineral Resource
estimation, mining studies and metallurgical studies.
•
Whether logging is qualitative or quantitative in
nature. Core (or costean, channel, etc.)photography.
•
The total length and percentage of the relevant
intersections logged.		 •
It has been noted by KG representatives that a geologist was on site at all times when the rig
is operational.
•
A handful of material for logging was taken from the 3/4 split bag (this was usually done
before weighing due to the need to keep pace with the drilling). The sample was then wet
sieved into a panning dish using a 1 or 2mm sieve. Oversize rock chips were geologically
logged using the appropriate log form.
•
After logging, rock chips were placed into appropriately labelled plastic chip storage trays.
A photographic record was later made of the chip trays laid out in an ordered arrangement
to reflect the progressive changes down the drill-hole. All core was photographed.
•
The sieved -1mm material was then panned down to a concentrate and notes made on the
presence of sulphides, magnetite, visible gold and other heavy minerals. Logging was
undertaken on a sample interval basis keeping pace with the progress of the drill-hole where
possible.
•
CRM viewed all core and chip trays from the Busai Deposit in the field and the photos of all
chip trays and core from the other deposits

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Criteria Explanation Commentary
Sub-sampling
techniques and sample
preparation		 •
If core, whether cut or sawn and whether quarter,
half or all core taken.
•
If non-core, whether riffled, tube sampled, rotary split,
etc. and whether sampled wet or dry.
•
For all sample types, the nature, quality and
appropriateness of the sample preparation
technique.
•
Quality control procedures adopted for all sub-
sampling stages to maximise representivity of
samples.
•
Measures taken to ensure that the sampling is
representative of the in situ material collected,
including for instance results for field
duplicate/second-half sampling.
•
Whether sample sizes are appropriate to the grain
size of the material being sampled.
•
The WML RC samples were collected into an open weave (polyweave) plastic sack, numbered
with the drill-hole number & sample interval. The sack is fixed to the throat of the cyclone.
The filled sack was transported to the splitting station in a barrow. This procedure reduced
the chances of spillage and injury caused by lifting heavy wet samples.
•
Holes made with fencing wire were applied to the top of the sample bag when the sample is
wet to allow excess water to dissipate. WML protocol was that the cyclone should be checked
and cleaned at every interval when the recovered sample is damp or wet.
•
A riffle splitter capable of handling up to 35kg of dry cuttings was be used to obtain a 4-5kg
split of the cuttings for despatch to the Sample Preparation Laboratory. This usually
represents 20 to 25% of the sample collected, dependent on the drill-hole size.
•
The laboratory sample is placed into a plastic bag labelled with the sample number and an
aluminium permatag with sample number inserted before sealing the bag with staples. The
bags is weighed then laid out in order of sampling for checking prior to transhipment to the
lab. Sample weights are determined for each sample interval whilst at the drill site.
Suspension scales accurate to 0.5kg are recommended for the 3/4 split residue and a set of top
balance scales accurate to 0.1kg is recommended for the lab sample.
•
For core drilling the samples are transported from the field, four trays at a time in a utility,
once in the core yard core blocks are recorded and core recoveries are calculated.
•
The core is photographed and then marked up in individual metres. Core is then geologically
and geotechnically logged and sample numbers are assigned for cutting and sampling.
•
Core is then sawn in half (if the core is not coherent it is first taped up) and the half core is
sampled according to the assigned sampling regime (usually by 1m intervals). Core is
packaged into plastic and then combined into calico and a polyweave sack, the quantity is
contingent upon weight.
•
The sample sizes are considered adequate to capture and adequately represent the prevailing
mineralisation style / gold variability over the project area.

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Criteria Explanation Commentary
Quality of assay data
and laboratory tests		 •
The nature, quality and appropriateness of the
assaying and laboratory procedures used and whether
the technique is considered partial or total.
•
For geophysical tools, spectrometers, handheld XRF
instruments, etc., the parameters used in determining
the analysis including instrument make and model,
reading times, calibrations factors applied and their
derivation, etc.
•
Nature of quality control procedures adopted (e.g.
standards, blanks, duplicates, external laboratory
checks) and whether acceptable levels of accuracy
(i.e. lack of bias) and precision have been
established.
•
WML sample preparation was carried out by Intertek personnel on Woodlark during 2004.
For the 2005 programme a new preparation facility was established and run by Intertek at
Alotau. In 2008 the preparation laboratory was moved to WML’s Woodlark camp. CRM
visited both facilities and was of the opinion that all necessary equipment was available and
fully serviceable and that all procedures and documentation were carried out to highest
standards.
•
The Sample Preparation Laboratory submitted a second pulp sample at the ratio of one
sample in fifteen.
•
Sample submission forms are completed at the sample preparation facility and the pulp
samples are transported to Intertek in Jakarta by air.
•
Gold analyses are conducted using Fire Assay with AAS finish on a 50g sample (Intertek
method Code FA50).
•
Routine base metal analyses are to be conducted using acid (aqua regia) digest with AAS
finish (Intertek method Code GA02).
•
As a standard practice, Intertek Analytical Laboratory in Jakarta routinely re-assays the pulps
at a ratio of approximately 1 in 9, including all samples returning greater than 10 g/t Au. Any
variation greater than 15% between first and second analyses triggers further repeats.
•
Many of the drill-holes completed by WML in 2004 contained zones with visible gold. It is
accepted that this has potential to contribute to a lack of homogeneity in both crushed and
pulverised sample material due to “nugget effect”. Screen fires have been used by past
explorers on Woodlark and have confirmed that nugget effect is a common occurrence.
•
As part of their own internal quality assurance program, Intertek run reference standards with
every batch of samples supplied by Woodlark Mining. Each batch of fifty samples fired
includes one blank, two gold reference standards and two randomly selected replicate
samples. This is in addition to the one-in fifteen second splits used for monitoring
_reproducibility. _

