Zuleika Gold Limited has the right to earn up to a 50% equity interest in the partially developed K2 Gold Mine under a binding farm-in joint venture agreement executed on 12 May 2017 with Vango Mining Limited (ASX:VAN). The K2 Gold Mine has a Measured, Indicated and Inferred underground Resources to 374,000 tonnes at 8.9 grams/t for 107,000 ounces.
The K2 Gold Mine is located in the East Murchison Goldfield, north of Meekatharra in Western Australia and 35km to the north east of Superior Gold Inc’s Plutonic Gold Mine.
The K2 Gold Mine is an underground operation, and it includes an existing 1.4km decline to the ore blocks at a vertical depth of ~200m. The decline was developed by Resolute Mining Limited (ASX:RSG) in the 1990’s and abandoned due to the collapse in the gold price in 1998/99.
Zuleika Gold’s rights to the 50% equity interest in the K2 Gold Mine are in exchange for expenditure to a maximum of A$3M on the development of the mine, with further contributions thereafter on a pro-rata (50:50) basis.
Frustratingly for Zuleika Gold and our shareholders who strongly supported this transaction, Vango has prevented Zuleika Gold from earning its rights under the binding term sheet which has led to a dispute which is currently in the West Australian Supreme Court.
On signing the binding joint venture, the plan was to immediately commence a 9-month dewatering and refurbishment program and produce gold in early 2018. The plan included trucking the ore 35km to the Plutonic Gold Mine and mill.
Zuleika Gold remains committed to this arrangement and to bringing the K2 Gold Mine into production so as to bring the value to Zuleika Gold’s shareholders.
On signing the term sheet in May 2017, the K2 Gold Mine had a resource inventory of Measured, Indicated and Inferred Resources of 417,000 tonnes at 7.7 grams/t for 103,000 ounces, including 240,000 tonnes at 6.9 grams/t for 54,000 ounces planned to be mined in the first stage of re-development. In 2017 ~50,000 ounces were predicted to be produced after recovery of 93%.
Vango has undertaken exploration from 2018 to 2021 along strike in the adjoining PHB-Corridor and adjacent to the K2 ore body (lodes) and has reduced the tonnes but enhanced the grade of the Measured, Indicated and Inferred underground Resources to 374,000 tonnes at 8.9 grams/t for 107,000 ounces. Within this global resource Vango announced Indicated Resources for the K2 Gold Mine as 197,000 tonnes at 10.6 grams/t for 67,000 ounces, (ASX:VAN announcement 25th November 2020).
Further, on 14th December 2020 Vango announced that drilling intersections of extensions to the high-grade Main Lode (and Central Lode) structures and the thick intersections on West Lode indicates potential for a larger open-pit resource, incorporating the PHB-1, the K2 underground resource and the new intersections on all three lode structures as per the following cross section.