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K92 Mining Announces Strong 2024 Q1 Financial Results – Financial Position Strong as Stage 3 Expansion Advances

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K92 Mining Announces Strong 2024 Q1 Financial Results – Financial Position Strong as Stage 3 Expansion Advances

 

 

 

 

 

K92 Mining Inc. (TSX: KNT) (OTCQX: KNTNF) is pleased to announce financial results for the three months ended March 31, 2024.

 

Production

  • Quarterly production of 27,462 ounces gold equivalent or 24,389 oz gold, 1,443,300 lbs copper and 35,650 oz silver (1), representing a 39% increase from Q1 2023.
  • Cash costs of US$934/oz gold and all-in sustaining costs of US$1,366/oz gold (2).
  • Ore processed of 130,632 tonnes or 1,436 tpd, an 11% increase from Q1 2023 and 5% greater than the Stage 2A Expansion design rate of 1,370 tpd.
  • During the quarter, multiple throughput records were achieved. Monthly throughput record achieved in January of 57,144 tonnes processed or 1,843 tpd, exceeding the Stage 2A Expansion design rate by 34%; weekly throughput record achieved in January averaging 2,149 tpd, exceeding the Stage 2A design rate by 57%, and daily throughput record achieved on January 21st of 2,389 tonnes processed, exceeding the Stage 2A design rate by 74% (3). In January and February, 95% of operating days exceeded the Stage 2A Expansion plant design rate.
  • Quarterly ore mined of 111,054 tonnes.

 

Financials

  • Strong cash and treasury bill position of US$73.4 million as of March 31, 2024 while remaining debt-free.
  • Operating cash flow (before working capital adjustments) for the three months ended March 31, 2024, of US$20.0 million or US$0.09 per share, and record earnings before interest, taxes, depreciation and amortization (2) of US$17.6 million or US$0.07 per share.
  • Quarterly revenue of US$59.8 million, an increase of 48% from Q1 2023.
  • Quarterly net income of US$3.1 million or $0.01 per share.
  • Sales of 27,996 oz gold, 1,582,668 lbs copper and 38,812 oz silver. Gold concentrate and doré inventory of 1,677 oz as of March 31, 2024, a decrease of 3,608 oz over the prior quarter.

 

Growth

  • On the Stage 3 and 4 Expansions, 52% of growth capital has been either spent or committed as of April 30, 2024. K92 has completed handover to GR Engineering for the construction of the 1.2 million tpa Stage 3 Process Plant, with commissioning of the Stage 3 Process Plant now targeting late-April (previously by end of March 2025) due to a significantly wetter and longer than average rainy season. Fortunately, as this occurred early in the mobilization process, cost variation is minor. Underground, two raise bore rigs are undergoing electrification and will commence boring imminently, with the larger raise bore commencing works for a ventilation raise first followed by the first waste/ore pass. The first waste/ore pass is scheduled to commence boring in Q3 2024.
  • During the quarter, results from the first two holes from K92’s maiden drill program at the Arakompa project recorded significant near-surface mineralization, with 4 high-grade lodes intersected in hole KARDD0002. Between the high-grade lodes, the tonalite to dioritic host rock is overprinted with porphyry style mineralization increasing the potential for bulk mining. The target size of Arakompa is very large, with mineralization demonstrated from drill holes, rock samples and surface workings for at least 1.7 km of strike, hosted within a ~150-225 m wide mineralized intense phyllic altered package, and exhibits a vertical extent of +500 m. Arakompa is sparsely drilled, with K92’s maiden drill results representing the first drilling on the project completed in 32 years. A total of 18 holes were drilled historically, with the vast majority shallow. Highlights from the maiden drill program include:
    • KARDD0002 recording 7.20 m at 24.76 g/t AuEq, 5.70 m at 9.94 g/t AuEq, 5.30 m at 6.06 g/t AuEq and 3.60 m at 3.38 g/t AuEq (4).
    • KARDD0002 recording a bulk intersection of 219.8 m at 1.59 g/t AuEq with a higher grade core of 149.4 m at 2.12 g/t AuEq, starting at 5.2 m from surface.

      Other historic highlights reported include:

    • 004DA92 recording 4.00 m at 32.03 g/t AuEq
    • 013AD92 recording 4.00 m at 20.21 g/t AuEq
    • 016AD92 recording 6.30 m at 14.96 g/t AuEq
    • 010AD92 recording 9.20 m at 10.67 g/t AuEq

      See news release dated February 21, 2024 for additional details.