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Criteria Explanation Commentary
Quality of assay data
and laboratory tests
(Cont)		 •
CRM supervised the collection of duplicate core, coarse crush, and pulp samples from
both WML’s 2004 and 2005 Kulumadau diamond drill programmes. These samples
were analysed for Au by Genalysis Laboratory Services Pty Ltd, Maddington, Western
Australia (Genalysis) using a 50g charge fire assay with an AAS finish. The check core
samples confirmed the presence of high grade gold mineralisation and the check pulp
samples the validity of Intertek’s assay procedures.
•
From mid-2008 WML included a series of gold reference standards and blanks (obtained
from an independent Australian supplier) with each batch of samples submitted for analysis.
These were included on a one-in-fifty basis as part of the normal sequence of sample numbers
not revealed to the Analytical Laboratory.
•
WML procedures have provided acceptable levels of accuracy and precision
Verification of
sampling and
assaying.		 •
The verification of significant intersections by either
independent or alternative company personnel.
•
The use of twinned holes.
•
Documentation of primary data, data entry
procedures, data verification, data storage(physical
and electronic) protocols.
Discuss any adjustment to assay data.		 •
When the site is accessible, Kula Gold Pty Ltd has a policy of permitting visits to its
operational sites by interested investors or authorities with concern for quality assurance
purposes.
•
Data verification is undertaken by Kula Gold representatives.
•
CRM had, to late 2005, obtained copies of all historical logs in WML’s library and in their
Woodlark office; obtained copies of all historical original laboratory assay sheets in WML’s
library and in their Woodlark office; verified all assays in the database against the original
assay sheet if available, or in default against the original log sheets if available, or in default
against BHP’s typed drill assay summaries; Obtained a selection of original laboratory assay
sheets for the 2004 WML drilling and verified the digital assay filet supplied by WML against
these; obtained original laboratory assay files and faxed assay reports from Intertek for the
2005 WML drilling; cross-checked drill-hole collar data against survey files and entries on
original logs; verified down-hole surveys by viewing a selection of down-hole camera discs
from WML’s 2004 drilling.
•

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Criteria Explanation Commentary
Verification of
sampling and
assaying. (Cont)		 •
Since 2005 CRM has received copies of all drill logs, drilling details, and assay results.
It has checked assay sheets and collar coordinates against the WML database and has
generated 3D down-hole assay locations using Micromine software, which
simultaneously carries out check validation of data.
•
Over the duration of the exploration of the project a number of twinned drill-holes have been
drilled. It was observed that overall results were broadly in agreement with the recognition of
periodic down-hole contamination in some RC drill-holes within the Kulumadau Deposit. The
correlation of data downhole between historical and current drilling assists with verification
of data repeatability.
•
Laboratory data is supplied electronically to the WML office for automated import into
database.
•
All data is stored on the WML Office server and is said to be backed up weekly by the Client.
•
There was no adjustment to the assay data provided from the laboratory.

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Criteria Explanation Commentary
Location of data
points		 •
Accuracy and quality of surveys used to locate drill
holes (collar and down-hole surveys), trenches, mine
workings and other locations used in Mineral
Resource estimation.
•
Specification of the grid system used.
Quality and adequacy of topographic control.
•
Prior to 2010, WML and its predecessors employed the UTM projection AGD66 Zone 56
datum. They also used a local grid system that was derived from it by the removal of the first
number from the easting and the first two numbers from the northing.
•
In early 2010 WML upgraded from a UTM projection using the AGD66 Zone 56 datum to a
UTM projection WGS84 Zone 56 datum for all work undertaken on the island. All historical
data was transformed from AGD66 to WGS84
•
A Geodetic survey was completed on the Island in September 2010 by Quickclose Pty Ltd,
whose principal; Mr Richard Stanaway is a Registered Surveyor in Australia, specializing in
establishing geodetic datum surveys by differential GPS techniques.
•
The survey tied all KG survey data in the kinematic WGS84 datum to the Papua New Guinea
legal standard static datum PNG94. Orthometric heights were adjusted to Local mean sea
level.
•
All data has been supplied to CRM by KG (Kula Gold or “The Client”) in the PNG94
datum. The LIDAR survey was flown in early 2011 using the PNG94 datum. The elevation
data produced is tied to Local Mean Sea Level and all the collar data received after
September 2010 is in PNG94 all historical elevation data prior to then have been reduced to
the LIDAR surface which is in PNG94.
•
CRM has checked down-hole survey information for WML diamond drill holes. Post 2008 Kula
Gold used Reflex EZ Shot electronic survey equipment for down-hole surveying.
Data spacing and
distribution		 •
Data spacing for reporting of Exploration Results.
•
Whether the data spacing and distribution is
sufficient to establish the degree of geological and
grade continuity appropriate for the Mineral
Resource and Ore Reserve estimation procedure(s)
and classifications applied
•
Whether sample compositing has been applied.		 •
Drilling over the Woodlark project areas was designed to intersect the mineralisation at
approximately 26 to 30m along strike and approximately 20 to 25m across strike.
•
Toward the extremities of the main project areas the drilling becomes broader to as much as
45 to 50m across strike and 43 to 52m along strike to define regional mineralised trends.
•
. CRM used 1m composites for the Kulumadau West modelling, and variable length
composites for the Kulumadau Adelaide and Kulumadau East modelling in order to de-
cluster data from drill-holes with varying azimuths and dips.
•
The data spacing is considered adequate by CRM to enable local short scale continuity in
geology and the known mineralised trends and is sufficient for use in Resource estimation.

