K92 Mining Inc. (TSX: KNT) (OTCQX: KNTNF) is pleased to announce financial results for the three months ended June 30, 2023.

Production

• Strong quarterly production of 30,794 ounces gold equivalent ^{(1) (2)} or 27,405 oz gold, 1,526,547 lbs copper and 34,001 oz silver, representing an 18% increase from Q2 2022 and 43% increase from Q1 2023.
• Cash costs of US$597/oz gold ⁽²⁾ and all-in sustaining costs of US$975/oz gold ⁽²⁾, notably better than the annual guidance of US$620-680/oz gold cash costs⁽²⁾ and US$1,180 to US$1,300/oz gold AISC ⁽²⁾.
• Strong metallurgical recoveries of 92.4% for gold and 92.8% for copper, representing the highest quarterly recoveries since Q4 2021 for both gold and copper, following the successful completion of the final upgrade for the Stage 2A Plant Expansion in May, the rougher flotation expansion.
• Quarterly ore processed of 112,471 tonnes or 1,236 tonnes per day at a grade of 9.23 g/t AuEq or 8.20 g/t gold, 0.66% copper and 11.56 g/t silver and ore tonnes mined of 109,155 tonnes or 1,200 tpd. Total ore tonnes processed and total mined material (ore and waste) increased 3% and 17% from Q2 2022, respectively.

Financials

• Cash position of US$95.6 million as of June 30, 2023, increasing US$6.9 million quarter-over-quarter, while remaining debt-free. During the quarter, $22.0 million was spent on property, plant and equipment and a Company record, US$6.3 million in exploration and evaluation expenditures.
• Revenue of US$51.8 million, increasing 39% from Q2 2022.
• Net earnings of US$8.8 million or $0.04 per share, increasing 71% from Q2 2022.
• Sales of 28,141 oz gold, 1,657,115 lbs copper and 36,253 oz silver. Gold concentrate and doré inventory of 2,398 oz as of June 30, 2023, a decrease of 895 oz over the prior quarter.
• Operating cash flow (before working capital adjustments) for the three months ended June 30, 2023, of US$16.2 million or US$0.07 per share, and earnings before interest, taxes, depreciation and amortization ⁽²⁾ of US$21.6 million or US$0.09 per share.

Growth

• A major milestone achieved in May with the completion of the Stage 2A Plant Expansion to 500,000 tonnes per annum following the commissioning of the final upgrade, the rougher flotation expansion. Post-commissioning, the process plant continues to perform well, delivering a significant increase to metallurgical recoveries. Recoveries for June were 93.0% for gold and 92.9% for copper. As mentioned above, Q2 recoveries averaged 92.4% for gold and 92.8% for copper, representing the highest quarterly recoveries since Q4 2021 for both gold and copper, and significantly higher than the 2022 average of 90.4% for gold and 90.5% for copper. The performance of the process plant to date continues to demonstrate the potential to ultimately exceed the Stage 2A Expansion name-plate of 500,000 tpa.

• Strong results from 62 diamond drill holes were reported from underground and surface at Kora, Kora South, Judd, Judd South and Kora Northern Deeps. The results demonstrated multiple high-grade results, including the discovery of high-grade mineralization at the J2 Vein to the South. The J2 Vein is not part of the current resource. Highlights from the J2 Vein include:
  • KUDD0040 recording 2.40 m at 345.36 g/t AuEq from the J2 Vein at Judd South,
  • KUDD0045 recording 11.20 m at 12.69 g/t AuEq from the J2 Vein at Judd South, and
  • KUDD0043 recording 3.80 m at 10.19 g/t AuEq from the J2 Vein at Judd South.

    Other highlights include:

  • KODD0036 recording 5.00 m at 161.57 g/t AuEq from the J1 Vein
  • KUDD0043 recording 6.20 m at 26.52 g/t AuEq from the J1 Vein at Judd South,
  • JDD0178 recording 6.36 m at 23.07 g/t AuEq from the J1 Vein, and
  • KUDD0041 recording 3.20 m at 11.27 g/t AuEq from the K2 Vein and 1.80 m at 16.45 g/t AuEq from the J1 Vein.

    Drilling also intersected a dilatant zone:

  • KUDD0040 recording 22.00 m at 5.14 g/t AuEq within a substantial 57.80 m at 2.73 g/t AuEq from the J1 Vein (see May 24, 2023 press release).

