Kula Gold Limited ('Kula' or 'the Company') is pleased to announce the acquisition of mining lease M77/0406 and exploration leases E77/2210, E77/2423 & E77/2668 ('Mt Palmer Gold Mine') located near Marvel Loch WA in the Southern Cross Goldfields.

Kula's Managing Director Ric Dawson comments: 'This acquisition is in alignment with the Company's strategy to add assets near to existing operations to fast track any discovery to monetary success. This historical rich 'half ounce' gold mine has huge potential of high-grade gold and is a priority drilling target for Kula.

About Mt Palmer Gold Mine

The mine produced over 150,000 ounces of gold at 15.9 grams/tonne in the period 1934 to 1944 and is north of the Nevoria Gold Mine (+600,000 ounces of gold), east of the circa 2.4million ounce Marvel Loch Gold Mine. The mine closed in part due to the continuation of World War 2 severely restricting access to labour and materials and subsequently the mine flooded and never reopened.

Geology and Mineralisation Mt Palmer Gold Mine is in the central area of the Southern Cross Greenstone Belt. The Southern Cross Greenstone Belt is a strongly deformed, metamorphosed synformal remnant of a once larger greenstone assemblage. It has been shaped and attenuated by the emplacement of syn-tectonic granitoids include the Ghooli, Parker, and Rankin domes. The historical gold workings at Mt Palmer Gold Mine are hosted within an amphibolite sequence that extends from the greenstone-granite contact located approximately 400m to the west of the mine and a thin Banded Iron Formation trending north-northeast located 200m east of the mine. Outcrop within the project area is restricted predominantly to the area of exposed mine workings. Elsewhere, the surface is covered by transported soil and colluvial material derived mainly from quartz blows and pegmatite. Outcrop is obscured to the south by the remnant mine tailings dump and lake sediments that cover the southeastern half of the tenement. Historic gold production was from a shallow open-pit and underground workings that were developed on two shoots, the Main Lode and East Lode, and the smaller West Lode and New Lode that are positioned to the west of the main shaft. The Main and East Lodes plunge south and north respectively on the limbs of a north-plunging synform. Historic sections and level plans clearly show the folded nature of the ore-horizon.

Mining records indicate that the high-grade shoots were developed within stratabound veins on the limbs and closures of pre-existing folds. Individual lodes were mined over a strike length extending up to 200m and to depths of 155m below surface. The shoots are up to 10m wide and 30 to 70m long and were best developed in the Main and East Lobes. The mine lease and surrounding areas are considered to have good exploration potential for the discovery of additional high-grade shoots. The shear zones were reported as zones of complex deformation with strongly developed foliation and quartz-carbonate veining. None are well exposed at surface.

Some amphibolite rocks within the shear zones have been altered to biotite schist and the gold bearing quartz veins within the shear zones are weakly sulphidic. Gold was said to be associated with pyrite-arsenopyrite and/or chalcopyrite-pyrrhotite mineralisation. Mine workings on the Main Lode comprise an open pit to a depth of about 20m and underground drives and stopes down to the 4th Level at 90m depth. Some stopes were up to 10m wide but were generally between 2m and 5m wide. The lode strikes N-S over most of its length and dips steeply to the east. It was mined over a strike length of about 200m. Mine records show that within the broader lode, a small high-grade shoot which plunges to the south at 40 to 50 degrees is coincident with thickened parasitic fold on the east limb. The Main Lode was best developed between 15 and 60m vertical depth (Levels 1 and 3) and widest at approximately 30m vertical depth (Level 2). The East Lode was discovered following underground drilling from the Main Lode workings, and subsequently developed over six levels to a total vertical depth of approximately 155m. Stopes were from 2 to 10m wide and generally around 5m wide. The lode strikes NNE and dips steeply to the west. The best mineralisation is developed around a parasitic fold on the eastern limb of a north-plunging synform, and close to the closure of this structure. The lode was mined to surface in a steeply north-plunging shoot but in the deeper levels the plunge flattens markedly as it tracks northward along the closure of the synform. At the cessation of mining on the 6th Level the shoot was becoming sub-horizontal. West Lode and New Lode are linked by development from the Mt Palmer shaft at the 2nd Level. The New Lode consists of two lodes approximately 10m apart, which have been interpreted to form an anticlinal fold closure close to the present-day land surface. The fold is interpreted to plunge to the north. The New Lode has been mined over a strike length of 50m to a depth of 30m. The stopes are 2-3m wide and open to the surface. The lodes strike NNE and NE and both dip steeply to the east. The open pit is inaccessible due to steep walls and unstable ground and the stopes below the pit floor are filled with water. The West Lode was mined over a strike length of about 40m to a depth of 30m. The reported stopes are about 2m wide but do not reach the surface as the lode is reported to have pinched out 5m below surface. The lode strikes N-S but swings to the SW at its southern end and dips steeply to the east. Historical exploration programmes at Mt Palmer Gold Mine were focused on gold mineralisation. The drilling database notes numerous parallel pegmatite intersections of up to 50m thickness that have never been assayed for lithium.

Contact:

Ric Dawson

Managing Director

Tel: 61 8 6144 0592

Email: cosec@kulagold.com.au

Competent Person Statement

The information in this announcement that relates to geology, exploration and visual estimates is based on, and fairly represents, information and supporting documentation compiled by Mr. Ric Dawson, a Competent Person who is a member of the Australian Institute of Mining and Metallurgy. Mr. Dawson is a Geology and Exploration Consultant who has been engaged by Kula Gold Limited and is a related party of the Company. Mr. Dawson 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). This market announcement is issued with the prior written consent of Mr. Dawson as to the form and context in which the exploration results, visual estimates and the supporting documentation are presented in the market announcement.

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