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Criteria Explanation Commentary
Orientation of data in
relation to geological
structure		 •
Whether the orientation of sampling achieves
unbiased sampling of possible structures and the
extent to which this is known, considering the deposit
type.
•
If the relationship between the drilling orientation
and the orientation of key mineralised structures is
considered to have introduced a sampling bias, this
should be assessed and reported if material.
•
Where possible the drill-holes were designed to perpendicularly intersect the mineralisation
to achieve unbiased sampling and reflect as close to true width possible given the geometry
of the mineralisation.
•
No sample biases have been considered by CRM to have been introduced during drilling
other than those stated earlier in sampling technique section in relation to down hole
smearing in a number of RC drill-holes and to preferential fine fraction core loss in
Kulumadau West diamond drilling.
Sample security •
The measures taken to ensure sample security.		 •
Sample chain of custody was maintained for this project.
•
WML samples despatched by chartered boat to the Alotau preparation facility during 2005
were accompanied by a WML employee to ensure that no tampering occurred. The samples
were securely and obviously sealed prior to transport and received by a senior WML staff
member in Alotau. From 2008 sealed sample packages transported by charter plane to Port
Moresby and thence by DHL courier air freight to Jakarta.
Audits or reviews •
The results of any audits or reviews of sampling
techniques and data.		 •
CRM supervised the collection of duplicate core, coarse crush, and pulp samples from
both WML’s 2004 and 2005 Kulumadau diamond drill programmes. These samples
were analysed for Au by Genalysis Laboratory Services Pty Ltd, Maddington, Western
Australia (Genalysis) using a 50g charge fire assay with an AAS finish. The check core
samples confirmed the presence of high grade gold mineralisation and the check pulp
samples the validity of Intertek’s assay procedures.
CRM has reviewed all QAQC data and is of the opinion that the reported grades adequately
and accurately reflect the grades of the mineralisation

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Section 2 Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section.)

Criteria Explanation Commentary
Mineral tenement
and land tenure
status		 •
Type, reference name/number, location and
ownership including agreements or material issues
with third parties such as joint ventures,
partnerships, overriding royalties, native title
interests, historical sites, wilderness or national
park and environmental settings.
•
The security of the tenure held at the time of
reporting along with any known impediments to
obtaining a licence to operate in the area.		 •
The Woodlark Gold Project comprises a granted Mining Lease (ML508) and three
contiguous granted Exploration Licences (EL 1279, EL 1172, and EL1465), covering an
aggregate area of about 577km2. The licences are held 100 per cent by Woodlark Mining
Limited (WML), a wholly owned subsidiary of Kula Gold Pty Ltd. The ML and the Busai,
Woodlark King, and Kulumadau Deposits are within EL1279.
•
Woodlark Island is approximately 60km in length and 25km in width. It is situated in the
Solomon Sea some 300km east-northeast of the mainland of PNG). It is within PNG’s Milne
Bay Province.
Exploration done by
other parties		 •
Acknowledgment and appraisal of exploration by
other parties.		 •
Historical exploration on the Woodlark Project is given by Spencer (2009), in summary:
Alluvial gold discovered in 1895; Alluvial rush slows in 1898; Rich veins mined at Busai
1896-1915 including Murua United open cut; Kulumadau main lode discovered 1898;
Company mining at Kulumadau 1899-1918; Mining of Woodlark King 1911-1939.
•
Since 1962 a number of explorers have conducted geological mapping, geophysical and
geochemical exploration, and drilling at Busai, Kulumadau, and other prospects. The
explorers listed are the Australian Bureau of Mineral Resources (BMR), BHP Minerals
Exploration (BHP), Highlands Gold Resources N.L. (Highlands), Auridiam Consolidated
Limited (Auridium), Misima Mines Limited (MML), and WML, which was a wholly owned
subsidiary of BDI Mining Ltd (BDI) between 2004 and 2007 (since when it has been a
wholly owned subsidiary of Kula Gold Pty Ltd).
•
WML drilled the Kulumadau Deposit between 2004 and 2006 and during 2011 and 2012;
the Busai Deposit from 2008 to 2010, and the Woodlark King Deposit during 2010 and
2011.

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Criteria Explanation Commentary
Geology •
Deposit type, geological setting and style of
mineralisation.		 •
The Woodlark Project is consistent with a low sulphidation epithermal system.
•
Woodlark Island is part of a Tertiary aged volcanic island arc complex, comprising part of
the Woodlark Oceanic Rise, one of a succession of composite east-west trending island arcs
in the eastern PNG region.
•
Gold mineralisation within the Woodlark Project is principally hosted by andesites and their
sub-volcanic equivalents within the Okiduse Volcanics. The mineralisation is variously
associated with lodes, quartz veins, stock-work zones, and breccias; developed within
proximal phyllic and marginal propylitic alteration envelopes.
•
Sulphide mineralogy is dominated by pyrite, which is weakly to moderately disseminated
throughout the regional propylitic alteration halo.