• Significant advance of the twin incline in Q2 with incline #2 (6m x 6.5m) advanced to 2,447 metres and #3 (5m x 5.5m) advanced to 2,506 metres as of June 30, 2023. Overall mine development during the quarter of 2,173 metres. The twin incline advance is ahead of schedule and as a result we expect first ore to be mined at Kora at depth in Q4, establishing a major new mining front at depth that will provide a significant boost to operational flexibility as 2024 progresses. We note that this area was not included in the 2023 budget and it is being mined earlier as a result of strong development advance rates.

The Company’s interim consolidated financial statements and associated management’s discussion and analysis for the three and six months ended June 30, 2023 are available for download on the Company’s website and under the Company’s profile on SEDAR+ (www.sedarplus.ca). All amounts are in U.S. dollars unless otherwise indicated.

Figure 1: Quarterly Production and AISC Chart

https://www.globenewswire.com/NewsRoom/AttachmentNg/5966eb17-7df2-4779-aceb-0f7714cce4a9

Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined Material Chart

https://www.globenewswire.com/NewsRoom/AttachmentNg/1a07f918-0cae-478c-9fad-5e9b3951bd18

John Lewins, K92 Chief Executive Officer and Director, stated, “During the second quarter, the Company achieved a significant number of positives with production growing 43% from Q1 2023 and 18% from Q2 2022; strong cash costs of $597/oz and AISC of $975/oz, well below the annual guidance range of $620-$680/oz for cash costs and $1,180-$1,300/oz for AISC; completion of the Stage 2A Plant Expansion in May, which delivered an immediate and notable boost to metallurgical recoveries; the discovery of a new high-grade zone at the J2 Vein at Judd South; exploration expanding multiple high-grade areas at Kora-Kora South and Judd-Judd South; and the considerable strengthening of our financial position.

Financially, the cash balance grew by $6.9m, even after a near-record $22.0m was spent on property, plant and equipment plus a record $6.3 million on exploration and evaluation expenditures during the quarter. The balance sheet is strong, standing at $95.6m cash and no debt at quarter end. Subsequent to quarter end, our financial outlook also strengthened significantly upon the order of long-lead items and the award of the Lump Sum Fixed Price engineering, procurement, construction and commissioning (“EPC”) contract for the 1.2 mtpa Stage 3 Process Plant. Combined with the long-lead items, K92 has awarded approximately 94% of the process plant capital cost, our largest growth capital item for the expansion, forecasted to represent over half of the growth capital, on a fixed price basis, significantly mitigating potential capital cost increases for the expansion. Other packages for the Stage 3 Expansion are also substantially progressing (see July 24, 2023 press release).

On the process plant, I would like to acknowledge and congratulate the team on site for the completion of the Stage 2A Plant Expansion. Since the end of 2019, the plant’s quarterly throughput has more than tripled, with two expansions, Stage 2 and Stage 2A, completed largely during the pandemic environment. The plant, as noted above, has performed well – our gold and copper recoveries in Q2 were the highest since Q4 2021. In June, the first full month post-commissioning, gold recoveries already achieved the Integrated Development Plan’s recovery parameter of 93%. Optimization work on the plant is underway, and we look forward to discovering its ultimate throughput and recovery potential.

On exploration, we are progressing on multiple fronts, with a total of 11 drills operating at the Kora-Kora South, Judd-Judd South vein systems and the A1 porphyry. We expect to provide another extensive exploration update shortly.”

Notes:

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Qualified Person

K92 Mine Geology Manager and Mine Exploration Manager, Mr. Andrew Kohler, PGeo, a qualified person under the meaning of Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects, has reviewed and is responsible for the technical content of this news release.

About K92

K92 Mining Inc. is engaged in the production of gold, copper and silver at the Kainantu Gold Mine in the Eastern Highlands province of Papua New Guinea, as well as exploration and development of mineral deposits in the immediate vicinity of the mine. The Company declared commercial production from Kainantu in February 2018 and is in a strong financial position. A maiden resource estimate on the Blue Lake copper-gold porphyry project was completed in August 2022. K92 is operated by a team of mining company professionals with extensive international mine-building and operational experience.