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Kula Gold (ASX:KGD) – diversified Western Australian explorer

Paul Sanger: I’m Paul Sanger for the Finance News Network and today I’m talking with Kula Gold, ASX Code KGD and they have a market cap of around 4 million. Kula Gold is a Western Australian mineral exploration company with expertise in the discovery of new mineral deposits in WA. We welcome to network for the first time Kula Gold managing director, Ric Dawson. Ric, welcome to the network.

Ric Dawson: Thank you very much, Paul.

Paul Sanger: Now Ric, as it’s the first time we’ve had Kula Gold on the network, can you just start by giving us a brief overview of the company?

Ric Dawson: Okay. We’re a very much Western Australian focused company. We’re at the exploration stage. We are looking for various commodities that we believe are going to be attractive to the ASX. We have been very much focused over the last 12 months on lithium mineralisation. We are also having tenements in the southern cross region, which predominantly are going to be more of a gold focus now.

Paul Sanger: And look, just want to elaborate a bit on that. How does your company tackle the challenges associated with exploring for a variety of minerals: lithium, gold, copper, nickel, PGE, and rare earths at the same time? How do you work through those challenges?

Ric Dawson: Well, I suppose it’s a combination of doing the basics. We start off with some concepts of where we want to be. We’ve got tenements which have been granted from the mines department. We now are going through the various phases of soil sampling, mapping, and rock chipping. And once we get past that first phase, then we go to RC drilling.

Paul Sanger: And you had a busy start to the year, particularly this month. Can you just talk about some of the recent announcement that you made to the market?

Ric Dawson: Certainly. Beginning of this month we’ve sort of gone into looking at more of our gold focused areas. We’re now looking at doing soil sampling with the opportunity of fine-tuning that soil sampling to be RC drilling probably within the next couple of months.

Paul Sanger: And in particular, can you talk about the benefits of your Marvel Loch exploration update?

Ric Dawson: Certainly. We’ve got probably about four prospects. Three are probably a little bit more advanced than one of the other ones. The first one that we’d probably talk about would be the Boomerang Prospect. That’s one that was drilled probably about three years ago for a kaolin deposit. Now the kaolin is a very much a surface and it’s pretty much like a clay. We had a drill spacing of 200 by 200 meter spacing and now we’ve realized that there’s a very nice golden intercept. We had a intercept of one meter at 2.6 grams per ton and now we know we’re going to harness in and focus in on that area and look to drill that very soon.

Paul Sanger: Now Ric, the start of 2024, we’re seeing some serious price volatility in the critical mineral space. I’d love to get your views. In particular, lithium price and nickel price have been absolutely crushed. Rare earths are not faring much better. What are your thoughts and views on what’s driving the factors around this weakness? And the second question is, Will it impact you on how you prioritise your projects going forward?

Ric Dawson: Yeah, no, it’s interesting. One, I mean I think the macro sort of economics of the lithium market is that we understand that the Chinese tend to, especially the battery space, they do a lot of stockpiling. And when the stockpiles have been reached then they pretty much go out of the market. Then the spot market becomes very flooded and then you see this very strong volatility. I think you can also see that there have been a few lithium producers that are at the sort of top end of the percentile and that’s affected them the most. The ones who are still making money at very low levels; your green bushes, they can make money. Probably they’re at the bottom 25% percentile. They’ll continue to make money. But yeah, the guys who are the new to the game, they’re the ones that are hurting the most.

Paul Sanger: Yeah, and it’s interesting that the market’s already reacting to that weaker lithium price. You’re seeing proposed expansion suddenly stopping in their tracks. We’ve seen the government step in with regards to the nickel producers. So I think we’re kind of with the view that probably things… The weakness has probably overshot the mark. And I think once the market realises that this expansion, there’s new suppliers not coming online, you are going to see things like the lithium price probably rally from here.

Ric Dawson: Yeah, I mean, nickel is an interesting one. The Indonesians basically changed the concept probably about five years ago where they forced the companies to value add. It took about five years for the smelters to be built and now they’re producing a lot of nickel. And yes, so the market is oversupply now and that could be a structural change, probably could be for a couple of years. But yeah, it probably isn’t going to be a long-term sustainable thing because Indonesia generally will produce a lot very quickly and then it’ll probably tail off a little bit.

Paul Sanger: Now just to finish up, let’s just talk more broadly what the next 6-12 months look like for Kula Gold. What’s going to be keeping you busy? What are you focusing on?

Ric Dawson: Yes. Well, as I said, we’ve got the Marvel Loch prospects or project with probably four prospects. We’re very keen to advance those over the next six months. We’d like to be drilling very soon. I think gold is phenomenally strong at the moment. You’re looking at over $2,000 US. The Australian dollar’s weak. I think it equates to around 2,800 Aussie, which is a phenomenal price. Doesn’t seem to be reflected just at the moment in the Australian Stock Exchange. I think maybe people will wake up somewhere during the year that gold is profitable. So yeah, we’ve got this Marvel Loch. And then on top of that, we’ve also got a very interesting gold prospect, which was initially a lithium play down at Mustang. So yeah, we’ve got a very nice rock chip at surface, 3.5 grams per ton and that’s something that we’ll be following up over the next month with some soil sampling, rock chipping. And then we’ll look to hopefully to have some RC drilling done in that area as well.

Paul Sanger: Ric, thank you for your time and we’ll be watching your progress with baited interest here and we’ll get you back on in the not too distant future. Thanks for your time today.

Ric Dawson: Much appreciated. Cheers.

Ends