Zuleika (ASX:ZAG) succeeds on K2 claim
November 1, 2022Zuleika Gold Limited has found itself on the right side of a Western Australian Supreme Court ruling in favour of a 4.1 per cent claim on Vango Mining Limited’s (ASX:VAN) K2 gold deposit near Dampier in Western Australia.
The disputed entitlement arose from a binding terms sheet agreed between the Zuleika and Vango subsidiary Dampier (Plutonic) Pty Ltd (DPPL) in 2017, allowing Zuleika to earn a 50 per cent interest in the tenement M52/183 that hosts mineralisation associated with the K2 gold deposit.
Justice Jennifer Smith found Vango to have breached the terms and wrongfully repudiated a 2017 Binding Terms Sheet between the parties, ordering Vango to pay transfer 4.1% ownership of the tenement to Zuleika immediately and be responsible for court costs.
“This is an excellent outcome for Zuleika,” Zuleika Managing Director Jonathan Lea said.
“The next stage of litigation will determine the quantum of damages payable by Vango on account of their determined breaches of the BTS.
“Zuleika intends to bring that aspect of its claim to trial as quickly as possible.”
Meanwhile, Vango said it would determine if it wishes to appeal this outcome.
“If at some future point in time, Vango decides to develop the K2 mine, Zuleika will be required to
contribute 4.1% of those costs and 4.1% of yearly holding costs of the tenement,” the Company said in a statement released to the Australian Stock Exchange today.
A possible damages claim against Vango will be determined at the next stage of litigation.
About the K2 deposit
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 many gold occurrences and has produced more than 5 Moz of gold since 1990. The most significant deposit is at Plutonic, which has made over 4 Moz of gold from five open pits and two underground operations.
The K2 mineralisation is contained in the PHB Corridor, including 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, the 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 decline had just produced its first ore when the K2 operations were closed in 1998 due to a falling gold price.
In 2016, Vango and Zuleika Gold (named Dampier Gold) entered a binding terms sheet in which Zuleika would contribute up to $3M towards developing the K2 deposit. After the agreement, Vango frustrated the efforts of Zuleika to spend the funds to earn the 50% interest, ultimately leading 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, May 20 2020) that included the mineralisation associated with the K2 (or PHB) trend. The following table that refers explicitly to the K2 trend mineralisation is an extract from Vango’s overall resource statement.
| Cut-Off | Indicated | Measured | Total | ||||||||
| g/t Au | K Tonnes | g/t Au | K Oz | K Tonnes | g/t Au | K Oz | K Tonnes | g/t Au | K Oz | ||
| PHB 1 (K3) | Pit | 0.5 | 604 | 2 | 39 | 238 | 1.4 | 11 | 841 | 1.9 | 50 |
| K1 | Pit | 0.5 | 743 | 1.8 | 42 | 837 | 1.7 | 47 | 1580 | 1.8 | 89 |
| Total Pit | 0.5 | 1347 | 1.9 | 81 | 1075 | 1.7 | 58 | 2421 | 1.8 | 139 | |
| K2 | UG | 3.0 | 197 | 10.6 | 67 | 177 | 7 | 4 | 374 | 8.9 | 107 |
| Total Resource | 1544 | 3.0 | 148 | 1252 | 1.5 | 62 | 2795 | 2.7 | 246 |
Various feasibility studies indicate the potential to access the down dip K2 mineralisation via the existing decline following rehabilitation. Test work confirmed the mineralisation was free milling with average metallurgical recoveries typical of Western Australia gold deposits. The K2 deposit is approximately 35km by road from the Plutonic Gold Mine treatment plant.
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