The aim of the program was to identify targets through the collection pan concentrate samples from a 30sq.km area selected in the feasibility study, and rank them before trenching takes place.
Kula believes the prospect is an extension of the Woodlark King deposit, and continues to look for corporate or project level joint venture partners to further the project.
"The regional drainage sampling program has immediately delivered results and demonstrated the increased potential of the Watou prospect to deliver additional resources for the project," Kula CEO Stuart Pether said.
"The area of the anomalous zones is at least twice the area of the current Waotu mineralisation, defined by close space trenching, and the shape of the anomalies confirms our understanding of the regional northwest and northeast structural controls on mineralisation."
According to Kula's quarterly report, a cost reduction program is on track to reduce corporate overhead costs by 60%.
Measures include a 50% reduction in directors' fees, the termination of external services by consultants and the closure of the Sydney office and relocation to Perth.
The company also said its cash position at the end of the June quarter was $A700,000 with an additional $A1.88 million received in July from the second tranche of a shares placement.
It also reports no lost time or injuries at Woodlark Island.