  • Subsequent to quarter end, strong results from 140 diamond drill holes were reported from underground and surface at Kora, Kora South, Judd, and Judd South deposits in addition to Kora and Judd Northern Deeps. Multiple dilatant zones intersected at Kora’s K2 Vein, including a new dilatant zone discovered outside of the Kora resource at Kora South and the extension of an existing dilatant zone down-dip:
    • Kora South new dilatant zone intercepts:
      • KUDD0053: 78.50 m at 27.03 g/t AuEq
      • KUDD0056: 34.00 m at 8.14 g/t AuEq
    • Known Dilatant zone extended down-dip:
      • KUDD0058: 51.00 m at 7.04 g/t AuEq

High-grade zones extended in multiple directions including up-dip from the main underground mining area at the K1, K2 and J1 Veins, to the South outside the Kora resource at the K2 Vein and 300 m to the North near surface at the J1 Vein. Highlights include:

    • KMDD0590: 3.26 m at 86.92 g/t AuEq from the K1 Vein
    • KMDD0634: 12.09 m at 18.90 g/t AuEq from the K1 Vein
    • KMDD0662: 9.00 m at 40.36 g/t AuEq from the K2 Vein
    • KMDD0654A: 17.45 m at 23.79 g/t AuEq from the K2 Vein
    • JDD0235: 4.13 m at 69.10 g/t AuEq from the J1 Vein
    • KODD0055: 9.85 m at 7.58 g/t AuEq from the J1 Vein

      See news release dated May 6, 2024 for additional details.

 

The Company’s interim consolidated financial statements and associated management’s discussion and analysis for the three months ended March 31, 2024 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.

 

See Figure 1: Quarterly Production, Cash Cost and AISC Chart

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

See Figure 3: Process Plant Throughput Performance, Daily Records and Near-Records

 

John Lewins, K92 Chief Executive Officer and Director, stated, “During the first quarter, K92 delivered strong financial results and above-budget production, even with the temporary suspension of underground operations for the last 22 days of March following a non-industrial incident. Since the lifting of the temporary suspension of underground operations in the first half of April, we have been pleased with the focus and motivation of our workforce, with operations having returned to normal. Financially, we remain in a strong position with $73 million in cash and treasury bills at quarter end, plus significant liquidity with the $100 million loan with Trafigura.

 

On the Stage 3 Expansion, we continue to move forward on multiple initiatives and as of April 30th, 52% of the Stage 3 and 4 Expansion growth capital has now been either spent or committed. The complete handover to GR Engineering for the construction of the Stage 3 Process Plant was a major milestone, in addition to the commencement of raise bore works planned for later this month, which will drive a step-change in productivity underground over the next few months.

 

And lastly, as shown this past week with our exploration drilling results, the Kora-Kora South and Judd-Judd South system is world class, has significant expansion potential and with the increase in drilling activity at Arakompa, we expect exploration to continue to be a driver of value during the Stage 3 Expansion construction period and beyond.”

 

 

Mine Operating Activities

 
    Three months ended
March 31, 2024
Three months ended
March 31, 2023
Operating data    
Gold head grade (Au g/t) 6.4 5.2
Copper grade (%) 0.55% 0.70%
Gold equivalent head grade (AuEq g/t) 7.2 6.4
Gold recovery (%) 90.7% 89.1%
Copper recovery (%) 91.9% 91.3%
Gold ounces produced 24,389 17,593
Gold ounces equivalent produced (1) (2) 27,462 21,488
Tonnes of copper produced 655 749
Silver ounces produced 35,650 29,891
       

Financial data (in thousands of dollars)
   
Gold ounces sold 27,996 17,602
Revenues from concentrate and doré sales US$59,798 US$40,366
Mine operating expenses US$12,465 US$8,753
Other mine expenses US$20,942 US$8,241
Depreciation and depletion US$7,482 US$6,744
       
Statistics (in dollars)    
Average realized selling price per ounce, net US$2,016 US$1,807
Cash cost per ounce (2) US$934 US$758
All-in sustaining cost per ounce (2) US$1,366 US$1,506
       
Notes:
     
(1) Gold equivalent in Q1 2024 is calculated based on: gold $2,070 per ounce; silver $23.34 per ounce; and copper $3.83 per pound. Gold equivalent in Q1 2023 is calculated based on: gold $1,890 per ounce; silver $22.55 per ounce; and copper $4.05 per pound.
       
(2) The Company provides some non-international financial reporting standard measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results. Please refer to non-IFRS financial performance measures in the Company’s management’s discussion and analysis dated May 10, 2024, available on SEDAR+ or the Company’s website, for reconciliation of these measures.
       
(3) Daily tonnes processed record achieved on day with 23.5 hours of plant operation. 7-day tonnes processed recorded achieved with 98.1% plant availability. 95.4% plant availability in January. 2024 budget annual average plant availability is 94.0%.
       
(4) Gold equivalent exploration results are calculated using longer-term commodity prices with a copper price of US$4.00/lb, a silver price of US$22.50/oz and a gold price of US$1,750/oz.
   

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.

 

Technical Report

 

The Integrated Development Plan, including the Definitive Feasibility Study and Preliminary Economic Assessment for the Kainantu Gold Mine Project in Papua New Guinea is included in the Technical Report, titled, “Independent Technical Report, Kainantu Gold Mine Integrated Development Plan, Kainantu Project, Papua New Guinea” dated October 26, 2022, with an effective date of January 1, 2022.

 

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.

 

Figure 1: Quarterly Production, Cash Cost and AISC Chart

 

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

 

Figure 3: Process Plant Throughput Performance, Daily Records and Near-Records

 

Posted May 13, 2024

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