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Criteria Explanation Commentary
Drill hole Information •
A summary of all information material to the
understanding of the exploration results including a
tabulation of the following information for all
Material drill holes:
o
easting and northing of the drill hole
collar
o
elevation or RL (Reduced Level – elevation
above sea level in metres) of the drill hole
collar
o
dip and azimuth of the hole
o
down hole length and interception depth
o
hole length.
•
If the exclusion of this information is justified on
the basis that the information is not Material and
this exclusion does not detract from the
understanding of the report, the Competent Person
should clearly explain why this is the case.

•
No drilling has been carried out within the resource areas since the resource estimations. All
prior drilling has been previously reported.
•
All drill-holes are located between 468656.567mE to 476261.1769mE and 8986241.592mN
to 8996728.262mN (on the (WGS8)4 World Geodectic grid System).
•
Using a local height Datum, the relative level (RL) for the drill collars are within 1.09mRL
and 163.90mRL.
•
The majority of holes were drilled on an azimuth of approximately 090 (with other notable
azimuths at 225, 045 and 270);
•
Drill-hole inclination varied between -45 to -90 degrees down dip.
•
The interception depth downhole varied due to the dip of the mineralisation.
•
Maximum total drill-hole length over the Busai, Kulumadau and Woodlark King projects did
not exceed 480m.
•
No exclusions are applicable at the time of writing this report.

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Criteria Explanation Commentary
Data aggregation
methods		 •
In reporting Exploration Results, weighting
averaging techniques, maximum and/or minimum
grade truncations (e.g. cutting of high grades) and
cut-off grades are usually Material and should be
stated.
•
Where aggregate intercepts incorporate short lengths
of high grade results and longer lengths of low grade
results, the procedure used for such aggregation
should be stated and some typical examples of such
aggregations should be shown in detail.
•
The assumptions used for any reporting of metal
equivalent values should be clearly stated.

•
No metal equivalent values have been used during estimation.by CRM.
Relationship between
mineralisation widths
and intercept lengths		 •
These relationships are particularly important in the
reporting of Exploration Results.
•
If the geometry of the mineralisation with respect to
the drill hole angle is known, its nature should be
reported.
•
If it is not known and only the down hole lengths
are reported, there should be a clear statement to
this effect (e.g. ‘down hole length, true width not
known’).
•
The drill-hole orientation intersects the mineralisation at a various angles in-line with the
variability of the mineralised trends.
•
In general the dominant drill hole orientation is -60o towards the predominant dip of the
mineralisation, which results in a propensity to intersect the mineralisation at as close to
perpendicular as possible.
•
As a result of the drilling and variability of the mineralisation, the mineralised intercepts are
exaggerated thickness and not true widths.

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Criteria Explanation Commentary
Diagrams •
Appropriate maps and sections (with scales) and
tabulations of intercepts should be included for any
significant discovery being reported These should
include, but not be limited to a plan view of drill
hole collar locations and appropriate sectional
views.		 •
There are no exploration results reported for the immediate Busai or Kulumadau Deposit
areas that have not been reported previously.
Balanced
reporting		 •
Where comprehensive reporting of all Exploration
Results is not practicable, representative reporting
of both low and high grades and/or widths should be
practiced to avoid misleading reporting of
Exploration Results.		 •
There are no exploration results reported for the immediate Busai or Kulumadau Deposit
areas that have not been reported previously
Other substantive
exploration data		 •
Other exploration data, if meaningful and material,
should be reported including (but not limited to):
geological observations; geophysical survey results;
geochemical survey results; bulk samples – size and
method of treatment; metallurgical test results; bulk
density, groundwater, geotechnical and rock
characteristics; potential deleterious or
contaminating substances.
•
Highlands carried out SG determinations on 81 core samples from Busai and 5 from
Kulumadau Adelaide. It also carried out a bulk SG on the Adelaide mineralisation.
•
CRM commissioned SG determinations on 88 RC chip samples and 10 Busai core samples
•
CRM and WML commissioned SG determinations on 10 Kulumadau core samples
•
CRM is not aware of any further substantive exploration data.
•

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Criteria Explanation Commentary
Further work •
The nature and scale of planned further work (e.g.
tests for lateral extensions or depth extensions or
large-scale step-out drilling).
•
Diagrams clearly highlighting the areas of possible
extensions, including the main geological
interpretations and future drilling areas, provided
this information is not commercially sensitive.		 •
The company has not defined any exploration programme or budget at this stage for
further exploration work within the areas of the deposits.
•
The company’s Quarterly Report for the period ending 30 June 2014 described a
helimag survey over the central part of Woodlark Island and a contract for follow-up
drilling.

