K2 Gold Mine

Zuleika Gold Limited has a 4.1% equity interest in the partially developed K2 Gold Mine with Vango Mining Limited (ASX:VAN) and Billabong Resources Pty Ltd. The K2 Gold Mine has a Measured, and Indicated underground Mineral Resource of 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 northeast of Superior Gold Inc’s Plutonic Gold Mine.

In 2017, a binding terms sheet (BTS) was signed allowing Zuleika Gold Ltd to earn up to a 50% interest in the tenement M52/183 that hosts mineralisation associated with the K2 gold deposit.  Legal action was pursued following the vendor’s (Vango Mining Ltd) refusal to accept the terms of the BTS agreement.

Following a WA Supreme Court Trial, the judgment was delivered in October, 2022. In the judgment, the Court:

• Found that Zuleika was entitled to an 4.1% stake in M52/183
• Ordered Vango to promptly transfer the 4.1% stake to Zuleika
• Found that Vango breached the terms of and wrongfully repudiated the BTS agreement
• Ordered that the issue of legal costs of the trial would be determined after submissions from the parties and to be paid by Vango to Zuleika

The next stage of litigation will determine the quantum of damages payable by Vango to Zuleika on account of the breach of the BTS.

Zuleika intends to program that aspect of its claim to trial as vigorously and quickly as possible.

The K2 deposit is part of the Plutonic Well Greenstone Belt.  The northeast trending greenstone is characterised by mafic/ultramafic and sedimentary sequences in a complex structural setting.  Gold mineralisation along the belt is largely structurally controlled.

The greenstone belt hosts a large number of gold occurrences and has produced in excess of 5 Moz of gold since 1990. The most significant deposit is at Plutonic which has produced over 4 Moz of gold from five open pits and two underground operations.

The K2 mineralisation is contained in the PHB Corridor that also includes the K1 and PHB-1 deposits.  Gold here is hosted in 3 separate and steeply west dipping mafic hosted lodes.  The K2 and K1 deposits produce 134,000 oz Au and 62,000 oz Au respectively from open pits with average grades of 3-4g/t Au.

In 1996, following the completion of open pit mining, development of the K2 Deeps underground mine commenced from the base of the K2 open pit which reached a final depth of 127 m.  The 1.4 km long decline had just produced its first ore when the K2 operations were closed in 1998 as a result of a falling gold price.

In 2017, Vango and Zuleika Gold (named Dampier Gold at that time) entered a binding terms sheet in which Zuleika would contribute up to $3M towards the development of the K2 deposit.  Subsequent to the agreement Vango frustrated the efforts of Zuleika to spend the funds to earn the 50% interest, leading ultimately to the Supreme Court action.

Following a separate court action against Vango in 2021, Billabong Resources Pty Ltd (a wholly owned subsidiary of Superior Gold Inc – owners of the nearby Plutonic Mine) gained the right to earn 50% ownership of the project.  See ASX announcement at www.superior-gold.com ‘Superior Gold Announces Court Awards It the Ability to Earn up to 50% Joint Venture Interest in Vango’s K2 Tenements’ dated March 14, 2022.

Vango announced an updated resource statement for the total project (ASX: Marymia Mineral Resource Increases to One Million Ounces, 20 May 2020) that included the mineralisation associated with the K2 (or PHB) trend.  The table below specifically refers to the K2 trend mineralisation is an extract from Vango’s overall resource statement.