Kula Gold surges as visible gold discovery at Mt Palmer fuels investor momentum

Kula Gold Limited (ASX: KGD) saw its shares surge by 60 percent to close at A$0.024 on September 19, 2025, after the company confirmed visible gold in its maiden diamond drilling campaign at the Mt Palmer Gold Project in Western Australia. The sharp upward move, which lifted trading volumes to nearly 56 million shares, has drawn renewed market attention to a micro-cap explorer whose one-year return now stands close to 200 percent and whose market capitalization has risen to A$24.9 million.

Why did visible gold sightings at Mt Palmer ignite such a strong investor response?

The rally was triggered by the company’s September 19 announcement that its first diamond drill hole, completed to a depth of 54 metres, intersected multiple quartz reefs containing visible native gold at several points downhole. Gold was observed at 31.4 metres, 35.4 metres, 35.85 metres, 36.1 metres, and 36.45 metres. While assays are pending, the sight of visible gold has historically acted as a psychological catalyst for investors who view it as an early marker of grade potential.

Kula Gold’s managing director Ric Dawson said management remained cautious while awaiting assay confirmation but expressed optimism about the structural setting. He highlighted that the geological context suggested opportunities to extend high-grade mineralisation zones that were historically mined before World War II, with the potential for new discoveries to emerge from deeper drilling.

How does the current program build on earlier drilling progress at Mt Palmer?

Just two days before the visible gold announcement, the company reported the completion of a 701-metre reverse circulation program involving 17 holes drilled across key target areas including Epis, Main Lode, Palmerston, Bryant, J2, El Dorado and East Lode. The program was designed to define shallow mineralisation and generate targets for the deeper work now underway. Samples from this round are currently being processed, with results expected in the weeks ahead.

The diamond program, which intersected the visible gold, is aimed at capturing structural data and refining understanding of the mineralisation plunge. Once completed, a larger RC rig will be mobilised to pursue deeper extensions. This staged approach reflects a systematic build-up from shallow reconnaissance through to resource definition, with management noting that a resource drill-out program is planned as results mature.

What makes Mt Palmer historically significant in the goldfields of Western Australia?

Mt Palmer is not a new discovery but a revival of a mine with a storied past. Between 1934 and 1944, the operation produced more than 150,000 ounces at an average grade of 15.9 grams per tonne, placing it firmly in high-grade territory. The mine was abruptly closed during the Second World War as workers left for military service, and it never re-opened despite its promising geology.

The project is located in the Southern Cross Goldfields and is surrounded by large-scale producers. The Marvel Loch Gold Mine, with an endowment of around three million ounces, lies nearby, while the Nevoria Gold Mine has yielded more than 600,000 ounces. The district has long been recognised as one of Western Australia’s richest gold belts, and the relative lack of systematic exploration at Mt Palmer since the 1940s has created an unusual opportunity for modern explorers.

How do recent results compare with Kula Gold’s earlier campaigns?

The latest drilling campaign builds on a series of encouraging intercepts reported over the past year. Notable results have included six metres at 36.0 grams per tonne gold from 17 metres at the New Lode prospect, including two metres at 53 grams per tonne, as well as eighteen metres at 4.4 grams per tonne from surface at Epis, which contained a high-grade zone of two metres at 31.3 grams per tonne. These intersections point to strong shallow mineralisation, which the company believes may link with deeper structures now being tested through diamond drilling.

By intersecting visible gold in quartz veins and associated shear zones, the current program reinforces the idea that Mt Palmer hosts a network of mineralised reefs that extend beyond the historically mined areas. Structural analysis of the core will be critical in defining extensions and plunge directions of these zones, giving the company a clearer picture of its resource potential.

What role does the Boomerang Kaolin Deposit play in Kula Gold’s portfolio?

While Mt Palmer dominates headlines, Kula Gold’s strategy is not limited to gold exploration. In July 2022, the company announced a maiden JORC resource of 93.3 million tonnes at the Boomerang Kaolin Deposit near Southern Cross. This included 15.2 million tonnes of indicated resources and 78.1 million tonnes of inferred resources. The deposit is currently in the economic study phase, with management exploring private equity partnerships or trade joint ventures to advance development.

The Boomerang project provides Kula Gold with exposure to industrial minerals, diversifying its asset base beyond precious metals. Given rising demand for kaolin in ceramics, paper and emerging applications such as battery technology, the deposit represents a potential second growth front for the company.

How does Kula Gold’s track record influence investor perception today?

Kula Gold has a history of generating early-stage discoveries and monetising them through partnerships. Its foundation was built on the Woodlark Island Gold Project in Papua New Guinea, which hosted more than one million ounces before being joint ventured and sold to Geopacific Resources Limited (ASX: GPR). This track record lends some credibility to its ability to generate value from exploration and eventually crystallise returns through transactions or partnerships.

How is the market currently valuing Kula Gold compared with peers?

At a market capitalisation of A$24.88 million, Kula Gold remains firmly in micro-cap territory, with more than 1.04 billion shares outstanding. The stock does not generate earnings and therefore carries no price-to-earnings ratio, making it a pure exploration play dependent on drilling outcomes. Its one-year return of nearly 200 percent underscores speculative momentum, but also highlights volatility.

Within the ASX’s basic materials sector, the company ranks mid-range, sitting at 543rd of 1,069 stocks. The surge in trading volumes, with nearly 56 million shares exchanged in a single session, indicates heightened retail participation. Institutional flows, by contrast, remain muted, as is typical for micro-cap explorers until resource definition progresses.

What are the biggest risks and potential opportunities for investors considering Kula Gold stock after the Mt Palmer drilling update?

For speculative investors, the upside case rests on assay results confirming the visual gold sightings and demonstrating continuity of high-grade mineralisation. Positive results could justify a higher valuation and open pathways to resource definition and potential development discussions. With gold prices remaining robust in 2025 amid macroeconomic uncertainty, high-grade discoveries are particularly attractive to investors seeking inflation-resistant assets.

Risks include the absence of revenue, the need for continued capital raisings to fund exploration, and the possibility that assay results may not match visual expectations. The dilution risk from future capital raisings also looms large given the company’s high share count. The binary nature of exploration success makes Kula Gold a stock for risk-tolerant investors only.

What does the outlook hold for Kula Gold and the Mt Palmer project?

The immediate focus is on assay results from the diamond drilling program and the larger RC drilling campaign set to follow. Should results confirm high-grade mineralisation, Kula Gold may advance to resource definition drilling by early 2026. Analysts believe that consistent high-grade intersections could make Mt Palmer an attractive joint venture or acquisition target, given its strategic location in the Southern Cross belt.

Longer term, the combination of a historic high-grade mine with modern exploration techniques creates the possibility of significant resource growth. Coupled with the Boomerang Kaolin project, Kula Gold could position itself as both a gold and industrial minerals player, diversifying its risk profile while remaining focused on discovery.