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Section 3 Estimation and Reporting of Mineral Resources
(Criterialistedinsection 1, andwhererelevantinsection 2, also apply to this section.)		 Section 3 Estimation and Reporting of Mineral Resources
(Criterialistedinsection 1, andwhererelevantinsection 2, also apply to this section.)
Criteria Explanation Commentary
Database integrity •
Measures taken to ensure that data has not
been corrupted by, for example, transcription
or keying errors, between its initial collection
and its use for Mineral Resource estimation
purposes.
•
Data validation procedures used.		 •
Database is maintained by WML representatives and management. The aforementioned
individuals compiled all data from the Busai, Kulumadau and Woodlark King projects and it
was this data which was supplied to CRM.
•
CRM had, to late 2005, obtained copies of all historical logs in WML’s library and in their
Woodlark office; obtained copies of all historical original laboratory assay sheets in
WML’s library and in their Woodlark office; verified all assays in the database against the
original assay sheet if available, or in default against the original log sheets if available,
or in default against BHP’s typed drill assay summaries; Obtained a selection of original
laboratory assay sheets for the 2004 WML drilling and verified the digital assay filet
supplied by WML against these; obtained original laboratory assay files and faxed assay
reports from Intertek for the 2005 WML drilling; cross-checked drill-hole collar data
against survey files and entries on original logs; verified down-hole surveys by viewing a
selection of down-hole camera discs from WML’s 2004 drilling.
•
Since 2005 CRM has received copies of all drill logs, drilling details, and assay results. It
has checked assay sheets and collar coordinates against the WML database and has
generated 3D down-hole assay locations using Micromine software, which simultaneously
carries out check validation of data.
Site visits •
Comment on any site visits undertaken by the
Competent Person and the outcome of those
visits.
•
If no site visits have been undertaken indicate
why this is the case.		 •
The competent person for the resource estimation visited the Busai, Woodlark King, and
Kulumadau Deposits during WML’s drilling programmes into them, during 2005, 2008, and
2010.

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Criteria Explanation Commentary
Geological
interpretation		 •
Confidence in (or conversely, the uncertainty of)
the geological interpretation of the mineral
deposit.
•
Nature of the data used and of any assumptions
made.
•
The effect, if any, of alternative interpretations
on Mineral Resource estimation.
•
The use of geology in guiding and controlling
Mineral Resource estimation.
•
The factors affecting continuity both of grade
and geology.		 •
Confidence in the geological model is good.
•
Lithological boundaries defined from geological logging were used to define the geological
model and weathering / oxidation surfaces.
•
The geological interpretation is considered robust & alternative interpretations are considered
not to have a material effect on the Mineral Resource. No alternate interpretations are proposed
as geological confidence in the model is high.
•
Mineralisation tenor is very closely associated with the host geology and assisted the
interpretation of the mineralisation model.
•
The factors affecting continuity both of grade and geology are most likely to be associated with
structural controls and local complexity, the knowledge of which is moderate to well advanced
with the current spacing of information. The approach to the mineralisation modelling is an
attempt to model an unbiased interpretation based on the best available data provided to CRM.
Dimensions •
The extent and variability of the Mineral
Resource expressed as length (along strike or
otherwise), plan width, and depth below surface
to the upper and lower limits of the Mineral
Resource.
•
The Busai mineralisation strikes NNW and has a moderate westerly dip, with higher grade
mineralisation within steeper dipping narrow lodes. The mineralisation defined to date outcrops
sporadically throughout the project area and is spread over a width of about 500m and has been
intersected to a maximum intersected depth of approximately 328m below surface.
•
The Kulumadau West mineralisation strikes NNE over a length of at least 500m. It dips steeply
east. Multiple lodes are spread over a width of about 200m and extend to a maximum
intersected depth of approximately 250m below surface.
•
The Kulumadau Adelaide Zone mineralisation strikes WNW over a length of at least 225m. It
dips at about 70o SSW. The high-grade domain has a width of about 40m and has been
intersected to a depth of about 175m below surface.
•
The Kulumadau East mineralisation , which consists of multiple lodes, strikes NNW over a
length of about 450m and a total width of at least 400m. The high-grade domain has a length of
about 330m, a width of about 70m, and has been intersected to a depth of about 150m beneath
surface. It dips at about 55o to the east.
~~•~~

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Criteria Explanation Commentary
Estimation and modelling
techniques		 •
The nature and appropriateness of the estimation
technique(s) applied and key assumptions,
including treatment of extreme grade values,
domaining, interpolation parameters and
maximum distance of extrapolation from data
points. If a computer assisted estimation method
was chosen include a description of computer
software and parameters used.
•
The availability of check estimates, previous
estimates and/or mine production records and
whether the Mineral Resource estimate takes
appropriate account of such data.
•
The assumptions made regarding recovery of
by-products.
•
Estimation of deleterious elements or other non-
grade variables of economic significance (e.g.
sulphur for acid mine drainage
characterisation).
•
In the case of block model interpolation, the
block size in relation to the average sample
spacing and the search employed.
•
Any assumptions behind modelling of selective
mining units.

Busai Deposits – IDS modelling

CRM modelled the Busai Deposits using Inverse Distance Squared (IDS) methodology within the Micromine
software estimation module. IDS methodology is considered appropriate for shear-hosted moderate-to high
grade gold deposits.

The mineralisation was modelled within prismatic bounding wireframes. The limits of the wireframes
followed geological boundaries and were also constrained by a DTM of the surface.

An upper cut of 100g/t Au was applied to the volcanic-hosted composite assays and of 25g/t to those of the
Kiriwina alluvial mineralisation.

CRM used 1m composites for the modelling.

Variography was carried out in three directions on the composite assays within each wireframe,e in order to
ascertain interpolation parameters

The interpolation radii for the volcanic-hosted mineralisation were:
100m in azimuth direction, 50m in dip direction, and 1m across;

Each of the 10 structurally separate domains had different azimuth directions and dips;

The interpolation parameters for the alluvial mineralisation were: 60m to 360o, 60m to 90 (0o dip); 1m
vertical,

Block sizes were:
Volcanic-hosted mineralisation : 10m EW, 10m NS, 10m vertical,
Alluvial mineralisation : 10m EW, 10m NS, 10m vertical,

No assumptions were made with regard to selective mining units

No assumptions were made with respect to correlation between variables (only Au grade was modelled)

Grade cutting was applied according to interpretation of log-probability plots

OBM grade validation was carried out by visual on-screen verification of assay grades against nearby
OBM grade ranges. CRM is of the opinion that the block grades reflect the sample grades.

Previous resource estimates of the Busai volcanic-hosted mineralisation were from significantly fewer drill-
holes.

No by products are assumed; and no estimation of deleterious elements was carried out.

No estimation of deleterious elements was carried out.

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Criteria Explanation Commentary
Estimation and modelling
techniques (continued)
•
Any assumptions about correlation between
variables.
•
Description of how the geological interpretation
was used to control the resource estimates.
•
Discussion of basis for using or not using grade
cutting or capping.
•
The process of validation, the checking process
used, the comparison of model data to drill hole
data, and use of reconciliation data if available.



Busai Deposits – OK modelling
•
Widenbar and Assoc. carried out an Ordinary Kriged estimate of the Busai volcanic-hosted
mineralisation;
•
The mineralisation was modelled within the same prismatic wireframes that were used for
the IDS estimate
•
Different top-cuts were applied to each of the ten structural domains. They varied from 10g/t
Au to 60g/t Au.
•
Separate variography was carried out on the 1m composite data for each of the domains;
•
Different search directions were applied within each domain;
•
Block dimensions were 5m EW, 10m NS, and 5m vertical
•
The search ellipsoids had dimensions of 75m along strike, 4m across structure, and 60m
down plunge;
•
The block model was validated against drill hole data on section, by comparison with
average input data grades, and by comparison against the IDS model.

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Criteria Explanation Commentary
Estimation and modelling
techniques		 •
The nature and appropriateness of the estimation
technique(s) applied and key assumptions,
including treatment of extreme grade values,
domaining, interpolation parameters and
maximum distance of extrapolation from data
points. If a computer assisted estimation method
was chosen include a description of computer
software and parameters used.
•
The availability of check estimates, previous
estimates and/or mine production records and
whether the Mineral Resource estimate takes
appropriate account of such data.
•
The assumptions made regarding recovery of
by-products.
•
Estimation of deleterious elements or other non-
grade variables of economic significance (e.g.
sulphur for acid mine drainage
characterisation).
•

Kulumadau Deposits

CRM modelled the Kulumadau Deposits using Inverse Distance Squared (IDS) methodology
within the Micromine software estimation module. IDS methodology is considered appropriate
for shear-hosted moderate-to high grade gold deposits.

The mineralisation was modelled within prismatic bounding wireframes. The limits of the
wireframes followed geological boundaries and were also constrained by a DTM of the surface.
The Kulumadau East mineralisation was divided on grade criteria into high and low-grade
domains.

An upper cut of 75g/t Au was applied to the Kulumadau West composite assays and of 25g/t to
those of the Adelaide Deposit. No upper-cuts were applied to the Kulumadau East Deposit
assays.

CRM used 1m composites for the Kulumadau West modelling, and variable length composites for
the Kulumadau Adelaide and Kulumadau East modelling in order to de-cluster data from drill-
holes with varying azimuths and dips.

Variography was carried out in three directions on the composite assays within each wireframe
in order to ascertain interpolation parameters

The interpolation parameters were:
Kulumadau West (western OBM): 60m to 025o, 75m down dip (75o E); 3m across strike,
Kulumadau West (eastern OBM): 75m to 010o, 75m down dip (60o NE); 2.5m across strike
Adelaide: 55m to 297.5o, 50m down dip (85o E); 2.5m across strike
Kulumadau East High Grade: 50m to 345o, 35m down dip (55o E); 1.5m across strike
Kulumadau East Low Grade: 70m to 350o, 90m down dip (25o E); 1.5m across strike,

The main Kulumadau West Lode was historically mined with a recorded production of 77,000oz
from 150,000 milled tonnes (a head grade of at least 16g/t)

Previous resource estimates of Kulumadau West and Adelaide were from significantly fewer
drill-holes (and over a shorter strike length for Kulumadau West).

No by products are assumed.

No estimation of deleterious elements was carried out.

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Criteria Explanation Commentary
Estimation and modelling
techniques (Cont)		 •
In the case of block model interpolation, the
block size in relation to the average sample
spacing and the search employed.
•
Any assumptions behind modelling of selective
mining units.
•
Any assumptions about correlation between
variables.
•
Description of how the geological interpretation
was used to control the resource estimates.
•
Discussion of basis for using or not using grade
cutting or capping.
•
The process of validation, the checking process
used, the comparison of model data to drill hole
data, and use of reconciliation data if available


•
Block sizes were:
Kulumadau West : 5m EW, 10m NS, 5m vertical,
Adelaide: 5m EW, 5m NS, 5m vertical
Kulumadau East: 5m EW, 10m NS, 5m vertical
These sizes took into account the various orientations of the mineralisation and the general north-
south line spacing
•
No assumptions were made with regard to selective mining units
•
No assumptions were made with respect to correlation between variables (only Au grade was
modelled)
•
Mineralised material was confined to non-heamatitic altered volcanics
•
Grade cutting was applied according to interpretation of log-probability plots
•
OBM grade validation was carried out by visual on-screen verification of assay grades against
nearby OBM grade ranges. CRM is of the opinion that the block grades reflect the sample
grades.
•
Moisture •
Whether the tonnages are estimated on a dry
basis or with natural moisture, and the
method of determination of the moisture
content.		 •
As reported by the Client, the sample is weighed wet then placed in a drying dish and put into an
oven overnight at 100oC. Samples are then re-weighed and the difference noted by WML.
•
The moisture content of the fresh core is calculated based on the difference in weight from field
(insitu) and dry prior to crushing.
•
Tonnages were estimated on a dry basis.

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Criteria Explanation Commentary
Cut-off parameters •
The basis of the adopted cut-off grade(s) or
quality parameters applied.		 •
The Busai Deposit was reported at lower block-cut off grades of 0.5, 0.8, and 1.0g/t;
•
The Kulumadau West Deposit was reported at lower block-cut off grades of 0.5, 0.86, and 1.0g/t
•
The Adelaide Deposit was reported at lower block-cut off grades of 0.5, 1.0, and 1.15g/t Au;
•
The Kulumadau East Deposit was reported at lower block-cut off grades of 0.5, 1.0, and 1.18g/t
Mining factors or
assumptions		 •
Assumptions made regarding possible mining
methods, minimum mining dimensions and
internal (or, if applicable, external) mining
dilution. It is always necessary as part of the
process of determining reasonable prospects
for eventual economic extraction to consider
potential mining methods, but the assumptions
made regarding mining methods and
parameters when estimating Mineral
Resources may not always be rigorous. Where
this is the case, this should be reported with an
explanation of the basis of the mining
assumptions made.
•
WML has completed a “Woodlark Island Gold Project Feasibility Study”. The study
determined that the project was both technically and financially viable based on the assumptions
used. On the basis of this report CRM is of the opinion that there are reasonable prospects for
eventual economic extraction.
•
LJ Putland and Associates has produced an Ore Reserve Estimate as at 16th July 2014 and
reported it in accordance with the 2012 JORC Code.
•
Ore Reserves are assumed to be recovered from open pit mining at the Busai, Kulumadau, and
Kulumadau East Deposits. .

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Criteria Explanation Commentary
Mining factors or
assumptions (Cont)		 • •
For the Busai Deposit a separate MIK resource model produced by Helman and Schofield Pty
ltd has been used for pit optimisation.
•
At Kulumadau West, based on pit configuration and style of mineralisation, an expected dilution
quantity of 10% of in-situ tonnes at an average grade of 0.22g/t Au has been adopted. A mining
recovery of 95% has been assumed for the Kulumadau West pit.
•
At Kulumadau Adelaide, based on pit configuration and style of mineralisation, an expected
dilution quantity 10% of in-situ tonnes at an average grade of 0g/t Au has been adopted. A
mining recovery of 95% has been assumed for the Kulumadau Adelaide pit.
•
At Kulumadau East, based on pit configuration, style of mineralisation, the lower level of
geotechnical investigations and the lack of hydrological investigations and an expected dilution
quantity of 15% of in-situ tonnes at an average grade of 0g/t Au has been adopted. A mining
recovery of 90% has been assumed for the Kulumadau East pit.
Metallurgical factors
or assumptions		 •
The basis for assumptions or predictions
regarding metallurgical amenability. It is
always necessary as part of the process of
determining reasonable prospects for eventual
economic extraction to consider potential
metallurgical methods, but the assumptions
regarding metallurgical treatment processes
and parameters made when reporting Mineral
Resources may not always be rigorous. Where
this is the case, this should be reported with
an explanation of the basis of the metallurgical
assumptions made.		 •
Metallurgical test work on samples from the Busai, Kulumadau, and Kulumadau East
Deposits indicate that the gold bearing material from each deposit can be treated utilising
conventional Gravity and Carbon-In-Leach (CIL) gold processing methodology.
•
The following metallurgical recoveries were used in the Ore Reserve Estimation:
o
Busai:

Murua United (Stage 1) = 92%

Zone 40 and Federation (Stage 2 & 3) = 73%
o
Kulumadau = 92%
o
Kulumadau East = 93.5%

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Criteria Explanation Commentary
Environmental factors
or assumptions		 •
Assumptions made regarding possible waste
and process residue disposal options. It is
always necessary as part of the process of
determining reasonable prospects for eventual
economic extraction to consider the potential
environmental impacts of the mining and
processing operation. While at this stage the
determination of potential environmental
impacts, particularly for a greenfields project,
may not always be well advanced, the status of
early consideration of these potential
environmental impacts should be reported.
Where these aspects have not been considered
this should be reported with an explanation of
the environmental assumptions made.		 •
As part of the Feasibility Study an Environmental and Social Impact Assessment (ESIA) and
Environmental Impact Statement (EIS) was completed for the project. The purpose of these
investigations was to characterise the existing environment in which the project will be
situated, identify the potential impacts of the project, determine suitable avoidance,
management or mitigation measures for them, and predict the residual impacts of the
project after the implementation of these measures.
•
Bathymetry and Oceanographic surveys and specific DSTP investigations were completed
during the Feasibility Study.
•
Waste rock geochemical characteristics assessment and waste dump design studies were
completed during the Feasibility Study.

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Criteria Explanation Commentary
Bulk density •
Whether assumed or determined. If assumed,
the basis for the assumptions. If determined, the
method used, whether wet or dry, the frequency
of the measurements, the nature, size and
representativeness of the samples.
•
The bulk density for bulk material must have
been measured by methods that adequately
account for void spaces (vugs, porosity, etc.),
moisture and differences between rock and
alteration zones within the deposit.
•
Discuss assumptions for bulk density estimates
used in the evaluation process of the different
materials.
•
Highlands carried out SG determinations on 81 core samples from Busai and 5 from
Kulumadau Adelaide. The determinations were according to ASTM C97-83 and averaged 2.46
at Busai and 2.28 at Adelaide.
•
It also carried out a bulk SG on a sample cut from a costean wall in Adelaide mineralisation that
returned 2.33.
•
CRM commissioned Genalysis to carry out SG determinations on 88 RC chip samples from
Busai, sub-set by weathering domain. Mean results for gravimetric water displacement
determinations were Fresh 2.64, Weakly weathered 2.49, Strongly weathered 2.43.
•
CRM commissioned SGS to carry out SG determinations on 10 wax coated weathered core
samples from Busai. Mean results were Saprolitic clay and rock 1.81, Strongly weathered 2.04
•
CRM commissioned Genalysis to carry out SG determinations on 6 sealed Kulumadau core
samples: the mean result was 2.48.
•
CRM used a density value of 2.48 for the Kulumadau West and Adelaide Deposits, as the
mineralised rocks were virtually fresh from surface

CRM assigned SGs to weathering regimes at Kulumadau East as follows: Clay: 1.82,
Strong: 2.04, Moderate: 2.20, Weak: 2.35, and Fresh: 2.48.

CRM assigned SGs to weathering regimes of the volcanic-hosted mineralisation at Busai
as follows: Clay: 1.82, Strong: 2.04, Moderate: 2.20, Weak: 2.35, and Fresh: 2.65.
•
A nominal SG of 1.9 was assigned to the Busai alluvial mineralisation

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Criteria Explanation Commentary
Classification •
The basis for the classification of
the Mineral Resources into varying
confidence categories.
•
Whether appropriate account has been taken of
all relevant factors (i.e. relative confidence in
tonnage/grade estimations, reliability of input
data, confidence in continuity of geology and
metal values, quality, quantity and distribution
of the data).
•
Whether the result appropriately reflects the
Competent Person’s view of the deposit.		 Busai IDS
•
The volcanic-hosted resources were classified according to the following criteria:
Measured Resources - Blocks interpolated from more than 35 points;
Indicated Resources - Blocks interpolated from 8 to 35 points; and
Inferred Resources - Blocks interpolated from 2 to 7 points.
•
The alluvial resources were classified according to the following criteria:
Indicated Resources - Blocks interpolated from 8 plus points; and
Inferred Resources - Blocks interpolated from 2to 7 points.
Busai OK
The resources were classified according to Kriging Variance as follows:
•
Measured Resources - Blocks interpolated with KV of less than 0.3;
Indicated Resources - Blocks interpolated with KV of 0.3 to 0.85
Inferred Resources - Blocks interpolated with KV of over 0.85.
Kulumadau
•
The Kulumadau West resources were classified according to the following criteria:
Measured Resources - Blocks interpolated from more than 35 points;
Indicated Resources - Blocks interpolated from 21 to 35 points; and
Inferred Resources - Blocks interpolated from 6 to 20 points.
•
The Adelaide Zone resources were classified according to the following criteria:
Indicated Resources - Blocks interpolated from 25 plus points; and
Inferred Resources - Blocks interpolated from 6 to 24 points.
•
The Kulumadau East Zone resources were classified according to the following criteria:
Indicated Resources - Blocks interpolated from 15 plus points IF BOTH north of
8995740N AND within high-grade wireframe; and
Inferred Resources - Blocks interpolated from 3 to 14 points, OR south of 8995740N, OR
NOT within high-grade wireframe.
•
The reported Mineral Resource estimates and their classification into the Measured, Indicated
and Inferred categories are consistent with the Competent Persons’ views of the deposits.

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Criteria Explanation Commentary
Audits or reviews. •
The results of any audits or reviews of Mineral
Resource estimates.		 •
The resource estimates have been peer reviewed within CRM.
Discussion of
relative accuracy/
confidence		 •
Where appropriate a statement of the relative
accuracy and confidence level in the Mineral
Resource estimate using an approach or
procedure deemed appropriate by the
Competent Person. For example, the application
of statistical or geostatistical procedures to
quantify the relative accuracy of the resource
within stated confidence limits, or, if such an
approach is not deemed appropriate, a
qualitative discussion of the factors that could
affect the relative accuracy and confidence of
the estimate.
•
The statement should specify whether it relates
to global or local estimates, and, if local, state
the relevant tonnages, which should be relevant
to technical and economic evaluation.
Documentation should include assumptions
made and the procedures used.
•
These statements of relative accuracy and
confidence of the estimate should be compared
with production data, where available.
•
The Mineral Resource Estimates have been reported in accordance with the code and guidelines
for the reporting of Mineral Resource Estimates, 2012 edition of the Australasian Code for
Reporting of Exploration Results, Mineral Resources & Ore Reserves and reflects the relative
accuracy of the Mineral Resources estimate. The Competent Persons deem the process to be in
line with industry standards for resource estimation & therefore within acceptable statistical
error limits.
•
The resource statements relate to global estimates of tonnes and grades.
•
The relative accuracy and confidence of the estimates are reflected in the reporting on
Measured, Indicated and Inferred resources in-line with the knowledge of geological, structural
and mineralisation aspects.

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